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CHAPTER 359--S.F.No. 2918
An act
relating to retirement; various retirement plans; increasing certain
contribution rates; suspending certain post-retirement adjustments; reducing
certain postretirement adjustment increase rates; suspending certain
postretirement adjustments temporarily; reducing interest rates on refunds;
reducing deferred annuity augmentation rates; eliminating interest on reemployed
annuitant earnings limitation deferred accounts; increasing certain vesting
requirements; increasing certain early retirement reduction rates; reducing
certain benefit accrual rates; extending certain amortization periods; making
changes of an administrative nature for retirement plans administered by the
Minnesota State Retirement Association; revising insurance withholding for
certain retired public employees; authorizing state patrol plan service credit for
leave procedures; addressing plan coverage errors and omitted contributions;
revising unlawful discharge annuity repayment requirements; requiring
employment unit accommodation of daily valuation of investment accounts;
eliminating administrative fee maximum for the unclassified state employees
retirement program; making changes of an administrative nature in the general
employees retirement plan of the Public Employees Retirement Association, the
public employees police and fire retirement plan, and the defined contribution
retirement plan; making various administrative modifications in the voluntary
statewide lump-sum volunteer firefighter retirement plan of the Public Employees
Retirement Association; revising purchase of salary credit procedures in certain
partial salary situations; adding new partial salary credit purchase authority for
partial paid medical leaves and budgetary leaves; redefining TRA allowable
service credit; defining annual base salary; requiring base salary reporting by
TRA-covered employing units; making changes of an administrative nature in the
Minnesota State Colleges and Universities System individual retirement account
plan; setting deadline dates for actuarial reporting; extending and revising an
early retirement incentive program; permitting the court-ordered revocation of
an optional annuity election in certain marriage dissolutions; transfer of the
administrative functions of the Minneapolis Employees Retirement Fund to the
Public Employees Retirement Association; creation of MERF consolidation
account within the Public Employees Retirement Association; making various
technical corrections relating to volunteer fire relief associations; revising
break-in-service return to firefighting authorizations; authorizing Minnesota
deferred compensation plan service pension transfers; revising payout defaults
in survivor benefits; authorizing corrections of certain special fund deposits;
requiring a retirement fund investment authority study; authorizing certain
service and salary credit for furloughs; allowing election of coverage by
legislative members; requiring a deferred contribution plan study; requiring
a defined contribution plan study; authorizing certain bylaw amendments;
making technical changes; appropriating money;amending Minnesota Statutes
2008, sections 3A.02, subdivision 4; 11A.04; 11A.23, subdivision 4; 13D.01,
subdivision 1; 43A.17, subdivision 9; 43A.316, subdivision 8; 69.021,
subdivision 10; 69.051, subdivision 3; 126C.41, subdivision 3; 256D.21;
352.01, subdivision 2a; 352.03, subdivision 4; 352.04, subdivision 9; 352.113,
subdivision 1; 352.115, subdivisions 1, 10; 352.12, subdivision 2; 352.22,
subdivisions 2, 3; 352.72, subdivisions 1, 2; 352.91, by adding a subdivision;
352.93, subdivisions 1, 2a, 3a; 352.931, subdivision 1; 352.965, subdivisions 1,
2, 6; 352B.02, as amended; 352B.08, subdivisions 1, 2a; 352B.11, subdivision
2b; 352B.30, subdivisions 1, 2; 352D.015, subdivisions 4, 9, by adding a
subdivision; 352D.02, subdivisions 1c, 2, 3; 352D.03; 352D.04, subdivisions 1,
2; 352D.05, subdivisions 3, 4; 352D.06, subdivision 3; 352D.065, subdivision
3; 352D.09, subdivisions 3, 7; 352F.07; 353.01, subdivisions 2b, 2d, by adding
subdivisions; 353.0161, subdivision 2; 353.03, subdivision 1; 353.05; 353.27, as
amended; 353.29, subdivision 1; 353.30, subdivision 1c; 353.32, subdivisions 1,
1a; 353.34, subdivisions 1, 2, 3, 6; 353.37, subdivisions 1, 2, 3, 3a, 4, 5; 353.46,
subdivisions 2, 6; 353.64, subdivision 7; 353.651, subdivisions 1, 4; 353.657,
subdivisions 1, 2a; 353.71, subdivisions 1, 2, 4; 353.86, subdivisions 1, 2; 353.87,
subdivisions 1, 2; 353.88; 353D.01, subdivision 2; 353D.03, subdivision 1;
353D.04, subdivisions 1, 2; 353E.04, subdivisions 1, 4; 353E.07, subdivisions 1,
2; 353F.025, subdivisions 1, 2; 353F.03; 354.05, by adding a subdivision; 354.07,
subdivision 5; 354.091; 354.42, subdivisions 3, 7, by adding subdivisions;
354.52, subdivision 6, by adding a subdivision; 354.66, subdivision 3; 354.71;
354A.011, subdivision 27; 354A.12, subdivisions 1, 3c, by adding a subdivision;
354A.27, subdivisions 5, 6, by adding a subdivision; 354A.31, subdivision 1;
354A.35, subdivision 1; 354A.37, subdivisions 2, 3, 4; 354A.39; 354B.25,
subdivisions 1, 3; 354C.14; 355.095, subdivision 1; 356.214, subdivision 1;
356.215, subdivisions 3, 8; 356.216; 356.24, subdivision 1; 356.30, subdivisions
1, 3; 356.302, subdivisions 1, 3, 4, 5, 7; 356.303, subdivisions 2, 4; 356.315,
subdivision 5; 356.407, subdivision 2; 356.431, subdivision 1; 356.465,
subdivision 3; 356.47, subdivision 3; 356.50, subdivision 4; 356.64; 356.65,
subdivision 2; 356.91; 356.96, subdivisions 2, 3, 7, 8; 356A.06, subdivision 8;
422A.101, subdivision 3; 422A.26; 473.511, subdivision 3; 473.606, subdivision
5; 475.52, subdivision 6; 490.123, by adding a subdivision; 518.58, subdivisions
3, 4; Minnesota Statutes 2009 Supplement, sections 6.67; 69.011, subdivision
1; 69.031, subdivision 5; 69.772, subdivision 6; 69.773, subdivision 6; 352.01,
subdivision 2b; 352.75, subdivision 4; 352.95, subdivision 2; 352B.011,
subdivision 3; 353.01, subdivisions 2, 2a, 16; 353.06; 353.27, subdivisions
2, 3, 7; 353.33, subdivision 1; 353.371, subdivision 4; 353.65, subdivisions
2, 3; 353F.02, subdivision 4; 353G.05, subdivision 2; 353G.06, subdivision
1; 353G.08; 353G.09, subdivision 3; 353G.11, subdivision 1, by adding a
subdivision; 354.42, subdivision 2; 354.47, subdivision 1; 354.49, subdivision
2; 354.52, subdivision 4b; 354.55, subdivision 11; 354A.12, subdivision 2a;
356.20, subdivision 2; 356.215, subdivision 11; 356.32, subdivision 2; 356.401,
subdivision 3; 356.415, subdivisions 1, 2, by adding subdivisions; 356.96,
subdivisions 1, 5; 423A.02, subdivision 3; 424A.01, subdivisions 1, 6; 424A.015,
by adding a subdivision; 424A.016, subdivisions 4, 7; 424A.02, subdivisions
9, 10; 424A.05, subdivision 3, by adding a subdivision; 424A.08; 480.181,
subdivision 2; Laws 2009, chapter 169, article 4, section 49; article 5, section
2; article 7, section 4; proposing coding for new law in Minnesota Statutes,
chapters 352; 352B; 353; 353G; 356; repealing Minnesota Statutes 2008,
sections 13.63, subdivision 1; 69.011, subdivision 2a; 352.91, subdivision 5;
353.01, subdivision 40; 353.46, subdivision 1a; 353.88; 353D.03, subdivision 2;
353D.12; 354A.27, subdivision 1; 354C.15; 356.43; 422A.01, subdivisions 1,
2, 3, 4, 4a, 5, 6, 7, 8, 9, 10, 11, 12, 13a, 17, 18; 422A.02; 422A.03; 422A.04;
422A.05, subdivisions 1, 2a, 2b, 2c, 2d, 2e, 2f, 5, 6, 8; 422A.06, subdivisions 1,
2, 3, 5, 6, 7; 422A.08, subdivision 1; 422A.09; 422A.10; 422A.101, subdivisions
1, 1a, 2, 2a; 422A.11; 422A.12; 422A.13; 422A.14, subdivision 1; 422A.15;
422A.151; 422A.155; 422A.156; 422A.16, subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9,
10; 422A.17; 422A.18, subdivisions 1, 2, 3, 4, 5, 7; 422A.19; 422A.20; 422A.21;
422A.22, subdivisions 1, 3, 4, 6; 422A.23, subdivisions 1, 2, 5, 6, 7, 8, 9, 10,
11, 12; 422A.231; 422A.24; 422A.25; Minnesota Statutes 2009 Supplement,
sections 422A.06, subdivision 8; 422A.08, subdivision 5; 424A.001, subdivision
6; Laws 2009, chapter 169, article 10, section 32.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1
FINANCIAL SUSTAINABILITY PROVISIONS

    Section 1. Minnesota Statutes 2008, section 3A.02, subdivision 4, is amended to read:
    Subd. 4. Deferred annuities augmentation. (a) The deferred retirement allowance
of any former legislator must be augmented as provided herein.
    (b) The required reserves applicable to the deferred retirement allowance,
determined as of the date the benefit begins to accrue using an appropriate mortality table
and an interest assumption of six percent, must be augmented from the first of the month
following the termination of active service, or July 1, 1973, whichever is later, to the first
day of the month in which the allowance begins to accrue, at the following annually
compounded rate or rates:
(1) five percent until January 1, 1981;
(2) three percent from January 1, 1981, or from the first day of the month following
the termination of active service, whichever is later, until January 1 of the year in which
the former legislator attains age 55 or until January 1, 2012, whichever is earlier; and
(3) five percent from the period end date under clause (2) to until the effective date
of retirement or until January 1, 2012, whichever is earlier; and
(4) two percent after December 31, 2011.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2008, section 352.113, subdivision 1, is amended to read:
    Subdivision 1. Age and service requirements. (a) An employee covered by the
system, who is less than normal retirement age and who becomes totally and permanently
disabled after three or more years of allowable service if employed before July 1, 2010, or
after five or more years of allowable service if employed after June 30, 2010, is entitled to
a disability benefit in an amount provided in subdivision 3.
(b) If the disabled employee's state service has terminated at any time, the employee
must have at least two years of allowable service after last becoming a state employee
covered by the system.
(c) Refunds may be repaid under section 352.23 before the effective accrual date of
the disability benefit under subdivision 2.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2008, section 352.115, subdivision 1, is amended to read:
    Subdivision 1. Age and service requirements. After separation from state service,
any employee (1) who has attained the age of at least 55 years and who is entitled to
credit for at least three years allowable service if employed before July 1, 2010, or after
five or more years of allowable service if employed after June 30, 2010, or (2) who has
received credit for at least 30 years allowable service regardless of age, is entitled upon
application to a retirement annuity.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2008, section 352.12, subdivision 2, is amended to read:
    Subd. 2. Surviving spouse benefit. (a) If an employee or former employee has
credit for at least three years allowable service if the employee was employed before July
1, 2010, or for at least five years of allowable service if the employee was employed
after June 30, 2010, 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 under subdivision 1, an
annuity equal to the joint and 100 percent survivor annuity which the employee or former
employee could have qualified for 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 if the employee was employed before July 1,
2010, or for at least five years of allowable service if the employee was employed after
June 30, 2010, 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.
    (d) The surviving spouse eligible for benefits under paragraph (a) may apply for the
annuity at any time after the date on which the employee or former employee would
have attained the required age for retirement based on the allowable service earned.
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 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 or former
employee's last designated beneficiary or, if none, as specified under subdivision 1.
    (e) Any employee or former employee may request in writing, with the signed
consent of the spouse, that this subdivision not apply and that payment be made only to a
designated beneficiary as otherwise provided by this chapter.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2008, section 352.22, subdivision 2, is amended to read:
    Subd. 2. Amount of refund. Except as provided in subdivision 3, the refund
payable to a person who ceased to be a state employee by reason of a termination of state
service is an amount equal to employee accumulated contributions plus interest at the rate
of six percent per year compounded daily from the date that the contribution was made
until June 30, 2011, or until the date on which the refund is paid, whichever is earlier, and
at the rate of four percent per year compounded daily from the date that the contribution
was made or from July 1, 2011, whichever is later, until the date on which the refund is
paid. Included with the refund is any interest paid as part of repayment of a past refund,
plus interest thereon from the date of repayment.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2008, section 352.22, subdivision 3, is amended to read:
    Subd. 3. Deferred annuity. (a) An employee who has at least three years of
allowable service if employed before July 1, 2010, or who has at least five years of
allowable service if employed after June 30, 2010, when termination occurs may elect
to leave the accumulated contributions in the fund and thereby be entitled to a deferred
retirement annuity. The annuity must be computed under the law in effect when state
service terminated, on the basis of the allowable service credited to the person before
the termination of service.
(b) An employee on layoff or on leave of absence without pay, except a leave of
absence for health reasons, and who does not return to state service must have an annuity,
deferred annuity, or other benefit to which the employee may become entitled computed
under the law in effect on the employee's last working day.
(c) No application for a deferred annuity may be made more than 60 days before
the time the former employee reaches the required age for entitlement to the payment of
the annuity. The deferred annuity begins to accrue no earlier than 60 days before the date
the application is filed in the office of the system, but not (1) before the date on which
the employee reaches the required age for entitlement to the annuity nor (2) before the
day following the termination of state service in a position which is not covered by the
retirement system.
(d) Application for the accumulated contributions left on deposit with the fund may
be made at any time following the date of the termination of service.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2008, section 352.72, subdivision 1, is amended to read:
    Subdivision 1. Entitlement to annuity. (a) Any person who has been an employee
covered by a retirement system listed in paragraph (b) is entitled when qualified to an
annuity from each fund if total allowable service in all funds or in any two of these funds
totals three or more years if employed before July 1, 2010, or totals five or more years
if employed after June 30, 2010.
(b) This section applies to the Minnesota State Retirement System, the Public
Employees Retirement Association including the Public Employees Retirement
Association police and fire fund, the Teachers Retirement Association, the State Patrol
Retirement Association, or any other public employee retirement system in the state with
a similar provision, except as noted in paragraph (c).
(c) This section does not apply to other funds providing benefits for police officers
or firefighters.
(d) No portion of the allowable service upon which the retirement annuity from
one fund is based shall be again used in the computation for benefits from another fund.
No refund may have been taken from any one of these funds since service entitling the
employee to coverage under the system or the employee's membership in any of the
associations last terminated. The annuity from each fund must be determined by the
appropriate provisions of the law except that the requirement that a person must have at
least three a specific number of years of allowable service in the respective system or
association does not apply for the purposes of this section if the combined service in two
or more of these funds equals three or more years at least the longest period of allowable
service of any of the applicable retirement plans.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 8. Minnesota Statutes 2008, section 352.72, subdivision 2, is amended to read:
    Subd. 2. Computation of deferred annuity. (a) The deferred annuity, if any,
accruing under subdivision 1, or section 352.22, subdivision 3, must be computed as
provided in section 352.22, subdivision 3, on the basis of allowable service before
termination of state service and augmented as provided herein. The required reserves
applicable to a deferred annuity or to an annuity for which a former employee was eligible
but had not applied or to any deferred segment of an annuity must be determined as of
the date the benefit begins to accrue and augmented by interest compounded annually
from the first day of the month following the month in which the employee ceased to be
a state employee, or July 1, 1971, whichever is later, to the first day of the month in
which the annuity begins to accrue. The rates of interest used for this purpose must be
five percent compounded annually until January 1, 1981, and three percent compounded
annually thereafter until January 1 of the year following the year in which the former
employee attains age 55 or until January 1, 2012, whichever is earlier, and from that date
the January 1 next following the attainment of age 55 to the effective date of retirement or
until January 1, 2012, whichever is earlier, the rate is five percent compounded annually if
the employee became an employee before July 1, 2006, and at 2.5 percent compounded
annually until January 1, 2012, if the employee becomes an employee after June 30, 2006,
and two percent compounded annually after December 31, 2011, irrespective of when the
employee became a state employee. If a person has more than one period of uninterrupted
service, the required reserves related to each period must be augmented by interest under
this subdivision. The sum of the augmented required reserves so determined is the present
value of the annuity. "Uninterrupted service" for the purpose of this subdivision means
periods of covered employment during which the employee has not been separated from
state service for more than two years. If a person repays a refund, the service restored by
the repayment must be considered continuous with the next period of service for which the
employee has credit with this system. The formula percentages used for each period of
uninterrupted service must be those applicable to a new employee. The mortality table
and interest assumption used to compute the annuity must be those in effect when the
employee files application for annuity. This section does not reduce the annuity otherwise
payable under this chapter.
(b) The retirement annuity or disability benefit of, or the survivor benefit payable on
behalf of, a former state employee who terminated service before July 1, 1997, which is
not first payable until after June 30, 1997, must be increased on an actuarial equivalent
basis to reflect the change in the postretirement interest rate actuarial assumption under
section 356.215, subdivision 8, from five percent to six percent under a calculation
procedure and the tables adopted by the board and approved by the actuary retained under
section 356.214.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2009 Supplement, section 352.75, subdivision 4, is
amended to read:
    Subd. 4. Existing deferred retirees. Any former member of the former
Metropolitan Transit Commission-Transit Operating Division employees retirement
fund is entitled to a retirement annuity from the Minnesota State Retirement System if
the employee:
(1) is not an active employee of the Transit Operating Division of the former
Metropolitan Transit Commission on July 1, 1978; (2) has at least ten years of active
continuous service with the Transit Operating Division of the former Metropolitan
Transit Commission as defined by the former Metropolitan Transit Commission-Transit
Operating Division employees retirement plan document in effect on December 31, 1977;
(3) has not received a refund of contributions; (4) has not retired or begun receiving an
annuity or benefit from the former Metropolitan Transit Commission-Transit Operating
Division employees retirement fund; (5) is at least 55 years old; and (6) submits a valid
application for a retirement annuity to the executive director of the Minnesota State
Retirement System.
The person is entitled to a retirement annuity in an amount equal to the normal
old age retirement allowance calculated under the former Metropolitan Transit
Commission-Transit Operating Division employees retirement fund plan document in
effect on December 31, 1977, subject to an early retirement reduction or adjustment in
amount on account of retirement before the normal retirement age specified in that former
Metropolitan Transit Commission-Transit Operating Division employees retirement fund
plan document.
The deferred retirement annuity of any person to whom this subdivision applies
must be augmented. The required reserves applicable to the deferred retirement annuity,
determined as of the date the allowance begins to accrue using an appropriate mortality
table and an interest assumption of five percent, must be augmented by interest at the
rate of five percent per year compounded annually from January 1, 1978, to January 1,
1981, and three percent per year compounded annually from January 1, 1981, until the
date that the annuity begins to accrue or January 1, 2012, whichever is earlier, and two
percent after December 31, 2011, to the first day of the month in which the annuity begins
to accrue. After the commencement of the retirement annuity, the annuity is eligible for
postretirement adjustments under section 356.415. On applying for a retirement annuity
under this subdivision, the person is entitled to elect a joint and survivor optional annuity
under section 352.116, subdivision 3.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. [352.925] VESTING.
(a) "Vesting" means obtaining a nonforfeitable entitlement to an annuity or benefit
from the correctional state employees retirement plan by having credit for sufficient
allowable service under paragraph (b) or (c), whichever applies.
(b) A member who first became a member of the correctional state employees
retirement plan before July 1, 2010, is vested when the person has accrued credit for not
less than three years of allowable service as defined under section 352.01, subdivision 11.
(c) A member who first becomes a member of the correctional state employees
retirement plan after June 30, 2010, is vested at the following percentages when the person
has accrued credited allowable service as defined under section 352.01, subdivision 11,
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. 11. Minnesota Statutes 2008, section 352.93, subdivision 1, is amended to read:
    Subdivision 1. Basis of annuity; when to apply. After separation from state
service, an employee covered under section 352.91 who has reached age 55 years and has
credit for at least three years of covered correctional service or a combination of covered
correctional service and general employees state retirement plan service is vested under
section 352.925, is entitled upon application to a retirement annuity under this section,
based only on covered correctional employees' service. Application may be made no
earlier than 60 days before the date the employee is eligible to retire by reason of both age
and service requirements.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 12. Minnesota Statutes 2008, section 352.93, subdivision 2a, is amended to read:
    Subd. 2a. Early retirement. Any covered correctional employee who becomes at
least 50 years old and who has at least three years of allowable service is vested under
section 352.925, is entitled upon application to a reduced retirement annuity equal to the
annuity calculated under subdivision 2, reduced by two-tenths of one percent for each
month that the correctional employee is under age 55 at the time of retirement if first
employed as a correctional state employee before July 1, 2010, and if retired before July
1, 2015, or reduced by 0.417 percent for each month that the correctional employee is
under age 55 at the time of retirement if first employed as a correctional state employee
after June 30, 2010, or if first employed as a correctional state employee before July 1,
2010, and if retired after June 30, 2015.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 13. Minnesota Statutes 2008, section 352.93, subdivision 3a, is amended to read:
    Subd. 3a. Optional annuities. The board may establish optional annuity forms to
pay a higher amount from the date of retirement until an employee is first eligible to draw
Social Security benefits, reaches age 65, or up to reaches the age the employee is eligible
to receive unreduced Social Security benefits, at which time the monthly benefits must be
reduced. The optional annuity forms must be actuarially equivalent to the normal single
life annuity form provided in subdivision 2. The optional annuity forms must be approved
certified as actuarially equivalent by the actuary retained under section 356.214.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 14. Minnesota Statutes 2008, section 352.931, subdivision 1, is amended to read:
    Subdivision 1. Surviving spouse benefit. (a) If the correctional employee was at
least age 50, has credit for at least three years of allowable service was vested under
section 352.925, 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 under section 352.12, subdivision 1,
an annuity for life 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. The
election may be made at any time after the date of death of the employee. The surviving
spouse benefit begins to accrue as of the first of the month next following the date on
which the application for the benefit was filed.
    (b) If the employee was under age 50, dies, and had credit for at least three years of
allowable service credit on the date of death was vested under section 352.925, 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 early retirement reduction under section 352.93,
subdivision 2a
, to age 50, and one-half of the early retirement reduction from age 50 to the
age payment begins. The surviving spouse eligible for surviving spouse benefits under
this paragraph may apply for the annuity at any time after the employee's death. Sections
352.22, subdivision 3, and 352.72, subdivision 2, apply to a deferred annuity or surviving
spouse benefit payable under this subdivision.
    (c) The annuity must cease with the last payment received by the surviving spouse
in the lifetime of the surviving spouse. Any employee may request in writing, with the
signed consent of the spouse, that this subdivision not apply and that payment be made
only to a designated beneficiary as otherwise provided by this chapter.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 15. Minnesota Statutes 2009 Supplement, section 352.95, subdivision 2, is
amended to read:
    Subd. 2. Regular disability; computation of benefit. A covered correctional
employee who was hired before July 1, 2009, after rendering at least one year of covered
correctional service, or a covered correctional employee who was first hired after June 30,
2009, after rendering at least three years of covered correctional plan service is vested
under section 352.925, and who is determined to have a regular disability, physical or
psychological, as defined under section 352.01, subdivision 17c, is entitled to a regular
disability benefit. The regular disability benefit must be based on covered correctional
service only. The regular disability benefit must be computed as provided in section
352.93, subdivisions 1 and 2. The regular disability benefit of a covered correctional
employee who was first hired before July 1, 2009, and who is determined to have a regular
disability, physical or psychological, under this subdivision must be computed as though
the employee had at least 15 years of covered correctional service.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 16. Minnesota Statutes 2008, section 352B.02, as amended by Laws 2009, chapter
101, article 2, section 109; and Laws 2009, chapter 169, article 1, section 23; article 2,
section 16; and article 4, sections 3 and 4, is amended to read:
352B.02 STATE PATROL RETIREMENT FUND.
    Subdivision 1. Fund created; membership. A State Patrol retirement fund
is established. Its membership consists of all persons defined in section 352B.011,
subdivision 10
.
    Subd. 1a. Member contributions. (a) The member contribution is 10.40 percent
the following percentage of the member's salary.:


(1) before the first day of the first pay
period beginning after July 1, 2011
10.40 percent


(2) on or after the first day of the first
pay period beginning after July 1, 2011
12.40 percent
(b) These contributions must be made by deduction from salary as provided in
section 352.04, subdivision 4.
    Subd. 1b. Salary deductions. Member contribution amounts must be deducted each
pay period by the department head, who shall have the total amount of the deductions paid
to the commissioner of management and budget for deposit in the State Patrol retirement
fund, and have a detailed report of all deductions made each pay period to the executive
director of the Minnesota State Retirement System.
    Subd. 1c. Employer contributions. (a) In addition to member contributions,
department heads shall pay a sum equal to 15.60 percent the specified percentage of the
salary upon which deductions were made, which constitutes the employer contribution
to the fund. as follows:


(1) before the first day of the first pay
period beginning after July 1, 2011
15.60 percent


(2) on or after the first day of the first
pay period beginning after July 1, 2011
18.60 percent
(b) Department contributions must be paid out of money appropriated to departments
for this purpose.
    Subd. 1d. Fund revenue and expenses. The amounts provided for in this section
must be credited to the State Patrol retirement fund. All money received must be deposited
by the commissioner of management and budget in the State Patrol retirement fund. The
fund must be used to pay the administrative expenses of the retirement fund, and the
benefits and annuities provided in this chapter.
    Subd. 1e. Audit; actuarial valuation. (a) The legislative auditor shall audit the
fund.
(b) Any actuarial valuation of the fund required under section 356.215 must be
prepared by the actuary retained under section 356.214.
(c) Any approved actuary retained by the executive director under section 352.03,
subdivision 6
, may perform actuarial valuations and experience studies to supplement
those performed by the actuary retained under section 356.214. Any supplemental
actuarial valuation or experience studies must be filed with the executive director of the
Legislative Commission on Pensions and Retirement.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 17. Minnesota Statutes 2008, section 352B.08, subdivision 1, is amended to read:
    Subdivision 1. Eligibility; when to apply; accrual. (a) Every member who is
credited with three or more years of allowable service if first employed before July 1,
2010, or with at least five years of allowable service if first employed after June 30, 2010,
is entitled to separate from state service and upon becoming 50 years old, is entitled to
receive a life annuity, upon separation from state service.
(b) Members shall must apply for an annuity in a form and manner prescribed by the
executive director.
(c) No application may be made more than 90 days before the date the member is
eligible to retire by reason of both age and service requirements.
(d) An annuity begins to accrue no earlier than 180 days before the date the
application is filed with the executive director.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 18. Minnesota Statutes 2008, section 352B.08, subdivision 2a, is amended to read:
    Subd. 2a. Early retirement. Any member who has become at least 50 years old and
who has at least three years of allowable service if first employed before July 1, 2010, or
who has at least five years of allowable service if first employed after June 30, 2010, is
entitled upon application to a reduced retirement annuity equal to the annuity calculated
under subdivision 2, reduced by one-tenth of one percent for each month that the member
is under age 55 at the time of retirement if first employed before July 1, 2010, or reduced
by two-tenths of one percent for each month that the member is under age 55 at the time of
retirement if first employed after June 30, 2010.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 19. Minnesota Statutes 2008, section 352B.11, subdivision 2b, is amended to read:
    Subd. 2b. Surviving spouse benefit eligibility. (a) If an active member with three or
more years of allowable service if first employed before July 1, 2010, or with at least five
years of allowable service if first employed after June 30, 2010, dies before attaining age
55, the surviving spouse is entitled to the benefit specified in subdivision 2c, paragraph (b).
(b) If an active member with less than three years of allowable service if first
employed before July 1, 2010, or with fewer than five years of allowable service if first
employed after June 30, 2010, dies at any age, the surviving spouse is entitled to receive
the benefit specified in subdivision 2c, paragraph (c).
(c) If an active member with three or more years of allowable service if first
employed before July 1, 2010, or with at least five years of allowable service if first
employed after June 30, 2010, dies on or after attaining exact age 55, the surviving spouse
is entitled to receive the benefits specified in subdivision 2c, paragraph (d).
(d) If a disabilitant dies while receiving a disability benefit under section 352B.10 or
before the benefit under that section commenced, and an optional annuity was not elected
under section 352B.10, subdivision 5, the surviving spouse is entitled to receive the benefit
specified in subdivision 2c, paragraph (b).
(e) If a former member with three or more years of allowable service if first
employed before July 1, 2010, or with at least five years of allowable service if first
employed after June 30, 2010, who terminated from service and has not received a refund
or commenced receipt of any other benefit provided by this chapter, dies, the surviving
spouse is entitled to receive the benefit specified in subdivision 2c, paragraph (e).
(f) If a former member with less than three years of allowable service if first
employed before July 1, 2010, or with fewer than five years of allowable service if first
employed after June 30, 2010, who terminated from service and has not received a refund
or commenced receipt of any other benefit, if applicable, provided by this chapter, dies, the
surviving spouse is entitled to receive the refund specified in subdivision 2c, paragraph (f).
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 20. Minnesota Statutes 2008, section 352B.30, subdivision 1, is amended to read:
    Subdivision 1. Entitlement to annuity. Any person who has been an employee
covered by the Minnesota State Retirement System, or a member of the Public Employees
Retirement Association including the Public Employees Retirement Association Police
and Fire Fund, or the Teachers Retirement Association, or the State Patrol retirement fund,
or any other public employee retirement system in Minnesota having a like provision but
excluding all other funds providing benefits for police or firefighters is entitled when
qualified to an annuity from each fund if total allowable service in all funds or in any two
of these funds totals three or more the number of years of allowable service required by
the applicable retirement plan with the longest vesting period for the person. No part of
the allowable service upon which the retirement annuity from one fund is based may
again be used in the computation for benefits from another fund. The member must not
have taken a refund from any one of these funds since service entitling the member to
coverage under the system or membership in any of the associations last terminated.
The annuity from each fund must be determined by the appropriate law except that the
requirement that a person must have at least three a specific number of years allowable
service in the respective system or association does not apply for the purposes of this
section if the combined service in two or more of these funds equals three or more the
number of years of allowable service required by the applicable retirement plan with
the longest vesting period for the person.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 21. Minnesota Statutes 2008, section 352B.30, subdivision 2, is amended to read:
    Subd. 2. Computation of deferred annuity. Deferred annuities must be computed
according to this chapter on the basis of allowable service before termination of service
and augmented as provided in this chapter. The required reserves applicable to a deferred
annuity must be augmented by interest compounded annually from the first day of the
month following the month in which the member terminated service, or July 1, 1971,
whichever is later, to the first day of the month in which the annuity begins to accrue. The
rates of interest used for this purpose shall must be five percent per year compounded
annually until January 1, 1981, and after that date three percent per year compounded
annually after January 1, 1981, until January 1, 2012, if the employee became an employee
before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes
an employee after June 30, 2006, and two percent per year compounded annually after
December 31, 2011, irrespective of when the employee was first employed. The mortality
table and interest assumption used to compute the annuity shall must be those in effect
when the member files application for annuity.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 22. Minnesota Statutes 2008, section 352F.07, is amended to read:
352F.07 EFFECT ON REFUND.
Notwithstanding any provision of chapter 352 to the contrary, terminated hospital
employees may receive a refund of employee accumulated contributions plus interest
at the rate of six percent per year compounded annually in accordance with Minnesota
Statutes 1994, section 352.22, subdivision 2, at any time after the transfer of employment
to Fairview, University of Minnesota Physicians, or University Affiliated Family
Physicians. If a terminated hospital employee has received a refund from a pension plan
enumerated 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 plans and complies
with section 356.30, subdivision 2.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 23. Minnesota Statutes 2008, section 353.01, is amended by adding a subdivision
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 who first became a public employee 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 who first becomes a public employee 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 who first became a public employee 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 who first becomes a public employee 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. 24. Minnesota Statutes 2009 Supplement, section 353.27, subdivision 2, is
amended to read:
    Subd. 2. Employee contribution. (a) For a basic member, the employee
contribution is 9.10 percent of salary. For a coordinated member, the employee
contribution is six percent the following percentage of salary plus any contribution rate
adjustment under subdivision 3b.:

Effective before January 1, 2011
6.00

Effective after December 31, 2010
6.25
(b) These contributions must be made by deduction from salary as defined in section
353.01, subdivision 10, in the manner provided in subdivision 4. If any portion of a
member's salary is paid from other than public funds, the member's employee contribution
must be based on the total salary received by the member from all sources.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 25. Minnesota Statutes 2009 Supplement, section 353.27, subdivision 3, is
amended to read:
    Subd. 3. Employer contribution. (a) For a basic member, the employer
contribution is 9.10 percent of salary. For a coordinated member, the employer
contribution is six percent the following percentage of salary plus any contribution rate
adjustment under subdivision 3b.:

Effective before January 1, 2011
6.00

Effective after December 31, 2010
6.25
(b) This contribution must be made from funds available to the employing
subdivision by the means and in the manner provided in section 353.28.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 26. Minnesota Statutes 2008, section 353.27, subdivision 3b, is amended to read:
    Subd. 3b. Change in employee and employer contributions in certain instances.
(a) For purposes of this section,:
(1) a contribution sufficiency exists if the total of the employee contribution under
subdivision 2, the employer contribution under subdivision 3, the additional employer
contribution under subdivision 3a, and any additional contribution previously imposed
under this subdivision exceeds the total of the normal cost, the administrative expenses,
and the amortization contribution of the retirement plan as reported in the most recent
actuarial valuation of the retirement plan prepared by the actuary retained under section
356.214 and prepared under section 356.215 and the standards for actuarial work of the
Legislative Commission on Pensions and Retirement. For purposes of this section,; and
(2) a contribution deficiency exists if the total of the employee contributions under
subdivision 2, the employer contributions under subdivision 3, the additional employer
contribution under subdivision 3a, and any additional contribution previously imposed
under this subdivision is less than the total of the normal cost, the administrative expenses,
and the amortization contribution of the retirement plan as reported in the most recent
actuarial valuation of the retirement plan prepared by the actuary retained under section
356.214 and prepared under section 356.215 and the standards for actuarial work of the
Legislative Commission on Pensions and Retirement.
(b) Employee and employer contributions under subdivisions 2 and 3 must be
adjusted:
(1) if, on or after July 1, 2010, the regular actuarial valuations valuation of the
general employees retirement plan of the Public Employees Retirement Association under
section 356.215 indicate indicates that there is a contribution sufficiency under paragraph
(a) equal to or greater than 0.5 one percent of covered payroll and that the sufficiency
has existed for at least two consecutive years, the coordinated program employee and
employer contribution rates must be decreased as determined under paragraph (c) to a
level such that the sufficiency equals is no more greater than 0.25 one percent of covered
payroll based on the most recent actuarial valuation; or
(2) if, on or after July 1, 2010, the regular actuarial valuations valuation of the
general employees retirement plan of the Public Employees Retirement Association under
section 356.215 indicate indicates that there is a contribution deficiency equal to or greater
than 0.5 percent of covered payroll and that the deficiency has existed for at least two
consecutive years, the coordinated program employee and employer contribution rates
must be increased as determined under paragraph (c) (d) to a level such that no deficiency
exists based on the most recent actuarial valuation.
(c) The contribution rate increase or decrease must be determined by the executive
director of the Public Employees Retirement Association, must be reported to the chair
and the executive director of the Legislative Commission on Pensions and Retirement
on or before the next February 1, and, if the Legislative Commission on Pensions and
Retirement does not recommend against the rate change or does not recommend a
modification in the rate change, is effective on the next July 1 following the determination
by the executive director that a contribution deficiency or sufficiency has existed for
two consecutive fiscal years based on the most recent actuarial valuations under section
356.215. If the actuarially required contribution exceeds or is less than the total support
provided by the combined employee and employer contribution rates under subdivisions
2, 3, and 3a, by more than 0.5 one percent of covered payroll, the coordinated program
employee and employer contribution rates under subdivisions 2 and 3 must be adjusted
decreased incrementally over one or more years by no more than 0.25 percent of pay each
for employee and employer matching contribution rates to a level such that there remains
a contribution sufficiency of no more than 0.25 at least one percent of covered payroll. No
contribution rate decrease may be made until at least two years have elapsed since any
adjustment under this subdivision has been fully implemented.
(d) No If the actuarially required contribution exceeds the total support provided
by the combined employee and employer contribution rates under subdivisions 2, 3, and
3a, the employee and matching employer contribution rates must be increased equally to
eliminate that contribution deficiency. If the contribution deficiency is:
(1) less than two percent, the incremental adjustment increase may exceed be up
to 0.25 percent for either the coordinated program employee and matching employer
contribution rates per year in which any adjustment is implemented. A contribution rate
adjustment under this subdivision must not be made until at least two years have passed
since fully implementing a previous adjustment under this subdivision.;
(2) greater than 1.99 percent and less than 4.01 percent, the incremental increase
may be up to 0.5 percent for the employee and matching employer contribution rates; or
(3) greater than four percent, the incremental increase may be up to 0.75 percent for
the employee and matching employer contribution.
(e) Any recommended adjustment to the contribution rates must be reported
to the chair and the executive director of the Legislative Commission on Pensions
and Retirement by January 15 following receipt of the most recent annual actuarial
valuation prepared under section 356.215. If the Legislative Commission on Pensions
and Retirement does not recommend against the rate change or does not recommend a
modification in the rate change, the recommended adjustment becomes effective on the
first day of the first full payroll period in the fiscal year following receipt of the most
recent actuarial valuation that gave rise to the adjustment.
(f) A contribution sufficiency of up to one percent of covered payroll must be held in
reserve to be used to offset any future actuarially required contributions that are more than
the total combined employee and employer contributions under subdivisions 2, 3, and 3a.
(g) Before any reduction in contributions to eliminate a sufficiency in excess of one
percent of covered pay may be recommended, the executive director must review any
need for a change in actuarial assumptions, as recommended by the actuary retained under
section 356.214 in the most recent experience study of the general employees retirement
plan prepared under section 356.215 and the standards for actuarial work promulgated by
the Legislative Commission on Pensions and Retirement that may result in an increase
in the actuarially required contribution and must report to the Legislative Commission
on Pensions and Retirement any recommendation by the board to use the sufficiency
exceeding one percent of covered payroll to offset the impact of an actuarial assumption
change recommended by the actuary retained under section 356.214, subdivision 1, and
reviewed by the actuary retained by the commission under section 356.214, subdivision 4.
(h) No contribution sufficiency in excess of one percent of covered pay may be
proposed to be used to increase benefits, and no benefit increase may be proposed that
would initiate an automatic adjustment to increase contributions under this subdivision.
Any proposed benefit improvement must include a recommendation, prepared by the
actuary retained under section 356.214, subdivision 1, and reviewed by the actuary
retained by the Legislative Commission on Pensions and Retirement as provided under
section 356.214, subdivision 4, on how the benefit modification will be funded.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 27. Minnesota Statutes 2008, section 353.29, subdivision 1, is amended to read:
    Subdivision 1. Age and allowable service requirements. Upon termination of
membership, a person who has attained normal retirement age and who received credit for
not less than three years of allowable service is vested under section 353.01, subdivision
47, is entitled upon application to a retirement annuity. The retirement annuity is known
as the "normal" retirement annuity.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 28. Minnesota Statutes 2008, section 353.30, subdivision 1c, is amended to read:
    Subd. 1c. Pre-July 1, 1989, members: early retirement. Upon termination of
public service, a person who first became a public employee or a member of a pension
fund listed in section 356.30, subdivision 3, before July 1, 1989, who has become at least
55 years old but not normal retirement age, and has received credit for at least three years
of allowable service is vested under section 353.01, subdivision 47, is entitled, upon
application, to a retirement annuity in an amount equal to the normal annuity provided in
section 353.29, subdivision 3, paragraph (a), reduced by one-quarter of one percent for
each month that the member is under normal retirement age at the time of retirement.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 29. Minnesota Statutes 2008, section 353.32, subdivision 1, is amended to read:
    Subdivision 1. Before retirement. If a member or former member who terminated
public service dies before retirement or before receiving any retirement annuity and no
other payment of any kind is or may become payable to any person, a refund shall be paid
is payable to the designated beneficiary or, if there be none, to the surviving spouse,
or, if none, to the legal representative of the decedent's estate. Such The refund shall
must be in an amount equal to accumulated deductions plus annual compound interest
thereon at the rate of six percent per annum compounded annually specified in section
353.34, subdivision 2, and less the sum of any disability or survivor benefits, if any, that
may have been paid by the fund; provided that a survivor who has a right to benefits
pursuant to under section 353.31 may waive such benefits in writing, except such benefits
for a dependent child under the age of 18 years may only be waived pursuant to under an
order of the district court.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 30. Minnesota Statutes 2008, section 353.32, subdivision 1a, is amended to read:
    Subd. 1a. Surviving spouse optional annuity. (a) If a member or former member
who has credit for not less than three years of allowable service is vested under section
353.01, subdivision 47, and who 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 a 100 percent joint and survivor annuity
computed consistent with section 353.30, subdivision 1a, 1c, or 5, whichever is applicable.
    (b) If a member first became a public employee or a member of a pension fund listed
in section 356.30, subdivision 3, before July 1, 1989, 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 computed using section 353.30, subdivision 1b,
except that the early retirement reduction under that provision will be applied from age
62 back to age 55 and one-half of the early retirement reduction from age 55 back to
the age payment begins.
    (c) If a member who was under age 55 and has credit for at least three years of
allowable service who is vested under section 353.01, subdivision 47, dies, but did not
qualify for retirement on the date of death, the surviving spouse may elect to receive a
100 percent joint and survivor annuity computed using section 353.30, subdivision 1c or
5, as applicable, except that the early retirement reduction specified in the applicable
subdivision will be applied to age 55 and one-half of the early retirement reduction from
age 55 back to the age payment begins.
    (d) 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.
    (e) 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.
    (f) Sections 353.34, subdivision 3, and 353.71, subdivision 2, apply to a deferred
annuity or surviving spouse benefit payable under this subdivision.
    (g) 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 surviving spouse's estate.
    (h) A member may specify in writing, with the signed consent of the spouse, that
this subdivision does not apply and that payment may be made only to the designated
beneficiary as otherwise provided by this chapter. The waiver of a surviving spouse
annuity under this section does not make a dependent child eligible for benefits under
subdivision 1c.
    (i) If the deceased member or former member first became a public employee or a
member of a public pension plan listed in section 356.30, subdivision 3, on or after July
1, 1989, a survivor annuity computed under paragraph (a) or (c) must be computed as
specified in section 353.30, subdivision 5, except for the revised early retirement reduction
specified in paragraph (c), if paragraph (c) is the applicable provision.
    (j) For any survivor annuity determined under this subdivision, the payment is to be
based on the total allowable service that the member had accrued as of the date of death
and the age of the member and surviving spouse on that date.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 31. Minnesota Statutes 2009 Supplement, section 353.33, subdivision 1, is
amended to read:
    Subdivision 1. Age, service, and salary requirements. (a) A coordinated or
basic member who has at least three years of allowable service is vested under section
353.01, subdivision 47, and who becomes totally and permanently disabled before normal
retirement age, upon application as defined under section 353.031, is entitled to a disability
benefit in an amount determined under subdivision 3.
(b) If the disabled person's public service has terminated at any time, at least two of
the required three years of allowable service required to be vested under section 353.01,
subdivision 47, must have been rendered after last becoming an active member.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 32. Minnesota Statutes 2008, section 353.34, subdivision 1, is amended to read:
    Subdivision 1. Refund or deferred annuity. (a) A former member is entitled to
either a refund of accumulated employee deductions under subdivision 2, or to a deferred
annuity under subdivision 3. Application for a refund may not be made before the date of
termination of public service. Except as specified in paragraph (b), a refund must be paid
within 120 days following receipt of the application unless the applicant has again become
a public employee required to be covered by the association.
(b) If an individual was placed on layoff under section 353.01, subdivision 12 or 12c,
a refund is not payable before termination of service under section 353.01, subdivision 11a.
(c) An individual who terminates public service covered by the Public Employees
Retirement Association general employees retirement plan, the Public Employees
Retirement Association police and fire retirement plan, or the public employees local
government corrections correctional service retirement plan, and who is employed by a
different employer and who becomes an active member covered by one of the other two
plans, may receive a refund of employee contributions plus six percent annual compound
interest compounded annually from the plan from which the member terminated service at
the applicable rate specified in subdivision 2.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 33. Minnesota Statutes 2008, section 353.34, subdivision 2, is amended to read:
    Subd. 2. Refund with interest. (a) Except as provided in subdivision 1, any person
who ceases to be a public employee shall is entitled to receive a refund in an amount equal
to accumulated deductions with annual compound interest to the first day of the month
in which the refund is processed at the rate of six percent compounded annually based
on fiscal year balances.
(b) For a person who ceases to be a public employee before July 1, 2011, the refund
interest is at the rate of six percent to June 30, 2011, and at the rate of four percent after
June 30, 2011. For a person who ceases to be a public employee after July 1, 2011, the
refund interest is at the rate of four percent.
(c) If a person repays a refund and subsequently applies for another refund, the
repayment amount, including interest, is added to the fiscal year balance in which the
repayment was made.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 34. Minnesota Statutes 2008, section 353.34, subdivision 3, is amended to read:
    Subd. 3. Deferred annuity; eligibility; computation. (a) A member with at least
three years of allowable service who is vested under section 353.01, subdivision 47, when
termination of public service or termination of membership occurs has the option of
leaving the accumulated deductions in the fund and being entitled to a deferred retirement
annuity commencing at normal retirement age or to a deferred early retirement annuity
under section 353.30, subdivision 1a, 1b, 1c, or 5.
(b) The deferred annuity must be computed under section 353.29, subdivision 3, on
the basis of the law in effect on the date of termination of public service or termination of
membership, whichever is earlier, and must be augmented as provided in section 353.71,
subdivision 2
.
(c) A former member qualified to apply for a deferred retirement annuity may
revoke this option at any time before the commencement of deferred annuity payments
by making application for a refund. The person is entitled to a refund of accumulated
member contributions within 30 days following date of receipt of the application by the
executive director.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 35. Minnesota Statutes 2009 Supplement, section 353.65, subdivision 2, is
amended to read:
    Subd. 2. Employee contribution. The employee contribution is 9.4 percent of the
salary of the member in calendar year 2010 and is 9.6 percent of the salary of the member
in each calendar year after 2010. This contribution must be made by deduction from
salary in the manner provided in subdivision 4. Where any portion of a member's salary
is paid from other than public funds, the member's employee contribution is based on
the total salary received from all sources.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 36. Minnesota Statutes 2009 Supplement, section 353.65, subdivision 3, is
amended to read:
    Subd. 3. Employer contribution. The employer contribution is 14.1 percent of the
salary of the member in calendar year 2010 and is 14.4 percent of the salary of the member
in each calendar year after 2010. This contribution must be made from funds available to
the employing subdivision by the means and in the manner provided in section 353.28.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 37. Minnesota Statutes 2008, section 353.651, subdivision 1, is amended to read:
    Subdivision 1. Age and allowable service requirements. Upon separation from
public service, any police officer or firefighter member who has attained the age of at
least 55 years and who received credit for not less than three years of allowable service
is vested under section 353.01, subdivision 47, is entitled upon application to a retirement
annuity. Such retirement annuity is, known as the "normal" retirement annuity.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 38. Minnesota Statutes 2008, section 353.651, subdivision 4, is amended to read:
    Subd. 4. Early retirement. (a) A person who becomes a police and fire plan
member after June 30, 2007, or a former member who is reinstated as a member of the
plan after that date, who is at least 50 years of age with at least three years of allowable
service and who is vested under section 353.01, subdivision 47, upon the termination of
public service is entitled upon application to a retirement annuity equal to the normal
annuity calculated under subdivision 3, reduced by two-tenths of one percent for each
month that the member is under age 55 at the time of retirement.
    (b) Upon the termination of public service, any police and fire plan member not
specified in paragraph (a), upon attaining at least 50 years of age with at least three years
of allowable service is entitled upon application to a retirement annuity equal to the
normal annuity calculated under subdivision 3, reduced by one-tenth of one percent for
each month that the member is under age 55 at the time of retirement.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 39. Minnesota Statutes 2008, section 353.657, subdivision 1, is amended to read:
    Subdivision 1. Generally. (a) In the event that a member of the police and fire
fund dies from any cause before retirement or before becoming disabled and receiving
disability benefits, the association shall grant survivor benefits to a surviving spouse, as
defined in section 353.01, subdivision 20, and to a dependent child or children, as defined
in section 353.01, subdivision 15, except that if the death is not a line of duty death, the
member must have accrued at least three years of credited service be vested under section
353.01, subdivision 47.
    (b) Notwithstanding the definition of surviving spouse, a former spouse of the
member, if any, is entitled to a portion of the monthly surviving spouse benefit 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 section 353.32, subdivision 1, if provided for in a
marriage dissolution decree but not a monthly surviving spouse benefit despite the terms
of a marriage dissolution decree filed with the association.
    (c) The spouse and child or children are entitled to monthly benefits as provided in
subdivisions 2 to 4.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 40. Minnesota Statutes 2008, section 353.657, subdivision 2a, is amended to read:
    Subd. 2a. Death while eligible survivor benefit. (a) If a member or former member
who has attained the age of at least 50 years and has credit for not less than three years
allowable service either who is vested under section 353.01, subdivision 47, or who has
credit for at least 30 years of allowable service, regardless of age attained, dies before
the annuity or disability benefit becomes payable, notwithstanding any designation of
beneficiary to the contrary, the surviving spouse may elect to receive a death while
eligible survivor benefit.
    (b) 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 death while
eligible survivor benefit 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 section 353.32, subdivision
1
, if provided for in a marriage dissolution decree but not a death while eligible survivor
benefit despite the terms of a marriage dissolution decree filed with the association.
    (c) The benefit may be elected instead of a refund with interest under section 353.32,
subdivision 1
, or surviving spouse benefits otherwise payable under subdivisions 1 and
2. The benefit must be an annuity equal to the 100 percent joint and survivor annuity
which the member could have qualified for on the date of death, computed as provided in
sections 353.651, subdivisions 2 and 3, and 353.30, subdivision 3.
    (d) The surviving spouse may apply for the annuity at any time after the date
on which the deceased employee would have attained the required age for retirement
based on the employee's allowable service. Sections 353.34, subdivision 3, and 353.71,
subdivision 2
, apply to a deferred annuity payable under this subdivision.
    (e) No payment accrues beyond the end of the month in which entitlement to
such annuity has terminated. An amount equal to the excess, if any, of the accumulated
contributions which were credited to the account of the deceased employee over and
above the total of the annuities paid and payable to the surviving spouse must be paid to
the deceased member's last designated beneficiary or, if none, to the legal representative of
the estate of such deceased member.
    (f) Any member may request in writing, with the signed consent of the spouse, that
this subdivision not apply and that payment be made only to the designated beneficiary, as
otherwise provided by this chapter.
    (g) For a member who is employed as a full-time firefighter by the Department of
Military Affairs of the state of Minnesota, allowable service as a full-time state Military
Affairs Department firefighter credited by the Minnesota State Retirement System may be
used in meeting the minimum allowable service requirement of this subdivision.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 41. Minnesota Statutes 2008, section 353.71, subdivision 1, is amended to read:
    Subdivision 1. Eligibility. Any person who has been a member of a defined benefit
retirement plan administered by the Public Employees Retirement Association, or a
retirement plan administered by the Minnesota State Retirement System, or the Teachers
Retirement Association, or any other public retirement system in the state of Minnesota
having a like provision, except a fund retirement plan providing benefits for police officers
or firefighters governed by sections 69.77 or 69.771 to 69.776, shall be is entitled, when
qualified, to an annuity from each fund retirement plan if the total allowable service in all
funds retirement plans or in any two of these funds retirement plans totals three or more
years the number of years of allowable service required to receive a normal retirement
annuity for that retirement plan, provided that no portion of the allowable service upon
which the retirement annuity from one fund retirement plan is based is again used in the
computation for benefits from another fund retirement plan and provided further that the
person has not taken a refund from any one of these funds retirement plans since the
person's membership in that association or system last terminated. The annuity from
each fund shall must be determined by the appropriate provisions of the law except that
the requirement that a person must have at least three years a specific minimum period
of allowable service in the respective association or system shall does not apply for the
purposes of this section provided if the combined service in two or more of these funds
retirement plans equals three or more the number of years of allowable service required to
receive a normal retirement annuity for that retirement plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 42. Minnesota Statutes 2008, section 353.71, subdivision 2, is amended to read:
    Subd. 2. Deferred annuity computation; augmentation. (a) The deferred annuity
accruing under subdivision 1, or under sections 353.34, subdivision 3, and 353.68,
subdivision 4
, must be computed on the basis of allowable service prior to the termination
of public service and augmented as provided in this paragraph subdivision. The required
reserves applicable to a deferred annuity, or to any deferred segment of an annuity must
be determined as of the first day of the month following the month in which the former
member ceased to be a public employee, or July 1, 1971, whichever is later. These
(b) For a person who became a public employee before July 1, 2006, whose period
of deferral began after June 30, 1971, and who terminated public employment before
January 1, 2012, the required reserves of the deferred annuity must be augmented at
the following applicable rate of or rates:
(1) five percent annually compounded annually annual compound interest until
January 1, 1981, and at the rate of;
(2) three percent thereafter annual compound interest after January 1, 1981, or until
the earlier of December 31, 2011, or after the date of the termination of public service or
the termination of membership, whichever is later, until January 1 of the year following
the year in which the former member attains age 55 and;
(3) five percent annual compound interest from that date to the effective date of
retirement, the rate is five percent compounded annually if the employee became an
employee before July 1, 2006, and at 2.5 percent compounded annually if the employee
becomes an January 1 of the year following the year in which the former member attains
age 55, or until December 31, 2011, whichever is earlier; and
(4) one percent annual compound interest from January 1, 2012.
(c) For a person who became a public employee after June 30, 2006, and who
terminated public employment before January 1, 2012, the required reserves of the
deferred annuity must be augmented at 2.5 percent annual compound interest from the date
of termination of public service or termination of membership, whichever is earlier, until
December 31, 2011, and one percent annual compound interest after December 31, 2011.
(d) For a person who terminates public employment after December 31, 2011, the
required reserves of the deferred annuity must not be augmented.
(e) If a person has more than one period of uninterrupted service, the required
reserves related to each period must be augmented as specified in this paragraph. The sum
of the augmented required reserves is the present value of the annuity. Uninterrupted
service for the purpose of this subdivision means periods of covered employment during
which the employee has not been separated from public service for more than two years.
If a person repays a refund, the restored service must be considered as continuous with the
next period of service for which the employee has credit with this association. This section
must not reduce the annuity otherwise payable under this chapter. This paragraph applies
to individuals who become deferred annuitants on or after July 1, 1971. For a member
who became a deferred annuitant before July 1, 1971, the paragraph applies from July 1,
1971, if the former active member applies for an annuity after July 1, 1973.
(b) (f) The retirement annuity or disability benefit of, or the survivor benefit payable
on behalf of, a former member who terminated service before July 1, 1997, or the
survivor benefit payable on behalf of a basic or police and fire member who was receiving
disability benefits before July 1, 1997, which is first payable after June 30, 1997, must
be increased on an actuarial equivalent basis to reflect the change in the postretirement
interest rate actuarial assumption under section 356.215, subdivision 8, from five percent
to six percent under a calculation procedure and tables adopted by the board and approved
by the actuary retained under section 356.214.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 43. Minnesota Statutes 2008, section 353E.04, subdivision 1, is amended to read:
    Subdivision 1. Eligibility requirements. After termination of public employment,
an employee covered under section 353E.02 who has attained the age of at least 55 years
and has credit for not less than three years of coverage who is vested under section
353.01, subdivision 47, in the local government correctional service plan is entitled, upon
application, to a normal retirement annuity. Instead of a normal retirement annuity, a
retiring employee may elect to receive the optional annuity provided in section 353.30,
subdivision 3
.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 44. Minnesota Statutes 2008, section 353E.04, subdivision 4, is amended to read:
    Subd. 4. Early retirement. An employee covered under section 353E.02 who has
attained the age of at least 50 years and has credit for not less than three years of coverage
who is vested under section 353.01, subdivision 47, in the local government correctional
service plan is entitled, upon application, to a reduced retirement annuity equal to the
annuity calculated under subdivision 3, reduced so that the reduced annuity is the actuarial
equivalent of the annuity that would be payable if the employee deferred receipt of the
annuity from the day the annuity begins to accrue until age 55.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 45. Minnesota Statutes 2008, section 353E.07, subdivision 1, is amended to read:
    Subdivision 1. Member at least age 50. If a member or former member of the local
government correctional service retirement plan who has attained the age of at least 50
years and has credit for not less than three years of allowable service who is vested under
section 353.01, subdivision 47, dies before the annuity or disability benefit has become
payable, notwithstanding any designation of beneficiary to the contrary, the surviving
spouse may elect to receive, in lieu of a refund with interest provided in section 353.32,
subdivision 1
, a surviving spouse annuity equal to the 100 percent joint and survivor
annuity for which the member could have qualified had the member terminated service
on the date of death.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 46. Minnesota Statutes 2008, section 353E.07, subdivision 2, is amended to read:
    Subd. 2. Member not yet age 50. If the member was under age 50, dies, and had
credit for not less than three years of allowable service was vested under section 353.01,
subdivision 47, 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 the surviving spouse at the time of death. The annuity is payable
using the early retirement reduction under section 353E.04, subdivision 4, to age 50 and
one-half the early retirement reduction from age 50 to the age payment begins. Sections
353.34, subdivision 3, and 353.71, subdivision 2, apply to a deferred annuity or surviving
spouse benefit payable under this subdivision.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 47. Minnesota Statutes 2008, section 353F.03, is amended to read:
353F.03 VESTING RULE FOR CERTAIN EMPLOYEES.
Notwithstanding any provision of chapter 353 to the contrary, a terminated medical
facility or other public employing unit employee is eligible to receive a retirement annuity
under section 353.29 of the edition of Minnesota Statutes published in the year before the
year in which the privatization occurred, without regard to the requirement for three years
of allowable service specified in section 353.01, subdivision 47.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 48. Minnesota Statutes 2009 Supplement, section 354.42, subdivision 2, is
amended to read:
    Subd. 2. Employee contribution. (a) For a basic member, the employee
contribution to the fund is 9.0 percent the following percentage of the member's salary.:

before July 1, 2011
9.0 percent

from July 1, 2011, until June 30, 2012
9.5 percent

from July 1, 2012, until June 30, 2013
10.0 percent

from July 1, 2013, until June 30, 2014
10.5 percent

after June 30, 2014
11.0 percent
(b) For a coordinated member, the employee contribution is 5.5 percent the following
percentage of the member's salary.:

before July 1, 2011
5.5 percent

from July 1, 2011, until June 30, 2012
6.0 percent

from July 1, 2012, until June 30, 2013
6.5 percent

from July 1, 2013, until June 30, 2014
7.0 percent

after June 30, 2014
7.5 percent
(c) When an employee contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
(d) After June 30, 2015, if a contribution rate revision is required under subdivisions
4a, 4b, and 4c, the employee contributions under paragraphs (a) and (b) must be adjusted
accordingly.
(b) (e) This contribution must be made by deduction from salary. Where any portion
of a member's salary is paid from other than public funds, the member's employee
contribution must be based on the entire salary received.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 49. Minnesota Statutes 2008, section 354.42, subdivision 3, is amended to read:
    Subd. 3. Employer. (a) The regular employer contribution to the fund by Special
School District No. 1, Minneapolis, after July 1, 2006, and before July 1, 2007, is an
amount equal to 5.0 percent of the salary of each of its teachers who is a coordinated
member and 9.0 percent of the salary of each of its teachers who is a basic member. After
July 1, 2007, the regular employer contribution to the fund by Special School District No.
1, Minneapolis, is an amount equal to 5.5 percent the applicable following percentage of
salary of each coordinated member and 9.5 percent the applicable following percentage
of salary of each basic member.:

Period
Coordinated Member
Basic Member

before July 1, 2011
5.5 percent
9.5 percent

from July 1, 2011, until June 30, 2012
6.0 percent
10.0 percent

from July 1, 2012, until June 30, 2013
6.5 percent
10.5 percent

from July 1, 2013, until June 30, 2014
7.0 percent
11.0 percent

after June 30, 2014
7.5 percent
11.5 percent
The additional employer contribution to the fund by Special School District No. 1,
Minneapolis, after July 1, 2006, is an amount equal to 3.64 percent of the salary of each
teacher who is a coordinated member or is a basic member.
(b) The employer contribution to the fund for every other employer is an amount
equal to 5.0 percent the applicable following percentage of the salary of each coordinated
member and 9.0 percent the applicable following percentage of the salary of each basic
member before July 1, 2007, and 5.5 percent of the salary of each coordinated member
and 9.5 percent of the salary of each basic member after June 30, 2007.:

Period
Coordinated Member
Basic Member

before July 1, 2011
5.5 percent
9.5 percent

from July 1, 2011, until June 30, 2012
6.0 percent
10.0 percent

from July 1, 2012, until June 30, 2013
6.5 percent
10.5 percent

from July 1, 2013, until June 30, 2014
7.0 percent
11.0 percent

after June 30, 2014
7.5 percent
11.5 percent
(c) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid for each employer unit with the
first payroll cycle reported.
(d) After June 30, 2015, if a contribution rate revision is made under subdivisions
4a, 4b, and 4c, the employer contributions under paragraphs (a) and (b) must be adjusted
accordingly.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 50. Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:
    Subd. 4a. Determination. (a) For purposes of this section, a contribution
sufficiency exists if the total of the employee contributions, the employer contributions,
and any additional employer contributions, if applicable, exceeds the total of the normal
cost, the administrative expenses, and the amortization contribution of the retirement plan
as reported in the most recent actuarial valuation of the retirement plan prepared by the
approved actuary retained under section 356.214 and prepared under section 356.215
and the standards for actuarial work of the Legislative Commission on Pensions and
Retirement.
(b) For purposes of this section, a contribution deficiency exists if the total of
the employee contributions, the employer contributions, and any additional employer
contributions are less than the total of the normal cost, the administrative expenses, and
the amortization contribution of the retirement plan as reported in the most recent actuarial
valuation of the retirement plan prepared by the approved actuary retained under section
356.214 and prepared under section 356.215 and the standards for actuarial work of the
Legislative Commission on Pensions and Retirement.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 51. Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:
    Subd. 4b. Contribution rate revision. Notwithstanding the contribution rate
provisions under subdivisions 2 and 3, the employee and employer contribution rates
may be adjusted as follows:
(1) if, after June 30, 2015, the regular actuarial valuation of the plan under section
356.215 indicates that there is a contribution sufficiency under subdivision 4a equal to
or greater than one percent of covered payroll and the sufficiency has existed for at least
two consecutive years, the employee and employer contribution rates for the plan may
each be decreased to a level such that the sufficiency equals no more than one percent of
covered payroll based on the most recent actuarial valuation; or
(2) if, after June 30, 2015, the regular valuation of the plan under section 356.215
indicates that there is a deficiency equal to or greater than 0.25 percent of covered payroll
and the deficiency has existed for at least two consecutive years, the employee and
employer contribution rates for the applicable plan may each be increased by:
(i) 0.25 percent if the deficiency is less than 2.00 percent of covered payroll;
(ii) 0.5 percent if the deficiency is equal to or greater than 2.00 percent of covered
payroll and less than or equal to four percent; and
(iii) 0.75 percent if the deficiency is greater than four percent.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 52. Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:
    Subd. 4c. Contribution sufficiency measures. (a) A contribution sufficiency of up
to one percent of covered payroll must be held in reserve to be used to offset any future
actuarially required contributions that are more than the total combined employee and
employer contributions being collected.
(b) Before any reduction in contributions to eliminate a sufficiency in excess of one
percent of covered pay may be recommended, the executive director must review any
need for a change in actuarial assumptions, as recommended by the actuary retained
under section 356.214 in the most recent experience study of the retirement plan, that
may result in an increase in the actuarially required contribution and must report to the
Legislative Commission on Pensions and Retirement any recommendation by the board
to use the sufficiency exceeding one percent of covered payroll to offset the impact of
an actuarial assumption change recommended by the actuary retained under section
356.214, subdivision 1, and reviewed by the actuary retained by the commission under
section 356.214, subdivision 4.
(c) A contribution sufficiency in excess of one percent of covered pay must not be
used to increase benefits, and a benefit increase must not be proposed that would initiate
an automatic adjustment under this section to increase contributions. A proposed benefit
improvement must include a recommendation, prepared by the actuary retained under
section 356.214, subdivision 1, and reviewed by the actuary retained by the Legislative
Commission on Pensions and Retirement, as provided under section 356.214, subdivision
4, on the manner in which the benefit modification is to be funded.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 53. Minnesota Statutes 2008, section 354.42, is amended by adding a subdivision
to read:
    Subd. 4d. Reporting; commission review. A contribution rate increase or decrease
under subdivision 4b, as determined by the executive director of the Teachers Retirement
Association, must be reported to the chair and the executive director of the Legislative
Commission on Pensions and Retirement on or before the next February 1 and, if the
Legislative Commission on Pensions and Retirement does not recommend against the rate
change or does not recommend a modification in the rate change, is effective on the next
July 1 following the determination by the executive director that a contribution deficiency
or sufficiency exists based on the most recent actuarial valuation under section 356.215.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 54. Minnesota Statutes 2009 Supplement, section 354.47, subdivision 1, is
amended to read:
    Subdivision 1. Death before retirement. (a) If a member dies before retirement
and is covered under section 354.44, subdivision 2, and neither an optional annuity, nor a
reversionary annuity, nor a benefit under section 354.46, subdivision 1, is payable to the
survivors if the member was a basic member, then the surviving spouse, or if there is no
surviving spouse, the designated beneficiary is entitled to an amount equal to the member's
accumulated deductions with interest credited to the account of the member to the date of
death of the member. If the designated beneficiary is a minor, interest must be credited to
the date the beneficiary reaches legal age, or the date of receipt, whichever is earlier.
(b) If a member dies before retirement and is covered under section 354.44,
subdivision 6
, and neither an optional annuity, nor reversionary annuity, nor the benefit
described in section 354.46, subdivision 1, is payable to the survivors if the member
was a basic member, then the surviving spouse, or if there is no surviving spouse, then
the designated beneficiary is entitled to an amount equal to the member's accumulated
deductions credited to the account of the member as of June 30, 1957, and from July 1,
1957, to the date of death of the member, the member's accumulated deductions plus six
percent interest compounded annually. a refund equal to the accumulated deductions
credited to the member's account plus interest compounded annually until the member's
date of death using the following interest rates:
(1) before July 1, 1957, no interest accrues;
(2) July 1, 1957, to June 30, 2011, six percent; and
(3) after June 30, 2011, four percent.
(c) If the designated beneficiary under paragraph (b) is a minor, any interest credited
under that paragraph must be credited to the date the beneficiary reaches legal age, or
the date of receipt, whichever is earlier.
(d) The amount of any refund payable under this subdivision must be reduced by
any permanent disability payment under section 354.48 received by the member.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 55. Minnesota Statutes 2009 Supplement, section 354.49, subdivision 2, is
amended to read:
    Subd. 2. Calculation. (a) Except as provided in section 354.44, subdivision 1,
any person who ceases to be a member by reason of termination of teaching service, is
entitled to receive a refund in an amount equal to the accumulated deductions credited
to the account as of June 30, 1957, and after July 1, 1957, the accumulated deductions
with interest at the rate of six percent per annum compounded annually. plus interest
compounded annually using the following interest rates:
(1) before July 1, 1957, no interest accrues;
(2) July 1, 1957, to June 30, 2011, six percent; and
(3) after June 30, 2011, four percent.
For the purpose of this subdivision, interest must be computed on fiscal year end
balances to the first day of the month in which the refund is issued.
(b) If the person has received permanent disability payments under section 354.48,
the refund amount must be reduced by the amount of those payments.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 56. Minnesota Statutes 2009 Supplement, section 354.55, subdivision 11, is
amended to read:
    Subd. 11. Deferred annuity; augmentation. (a) Any person covered under section
354.44, subdivision 6, who ceases to render teaching service, may leave the person's
accumulated deductions in the fund for the purpose of receiving a deferred annuity
at retirement.
(b) The amount of the deferred retirement annuity is determined by section 354.44,
subdivision 6
, and augmented as provided in this subdivision. The required reserves for
the annuity which had accrued when the member ceased to render teaching service must
be augmented, as further specified in this subdivision, by the applicable interest rate
compounded annually from the first day of the month following the month during which
the member ceased to render teaching service to the effective date of retirement.
(c) No augmentation is not creditable if the deferral period is less than three months
or if deferral commenced before July 1, 1971.
(d) For persons who became covered employees before July 1, 2006, with a deferral
period commencing after June 30, 1971, the annuity must be augmented using as follows:
(1) five percent interest compounded annually until January 1, 1981, and;
(2) three percent interest compounded annually thereafter from January 1, 1981, until
January 1 of the year following the year in which the deferred annuitant attains age 55.;
From that date (3) five percent interest compounded annually from the date
established in clause (2) to the effective date of retirement, the rate is five percent
compounded annually. or until June 30, 2012, whichever is earlier; and
(4) two percent interest compounded annually after June 30, 2012.
(e) For persons who become covered employees after June 30, 2006, the interest
rate used to augment the deferred annuity is 2.5 percent interest compounded annually
until June 30, 2012, or until the effective date of retirement, whichever is earlier, and two
percent interest compounded annually after June 30, 2012.
(f) If a person has more than one period of uninterrupted service, a separate average
salary determined under section 354.44, subdivision 6, must be used for each period
and the required reserves related to each period must be augmented as specified in this
subdivision. The sum of the augmented required reserves is the present value of the
annuity. For the purposes of this subdivision, "period of uninterrupted service" means a
period of covered teaching service during which the member has not been separated from
active service for more than one fiscal year.
(g) If a person repays a refund, the service restored by the repayment must be
considered as continuous with the next period of service for which the person has
allowable service credit in the Teachers Retirement Association.
(h) If a person does not render teaching service in any one fiscal year or more
consecutive fiscal years and then resumes teaching service, the formula percentages used
from the date of the resumption of teaching service must be those applicable to new
members.
(i) The mortality table and interest rate actuarial assumption used to compute the
annuity must be the applicable mortality table established by the board under section
354.07, subdivision 1, and the interest rate actuarial assumption under section 356.215 in
effect when the member retires.
(j) In no case may the annuity payable under this subdivision be less than the amount
of annuity payable under section 354.44, subdivision 6.
(k) The requirements and provisions for retirement before normal retirement age
contained in section 354.44, subdivision 6, also apply to an employee fulfilling the
requirements with a combination of service as provided in section 354.60.
(l) The augmentation provided by this subdivision applies to the benefit provided
in section 354.46, subdivision 2.
(m) The augmentation provided by this subdivision does not apply to any period
in which a person is on an approved leave of absence from an employer unit covered
by the provisions of this chapter.
(n) The retirement annuity or disability benefit of, or the survivor benefit payable on
behalf of, a former teacher who terminated service before July 1, 1997, which is not first
payable until after June 30, 1997, must be increased on an actuarial equivalent basis to
reflect the change in the postretirement interest rate actuarial assumption under section
356.215, subdivision 8, from five percent to six percent under a calculation procedure and
tables adopted by the board as recommended by an approved actuary and approved by the
actuary retained under section 356.214.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 57. Minnesota Statutes 2008, section 354A.12, subdivision 1, is amended to read:
    Subdivision 1. Employee contributions. (a) The contribution required to be paid
by each member of a teachers retirement fund association shall not be less than is the
percentage of total salary specified below for the applicable association and program:

Association and Program
Percentage of Total Salary

Duluth Teachers Retirement Fund Association

old law and new law

coordinated programs
5.5 percent

before July 1, 2011
5.5 percent

effective July 1, 2011
6.0 percent

effective July 1, 2012
6.5 percent

St. Paul Teachers Retirement Fund Association

basic program before July 1, 2011
8 percent

basic program after June 30, 2011
8.25 percent

basic program after June 30, 2012
8.5 percent

basic program after June 30, 2013
8.75 percent

basic program after June 30, 2014
9.0 percent

coordinated program before July 1, 2011
5.5 percent

coordinated program after June 30, 2011
5.75 percent

coordinated program after June 30, 2012
6.0 percent

coordinated program after June 30, 2013
6.25 percent

coordinated program after June 30, 2014
6.50 percent
(b) 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.
(c) When an employee contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid by the employer with the first
payroll cycle reported.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 58. Minnesota Statutes 2009 Supplement, section 354A.12, subdivision 2a,
is amended to read:
    Subd. 2a. Employer regular and additional contributions. (a) The employing
units shall make the following employer contributions to teachers retirement fund
associations:
(1) 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

before July 1, 2011
5.79 percent

effective July 1, 2011
6.29 percent

effective July 1, 2012
6.79 percent


St. Paul Teachers Retirement Fund Association
before July 1, 2011
4.50 percent

after June 30, 2011
4.75 percent

after June 30, 2012
5.0 percent

after June 30, 2013
5.25 percent

after June 30, 2014
5.5 percent
(2) for any basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make a regular employer contribution to the respective retirement
fund in an amount equal to 8.00 percent of the salary of the basic member; according to
the schedule below:

before July 1, 2011
8.0 percent of salary

after June 30, 2011
8.25 percent of salary

after June 30, 2012
8.5 percent of salary

after June 30, 2013
8.75 percent of salary

after June 30, 2014
9.0 percent of salary
(3) for a basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make an additional employer contribution to the respective fund in
an amount equal to 3.64 percent of the salary of the basic member;
(4) for a coordinated member of a teachers retirement fund association in a city of
the first class the St. Paul Teachers Retirement Fund Association, the employing unit shall
make an additional employer contribution to the respective fund in an amount equal to the
applicable percentage of the coordinated member's salary, as provided below:


Duluth Teachers Retirement
Fund Association
1.29 percent


St. Paul Teachers Retirement
Fund Association
3.84 percent
(b) 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.
(c) Payments of regular and additional employer contributions for school district
or technical college employees who are paid from normal operating funds must be made
from the appropriate fund of the district or technical college.
(d) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid by the employer with the first
payroll cycle reported.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 59. Minnesota Statutes 2008, section 354A.12, subdivision 3c, is amended to read:
    Subd. 3c. Termination of supplemental contributions and direct matching
and state aid. (a) The supplemental contributions payable to the 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 terminate at the end of the fiscal year in which the accrued liability funding
ratio for that fund, as determined in the most recent actuarial report for that fund by the
actuary retained under section 356.214, equals or exceeds the accrued liability funding
ratio for the Teachers Retirement Association, as determined in the most recent actuarial
report for the Teachers Retirement Association by the actuary retained under section
356.214. 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.
    (b) If the St. Paul Teachers Retirement Fund Association is funded at an amount
equal to or greater than the funding ratio applicable to the Teachers Retirement
Association, then any future state aid under subdivision 3a is payable to the Teachers
Retirement Association.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 60. Minnesota Statutes 2008, section 354A.27, subdivision 5, is amended to read:
    Subd. 5. Calculation Eligibility for and payment of postretirement adjustments.
(a) Annually, after June 30, the board of trustees of the Duluth Teachers Retirement Fund
Association determines the amount of any postretirement adjustment using the procedures
in this subdivision and subdivision 6 or 7, whichever is applicable.
(b) Each person who has been receiving an annuity or benefit under the articles
of incorporation, bylaws, or under this section for at least 12 months as of the date of
the postretirement adjustment shall be eligible for a postretirement adjustment. The
postretirement adjustment shall be payable each January 1. The postretirement adjustment
shall be equal to two percent of a permanent percentage increase as specified under
subdivision 6 or 7, whichever is applicable, applied to the annuity or benefit to which the
person is entitled one month prior to the payment of the postretirement adjustment.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 61. Minnesota Statutes 2008, section 354A.27, subdivision 6, is amended to read:
    Subd. 6. Additional increase Calculation of postretirement adjustments;
transitional provision. (a) In addition to the postretirement increases granted under
subdivision 5, an additional percentage increase must be computed and paid under this
subdivision.
(b) The board of trustees shall determine the number of annuitants or benefit
recipients who have been receiving an annuity or benefit for at least 12 months as of the
current June 30. These recipients are entitled to receive the surplus investment earnings
additional postretirement increase.
(c) Annually, as of each June 30, the board shall determine the five-year annualized
rate of return attributable to the assets of the Duluth Teachers Retirement Fund Association
under the formula or formulas specified in section 11A.04, clause (11).
(d) The board shall determine the amount of excess five-year annualized rate of
return over the preretirement interest assumption as specified in section 356.215.
(e) The additional percentage increase must be determined by multiplying the
quantity one minus the rate of contribution deficiency, as specified in the most recent
actuarial report of the actuary retained under section 356.214, times the rate of return
excess as determined in paragraph (d).
(f) The additional increase is payable to all eligible annuitants or benefit recipients
on the following January 1.
(a) For purposes of computing postretirement adjustments after the effective date
of this section for eligible benefit recipients of the Duluth Teachers Retirement Fund
Association, the funding ratio of the plan, as determined by dividing the market value of
assets by the actuarial accrued liability as reported in the most recent actuarial valuation
prepared under sections 356.214 and 356.215, determines the postretirement increase
as follows:

Funding Ratio
Postretirement Increase

less than 80 percent
0 percent


at least 80 percent but less than 90
percent
1 percent

at least 90 percent
2 percent
(b) If the funding ratio of the plan based on actuarial value, rather than market value,
is at least 90 percent as reported in the most recent actuarial valuation prepared under
sections 356.214 and 356.215, this subdivision expires and subsequent postretirement
increases must be paid as specified under subdivision 7.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 62. Minnesota Statutes 2008, section 354A.27, is amended by adding a
subdivision to read:
    Subd. 7. Calculation of postretirement adjustments. (a) This subdivision applies
if subdivision 6 has expired.
(b) A percentage adjustment must be computed and paid under this subdivision to
eligible persons under subdivision 5. This adjustment is determined by reference to the
Consumer Price Index for urban wage earners and clerical workers all items index as
reported by the Bureau of Labor Statistics within the United States Department of Labor
each year as part of the determination of annual cost-of-living adjustments to recipients
of federal old-age, survivors, and disability insurance. For calculations of cost-of-living
adjustments under paragraph (c), the term "average third quarter Consumer Price Index
value" means the sum of the monthly index values as initially reported by the Bureau of
Labor Statistics for the months of July, August, and September, divided by 3.
(c) Before January 1 of each year, the executive director must calculate the amount
of the cost-of-living adjustment by dividing the most recent average third quarter index
value by the same average third quarter index value from the previous year, subtract one
from the resulting quotient, and express the result as a percentage amount, which must be
rounded to the nearest one-tenth of one percent.
(d) The amount calculated under paragraph (c) is the full cost-of-living adjustment
to be applied as a permanent increase to the regular payment of each eligible member
on January 1 of the next calendar year. For any eligible member whose effective date
of benefit commencement occurred during the calendar year before the cost-of-living
adjustment is applied, the full increase amount must be prorated on the basis of whole
calendar quarters in benefit payment status in the calendar year prior to the January 1 on
which the cost-of-living adjustment is applied, calculated to the third decimal place.
(e) The adjustment must not be less than zero nor greater than five percent.
(f) If the funding ratio of the plan as determined in the most recent actuarial
valuation using the actuarial value of assets is less than 80 percent there will be no
postretirement adjustment the following January 1.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 63. Minnesota Statutes 2008, section 354A.31, subdivision 1, is amended to read:
    Subdivision 1. Age and service requirements. Any coordinated member or former
coordinated member of the St. Paul Teachers Retirement Fund Association who has
ceased to render teaching service for the school district in which the teachers retirement
fund association exists and who has either attained the age of at least 55 years with not
less than three years of allowable service credit or received credit for not less than 30
years of allowable service regardless of age, shall be entitled upon written application to a
retirement annuity. Any coordinated member or former coordinated member of the Duluth
Teachers Retirement Fund Association who has ceased to render teaching service for the
school district in which the teacher retirement fund association exists and who has either
attained the age of at least 55 years with not less than three years of allowable service
credit if the member became an employee before July 1, 2010, or not less than five years
of allowable service credit if the member became an employee after June 30, 2010, or
received service credit for not less than 30 years of allowable service regardless of age,
shall be entitled upon written application to a retirement annuity.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 64. Minnesota Statutes 2008, section 354A.35, subdivision 1, is amended to read:
    Subdivision 1. Death before retirement; refund. If a coordinated member
or former coordinated member dies prior to retirement or prior to the receipt of any
retirement annuity or other benefit payment which is or may be payable and a surviving
spouse optional annuity is not payable pursuant to subdivision 2, a refund shall be paid to
the person's surviving spouse, or if there is none, to the person's designated beneficiary,
or if there is none, to the legal representative of the person's estate. For a coordinated
member or former coordinated member of the St. Paul Teachers Retirement Fund
Association, the refund shall be in an amount equal to the person's accumulated employee
contributions plus interest at the rate of six percent per annum compounded annually. For
a coordinated member or former coordinated member of the Duluth Teachers Retirement
Fund Association, the refund shall be in an amount equal to the person's accumulated
employee contributions plus interest at the rate of six percent per annum compounded
annually to July 1, 2010, and four percent per annum compounded annually thereafter.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 65. Minnesota Statutes 2008, section 354A.37, subdivision 2, is amended to read:
    Subd. 2. Eligibility for deferred retirement annuity. (a) Any coordinated member
who ceases to render teaching services for the school district in which the teachers
retirement fund association is located, with sufficient allowable service credit to meet
the minimum service requirements specified in section 354A.31, subdivision 1, shall be
entitled to a deferred retirement annuity in lieu of a refund pursuant to subdivision 1. The
deferred retirement annuity shall be computed pursuant to section 354A.31 and shall be
augmented as provided in this subdivision. The deferred annuity shall commence upon
application after the person on deferred status attains at least the minimum age specified in
section 354A.31, subdivision 1.
(b) The monthly annuity amount that had accrued when the member ceased to
render teaching service must be augmented from the first day of the month following the
month during which the member ceased to render teaching service to the effective date
of retirement. There is no augmentation if this period is less than three months. For a
member of the St. Paul Teachers Retirement Fund Association, the rate of augmentation
is three percent compounded annually until January 1 of the year following the year in
which the former member attains age 55, and five percent compounded annually after that
date to the effective date of retirement if the employee became an employee before July
1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee
after June 30, 2006. For a member of the Duluth Teachers Retirement Fund Association,
the rate of augmentation is three percent compounded annually until January 1 of the year
following the year in which the former member attains age 55, five percent compounded
annually after that date to July 1, 2012, and two percent compounded annually after that
date to the effective date of retirement if the employee became an employee before
July 1, 2006, and at 2.5 percent compounded annually to July 1, 2012, and two percent
compounded annually after that date to the effective date of retirement if the employee
becomes an employee after June 30, 2006. If a person has more than one period of
uninterrupted service, a separate average salary determined under section 354A.31 must
be used for each period, and the monthly annuity amount related to each period must be
augmented as provided in this subdivision. The sum of the augmented monthly annuity
amounts determines the total deferred annuity payable. If a person repays a refund, the
service restored by the repayment must be considered as continuous with the next period
of service for which the person has credit with the fund. If a person does not render
teaching services in any one fiscal year or more consecutive fiscal years and then resumes
teaching service, the formula percentages used from the date of resumption of teaching
service are those applicable to new members. The mortality table and interest assumption
used to compute the annuity are the table established by the fund to compute other
annuities, and the interest assumption under section 356.215 in effect when the member
retires. A period of uninterrupted service for the purpose of this subdivision means a
period of covered teaching service during which the member has not been separated from
active service for more than one fiscal year.
(c) The augmentation provided by this subdivision applies to the benefit provided
in section 354A.35, subdivision 2. The augmentation provided by this subdivision does
not apply to any period in which a person is on an approved leave of absence from an
employer unit.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 66. Minnesota Statutes 2008, section 354A.37, subdivision 3, is amended to read:
    Subd. 3. Computation of refund amount. A former coordinated member of the
St. Paul Teachers Retirement Fund Association who qualifies for a refund pursuant to
under subdivision 1 shall receive a refund equal to the amount of the former coordinated
member's accumulated employee contributions with interest at the rate of six percent per
annum compounded annually. A former coordinated member of the Duluth Teachers
Retirement Fund Association who qualifies for a refund under subdivision 1 shall receive
a refund equal to the amount of the former coordinated member's accumulated employee
contributions with interest at the rate of six percent per annum compounded annually to
July 1, 2010, and four percent per annum compounded annually thereafter.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 67. Minnesota Statutes 2008, section 354A.37, subdivision 4, is amended to read:
    Subd. 4. Certain refunds at normal retirement age. Any coordinated member
who has attained the normal retirement age with less than ten years of allowable service
credit and has terminated active teaching service shall be entitled to a refund in lieu of
a proportionate annuity pursuant to section 356.32. The refund for a member of the St.
Paul Teachers Retirement Fund Association shall be equal to the coordinated member's
accumulated employee contributions plus interest at the rate of six percent compounded
annually. The refund for a member of the Duluth Teachers Retirement Fund Association
shall be equal to the coordinated member's accumulated employee contributions plus
interest at the rate of six percent compounded annually to July 1, 2010, and four percent
per annum compounded annually thereafter.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 68. Minnesota Statutes 2008, 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

Minneapolis employees retirement plan
6.0
5.0

Duluth teachers retirement plan
8.5
8.5

St. Paul teachers retirement plan
8.5
8.5

Minneapolis Police Relief Association
6.0
6.0

Fairmont Police Relief Association
5.0
5.0

Minneapolis Fire Department Relief Association
6.0
6.0

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

Minneapolis Police Relief Association
4.0

Fairmont Police Relief Association
3.5


Minneapolis Fire Department Relief
Association
4.0

Virginia Fire Department Relief Association
3.5


Bloomington Fire Department Relief
Association
4.0
    (2) modified single rate future salary increase assumption


plan
future salary
increase assumption




Minneapolis employees
retirement plan
the prior calendar year amount increased
first by 1.0198 percent to prior fiscal year
date and then increased by 4.0 percent
annually for each future year
    (3) age-related select and ultimate future salary increase assumption or graded rate
future salary increase assumption


plan
future salary
increase assumption


general state employees retirement plan
select calculation and
assumption A

correctional state employees retirement plan
assumption H G

State Patrol retirement plan
assumption G F


general public employees retirement plan
select calculation and
assumption B

public employees police and fire fund retirement plan
assumption C B

local government correctional service retirement plan
assumption G F

teachers retirement plan
assumption D C

Duluth teachers retirement plan
assumption E D

St. Paul teachers retirement plan
assumption F E
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 and the general public 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, the public employees police
and fire plan, and the local government
correctional service plan; (2) 0.6 percent
for the general state employees retirement
plan and the general public 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
CB
DC
ED
FE
GF
HG

16
5.95%
5.95%
11.00%
7.70%
8.00%
6.90%
7.7500%
7.2500%

17
5.90
5.90
11.00
7.65
8.00
6.90
7.7500
7.2500

18
5.85
5.85
11.00
7.60
8.00
6.90
7.7500
7.2500

19
5.80
5.80
11.00
7.55
8.00
6.90
7.7500
7.2500

20
5.75
5.40
11.00
5.50
6.90
6.90
7.7500
7.2500

21
5.75
5.40
11.00
5.50
6.90
6.90
7.1454
6.6454

22
5.75
5.40
10.50
5.50
6.90
6.90
7.0725
6.5725

23
5.75
5.40
10.00
5.50
6.85
6.85
7.0544
6.5544

24
5.75
5.40
9.50
5.50
6.80
6.80
7.0363
6.5363

25
5.75
5.40
9.00
5.50
6.75
6.75
7.0000
6.5000

26
5.75
5.36
8.70
5.50
6.70
6.70
7.0000
6.5000

27
5.75
5.32
8.40
5.50
6.65
6.65
7.0000
6.5000

28
5.75
5.28
8.10
5.50
6.60
6.60
7.0000
6.5000

29
5.75
5.24
7.80
5.50
6.55
6.55
7.0000
6.5000

30
5.75
5.20
7.50
5.50
6.50
6.50
7.0000
6.5000

31
5.75
5.16
7.30
5.50
6.45
6.45
7.0000
6.5000

32
5.75
5.12
7.10
5.50
6.40
6.40
7.0000
6.5000

33
5.75
5.08
6.90
5.50
6.35
6.35
7.0000
6.5000

34
5.75
5.04
6.70
5.50
6.30
6.30
7.0000
6.5000

35
5.75
5.00
6.50
5.50
6.25
6.25
7.0000
6.5000

36
5.75
4.96
6.30
5.50
6.20
6.20
6.9019
6.4019

37
5.75
4.92
6.10
5.50
6.15
6.15
6.8074
6.3074

38
5.75
4.88
5.90
5.40
6.10
6.10
6.7125
6.2125

39
5.75
4.84
5.70
5.30
6.05
6.05
6.6054
6.1054

40
5.75
4.80
5.50
5.20
6.00
6.00
6.5000
6.0000

41
5.75
4.76
5.40
5.10
5.90
5.95
6.3540
5.8540

42
5.75
4.72
5.30
5.00
5.80
5.90
6.2087
5.7087

43
5.65
4.68
5.20
4.90
5.70
5.85
6.0622
5.5622

44
5.55
4.64
5.10
4.80
5.60
5.80
5.9048
5.4078

45
5.45
4.60
5.00
4.70
5.50
5.75
5.7500
5.2500

46
5.35
4.56
4.95
4.60
5.40
5.70
5.6940
5.1940

47
5.25
4.52
4.90
4.50
5.30
5.65
5.6375
5.1375

48
5.15
4.48
4.85
4.50
5.20
5.60
5.5822
5.0822

49
5.05
4.44
4.80
4.50
5.10
5.55
5.5404
5.0404

50
4.95
4.40
4.75
4.50
5.00
5.50
5.5000
5.0000

51
4.85
4.36
4.75
4.50
4.90
5.45
5.4384
4.9384

52
4.75
4.32
4.75
4.50
4.80
5.40
5.3776
4.8776

53
4.65
4.28
4.75
4.50
4.70
5.35
5.3167
4.8167

54
4.55
4.24
4.75
4.50
4.60
5.30
5.2826
4.7826

55
4.45
4.20
4.75
4.50
4.50
5.25
5.2500
4.7500

56
4.35
4.16
4.75
4.50
4.40
5.20
5.2500
4.7500

57
4.25
4.12
4.75
4.50
4.30
5.15
5.2500
4.7500

58
4.25
4.08
4.75
4.60
4.20
5.10
5.2500
4.7500

59
4.25
4.04
4.75
4.70
4.10
5.05
5.2500
4.7500

60
4.25
4.00
4.75
4.80
4.00
5.00
5.2500
4.7500

61
4.25
4.00
4.75
4.90
3.90
5.00
5.2500
4.7500

62
4.25
4.00
4.75
5.00
3.80
5.00
5.2500
4.7500

63
4.25
4.00
4.75
5.10
3.70
5.00
5.2500
4.7500

64
4.25
4.00
4.75
5.20
3.60
5.00
5.2500
4.7500

65
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

66
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

67
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

68
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

69
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

70
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

71
4.25
4.00
5.20
(4) service-related ultimate future salary increase assumption


service length
general employees retirement plan of the Public
Employees Retirement Association

1
12.03%

2
8.90

3
7.46

4
6.58

5
5.97

6
5.52

7
5.16

8
4.87

9
4.63

10
4.42

11
4.24

12
4.08

13
3.94

14
3.82

15
3.70

16
3.60

17
3.51

18
3.50

19
3.50

20
3.50

21
3.50

22
3.50

23
3.50

24
3.50

25
3.50

26
3.50

27
3.50

28
3.50

29
3.50

30 or more
3.50
    (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
4.50%

correctional state employees retirement plan
4.50

State Patrol retirement plan
4.50

legislators retirement plan
4.50

judges retirement plan
4.00


general public employees retirement plan of the
Public Employees Retirement Association
4.504.00

public employees police and fire retirement plan
4.50


local government correctional service retirement
plan
4.50

teachers retirement plan
4.50

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. 69. Minnesota Statutes 2009 Supplement, 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), 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, the additional
annual contribution must be calculated on a level annual dollar amount basis.
    (b) For any retirement plan other than the Minneapolis Employees Retirement Fund,
the general employees retirement plan of the Public Employees Retirement Association,
the general state employees retirement plan of the Minnesota State Retirement System,
and the St. Paul Teachers Retirement Fund Association, 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 Minneapolis Employees Retirement
Fund and 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 Minneapolis Employees Retirement Fund, the established date for full
funding is June 30, 2020.
    (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 shall 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. 70. Minnesota Statutes 2008, section 356.30, subdivision 1, is amended to read:
    Subdivision 1. Eligibility; computation of annuity. (a) Notwithstanding any
provisions of the laws governing the retirement plans enumerated in subdivision 3, a
person who has met the qualifications of paragraph (b) may elect to receive a retirement
annuity from each enumerated retirement plan in which the person has at least one-half
year of allowable service, based on the allowable service in each plan, subject to the
provisions of paragraph (c).
(b) A person may receive, upon retirement, a retirement annuity from each
enumerated retirement plan in which the person has at least one-half year of allowable
service, and augmentation of a deferred annuity calculated at the appropriate rate under
the laws governing each public pension plan or fund named in subdivision 3, based on
the date of the person's initial entry into public employment from the date the person
terminated all public service if:
(1) the person has allowable service totaling an amount that allows the person to
receive an annuity in any two or more of the enumerated plans;
(2) the person has sufficient allowable service in total that equals or exceeds the
applicable service credit vesting requirement of the retirement plan with the longest
applicable service credit vesting requirement; and
(2) (3) the person has not begun to receive an annuity from any enumerated plan or
the person has made application for benefits from each applicable plan and the effective
dates of the retirement annuity with each plan under which the person chooses to receive
an annuity are within a one-year period.
(c) The retirement annuity from each plan must be based upon the allowable service,
accrual rates, and average salary in the applicable plan except as further specified or
modified in the following clauses:
(1) the laws governing annuities must be the law in effect on the date of termination
from the last period of public service under a covered retirement plan with which the
person earned a minimum of one-half year of allowable service credit during that
employment;
(2) the "average salary" on which the annuity from each covered plan in which
the employee has credit in a formula plan must be based on the employee's highest five
successive years of covered salary during the entire service in covered plans;
(3) the accrual rates to be used by each plan must be those percentages prescribed by
each plan's formula as continued for the respective years of allowable service from one
plan to the next, recognizing all previous allowable service with the other covered plans;
(4) the allowable service in all the plans must be combined in determining eligibility
for and the application of each plan's provisions in respect to reduction in the annuity
amount for retirement prior to normal retirement age; and
(5) the annuity amount payable for any allowable service under a nonformula plan
of a covered plan must not be affected, but such service and covered salary must be used
in the above calculation.
(d) This section does not apply to any person whose final termination from the last
public service under a covered plan was before May 1, 1975.
(e) For the purpose of computing annuities under this section, the accrual rates
used by any covered plan, except the public employees police and fire plan, the judges
retirement fund, and the State Patrol retirement plan, must not exceed the percent specified
in section 356.315, subdivision 4, per year of service for any year of service or fraction
thereof. The formula percentage used by the judges retirement fund must not exceed the
percentage rate specified in section 356.315, subdivision 8, per year of service for any
year of service or fraction thereof. The accrual rate used by the public employees police
and fire plan and the State Patrol retirement plan must not exceed the percentage rate
specified in section 356.315, subdivision 6, per year of service for any year of service or
fraction thereof. The accrual rate or rates used by the legislators retirement plan must not
exceed 2.5 percent, but this limit does not apply to the adjustment provided under section
3A.02, subdivision 1, paragraph (c).
(f) Any period of time for which a person has credit in more than one of the covered
plans must be used only once for the purpose of determining total allowable service.
(g) If the period of duplicated service credit is more than one-half year, or the person
has credit for more than one-half year, with each of the plans, each plan must apply its
formula to a prorated service credit for the period of duplicated service based on a fraction
of the salary on which deductions were paid to that fund for the period divided by the total
salary on which deductions were paid to all plans for the period.
(h) If the period of duplicated service credit is less than one-half year, or when
added to other service credit with that plan is less than one-half year, the service credit
must be ignored and a refund of contributions made to the person in accord with that
plan's refund provisions.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 71. Minnesota Statutes 2008, section 356.302, subdivision 3, is amended to read:
    Subd. 3. General employee plan eligibility requirements. A disabled member
of a covered retirement plan who has credit for allowable service in a combination of
general employee retirement plans is entitled to a combined service disability benefit
if the member:
(1) is less than the normal retirement age on the date of the application for the
disability benefit;
(2) has become totally and permanently disabled;
(3) has credit for allowable service in any combination of general employee
retirement plans totaling at least three years the number of years required by the applicable
retirement plan with the longest service credit requirement for disability benefit receipt;
(4) has credit for at least one-half year of allowable service with the current general
employee retirement plan before the commencement of the disability;
(5) has at least three continuous years of allowable service credit by the general
employee retirement plan or has at least a total of three years of allowable service credit
by a combination of general employee retirement plans in a 72-month period during
which no interruption of allowable service credit from a termination of employment
exceeded 29 days; and
(6) was not receiving a retirement annuity or disability benefit from any covered
general employee retirement plan at the time of the commencement of the disability.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 72. Minnesota Statutes 2008, section 356.302, subdivision 4, is amended to read:
    Subd. 4. Public safety plan eligibility requirements. A disabled member of a
covered retirement plan who has credit for allowable service in a combination of public
safety employee retirement plans is entitled to a combined service disability benefit if the
member:
(1) has become occupationally disabled;
(2) has credit for allowable service in any combination of public safety employee
retirement plans totaling at least one year the minimum period of service credit required by
the applicable retirement plan with the longest service credit eligibility requirement for the
receipt of a duty-related disability benefit if the disability is duty-related or totaling at least
three years the minimum period of service credit required by the applicable retirement
plan with the longest service credit eligibility requirement for a disability benefit that is
not duty-related if the disability is not duty-related;
(3) has credit for at least one-half year of allowable service with the current public
safety employee retirement plan before the commencement of the disability; and
(4) was not receiving a retirement annuity or disability benefit from any covered
public safety employee retirement plan at the time of the commencement of the disability.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 73. Minnesota Statutes 2008, section 356.302, subdivision 5, is amended to read:
    Subd. 5. General and public safety plan eligibility requirements. A disabled
member of a covered retirement plan who has credit for allowable service in a combination
of both a public safety employee retirement plan and general employee retirement plan
must meet the qualifying requirements in subdivisions 3 and 4 to receive a combined
service disability benefit from the applicable general employee and public safety
employee retirement plans, except that the person need only be a member of a covered
retirement plan at the time of the commencement of the disability, that the person must
have allowable service credit for the applicable retirement plan with the longest service
credit eligibility requirement for the receipt of a disability benefit, and that the minimum
allowable service requirements of subdivisions 3, clauses (3) and (5), and 4, clauses (3)
and (4), may be met in any combination of covered retirement plans.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 74. Minnesota Statutes 2008, section 356.303, subdivision 2, is amended to read:
    Subd. 2. Entitlement; eligibility. Notwithstanding any provision of law to the
contrary governing a covered retirement plan, a person who is the survivor of a deceased
member of a covered retirement plan may receive a combined service survivor benefit
from each covered retirement plan in which the deceased member had credit for at least
one-half year of allowable service if the deceased member:
(1) had credit for sufficient allowable service in any combination of covered
retirement plans to meet any the minimum allowable service credit requirement of the
applicable covered retirement fund with the longest allowable service credit requirement
for qualification for a survivor benefit or annuity;
(2) had credit for at least one-half year of allowable service with the most recent
covered retirement plan before the date of death and was an active member of that covered
retirement plan on the date of death; and
(3) was not receiving a retirement annuity from any covered retirement plan on the
date of death.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 75. Minnesota Statutes 2008, section 356.315, subdivision 5, is amended to read:
    Subd. 5. Correctional plan members. The applicable benefit accrual rate is 2.4
percent if employed as a correctional state employee before July 1, 2010, or 2.2 percent if
employed as a correctional state employee after June 30, 2010.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 76. Minnesota Statutes 2009 Supplement, section 356.415, subdivision 1, is
amended to read:
    Subdivision 1. Annual postretirement adjustments; generally. (a) Except as
otherwise provided in subdivision 1a, 1b, 1c, 1d, or 1e, retirement annuity, disability
benefit, or survivor benefit recipients of a covered retirement plan are entitled to a
postretirement adjustment annually on January 1, as follows:
(1) a postretirement increase of 2.5 percent must be applied each year, effective
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has
been receiving an annuity or a benefit for at least 12 full months prior to the January 1
increase; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit amount for at least one full month, an annual postretirement increase of 1/12 of 2.5
percent for each month that the person has been receiving an annuity or benefit must be
applied, effective on January 1 following the calendar year in which the person has been
retired for less than 12 months.
(b) The increases provided by this section subdivision commence on January 1, 2010.
(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 covered retirement plan 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 353.29, subdivision 6, or 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 for section 353.29, subdivision 6, or 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. 77. Minnesota Statutes 2009 Supplement, section 356.415, is amended by adding
a subdivision to read:
    Subd. 1a. Annual postretirement adjustments; Minnesota State Retirement
System plans other than State Patrol retirement plan. (a) Retirement annuity, disability
benefit, or survivor benefit recipients of the legislators retirement plan, the general state
employees retirement plan, the correctional state employees retirement plan, the elected
state officers retirement plan, the unclassified state employees retirement program, and the
judges retirement plan are entitled to a postretirement adjustment annually on January
1, as follows:
(1) a postretirement increase of two percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 18 full months before the January 1
increase; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or
a benefit for at least six full months, an annual postretirement increase of 1/12 of two
percent for each month that the person has been receiving an annuity or benefit must be
applied, effective January 1, following the calendar year in which the person has been
retired for at least six months, but has been retired for less than 18 months.
(b) The increases provided by this subdivision commence on January 1, 2011.
Increases under this subdivision for the general state employees retirement plan, the
correctional state employees retirement plan, or the judges retirement plan terminate
on December 31 of the calendar year in which the actuarial valuation prepared by the
approved actuary under sections 356.214 and 356.215 and the standards for actuarial work
promulgated by the Legislative Commission on Pensions and Retirement indicates that the
market value of assets of the retirement plan equals or exceeds 90 percent of the actuarial
accrued liability of the retirement plan and increases under subdivision 1 recommence
after that date. Increases under this subdivision for the legislators retirement plan or the
elected state officers retirement plan terminate on December 31 of the calendar year in
which the actuarial valuation prepared by the approved actuary under sections 356.214 and
356.215 and the standards for actuarial work promulgated by the Legislative Commission
on Pensions and Retirement indicates that the market value of assets of the general state
employees retirement plan equals or exceeds 90 percent of the actuarial accrued liability
of the retirement plan and increases under subdivision 1 recommence after that date.
(c) An increase in annuity or benefit payments under this subdivision must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the applicable covered retirement plan requesting that the increase
not be made.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 78. Minnesota Statutes 2009 Supplement, section 356.415, is amended by adding
a subdivision to read:
    Subd. 1b. Annual postretirement adjustments; PERA; general employees
retirement plan and local government correctional retirement plan. (a) Retirement
annuity, disability benefit, or survivor benefit recipients of the general employees
retirement plan of the Public Employees Retirement Association and the local government
correctional service retirement plan are entitled to a postretirement adjustment annually
on January 1, as follows:
(1) for January 1, 2011, and each successive January 1 until funding stability is
restored for the applicable retirement plan, a postretirement increase of one percent must
be applied each year, effective on January 1, to the monthly annuity or benefit amount of
each annuitant or benefit recipient who has been receiving an annuity or benefit for at least
12 full months as of the current June 30;
(2) for January 1, 2011, and each successive January 1 until funding stability is
restored for the applicable retirement plan, for each annuitant or benefit recipient who has
been receiving an annuity or a benefit for at least one full month, but less than 12 full
months as of the current June 30, an annual postretirement increase of 1/12 of one percent
for each month the person has been receiving an annuity or benefit must be applied;
(3) for each January 1 following the restoration of funding stability for the applicable
retirement plan, a postretirement increase of 2.5 percent must be applied each year,
effective January 1, to the monthly annuity or benefit amount of each annuitant or benefit
recipient who has been receiving an annuity or benefit for at least 12 full months as of
the current June 30; and
(4) for each January 1 following restoration of funding stability for the applicable
retirement plan, for each annuity or benefit recipient who has been receiving an annuity or
a benefit for at least one full month, but less than 12 full months as of the current June
30, 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.
(b) Funding stability is restored when the market value of assets of the applicable
retirement plan equals or exceeds 90 percent of the actuarial accrued liabilities of the
applicable plan in the most recent prior actuarial valuation prepared under section 356.215
and the standards for actuarial work by the approved actuary retained by the Public
Employees Retirement Association under section 356.214.
(c) If, after applying the increase as provided for in paragraph (a), clauses (3)
and (4), the market value of the applicable retirement plan is determined in the next
subsequent actuarial valuation prepared under section 356.215 to be less than 90 percent
of the actuarial accrued liability of any of the applicable Public Employees Retirement
Association plans, the increase provided in paragraph (a), clauses (1) and (2), are to be
applied as of the next successive January until funding stability is again restored.
(d) An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the Public Employees Retirement Association requesting that the
increase not be made.
(e) 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 353.29, subdivision 6, 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 for section 353.29, subdivision 6. 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. 79. Minnesota Statutes 2009 Supplement, section 356.415, is amended by adding
a subdivision to read:
    Subd. 1c. Annual postretirement adjustments; PERA-P&F. (a) Retirement
annuity, disability benefit, or survivor benefit recipients of the public employees police
and fire retirement plan are entitled to a postretirement adjustment annually on January
1, as follows:
(1) for January 1, 2011, and for January 1, 2012, for each annuitant or benefit
recipient who has been receiving the annuity or benefit for at least 12 full months as of the
immediate preceding June 30, an amount equal to one percent in each year;
(2) for January 1, 2011, and for January 1, 2012, for each annuitant or benefit
recipient who has been receiving the annuity or benefit for at least one full month as of the
immediate preceding June 30, an amount equal to 1/12 of one percent in each year;
(3) for January 1, 2013, and each successive January 1 that follows the loss of
funding stability as defined under paragraph (b) until funding stability as defined under
paragraph (b) is again restored, for each annuitant or benefit recipient who has been
receiving the annuity or benefit for at least 12 full months as of the immediate preceding
June 30, an amount equal to the percentage increase in the Consumer Price Index for
urban wage earners and clerical workers all items index published by the Bureau of Labor
Statistics of the United States Department of Labor between the immediate preceding June
30 and the June 30 occurring 12 months previous, but not to exceed 1.5 percent;
(4) for January 1, 2013, and each successive January 1 that follows the loss of
funding stability as defined under paragraph (b) until funding stability as defined under
paragraph (b) is again restored, for each annuitant or benefit recipient who has been
receiving the annuity or benefit for at least one full month as of the immediate preceding
June 30, an amount equal to 1/12 of the percentage increase in the Consumer Price Index
for urban wage earners and clerical workers all items index published by the Bureau
of Labor Statistics of the United States Department of Labor between the immediate
preceding June 30 and the June 30 occurring 12 months previous for each full month of
annuity or benefit receipt, but not to exceed 1/12 of 1.5 percent for each full month of
annuity or benefit receipt;
(5) for each January 1 following the restoration of funding stability as defined under
paragraph (b) and during the continuation of funding stability as defined under paragraph
(b), for each annuitant or benefit recipient who has been receiving the annuity or benefit
for at least 12 full months as of the immediate preceding June 30, an amount equal to the
percentage increase in the Consumer Price Index for urban wage earners and clerical
workers all items index published by the Bureau of Labor Statistics of the United States
Department of Labor between the immediate preceding June 30 and the June 30 occurring
12 months previous, but not to exceed 2.5 percent; and
(6) for each January 1 following the restoration of funding stability as defined under
paragraph (b) and during the continuation of funding stability as defined under paragraph
(b), for each annuitant or benefit recipient who has been receiving the annuity or benefit
for at least one full month as of the immediate preceding June 30, an amount equal to
1/12 of the percentage increase in the Consumer Price Index for urban wage earners and
clerical workers all items index published by the Bureau of Labor Statistics of the United
States Department of Labor between the immediate preceding June 30 and the June 30
occurring 12 months previous for each full month of annuity or benefit receipt, but not to
exceed 1/12 of 2.5 percent for each full month of annuity or benefit receipt.
(b) Funding stability is restored when the market value of assets of the public
employees police and fire retirement plan equals or exceeds 90 percent of the actuarial
accrued liabilities of the applicable plan in the most recent prior actuarial valuation
prepared under section 356.215 and under the standards for actuarial work of the
Legislative Commission on Pensions and Retirement by the approved actuary retained by
the Public Employees Retirement Association under section 356.214.
(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 Public Employees Retirement Association requesting that the
increase not be made.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 80. Minnesota Statutes 2009 Supplement, section 356.415, is amended by adding
a subdivision 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, 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 which the person has been retired
for less than 12 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, 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 which the person has been retired for less than 12 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. 81. Minnesota Statutes 2009 Supplement, section 356.415, is amended by adding
a subdivision to read:
    Subd. 1e. Annual postretirement adjustments; State Patrol retirement plan.
(a) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol
retirement plan are entitled to a postretirement adjustment annually on January 1, as
follows:
(1) a postretirement increase of 1.5 percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 18 full months before the January 1
increase; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least six full months, an annual postretirement increase of 1/12 of 1.5 percent
for each month that the person has been receiving an annuity or benefit must be applied,
effective January 1, following the calendar year in which the person has been retired for at
least six months, but has been retired for less than 18 months.
(b) The increases provided by this subdivision commence on January 1, 2011.
Increases under this subdivision for the State Patrol retirement plan terminate on December
31 of the calendar year in which the actuarial valuation prepared by the approved actuary
under sections 356.214 and 356.215 and the standards for actuarial work promulgated by
the Legislative Commission on Pensions and Retirement indicates that the market value of
assets of the retirement plan equals or exceeds 90 percent of the actuarial accrued liability
of the retirement plan and increases under subdivision 1 recommence after that date.
(c) An increase in annuity or benefit payments under this subdivision must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the applicable covered retirement plan requesting that the increase
not be made.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 82. Minnesota Statutes 2009 Supplement, section 356.415, is amended by adding
a subdivision to read:
    Subd. 3. Actuarial valuation reports until funding is stabilized. Notwithstanding
any provision of section 356.215, subdivision 8, to the contrary, until the actuarial
valuations, prepared annually by the approved actuary under sections 356.214 and
356.215 and the standards for actuarial work promulgated by the Legislative Commission
on Pensions and Retirement, indicate that the market value of assets of the applicable
covered plans equals or exceeds 90 percent of the actuarial accrued liabilities, the actuarial
valuation reports must utilize a postretirement interest rate assumption that is equal to the
difference between the preretirement interest rate assumption provided in section 356.215,
subdivision 8, and the stated annual postretirement adjustment rate provided under this
section, as applicable to each covered plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 83. Minnesota Statutes 2008, section 356.47, subdivision 3, is amended to read:
    Subd. 3. Payment. (a) Beginning one year after the reemployment withholding
period ends relating to the reemployment that gave rise to the limitation, and the filing of a
written application, the retired member is entitled to the payment, in a lump sum, of the
value of the person's amount under subdivision 2, plus annual compound interest at. For
the general state employees retirement plan, the correctional state employees retirement
plan, the general employees retirement plan of the Public Employees Retirement
Association, the public employees police and fire retirement plan, the local government
correctional employees retirement plan, and the teachers retirement plan, the annual
interest rate is six percent from the date on which the amount was deducted from the
retirement annuity to the date of payment or until January 1, 2011, whichever is earlier, and
no interest after January 1, 2011. For the Duluth Teachers Retirement Fund Association,
the annual interest is six percent from the date on which the amount was deducted from the
retirement annuity to the date of payment or until June 30, 2010, whichever is earlier, and
no interest after June 30, 2010. For the St. Paul Teachers Retirement Fund Association,
the annual interest is the compound annual rate of six percent from the date that the
amount was deducted from the retirement annuity to the date of payment.
    (b) The written application must be on a form prescribed by the chief administrative
officer of the applicable retirement plan.
    (c) If the retired member dies before the payment provided for in paragraph (a) is
made, the amount is payable, upon written application, to the deceased person's surviving
spouse, or if none, to the deceased person's designated beneficiary, or if none, to the
deceased person's estate.
    (d) In lieu of the direct payment of the person's amount under subdivision 2, on
or after the payment date under paragraph (a), if the federal Internal Revenue Code so
permits, the retired member may elect to have all or any portion of the payment amount
under this section paid in the form of a direct rollover to an eligible retirement plan as
defined in section 402(c) of the federal Internal Revenue Code that is specified by the
retired member. If the retired member dies with a balance remaining payable under this
section, the surviving spouse of the retired member, or if none, the deceased person's
designated beneficiary, or if none, the administrator of the deceased person's estate may
elect a direct rollover under this paragraph.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 84. Minnesota Statutes 2009 Supplement, 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), Independent School District No. 625, St. Paul, must make contributions
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) Money contributed under paragraph (a) and either paragraph (b) or (c), as
applicable, must be credited to a separate account in the applicable teachers retirement
fund and may not be used in determining any benefit increases. The separate account
terminates for a fund when the aid payments to the fund under paragraph (a) cease.
    (e) (d) 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. 85. LOCAL RETIREMENT FUND INVESTMENT AUTHORITIES
STUDY.
A study group consisting of representatives from pension plans subject to Minnesota
Statutes, section 356A.06, subdivision 6 or 7, shall be convened by the state auditor to
study investment-related provisions, authorities, and limitations under Minnesota Statutes,
chapter 356A, and related sections of other chapters. Administrative support for the
study group shall be provided by the state auditor. The study group shall prepare a
report to include an assessment of the effectiveness of current statutory prescriptions,
options for change, and recommendations for consideration by the governor and the
legislature during the 2011 legislative session. The report will be provided no later than
January 15, 2011, to the executive director of the Legislative Commission on Pensions and
Retirement, the chair and ranking minority caucus member of the senate State and Local
Government Operations and Oversight Committee, and the chair and ranking minority
caucus member of the house State and Local Government Operations Reform, Technology
and Elections Committee.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 86. DEFINED CONTRIBUTION PLAN STUDY.
The executive directors of the Minnesota State Retirement System, the Public
Employees Retirement Association, and the Teachers Retirement Association shall jointly
conduct a study of defined benefit, defined contribution, and other alternative retirement
plans for Minnesota public employees. The study must include analysis of the feasibility,
sustainability, financial impacts, and other design considerations of these retirement plans.
The report must be provided no later than June 1, 2011, to the chair, the vice-chair, and the
executive director of the Legislative Commission on Pensions and Retirement.

    Sec. 87. BYLAW AUTHORIZATION.
Consistent with the requirements of Minnesota Statutes, section 354A.12,
subdivision 4, the board of the Duluth Teachers Retirement Fund Association is authorized
to revise the bylaws or articles of incorporation so that the requirements of this act apply
to the old law coordinated program.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 88. ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION;
TEMPORARY SUSPENSION OF POSTRETIREMENT ADJUSTMENT.
Notwithstanding Minnesota Statutes, section 354A.29, no postretirement benefit
adjustment to benefit recipients of the St. Paul Teachers Retirement Fund Association
shall be provided for the year commencing January 1, 2011.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 89. REPEALER.
Minnesota Statutes 2008, section 354A.27, subdivision 1, is repealed.
EFFECTIVE DATE.This section is effective July 1, 2010.

ARTICLE 2
MSRS ADMINISTRATIVE PROVISIONS

    Section 1. Minnesota Statutes 2008, section 352.01, subdivision 2a, is amended to read:
    Subd. 2a. Included employees. (a) "State employee" includes:
    (1) employees of the Minnesota Historical Society;
    (2) employees of the State Horticultural Society;
    (3) employees of the Minnesota Crop Improvement Association;
    (4) employees of the adjutant general who whose salaries are paid from federal funds
and who are not covered by any federal civilian employees retirement system;
    (5) employees of the Minnesota State Colleges and Universities who are employed
under the university or college activities program;
    (6) currently contributing employees covered by the system who are temporarily
employed by the legislature during a legislative session or any currently contributing
employee employed for any special service as defined in subdivision 2b, clause (8);
    (7) employees of the legislature who are appointed without a limit on the duration
of their employment and persons employed or designated by the legislature or by a
legislative committee or commission or other competent authority to conduct a special
inquiry, investigation, examination, or installation;
    (8) trainees who are employed on a full-time established training program
performing the duties of the classified position for which they will be eligible to receive
immediate appointment at the completion of the training period;
    (9) employees of the Minnesota Safety Council;
    (10) any employees who are on authorized leave of absence from the Transit
Operating Division of the former Metropolitan Transit Commission and who are employed
by the labor organization which is the exclusive bargaining agent representing employees
of the Transit Operating Division;
    (11) employees of the Metropolitan Council, Metropolitan Parks and Open Space
Commission, Metropolitan Sports Facilities Commission, or Metropolitan Mosquito
Control Commission, or Metropolitan Radio Board unless excluded under subdivision 2b
or are covered by another public pension fund or plan under section 473.415, subdivision 3;
    (12) judges of the Tax Court;
    (13) personnel who were employed on June 30, 1992, by the University of
Minnesota in the management, operation, or maintenance of its heating plant facilities,
whose employment transfers to an employer assuming operation of the heating plant
facilities, so long as the person is employed at the University of Minnesota heating plant
by that employer or by its successor organization;
    (14) personnel who are employed as seasonal help employees in the classified or
unclassified service employed by the Department of Revenue;
    (15) persons who are employed by the Department of Commerce as a peace officer
in the Insurance Fraud Prevention Division under section 45.0135 who have attained the
mandatory retirement age specified in section 43A.34, subdivision 4;
    (16) employees of the University of Minnesota unless excluded under subdivision
2b, clause (3);
    (17) employees of the Middle Management Association whose employment began
after July 1, 2007, and to whom section 352.029 does not apply; and
    (18) employees of the Minnesota Government Engineers Council to whom section
352.029 does not apply.
    (b) Employees specified in paragraph (a), clause (13), are included employees under
paragraph (a) if employer and employee contributions are made in a timely manner in the
amounts required by section 352.04. Employee contributions must be deducted from
salary. Employer contributions are the sole obligation of the employer assuming operation
of the University of Minnesota heating plant facilities or any successor organizations to
that employer.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2008, section 352.03, subdivision 4, is amended to read:
    Subd. 4. Duties and powers of board of directors. (a) The board shall:
    (1) elect a chair;
    (2) appoint an executive director;
    (3) establish rules to administer this chapter and chapters 3A, 352B, 352C, 352D,
and 490 and transact the business of the system, subject to the limitations of law;
    (4) consider and dispose of, or take any other action the board of directors deems
appropriate concerning, denials of applications for annuities or disability benefits under
this chapter, chapter 3A, 352B, 352C, 352D, or 490, and complaints of employees and
others pertaining to the retirement of employees and the operation of the system;
    (5) oversee the administration of the state deferred compensation plan established
in section 352.965; and
    (6) oversee the administration of the health care savings plan established in section
352.98.
    (b) The board shall advise the director on any matters relating to the system and
carrying out functions and purposes of this chapter. The board's advice shall control.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2008, section 352.04, subdivision 9, is amended to read:
    Subd. 9. Erroneous deductions, canceled warrants. (a) Deductions taken from the
salary of an employee for the retirement fund in error excess of required amounts must,
upon discovery and verification by the department making the deduction, be refunded to
the employee.
(b) If a deduction for the retirement fund is taken from a salary warrant or check,
and the check is canceled or the amount of the warrant or check returned to the funds of
the department making the payment, the sum deducted, or the part of it required to adjust
the deductions, must be refunded to the department or institution if the department applies
for the refund on a form furnished by the director. The department's payments must
likewise be refunded to the department.
(c) Employee deductions and employer contributions taken in error may be directly
transferred, without interest, to another Minnesota public employee retirement plan by
which the employee is actually covered.
For purposes of this subdivision, a Minnesota public pension plan means a plan
specified in section 356.30, subdivision 3, or the plan governed by chapter 354B.
(c) If erroneous employee deductions and employer contributions are caused by an
error in plan coverage involving the plan and any other plans specified in section 356.99,
that section applies. If the employee should have been covered by the plan governed by
chapter 352D, 353D, 354B, or 354D, the employee deductions and employer contributions
taken in error must be directly transferred to the applicable employee's account in the
correct retirement plan, with interest at the rate of 0.71 percent per month, compounded
annually, from the first day of the month following the month in which coverage should
have commenced in the correct defined contribution plan until the end of the month in
which the transfer occurs.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 4. Minnesota Statutes 2008, section 352.115, subdivision 10, is amended to read:
    Subd. 10. Reemployment of annuitant. (a) Except for salary or wages received
as a temporary employee of the legislature during a legislative session, if any retired
employee again becomes entitled to receive salary or wages from the state, or any
employer who employs state employees as that term is defined in section 352.01,
subdivision 2
, other than salary or wages received as a temporary employee of the
legislature during a legislative session in a position covered by this chapter, the annuity or
retirement allowance shall must cease when the retired employee has earned an amount
equal to the annual maximum earnings allowable for that age for the continued receipt of
full benefit amounts monthly under the federal old age, survivors, and disability insurance
program as set by the secretary of health and human services under United States Code,
title 42, section 403, in any calendar year. If the retired employee has not yet reached the
minimum age for the receipt of Social Security benefits, the maximum earnings for the
retired employee shall be are equal to the annual maximum earnings allowable for the
minimum age for the receipt of Social Security benefits.
(b) The balance of the annual retirement annuity after cessation must be handled or
disposed of as provided in section 356.47.
(c) The annuity must be resumed when state service ends, or, if the retired employee
is still employed at the beginning of the next calendar year, at the beginning of that
calendar year, and payment must again end when the retired employee has earned the
applicable reemployment earnings maximum specified in this subdivision. If the retired
employee is granted a sick leave without pay, but not otherwise, the annuity or retirement
allowance must be resumed during the period of sick leave.
(d) No payroll deductions for the retirement fund may be made from the earnings of
a reemployed retired employee.
(e) No change shall may be made in the monthly amount of an annuity or retirement
allowance because of the reemployment of an annuitant.
(f) If a reemployed annuitant whose annuity is suspended under paragraph (a)
is having insurance premium amounts withheld under section 356.87, subdivision 2,
insurance premium amounts must continue to be withheld and transferred from the
suspended portion of the annuity. The balance of the annual retirement annuity after
cessation, after deduction of the insurance premium amounts, must be treated as specified
in paragraph (b).
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 5. Minnesota Statutes 2008, section 352.91, is amended by adding a subdivision
to read:
    Subd. 6. Correction of plan coverage errors. If erroneous employee deductions
and employer contributions are caused by an error in plan coverage involving the
correctional state employees retirement plan and any other plan specified in section
356.99, that section applies.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 6. Minnesota Statutes 2008, section 352.965, subdivision 1, is amended to read:
    Subdivision 1. Establishment. (a) The Minnesota state deferred compensation plan
is established. For purposes of this section, "plan" means the Minnesota state deferred
compensation plan, unless the context clearly indicates otherwise. The Minnesota State
Retirement System shall administer the plan.
    (b) The purpose of the plan is to provide a means for a public employee to contribute
a portion of the employee's compensation to a tax-deferred investment account. The plan
is an eligible tax-deferred compensation plan under section 457(b) of the Internal Revenue
Code, United States Code, title 26, section 457(b), and the applicable regulations under
Code of Federal Regulations, title 26, parts 1.457-3 to 1.457-10.
    (c) The board of directors of the Minnesota State Retirement System is the plan
trustee and plan sponsor. The board's executive director is the plan administrator. Fiduciary
activities of the plan must be undertaken in a manner consistent with chapter 356A.
    (d) The executive director, with the approval of the board of directors, shall
adopt and amend, as required to maintain tax-qualified status, a written plan document
specifying the material terms and conditions for eligibility, benefits, applicable limitations,
and the time and form under which benefit distributions can be made. With the approval
of the board of directors, the executive director may also establish policies and procedures
necessary for the administration of the deferred compensation plan.
    (e) The plan document shall must include provisions that are necessary to cause the
plan to be an eligible deferred compensation plan within the meaning of section 457(b) of
the Internal Revenue Code. The plan document may provide additional administrative and
substantive provisions consistent with state law, provided that those provisions will do
not cause the plan to fail to be an eligible deferred compensation plan within the meaning
of section 457(b) of the Internal Revenue Code and may include provisions for certain
optional features and services.
    (f) The board of directors may authorize the executive director to establish and
administer a Roth 457 plan if authorized by the Internal Revenue Code or a Roth
individual retirement account as defined under section 408A of the Internal Revenue Code.
    (g) All amounts contributed to the deferred compensation plan and all earnings
on those amounts must be held in trust, in custodial accounts, or in qualifying annuity
contracts for the exclusive benefit of the plan participants and beneficiaries, as required by
section 457(g) of the Internal Revenue Code and in accordance with sections 356.001 and
356A.06, subdivision 1.
    (h) The information and data maintained in the accounts of the participants and
beneficiaries are private data and shall must not be disclosed to anyone other than the
participant or beneficiary pursuant to a court order or pursuant to under section 356.49.
    (i) The plan document is not subject to the rule adoption process under the
Administrative Procedures Act, including section 14.386, but must conform with
applicable federal and state laws.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2008, section 352.965, subdivision 2, is amended to read:
    Subd. 2. Right to participate in deferred compensation plan. (a) At the request
of an officer or employee of the state, an officer or employee of a political subdivision, or
an employee covered by a retirement fund in section 356.20, subdivision 2, the appointing
authority shall defer the payment of part of the compensation of the public officer or
employee through payroll deduction.
(b) The amount to be deferred must be as provided in a written an agreement
between the officer or employee and the public employer plan sponsor. The agreement
must be in a form specified by the executive director of the Minnesota State Retirement
System and must be consistent with the requirements for an eligible plan under federal
and state tax laws, regulations, and rulings.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 8. Minnesota Statutes 2009 Supplement, section 352B.011, subdivision 3, is
amended to read:
    Subd. 3. Allowable service. (a) "Allowable service" means:
(1) service in a month during which a member is paid a salary from which a member
contribution is deducted, deposited, and credited in the State Patrol retirement fund;
(2) for members defined in subdivision 10, clause (1), service in any month for
which payments have been made to the State Patrol retirement fund under law; and
(3) for members defined in subdivision 10, clauses (2) and (3), service for which
payments have been made to the State Patrol retirement fund under law, service for which
payments were made to the State Police officers retirement fund under law after June
30, 1961, and all prior service which was credited to a member for service on or before
June 30, 1961.;
(4) any period of authorized leave of absence without pay that does not exceed one
year and for which the employee obtains credit by payment to the fund under section
352B.013; and
(5) eligible periods of uniformed service for which the member obtained service
credit by payment under section 352B.086 to the fund.
(b) Allowable service also includes any period of absence from duty by a member
who, by reason of injury incurred in the performance of duty, is temporarily disabled and
for which disability the state is liable under the workers' compensation law, until the date
authorized by the executive director for commencement of payment of a disability benefit
or until the date of a return to employment.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. [352B.013] AUTHORIZED LEAVE OF ABSENCE SERVICE CREDIT
PURCHASE PROCEDURE.
    Subdivision 1. Application. This section specifies the procedure for purchasing
service credit in the State Patrol retirement plan for authorized leaves of absence under
section 352B.011, subdivision 3, unless an alternative payment procedure is specified in
law for a particular form of leave or break in service.
    Subd. 2. Purchase procedure. (a) An employee covered by the plan specified in
this chapter may purchase credit for allowable service in the plan for a period specified
in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c),
whichever applies. The employing unit, at its option, may pay the employer portion of the
amount specified in paragraph (b) on behalf of its employees.
(b) If payment is received by the executive director within one year from the date
the employee returned to work following the authorized leave, the payment amount is
equal to the employee and employer contribution rates specified in section 352B.02 at the
end of the leave period multiplied by the employee's hourly rate of salary on the date of
return from the leave of absence and by the days and months of the leave of absence for
which the employee is eligible for allowable service credit. The payment must include
compound interest at a monthly rate of 0.71 percent from the last day of the leave period
until the last day of the month in which payment is received. If payment is received by the
executive director after one year from the date the employee returned to work following
the authorized leave, the payment amount is the amount determined under section
356.551. Payment under this paragraph must be made before the date of termination from
public employment covered under this chapter.
(c) If the employee terminates employment covered by this chapter during the leave
or following the leave rather than returning to covered employment, payment must
be received by the executive director within 30 days after the termination date. The
payment amount is equal to the employee and employer contribution rates specified in
section 352B.02 on the day prior to the termination date, multiplied by the employee's
hourly rate of salary on that date and by the days and months of the leave of absence
prior to termination.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. Minnesota Statutes 2008, section 352B.02, is amended by adding a
subdivision to read:
    Subd. 3. Correction of plan coverage errors. If erroneous employee deductions
and employer contributions are caused by an error in plan coverage involving the State
Patrol retirement plan and any other plan specified in section 356.99, that section applies.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 11. Minnesota Statutes 2008, section 353.27, subdivision 7a, is amended to read:
    Subd. 7a. Deductions or contributions transmitted by error. (a) If employee
deductions and employer contributions were erroneously transmitted to the association,
but should have been transmitted to another Minnesota public pension a plan covered by
chapter 352D, 353D, 354B, or 354D, the executive director shall transfer the erroneous
employee deductions and employer contributions to the appropriate retirement fund or
individual account, as applicable, without interest. The time limitations specified in
subdivisions 7 and 12 do not apply. The transfer to the applicable defined contribution
plan account must include interest at the rate of 0.71 percent per month, compounded
annually, from the first day of the month following the month in which coverage should
have commenced in the defined contribution plan until the end of the month in which
the transfer occurs.
(b) For purposes of this subdivision, a Minnesota public pension plan means a
plan specified in section 356.30, subdivision 3, or the plans governed by chapters 353D
and 354B.
(c) (b) A potential transfer under paragraph (a) that is reasonably determined to
cause the plan to fail to be a qualified plan under section 401(a) of the federal Internal
Revenue Code, as amended, must not be made by the executive director of the association.
Within 30 days after being notified by the Public Employees Retirement Association of
an unmade potential transfer under this paragraph, the employer of the affected person
must transmit an amount representing the applicable salary deductions and employer
contributions, without interest, to the retirement fund of the appropriate Minnesota public
pension plan, or to the applicable individual account if the proper coverage is by a defined
contribution plan. The association must provide the employing unit a credit for the amount
of the erroneous salary deductions and employer contributions against future contributions
from the employer. If the employing unit receives a credit under this paragraph, the
employing unit is responsible for refunding to the applicable employee any amount that
had been erroneously deducted from the person's salary.
(c) If erroneous employee deductions and employer contributions reflect a plan
coverage error involving any Public Employees Retirement Association plan specified in
section 356.99 and any other plan specified in that section, section 356.99 applies.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 12. Minnesota Statutes 2008, section 353.37, subdivision 3a, is amended to read:
    Subd. 3a. Disposition of suspension or reduction amount. (a) The balance of
the annual retirement annuity after suspension or the amount of the retirement annuity
reduction must be handled or disposed of as provided in section 356.47.
(b) If a reemployed annuitant whose annuity is suspended is having insurance
premium amounts withheld under section 356.87, subdivision 2, insurance premium
amounts must continue to be withheld and transferred from the suspended portion of the
annuity. The balance of the annual retirement annuity after cessation, after deduction of
the insurance premium amounts, must be treated as specified in paragraph (a).
EFFECTIVE DATE.This section is effective January 1, 2010.

    Sec. 13. Minnesota Statutes 2008, section 354.42, subdivision 7, is amended to read:
    Subd. 7. Erroneous salary deductions or direct payments. (a) Any deductions
taken from the salary of an employee for the retirement fund in error excess of amounts
required must be refunded to the employee upon the discovery of the error and after the
verification of the error by the employing unit making the deduction. The corresponding
excess employer contribution and excess additional employer contribution amounts
attributable to the erroneous salary deduction must be refunded to the employing unit.
(b) If salary deductions and employer contributions were erroneously transmitted
to the retirement fund and should have been transmitted to another Minnesota public
pension the plan covered by chapter 352D, 353D, 354B, or 354D, the executive director
must transfer these salary deductions and employer contributions to the account of the
appropriate public pension fund without interest. For purposes of this paragraph, a
Minnesota public pension plan means a plan specified in section 356.30, subdivision 3,
or the plan governed by chapter 354B. person under the applicable plan. The transfer to
the applicable defined contribution plan account must include interest at the rate of 0.71
percent per month, compounded annually, from the first day of the month following the
month in which coverage should have commenced in the defined contribution plan until
the end of the month in which the transfer occurs.
(c) A potential transfer under paragraph (b) that would cause the plan to fail to
be a qualified plan under section 401(a) of the Internal Revenue Code, as amended,
must not be made by the executive director. Within 30 days after being notified by the
Teachers Retirement Association of an unmade potential transfer under this paragraph,
the employer of the affected person must transmit an amount representing the applicable
salary deductions and employer contributions, without interest, to the retirement fund of
the appropriate Minnesota public pension plan fund account of the applicable person under
the appropriate plan. The retirement association must provide a credit for the amount of
the erroneous salary deductions and employer contributions against future contributions
from the employer.
(d) If a salary warrant or check from which a deduction for the retirement fund was
taken has been canceled or the amount of the warrant or if a check has been returned to
the funds of the employing unit making the payment, a refund of the amount deducted,
or any portion of it that is required to adjust the salary deductions, must be made to the
employing unit.
(e) Erroneous direct payments of member-paid contributions or erroneous salary
deductions that were not refunded during the regular payroll cycle processing must be
refunded to the member, plus interest computed using the rate and method specified in
section 354.49, subdivision 2.
(f) Any refund under this subdivision that would cause the plan to fail to be a
qualified plan under section 401(a) of the Internal Revenue Code, as amended, may not
be refunded and instead must be credited against future contributions payable by the
employer. The employer is responsible for refunding to the applicable employee any
amount that was erroneously deducted from the salary of the employee, with interest as
specified in paragraph (e).
(g) If erroneous employee deductions and employer contributions are caused by an
error in plan coverage involving the plan and any other plan specified in section 356.99,
that section applies.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 14. Minnesota Statutes 2008, section 354A.12, is amended by adding a
subdivision to read:
    Subd. 6a. Erroneous salary deductions or direct payments. If erroneous
employee deductions and employer contributions reflect a plan coverage error involving
any plan covered by this chapter and any plan specified in section 356.99, that section
applies.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 15. Minnesota Statutes 2008, section 356.24, subdivision 1, is amended to read:
    Subdivision 1. Restriction; exceptions. (a) It is unlawful for a school district
or other governmental subdivision or state agency to levy taxes for, or to contribute
public funds to a supplemental pension or deferred compensation plan that is established,
maintained, and operated in addition to a primary pension program for the benefit of the
governmental subdivision employees other than:
    (1) to a supplemental pension plan that was established, maintained, and operated
before May 6, 1971;
    (2) to a plan that provides solely for group health, hospital, disability, or death
benefits;
    (3) to the individual retirement account plan established by chapter 354B;
    (4) to a plan that provides solely for severance pay under section 465.72 to a retiring
or terminating employee;
    (5) for employees other than personnel employed by the Board of Trustees of the
Minnesota State Colleges and Universities and covered under the Higher Education
Supplemental Retirement Plan under chapter 354C, but including city managers covered
by an alternative retirement arrangement under section 353.028, subdivision 3, paragraph
(a), or by the defined contribution plan of the Public Employees Retirement Association
under section 353.028, subdivision 3, paragraph (b), if the supplemental plan coverage is
provided for in a personnel policy of the public employer or in the collective bargaining
agreement between the public employer and the exclusive representative of public
employees in an appropriate unit or in the individual employment contract between a city
and a city manager, and if for each available investment all fees and historic rates of return
for the prior one-, three-, five-, and ten-year periods, or since inception, are disclosed in an
easily comprehended document not to exceed two pages, in an amount matching employee
contributions on a dollar for dollar basis, but not to exceed an employer contribution of
one-half of the available elective deferral permitted per year per employee, under the
Internal Revenue Code:
    (i) to the state of Minnesota deferred compensation plan under section 352.965;
    (ii) in payment of the applicable portion of the contribution made to any investment
eligible under section 403(b) of the Internal Revenue Code, if the employing unit has
complied with any applicable pension plan provisions of the Internal Revenue Code with
respect to the tax-sheltered annuity program during the preceding calendar year; or
    (iii) any other deferred compensation plan offered by the employer under section
457 of the Internal Revenue Code;
    (6) for personnel employed by the Board of Trustees of the Minnesota State Colleges
and Universities and not covered by clause (5), to the supplemental retirement plan under
chapter 354C, if the supplemental plan coverage is provided for in a personnel policy
or in the collective bargaining agreement of the public employer with the exclusive
representative of the covered employees in an appropriate unit, in an amount matching
employee contributions on a dollar for dollar basis, but not to exceed an employer
contribution of $2,700 a year for each employee;
    (7) to a supplemental plan or to a governmental trust to save for postretirement
health care expenses qualified for tax-preferred treatment under the Internal Revenue
Code, if the supplemental plan coverage is provided for in a personnel policy or in the
collective bargaining agreement of a public employer with the exclusive representative of
the covered employees in an appropriate unit;
    (8) to the laborers national industrial pension fund or to a laborers local pension
fund for the employees of a governmental subdivision who are covered by a collective
bargaining agreement that provides for coverage by that fund and that sets forth a fund
contribution rate, but not to exceed an employer contribution of $5,000 per year per
employee;
    (9) to the plumbers and pipefitters national pension fund or to a plumbers and
pipefitters local pension fund for the employees of a governmental subdivision who are
covered by a collective bargaining agreement that provides for coverage by that fund and
that sets forth a fund contribution rate, but not to exceed an employer contribution of
$5,000 per year per employee;
    (10) to the international union of operating engineers pension fund for the employees
of a governmental subdivision who are covered by a collective bargaining agreement that
provides for coverage by that fund and that sets forth a fund contribution rate, but not to
exceed an employer contribution of $5,000 per year per employee;
    (11) to a supplemental plan organized and operated under the federal Internal
Revenue Code, as amended, that is wholly and solely funded by the employee's
accumulated sick leave, accumulated vacation leave, and accumulated severance pay;
    (12) to the International Association of Machinists national pension fund for the
employees of a governmental subdivision who are covered by a collective bargaining
agreement that provides for coverage by that fund and that sets forth a fund contribution
rate, but not to exceed an employer contribution of $5,000 per year per employee; or
    (13) for employees of United Hospital District, Blue Earth, to the state of Minnesota
deferred compensation program, if the employee makes a contribution, in an amount that
does not exceed the total percentage of covered salary under section 353.27, subdivisions
3 and 3a.
    (b) No governmental subdivision may make a contribution to a deferred
compensation plan operating under section 457 of the Internal Revenue Code for volunteer
or emergency on-call firefighters in lieu of providing retirement coverage under the federal
Old Age, Survivors, and Disability Insurance Program.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 16. Minnesota Statutes 2008, section 356.50, subdivision 4, is amended to read:
    Subd. 4. Annuity repayment. Notwithstanding subdivisions 1 and 2, if after being
discharged, the person commences receipt of an annuity from the applicable plan, and it is
later determined that the person was wrongfully discharged, the person shall repay the
annuity received in a lump sum within 60 days of receipt of the back pay award. If the
annuity is not repaid, the person is not entitled to reinstatement in the applicable plan as
an active member, the person is not authorized to make payments under subdivision 2,
paragraph (a), and, for subsequent employment with the employer, the person shall be
treated as a reemployed annuitant.
EFFECTIVE DATE.This section is effective the day following final enactment.
CORRECTION OF PLAN COVERAGE ERRORS

    Sec. 17. [356.99] CORRECTION OF ERRONEOUS DEFINED BENEFIT PLAN
COVERAGE.
    Subdivision 1. Definitions. (a) For purposes of this section, the terms in paragraphs
(b) to (e) have the meanings given them.
(b) "Chief administrative officer" means the person selected or elected by the
governing board of a covered pension plan with primary responsibility to administer the
covered pension plan, or that person's designee or representative.
(c) "Covered pension plan" means a plan enumerated in section 356.30, subdivision
3, except clauses (3), (5), (6), and (11).
(d) "Governing board" means the governing board of the Minnesota State Retirement
System, the Public Employees Retirement Association, the Teachers Retirement
Association, the Duluth Teachers Retirement Fund Association, or the St. Paul Teachers
Retirement Fund Association.
(e) "Member" means an active plan member in a covered pension plan.
    Subd. 2. Treatment of terminated employee coverage error. Any person
who terminated the erroneously covered service before a chief administrative officer
determined the covered pension plan coverage was in error retains the coverage with the
plan that originally credited the service.
    Subd. 3. Active employee correction of prospective service coverage. Upon
determination by a chief administrative officer that a member is covered by the wrong
pension plan, the employer must stop remitting the erroneous employee deductions and
employer contributions and report the employee to the correct covered pension plan for all
subsequent service.
    Subd. 4. Active employee treatment of past service. Any plan member, with past
service credited in an erroneous plan, retains the coverage for that past service with the
plan that originally credited that service if the reporting error began earlier than two
fiscal years prior to the current fiscal year in which the error was determined by the chief
administrative officer. If the reporting error began within two fiscal years prior to the
current fiscal year, the pension plan coverage for that past service must be corrected as
provided in subdivision 5.
    Subd. 5. Past service transfer procedure. (a) For cases under subdivision 4
requiring correction of prior service coverage, on behalf of the applicable member the
chief administrative officer of the covered pension plan fund that has received erroneous
employee deductions and employer contributions must transfer to the appropriate covered
retirement plan fund an amount which is the lesser of all contributions made by or on
behalf of the member for the period of erroneous membership, or the specific amount
requested by the chief administrative officer of the other covered pension plan which
represents the employee deductions and employer contributions that would have been
made had the member been properly reported.
(b) If excess employee deductions remain in the member's account after the transfer
of funds, the remaining erroneous amount must be refunded to the person with interest
at the rate provided under the general refund law of the applicable covered pension
plan. The chief administrative officer must also return any remaining excess employer
contributions by providing to the employer a credit against future contributions payable by
that employer.
(c) If the contributions transferred to the correct covered pension plan fund are less
than the amounts required for the period being corrected, the chief administrative officer
of the correct covered pension plan fund must collect the remaining employee deductions
and employer contributions from the employer under laws for recovering deficient
contributions applicable to the correct covered pension plan, except that no interest is
chargeable if the additional amounts due under this paragraph are received by the chief
administrative officer within 30 days of notifying the employer of the amount due.
(d) A potential transfer under this section that would cause a plan to fail to be a
qualified plan under section 401(a) of the Internal Revenue Code, as amended, must not be
made. Within 30 days after being notified by a chief administrative officer of an unmade
potential transfer under this section, the employer of the member must transmit an amount
representing the applicable salary deductions and employer contributions, without interest,
to the fund of the appropriate covered pension plan. The chief administrative officer of the
covered pension plan which erroneously provided coverage must provide to the employer
a credit for the amount of the erroneous salary deductions and employer contributions
against future contributions from that employer.
(e) Upon transfer of the required assets, or payment from the employer under
paragraph (d), whichever is applicable, allowable service and salary credit for the period
being transferred is forfeited in the erroneous plan and is granted in the correct plan.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 18. Minnesota Statutes 2008, section 490.123, is amended by adding a subdivision
to read:
    Subd. 4. Correction of contribution errors. (a) If erroneous employee deductions
and employer contributions are caused by an error in plan coverage involving the judges
retirement plan and any other plan specified in section 356.99, that section applies.
(b) The provisions of section 352.04, subdivisions 8 and 9, apply to the judges'
retirement plan, except that if employee deductions or contributions are erroneously
transmitted to the judges' retirement fund for service rendered after the service credit limit
under section 490.121, subdivision 22, has been attained, consistent with section 352D.04,
subdivision 2, no employer contributions may be transferred.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 19. REPEALER.
Minnesota Statutes 2008, sections 352.91, subdivision 5; and 353.88, are repealed.
EFFECTIVE DATE.This section is effective July 1, 2010.

ARTICLE 3
MINNESOTA STATE DEFERRED COMPENSATION PLAN AMENDMENTS

    Section 1. Minnesota Statutes 2008, section 352.965, subdivision 6, is amended to read:
    Subd. 6. Plan administrative expenses. (a) The reasonable and necessary
administrative expenses of the deferred compensation plan may be charged to plan
participants in the form of an annual fee, an asset-based fee, a percentage of the
contributions to the plan, or a combination thereof, as set forth in the plan document. The
executive director of the system at the direction of the board of directors shall establish
procedures to carry out this section including allocation of administrative costs of the plan
to participants. Processes and procedures shall be set forth in the plan document. Fees
cannot be charged on contributions and investment returns attributable to contributions
made to the Minnesota supplemental investment funds before July 1, 1992.
    (b) The plan document must conform to federal and state tax laws, regulations, and
rulings, and is not subject to the Administrative Procedure Act.
    (c) The executive director may contract with a third party to perform administrative
and record keeping functions. The executive director may solicit bids and negotiate such
contracts. Participating employers must provide the necessary data to the third-party
record keeper as determined by the executive director. The third-party record keeper and
the Minnesota State Retirement System shall follow the data privacy provisions under
chapter 13. The third-party record keeper may not solicit participants for any product or
services not related to the deferred compensation plan.
    (d) The board of directors may authorize a third-party investment consultant
to provide investment information and advice, provided that if the offering of such
information and advice is consistent with the investment advice requirements applicable
to private plans under Title VI, subtitle A, of the Pension Protection Act of 2006, Public
Law 109-280, section 601.
EFFECTIVE DATE.This section is effective July 1, 2010.

ARTICLE 4
MSRS UNCLASSIFIED STATE EMPLOYEES RETIREMENT
PROGRAM AMENDMENTS

    Section 1. Minnesota Statutes 2009 Supplement, section 352.01, subdivision 2b,
is amended to read:
    Subd. 2b. Excluded employees. "State employee" does not include:
    (1) students who are employed by the University of Minnesota, or the state colleges
and universities, unless approved for coverage by the Board of Regents of the University
of Minnesota or the Board of Trustees of the Minnesota State Colleges and Universities,
whichever is applicable;
    (2) employees who are eligible for membership in the state Teachers Retirement
Association, except employees of the Department of Education who have chosen or may
choose to be covered by the general state employees retirement plan of the Minnesota
State Retirement System instead of the Teachers Retirement Association;
    (3) employees of the University of Minnesota who are excluded from coverage by
action of the Board of Regents;
    (4) officers and enlisted personnel in the National Guard and the naval militia who
are assigned to permanent peacetime duty and who under federal law are or are required to
be members of a federal retirement system;
    (5) election officers;
    (6) persons who are engaged in public work for the state but who are employed
by contractors when the performance of the contract is authorized by the legislature or
other competent authority;
    (7) officers and employees of the senate, or of the house of representatives, or of a
legislative committee or commission who are temporarily employed;
    (8) receivers, jurors, notaries public, and court employees who are not in the judicial
branch as defined in section 43A.02, subdivision 25, except referees and adjusters
employed by the Department of Labor and Industry;
    (9) patient and inmate help who perform services in state charitable, penal, and
correctional institutions including the Minnesota Veterans Home;
    (10) persons who are employed for professional services where the service is
incidental to their regular professional duties and whose compensation is paid on a per
diem basis;
    (11) employees of the Sibley House Association;
    (12) the members of any state board or commission who serve the state intermittently
and are paid on a per diem basis; the secretary, secretary-treasurer, and treasurer of those
boards if their compensation is $5,000 or less per year, or, if they are legally prohibited
from serving more than three years; and the board of managers of the State Agricultural
Society and its treasurer unless the treasurer is also its full-time secretary;
    (13) state troopers and persons who are described in section 352B.011, subdivision
10
, clauses (2) to (8);
    (14) temporary employees of the Minnesota State Fair who are employed on or
after July 1 for a period not to extend beyond October 15 of that year; and persons who
are employed at any time by the state fair administration for special events held on the
fairgrounds;
    (15) emergency employees who are in the classified service; except that if an
emergency employee, within the same pay period, becomes a provisional or probationary
employee on other than a temporary basis, the employee must be considered a "state
employee" retroactively to the beginning of the pay period;
    (16) temporary employees in the classified service, and temporary employees in the
unclassified service who are appointed for a definite period of not more than six months
and who are employed less than six months in any one-year period;
    (17) interns who are hired for six months or less and trainee employees, except
those listed in subdivision 2a, clause (8);
    (18) persons whose compensation is paid on a fee basis or as an independent
contractor;
    (19) state employees who are employed by the Board of Trustees of the Minnesota
State Colleges and Universities in unclassified positions enumerated in section 43A.08,
subdivision 1
, clause (9);
    (20) state employees who in any year have credit for 12 months service as teachers
in the public schools of the state and as teachers are members of the Teachers Retirement
Association or a retirement system in St. Paul, Minneapolis, or Duluth, except for
incidental employment as a state employee that is not covered by one of the teacher
retirement associations or systems;
    (21) employees of the adjutant general who are employed on an unlimited
intermittent or temporary basis in the classified or unclassified service for the support of
Army and Air National Guard training facilities;
    (22) chaplains and nuns who are excluded from coverage under the federal Old
Age, Survivors, Disability, and Health Insurance Program for the performance of service
as specified in United States Code, title 42, section 410(a)(8)(A), as amended, if no
irrevocable election of coverage has been made under section 3121(r) of the Internal
Revenue Code of 1986, as amended through December 31, 1992;
    (23) examination monitors who are employed by departments, agencies,
commissions, and boards to conduct examinations required by law;
    (24) persons who are appointed to serve as members of fact-finding commissions or
adjustment panels, arbitrators, or labor referees under chapter 179;
    (25) temporary employees who are employed for limited periods under any state or
federal program for training or rehabilitation, including persons who are employed for
limited periods from areas of economic distress, but not including skilled and supervisory
personnel and persons having civil service status covered by the system;
    (26) full-time students who are employed by the Minnesota Historical Society
intermittently during part of the year and full-time during the summer months;
    (27) temporary employees who are appointed for not more than six months, of
the Metropolitan Council and of any of its statutory boards, if the board members are
appointed by the Metropolitan Council;
    (28) persons who are employed in positions designated by the Department of
Management and Budget as student workers;
    (29) members of trades who are employed by the successor to the Metropolitan
Waste Control Commission, who have trade union pension plan coverage under a
collective bargaining agreement, and who are first employed after June 1, 1977;
    (30) off-duty peace officers while employed by the Metropolitan Council;
    (31) persons who are employed as full-time police officers by the Metropolitan
Council and as police officers are members of the public employees police and fire fund;
    (32) persons who are employed as full-time firefighters by the Department of Military
Affairs and as firefighters are members of the public employees police and fire fund;
    (33) foreign citizens with who are employed under a work permit of less than three
years, or an H-1b/JV visa valid for less than three years of employment, unless notice of
extension is supplied which allows them to work for three or more years as of the date
that the extension is granted, in which case they are eligible for coverage from the date
extended; and
    (34) persons who are employed by the Board of Trustees of the Minnesota State
Colleges and Universities and who elected to remain members of the Public Employees
Retirement Association or the Minneapolis Employees Retirement Fund, whichever
applies, under Minnesota Statutes 1994, section 136C.75.; and
(35) employees who have elected to transfer service to the unclassified program
under section 352D.02, subdivision 1d.
EFFECTIVE DATE.This section is effective June 30, 2010.

    Sec. 2. Minnesota Statutes 2008, section 352D.015, subdivision 4, is amended to read:
    Subd. 4. General fund. "General fund" means the general state employees
retirement fund under chapter 352 except the moneys for the unclassified program.
EFFECTIVE DATE.This section is effective June 30, 2010.

    Sec. 3. Minnesota Statutes 2008, section 352D.015, is amended by adding a
subdivision to read:
    Subd. 4a. General employees retirement plan. "General employees retirement
plan" means the general state employees retirement plan under chapter 352.
EFFECTIVE DATE.This section is effective June 30, 2010.

    Sec. 4. Minnesota Statutes 2008, section 352D.015, subdivision 9, is amended to read:
    Subd. 9. Value. "Value" means cash value at the end of the month following receipt
of an application. If no application is required, "value" means the cash value at the end
of the month in which the event necessitating the transfer occurs the market value of the
account at the end of the United States investment market day.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 5. Minnesota Statutes 2008, section 352D.02, subdivision 1c, is amended to read:
    Subd. 1c. Transfer of contributions. An employee covered by the regular general
employees retirement plan who is subsequently employed as a full-time unclassified
employee of the legislature or any commission or agency of the legislature without a
limit on the duration of the employment may elect to transfer accumulated employee and
matching employer contributions, as provided in section 352D.03.
EFFECTIVE DATE.This section is effective June 30, 2010.

    Sec. 6. Minnesota Statutes 2008, section 352D.02, subdivision 2, is amended to read:
    Subd. 2. Coverage upon employment change. A person becoming a participant
in the unclassified program prior to July 1, 2010, by virtue of employment in a position
specified in subdivision 1, clause (4), and remaining in the unclassified service shall
remain a participant in the program even though the position the person occupies is
deleted from any of the sections referenced in subdivision 1, clause (4), by subsequent
amendment, except that a person shall is not be eligible to elect the unclassified program
after separation from unclassified service if on the return of the person to service, that
position is not specified in subdivision 1, clause (4). Any person employed in a position
specified in subdivision 1 shall cease to participate in the unclassified program in the event
that the position is placed in the classified service.
EFFECTIVE DATE.This section is effective June 30, 2010.

    Sec. 7. Minnesota Statutes 2008, section 352D.02, subdivision 3, is amended to read:
    Subd. 3. Transfer to general employees retirement plan. (a) An employee
referred to in subdivision 1, paragraph (c), clauses (2) to (4), (6) to (14), and (16) to
(18), who is credited with employee shares in the unclassified program, after acquiring
and who has credit for ten years of allowable service and, 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. if the employee 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 was employed after June 30, 2010, and has no more than seven years of
allowable service as of the date of the election.
(b) 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 shall must be transferred to the general
employees retirement plan retirement fund, except that (1) the employee contribution paid
to the unclassified program must be compared to (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.
    (b) (c) An election under paragraph (a) to transfer coverage to the general employees
retirement plan is irrevocable during any period of covered employment.
(d) 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 June 30, 2010.

    Sec. 8. Minnesota Statutes 2008, section 352D.03, is amended to read:
352D.03 TRANSFER OF ASSETS.
Unless an eligible employee enumerated in section 352D.02, subdivision 1, has
elected coverage under the individual retirement account plan under chapter 354B, a
sum of money representing the assets credited to each employee exercising the option
contained in section 352D.02, plus an equal employer contribution together with interest
for an employee exercising an option under section 352D.02, an amount equal to the
employee and employer contributions for the employment period at the applicable
preretirement interest actuarial assumption rate during this period plus six percent interest,
compounded annually, must be used for the purchase of shares on behalf of each employee
in the accounts of the supplemental retirement fund established by section 11A.17.
EFFECTIVE DATE.This section is effective June 30, 2010.

    Sec. 9. Minnesota Statutes 2008, section 352D.04, subdivision 1, is amended to read:
    Subdivision 1. Investment options. (a) A person exercising an option to participate
in the retirement program provided by this chapter may elect to purchase shares in one or
a combination of the income share account, the growth share account, the international
share account, the money market account, the bond market account, the fixed interest
account, or the common stock index account established in section 11A.17. The person
may elect to participate in one or more of the investment accounts in the fund by
specifying, on a form provided in a manner prescribed by the executive director, the
percentage of the person's contributions provided in subdivision 2 to be used to purchase
shares in each of the accounts.
(b) A participant may indicate in writing on forms provided, in a manner prescribed
by the Minnesota State Retirement System a choice of options executive director, choose
their investment allocation for subsequent purchases of shares. Until a different written
indication is made by the participant, the executive director shall purchase shares in the
supplemental fund as selected by the participant. If no initial option is chosen, 100 percent
income shares must be purchased for a participant. A change in choice of investment
option is effective no later than the first pay date first occurring after 30 days following the
receipt of the request for a change at the end of the most recent United States investment
market day.
(c) Shares in the fixed interest account attributable to any guaranteed investment
contract as of July 1, 1994, may not be withdrawn from the fund or transferred to another
account until the guaranteed investment contract has expired, unless the participant
qualifies for withdrawal under section 352D.05 or for benefit payments under sections
352D.06 to 352D.075.
(d) (c) A participant or former participant may also change the investment options
selected for all or a portion of the participant's shares previously purchased in accounts,
subject to the provisions of paragraph (c) concerning the fixed interest account. Changes
in investment options for the participant's shares must be effected as soon as cash flow to
an account practically permits, but not later than six months after the requested change
trading restrictions imposed on the investment option.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 10. Minnesota Statutes 2008, section 352D.04, subdivision 2, is amended to read:
     Subd. 2. Contribution rates. (a) The money used to purchase shares under this
section is the employee and employer contributions provided in this subdivision.
     (b) The employee contribution is an amount equal to four the percent of salary
specified in section 352.04, subdivision 2, or 352.045, subdivision 3.
     (c) The employer contribution is an amount equal to six percent of salary.
     (d) For members of the legislature, the contributions under this subdivision also must
be made on per diem payments received during a regular or special legislative session, but
may not be made on per diem payments received outside of a regular or special legislative
session, on the additional compensation attributable to a leadership position under section
3.099, subdivision 3, living expense payments under section 3.101, or special session
living expense payments under section 3.103.
    (e) For a judge who is a member of the unclassified plan under section 352D.02,
subdivision 1, paragraph (c), clause (16), the employee contribution rate is eight percent
of salary, and there is no employer contribution.
(f) These contributions must be made in the manner provided in section 352.04,
subdivisions 4, 5, and 6.
EFFECTIVE DATE.This section is effective the first day of the first full pay
period beginning after July 1, 2010.

    Sec. 11. Minnesota Statutes 2008, section 352D.05, subdivision 3, is amended to read:
    Subd. 3. Full or partial withdrawal. After termination of covered employment
or at any time thereafter, a participant is entitled, upon application, to withdraw the cash
value of the participant's total shares or leave such shares on deposit with the supplemental
retirement fund. The account is valued at the end of the month in which most recent
United States investment market day following receipt of the application for withdrawal is
made. Shares not withdrawn remain on deposit with the supplemental retirement fund
until the former participant becomes at least 55 years old, and applies for an annuity under
section 352D.06, subdivision 1.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 12. Minnesota Statutes 2008, section 352D.05, subdivision 4, is amended to read:
    Subd. 4. Repayment of refund. (a) A participant in the unclassified program may
repay regular refunds taken under section 352.22, as provided in section 352.23.
(b) A participant in the unclassified program or an employee covered by the general
employees retirement plan who has withdrawn the value of the total shares may repay
the refund taken and thereupon restore the service credit, rights and benefits forfeited by
paying into the fund the amount refunded plus interest at an annual rate of 8.5 percent
compounded annually from the date that the refund was taken until the date that the refund
is repaid. If the participant had withdrawn only the employee shares as permitted under
prior laws, repayment must be pro rata.
(c) Except as provided in section 356.441, the repayment of a refund under this
section must be made in a lump sum.
EFFECTIVE DATE.This section is effective June 30, 2010.

    Sec. 13. Minnesota Statutes 2008, section 352D.06, subdivision 3, is amended to read:
    Subd. 3. Accrual date. An annuity under this section accrues the first day of the
first full month after an application is received or the day following termination of state
service, whichever is later. The account must be valued and redeemed on the later of the
end of the month of termination of covered employment, or the end of the month of receipt
of the annuity application for the purpose of computing the annuity day following receipt
of the application or the day following termination, whichever is later. The benefit must be
based on the value of the account the day following receipt of the application or the date of
termination, whichever is later, plus any contributions and interest received after that date.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 14. Minnesota Statutes 2008, section 352D.065, subdivision 3, is amended to read:
    Subd. 3. Annuity payment. The annuity payable under this section shall begin
begins to accrue the first day of the month following the date of disability receipt of the
application or the day after termination, whichever is later, plus any contributions and
interest received after that date, and shall must be based on the participant's age when the
annuity begins to accrue. The shares shall must be valued as of the end of the month
following authorization of payments day on which the benefit accrues.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 15. Minnesota Statutes 2008, section 352D.09, subdivision 3, is amended to read:
    Subd. 3. Prospectus. (a) The executive director shall annually distribute make
available by electronic means to each participant the prospectus prepared by the
supplemental fund, by July 1 or when received from such fund, whichever is later, to
each participant in covered employment.
(b) Any participant may contact the Minnesota State Retirement System and request
a copy of the prospectus.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 16. Minnesota Statutes 2008, section 352D.09, subdivision 7, is amended to read:
    Subd. 7. Administrative fees. The board of directors shall establish a budget and
charge participants a reasonable fee to pay the administrative expenses of the unclassified
program. Fees cannot may not be charged on contributions and investment returns
attributable to contributions made before July 1, 1992. Annual total fees charged for plan
administration cannot exceed 10/100 of one percent of the contributions and investment
returns attributable to contributions made on or after July 1, 1992.
EFFECTIVE DATE.This section is effective July 1, 2010.

ARTICLE 5
PUBLIC EMPLOYEES RETIREMENT ASSOCIATION
ADMINISTRATIVE PROVISIONS

    Section 1. Minnesota Statutes 2009 Supplement, section 353.01, subdivision 2, is
amended to read:
    Subd. 2. Public employee. "Public employee" means a governmental employee
or a public officer performing personal services for a governmental subdivision defined
in subdivision 6, whose salary is paid, in whole or in part, from revenue derived from
taxation, fees, assessments, or from other sources. For purposes of membership in the
association, the term includes the classes of persons described or listed in subdivision
2a and excludes the classes of persons listed in subdivision 2b. The term also includes
persons who elect association membership under subdivision 2d, paragraph (a), and
persons for whom the applicable governmental subdivision had elected association
membership under subdivision 2d, paragraph (b). The term excludes the classes of persons
listed in subdivision 2b for purposes of membership in the association.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 2. Minnesota Statutes 2009 Supplement, section 353.01, subdivision 2a, is
amended to read:
    Subd. 2a. Included employees; mandatory membership. (a) Public employees
whose salary from employment in one or more positions within one governmental
subdivision exceeds $425 in any month shall participate as members of the association.
If the salary is less than $425 in a subsequent month, the employee retains membership
eligibility. Eligible Public employees shall 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 public employees retirement plan or 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 unless they or on the
first day that the eligibility criteria are met, whichever is later. Public employees include
but are not limited to:
    (1) are specifically excluded under subdivision 2b;
    (2) do not exercise their option to elect retirement coverage in the association as
provided in subdivision 2d, paragraph (a); or
    (3) are employees of the governmental subdivisions listed in subdivision 2d,
paragraph (b), where the governmental subdivision has not elected to participate as a
governmental subdivision covered by the association.
(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; and
(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.
    (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) Public employees under paragraph (a) include:
(1) physicians under section 353D.01, subdivision 2, who do not elect public
employees defined contribution plan coverage under section 353D.02, subdivision 2;
(2) full-time employees of the Dakota County Agricultural Society; and
(3) 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 elect Public Employee Retirement
Association general plan coverage under Laws 2009, chapter 169, article 12, section 10.
(c) If the salary of an included public employee is less than $425 in any subsequent
month, the member retains membership eligibility.
EFFECTIVE DATE.This section is effective July 1, 2010, except that the
amendment to paragraph (a), clause (3), applies to any person first appointed, elected, or
contracted after June 30, 2010.

    Sec. 3. Minnesota Statutes 2008, section 353.01, subdivision 2b, is amended to read:
    Subd. 2b. Excluded employees. (a) The following public employees are not eligible
to participate as members of the association with retirement coverage by the public general
employees retirement plan, the local government correctional employees retirement plan
under chapter 353E, or the public employees police and fire retirement plan:
    (1) persons whose salary from one governmental subdivision never exceeds $425 in
a month;
(2) public officers, other than county sheriffs, who are elected to a governing body,
city mayors, or persons who are appointed to fill a vacancy in an elective office of a
governing body, whose term of office commences on or after July 1, 2002, for the service
to be rendered in that elective position;
    (2) (3) election officers or election judges;
    (3) (4) patient and inmate personnel who perform services for a governmental
subdivision;
    (4) (5) except as otherwise specified in subdivision 12a, employees who are hired
for a temporary position as defined under subdivision 12a, and employees who resign
from a nontemporary position and accept a temporary position within 30 days in the
same governmental subdivision;
    (5) (6) employees who are employed by reason of work emergency caused by fire,
flood, storm, or similar disaster;
    (6) (7) employees who by virtue of their employment in one governmental
subdivision are required by law to be a member of and to contribute to any of the plans or
funds administered by the Minnesota State Retirement System, the Teachers Retirement
Association, the Duluth Teachers Retirement Fund Association, the St. Paul Teachers
Retirement Fund Association, the Minneapolis Employees Retirement Fund, or any police
or firefighters relief association governed by section 69.77 that has not consolidated
with the Public Employees Retirement Association, or any local police or firefighters
consolidation account who have not elected the type of benefit coverage provided by the
public employees police and fire fund under sections 353A.01 to 353A.10, or any persons
covered by section 353.665, subdivision 4, 5, or 6, who have not elected public employees
police and fire plan benefit coverage. This clause must not be construed to prevent a person
from being a member of and contributing to the Public Employees Retirement Association
and also belonging to and contributing to another public pension plan or fund for other
service occurring during the same period of time. A person who meets the definition of
"public employee" in subdivision 2 by virtue of other service occurring during the same
period of time becomes a member of the association unless contributions are made to
another public retirement fund on the salary based on the other service or to the Teachers
Retirement Association by a teacher as defined in section 354.05, subdivision 2;
    (7) (8) persons who are members of a religious order and are excluded from coverage
under the federal Old Age, Survivors, Disability, and Health Insurance Program for the
performance of service as specified in United States Code, title 42, section 410(a)(8)(A),
as amended through January 1, 1987, if no irrevocable election of coverage has been made
under section 3121(r) of the Internal Revenue Code of 1954, as amended;
    (8) (9) employees of a governmental subdivision who have not reached the age of
23 and are enrolled on a full-time basis to attend or are attending classes on a full-time
basis at an accredited school, college, or university in an undergraduate, graduate, or
professional-technical program, or a public or charter high school;
    (9) (10) resident physicians, medical interns, and pharmacist residents and
pharmacist interns who are serving in a degree or residency program in public hospitals
or clinics;
    (10) (11) students who are serving in an internship or residency program sponsored
by an accredited educational institution;
    (11) (12) persons who hold a part-time adult supplementary technical college license
who render part-time teaching service in a technical college;
    (12) (13) except for employees of Hennepin County or Hennepin Healthcare System,
Inc., foreign citizens working for who are employed by a governmental subdivision with
under a work permit of less than three years, or an H-1b visa valid initially issued or
extended for a combined period less than three years of employment. Upon notice to the
association that the work permit or visa extends extension of the employment beyond the
three-year period, the foreign citizens must be reported for membership from the date of
the extension beginning the first of the month thereafter provided the monthly earnings
threshold as provided under subdivision 2a is met;
    (13) (14) public hospital employees who elected not to participate as members
of the association before 1972 and who did not elect to participate from July 1, 1988,
to October 1, 1988;
    (14) (15) except as provided in section 353.86, volunteer ambulance service
personnel, as defined in subdivision 35, but persons who serve as volunteer ambulance
service personnel may still qualify as public employees under subdivision 2 and may be
members of the Public Employees Retirement Association and participants in the public
general employees retirement fund plan or the public employees police and fire fund plan,
whichever applies, on the basis of compensation received from public employment service
other than service as volunteer ambulance service personnel;
    (15) (16) except as provided in section 353.87, volunteer firefighters, as defined
in subdivision 36, engaging in activities undertaken as part of volunteer firefighter
duties; provided that, but a person who is a volunteer firefighter may still qualify as a
public employee under subdivision 2 and may be a member of the Public Employees
Retirement Association and a participant in the public general employees retirement
fund plan or the public employees police and fire fund plan, whichever applies, on the
basis of compensation received from public employment activities other than those as a
volunteer firefighter;
    (16) (17) pipefitters and associated trades personnel employed by Independent
School District No. 625, St. Paul, with coverage under a collective bargaining agreement
by the pipefitters local 455 pension plan who were either first employed after May 1,
1997, or, if first employed before May 2, 1997, elected to be excluded under Laws 1997,
chapter 241, article 2, section 12;
    (17) (18) electrical workers, plumbers, carpenters, and associated trades personnel
who are employed by Independent School District No. 625, St. Paul, or the city of St.
Paul, who have retirement coverage under a collective bargaining agreement by the
Electrical Workers Local 110 pension plan, the United Association Plumbers Local 34
pension plan, or the pension plan applicable to Carpenters Local 87 pension plan who
were either first employed after May 1, 2000, or, if first employed before May 2, 2000,
elected to be excluded under Laws 2000, chapter 461, article 7, section 5;
    (18) (19) bricklayers, allied craftworkers, cement masons, glaziers, glassworkers,
painters, allied tradesworkers, and plasterers who are employed by the city of St. Paul
or Independent School District No. 625, St. Paul, with coverage under a collective
bargaining agreement by the Bricklayers and Allied Craftworkers Local 1 pension plan,
the Cement Masons Local 633 pension plan, the Glaziers and Glassworkers Local L-1324
pension plan, the Painters and Allied Trades Local 61 pension plan, or the Twin Cities
Plasterers Local 265 pension plan who were either first employed after May 1, 2001, or if
first employed before May 2, 2001, elected to be excluded under Laws 2001, First Special
Session chapter 10, article 10, section 6;
    (19) (20) plumbers who are employed by the Metropolitan Airports Commission,
with coverage under a collective bargaining agreement by the Plumbers Local 34 pension
plan, who either were first employed after May 1, 2001, or if first employed before May 2,
2001, elected to be excluded under Laws 2001, First Special Session chapter 10, article
10, section 6;
    (20) (21) employees who are hired after June 30, 2002, to fill seasonal positions
under subdivision 12b which are limited in duration by the employer to 185 consecutive
calendar days or less in each year of employment with the governmental subdivision;
    (21) (22) persons who are provided supported employment or work-study positions
by a governmental subdivision and who participate in an employment or industries
program maintained for the benefit of these persons where the governmental subdivision
limits the position's duration to three years or less, including persons participating in a
federal or state subsidized on-the-job training, work experience, senior citizen, youth, or
unemployment relief program where the training or work experience is not provided as a
part of, or for, future permanent public employment;
    (22) (23) independent contractors and the employees of independent contractors; and
    (23) (24) reemployed annuitants of the association during the course of that
reemployment.; and
(25) persons appointed to serve on a board or commission of a governmental
subdivision or an instrumentality thereof.
(b) Any person performing the duties of a public officer in a position defined in
subdivision 2a, paragraph (a), clause (3), is not an independent contractor and is not an
employee of an independent contractor.
EFFECTIVE DATE.This section is effective July 1, 2010, except that clause (25)
is effective for persons first appointed after June 30, 2010.

    Sec. 4. Minnesota Statutes 2008, section 353.01, subdivision 2d, is amended to read:
    Subd. 2d. Optional membership. (a) Membership in the association is optional
by action of the individual employee for the following public employees who meet the
conditions set forth in subdivision 2a:
(1) members of the coordinated plan who are also employees of labor organizations
as defined in section 353.017, subdivision 1, for their employment by the labor
organization only, if they elect to have membership under section 353.017, subdivision 2;
(2) persons who are elected or persons who are appointed to elected positions other
than local governing body elected positions who elect to participate by filing a written
election for membership;
(3) members of the association who are appointed by the governor to be a state
department head and who elect not to be covered by the general state employees retirement
plan of the Minnesota State Retirement System under section 352.021;
(4) city managers as defined in section 353.028, subdivision 1, who do not elect to be
excluded from membership in the association under section 353.028, subdivision 2; and
(5) employees of the Port Authority of the city of St. Paul on January 1, 2003,
who were at least age 45 on that date, and who elected to participate by filing a written
election for membership.
(b) Membership in the association is optional by action of the governmental
subdivision for the employees of the following governmental subdivisions under the
conditions specified:
(1) the Minnesota Association of Townships if the board of that association, at its
option, certifies to the executive director that its employees who meet the conditions set
forth in subdivision 2a are to be included for purposes of retirement coverage, in which
case the status of the association as a participating employer is permanent;
(2) a county historical society if the county in which the historical society is located,
at its option, certifies to the executive director that the employees of the historical society
who meet the conditions set forth in subdivision 2a are to be considered county employees
for purposes of retirement coverage under this chapter. The status as a county employee
must be accorded to all similarly situated county historical society employees and, once
established, must continue as long as a person is an employee of the county historical
society; and
(3) Hennepin Healthcare System, Inc., a public corporation, with respect to
employees other than paramedics, emergency medical technicians, and protection officers,
if the corporate board establishes alternative retirement plans for certain classes of
employees of the corporation and certifies to the association the applicable employees to
be excluded from future retirement coverage.
(c) For employees who are covered by paragraph (a), clause (1), (2), or (3), or
covered by paragraph (b), clause (1) or (2), if the necessary membership election is
not made, the employee is excluded from retirement coverage under this chapter. For
employees who are covered by paragraph (a), clause (4), if the necessary election is not
made, the employee must become a member and have retirement coverage under the
applicable provisions of this chapter. For employees specified in paragraph (b), clause
(3), membership continues until the exclusion option is exercised for the designated class
of employee.
(d) The option to become a member, once exercised under this subdivision, may not
be withdrawn until the termination of public service as defined under subdivision 11a.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 5. Minnesota Statutes 2009 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 is 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.
    (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 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, "applicable
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.
    (e) MS 2002 [Expired]
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2008, section 353.0161, subdivision 2, is amended to read:
    Subd. 2. Purchase procedure. (a) An employee covered by a plan specified in
subdivision 1 may purchase credit for allowable service in that plan for a period specified
in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c),
whichever applies. The employing unit, at its option, may pay the employer portion of the
amount specified in paragraph (b) on behalf of its employees.
    (b) If payment is received by the executive director within one year from the date the
member returned to work following the authorized leave, or within 30 days after the date
of termination of public service if the member did not return to work, the payment amount
is equal to the employee and employer contribution rates specified in law for the applicable
plan at the end of the leave period, or at termination of public service, whichever is earlier,
multiplied by the employee's average monthly salary, excluding overtime, upon which
deductions were paid during the six months, or portion thereof, before the commencement
of the leave of absence and by the number of months of the leave of absence for which
the employee wants allowable service credit. Payments made under this paragraph must
include compound interest at a monthly rate of 0.71 percent from the last day of the leave
period until the last day of the month in which payment is received.
    (c) If payment is received by the executive director after one year, the payment
amount is the amount determined under section 356.551. Payment under this paragraph
must be made before the date the person terminates public service under section 353.01,
subdivision 11a.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. [353.0162] REDUCED SALARY PERIODS SALARY CREDIT
PURCHASE.
(a) A member may purchase additional salary credit for a period specified in this
section.
(b) The applicable period is a period during which the member is receiving a reduced
salary from the employer while the member is:
(1) receiving temporary workers' compensation payments related to the member's
service to the public employer;
(2) on an authorized medical leave of absence; or
(3) on an authorized partial paid leave of absence as a result of a budgetary or salary
savings program offered or mandated by a governmental subdivision.
(c) The differential salary amount is the difference between the average monthly
salary received by the member during the period of reduced salary under this section and
the average monthly salary of the member, excluding overtime, on which contributions
to the applicable plan were made during the period of the last six months of covered
employment occurring immediately before the period of reduced salary, applied to the
member's normal employment period, measured in hours or otherwise, as applicable.
(d) To receive eligible salary credit, the member shall pay an amount equal to:
(1) the applicable employee contribution rate under section 353.27, subdivision
2
; 353.65, subdivision 2; or 353E.03, subdivision 1, as applicable, multiplied by the
differential salary amount;
(2) plus an employer equivalent payment equal to the applicable employer
contribution rate in section 353.27, subdivision 3; 353.65, subdivision 3; or 353E.03,
subdivision 2
, as applicable, multiplied by the differential salary amount;
(3) plus, if applicable, an equivalent employer additional amount equal to the
additional employer contribution rate in section 353.27, subdivision 3a, multiplied by the
differential salary amount.
(e) The employer, by appropriate action of its governing body and documented in its
official records, may pay the employer equivalent contributions and, as applicable, the
equivalent employer additional contributions on behalf of the member.
(f) Payment under this section must include interest on the contribution amount
or amounts, whichever applies, at an 8.5 percent annual rate, prorated for applicable
months from the date on which the period of reduced salary specified under this section
terminates to the date on which the payment or payments are received by the executive
director. Payment under this section must be completed within the earlier of 30 days from
termination of public service by the employee under section 353.01, subdivision 11a, or
one year after the termination of the period specified in paragraph (b), as further restricted
under this section.
(g) The period for which additional allowable salary credit may be purchased is
limited to the period during which the person receives temporary workers' compensation
payments or for those business years in which the governmental subdivision offers or
mandates a budget or salary savings program, as certified to the executive director by a
resolution of the governing body of the governmental subdivision. For an authorized
medical leave of absence, the period for which allowable salary credit may be purchased
may not exceed 12 consecutive months of authorized medical leave.
(h) To purchase salary credit for a subsequent period of temporary workers'
compensation benefits or subsequent authorized medical leave of absence, the member
must return to public service and render a minimum of three months of allowable service.
EFFECTIVE DATE.This section is effective July 1, 2010. Purchase of reduced
salary credit may be made for a period mandated or offered by a governmental subdivision
for purposes of budget or salary savings on or after July 1, 2009.

    Sec. 8. Minnesota Statutes 2008, section 353.03, subdivision 1, is amended to read:
    Subdivision 1. Management; composition; election. (a) The management of the
public employees retirement fund is vested in an 11-member board of trustees consisting
of ten members and the state auditor. The state auditor may designate a deputy auditor
with expertise in pension matters as the auditor's representative on the board. The
governor shall appoint five trustees to four-year terms, one of whom shall be designated to
represent school boards, one to represent cities, one to represent counties, one who is a
retired annuitant, and one who is a public member knowledgeable in pension matters. The
membership of the association, including recipients of retirement annuities and disability
and survivor benefits, shall elect five trustees for terms of four years, one of whom must
be a member of the police and fire fund and one of whom must be a former member who
met the definition of public employee under section 353.01, subdivisions 2 and 2a, for at
least five years prior to terminating membership and who is receiving a retirement annuity
or a member who receives a disability benefit. Terms expire on January 31 of the fourth
year, and positions are vacant until newly elected members are seated. Except as provided
in this subdivision, trustees elected by the membership of the association must be public
employees and members of the association.
(b) For seven days beginning October 1 of each year preceding a year in which
an election is held, the association shall accept at its office filings in person or by mail
of candidates for the board of trustees. A candidate shall submit at the time of filing a
nominating petition signed by 25 or more members of the association. No name may
be withdrawn from nomination by the nominee after October 15. At the request of a
candidate for an elected position on the board of trustees, the board shall mail provide
a statement of up to 300 words prepared by the candidate to all persons eligible to vote
in the election of the candidate. The board may adopt policies, subject to review and
approval by the secretary of state under paragraph (e), and procedures to govern the form
and length of these statements, and the timing of mailings, and deadlines for submitting
materials to be mailed. The secretary of state shall resolve disputes between the board and
a candidate concerning application of these policies to a particular statement distributed to
the eligible voters.
(c) By January 10 of each year in which elections are to be held, the board shall
distribute by mail to the members ballots listing eligible voters the instructions and
materials necessary to vote for the candidates seeking terms on the board of trustees.
Eligible voters are the members, retirees, and other benefit recipients. No member voter
may vote for more than one candidate for each board position to be filled. A ballot
indicating a vote for more than one person for any position is void. No special marking
may be used on the ballot to indicate incumbents. Ballots Votes cast by using paper ballots
mailed to the association must be postmarked no later than January 31. Votes cast by using
telephone or other electronic means authorized under the board's procedures must be
entered by the end of the day on January 31. The ballot envelopes must be so designated
and the ballots must be counted in a manner that ensures design of the voting response
media must ensure that each voter's vote is secret.
(d) A candidate who receives contributions or, who makes expenditures in excess
of $100, or who has given implicit or explicit consent for any other person to receive
contributions or make expenditures in excess of $100 for the purpose of bringing about the
candidate's election, shall file a report with the campaign finance and public disclosure
board disclosing the source and amount of all contributions to the candidate's campaign.
The campaign finance and public disclosure board shall prescribe forms governing these
disclosures. Expenditures and contributions have the meaning defined in section 10A.01.
These terms do not include the mailing any distribution made by the association board on
behalf of the candidate. A candidate shall file a report within 30 days from the day that the
results of the election are announced. The Campaign Finance and Public Disclosure Board
shall maintain these reports and make them available for public inspection in the same
manner as the board maintains and makes available other reports filed with it.
(e) The secretary of state shall review and approve comment on the procedures
defined by the board of trustees for conducting the elections specified in this subdivision,
including board policies adopted under paragraph (b).
(f) The board of trustees and the executive director shall undertake their activities
consistent with chapter 356A.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2008, section 353.27, subdivision 4, is amended to read:
    Subd. 4. Employer reporting requirements; contributions; member status.
(a) A representative authorized by the head of each department shall deduct employee
contributions from the salary of each public employee who qualifies for membership
under this chapter and or chapter 353D or 353E at the rate under section 353.27, 353.65,
353D.03, or 353E.03, whichever is applicable, that is in effect on the date the salary is
paid. The employer representative must also remit payment in a manner prescribed by
the executive director for the aggregate amount of the employee contributions, and the
required employer contributions and the additional employer contributions to be received
by the association within 14 calendar days after each pay date. If the payment is less than
the amount required, the employer must pay the shortage amount to the association and
collect reimbursement of any employee contribution shortage paid on behalf of a member
through subsequent payroll withholdings from the wages of the employee. Payment of
shortages in employee contributions and associated employer contributions, if applicable,
must include interest at the rate specified in section 353.28, subdivision 5, if not received
within 30 days following the date the amount was initially due under this section.
(b) The head of each department or the person's designee shall submit for each pay
period submit to the association a salary deduction report in the format prescribed by the
executive director. The report must be received by the association within 14 calendar days
after each pay date or the employer may be assessed a fine of $5 per calendar day until
the association receives the required data. Data required to be submitted as part of salary
deduction reporting must include, but are not limited to:
(1) the legal names and Social Security numbers of employees who are members;
(2) the amount of each employee's salary deduction;
(3) the amount of salary defined in section 353.01, subdivision 10, earned in the
pay period from which each deduction was made and the salary amount earned by a
reemployed annuitant under section 353.37, subdivision 1, or 353.371, subdivision 1, or
by a disabled member under section 353.33, subdivision 7 or 7a;
(4) the beginning and ending dates of the payroll period covered and the date of
actual payment; and
(5) adjustments or corrections covering past pay periods as authorized by the
executive director.
(b) (c) Employers must furnish the data required for enrollment for each new
or reinstated employee who qualifies for membership in the format prescribed by the
executive director. The required enrollment data on new employees members must be
submitted to the association prior to or concurrent with the submission of the initial
employee salary deduction. Also, the employer shall also report to the association all
member employment status changes, such as leaves of absence, terminations, and death,
and shall report the effective dates of those changes, on an ongoing basis for the payroll
cycle in which they occur. If an employer fails to comply with the reporting requirements
under this paragraph, the executive director may assess a fine of $25 for each failure if the
association staff has notified the employer of the noncompliance and attempted to obtain
the missing data or form from the employer for a period of more than three months.
(d) The employer shall furnish data, forms, and reports as may be required by
the executive director for proper administration of the retirement system. Before
implementing new or different computerized reporting requirements, the executive
director shall give appropriate advance notice to governmental subdivisions to allow time
for system modifications.
(c) (e) Notwithstanding paragraph (a), the association may provide for less frequent
reporting and payments for small employers.
(f) The executive director may establish reporting procedures and methods as
required to review compliance by employers with the salary and contribution reporting
requirements in this chapter. A review of the payroll records of a participating employer
may be conducted by the association on a periodic basis or as a result of concerns known
to exist within a governmental subdivision. An employer under review must extract
requested data and provide records to the association after receiving reasonable advanced
notice. Failure to provide requested information or materials will result in the employer
being liable to the association for any expenses associated with a field audit, which may
include staff salaries, administrative expenses, and travel expenses.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. Minnesota Statutes 2009 Supplement, section 353.27, subdivision 7, is
amended to read:
    Subd. 7. Adjustment for erroneous receipts or disbursements. (a) Except
as provided in paragraph (b), erroneous employee deductions and erroneous employer
contributions and additional employer contributions for a person, who otherwise does not
qualify for membership under this chapter, are considered:
(1) valid if the initial erroneous deduction began before January 1, 1990. Upon
determination of the error by the association, the person may continue membership in the
association while employed in the same position for which erroneous deductions were
taken, or file a written election to terminate membership and apply for a refund upon
termination of public service or defer an annuity under section 353.34; or
(2) invalid, if the initial erroneous employee deduction began on or after January 1,
1990. Upon determination of the error, the association shall refund all erroneous employee
deductions and all erroneous employer contributions as specified in paragraph (e). No
person may claim a right to continued or past membership in the association based on
erroneous deductions which began on or after January 1, 1990.
(b) Erroneous deductions taken from the salary of a person who did not qualify for
membership in the association by virtue of concurrent employment before July 1, 1978,
which required contributions to another retirement fund or relief association established
for the benefit of officers and employees of a governmental subdivision, are invalid. Upon
discovery of the error, the association shall remove allowable service credit for all invalid
service if forfeited and, upon termination of public service, the association shall refund all
erroneous employee deductions to the person, with interest as determined under section
353.34, subdivision 2, and all erroneous employer contributions without interest to the
employer. This paragraph has both retroactive and prospective application.
(c) Adjustments to correct employer contributions and employee deductions taken
in error from amounts which are not salary under section 353.01, subdivision 10, must
be made as specified in paragraph (e). The period of adjustment must be limited to the
fiscal year in which the error is discovered by the association and the immediate two
preceding fiscal years.
(d) If there is evidence of fraud or other misconduct on the part of the employee or
the employer, the board of trustees may authorize adjustments to the account of a member
or former member to correct erroneous employee deductions and employer contributions
on invalid salary and the recovery of any overpayments for a period longer than provided
for under paragraph (c).
(e) Upon discovery of the receipt of erroneous employee deductions and employer
contributions under paragraph (a), clause (2), or paragraph (c), the association must require
the employer to discontinue the erroneous employee deductions and erroneous employer
contributions reported on behalf of a member. Upon discontinuation, the association must:
(1) for a member, provide a refund or credit to the employer in the amount of the
invalid employee deductions with interest on the invalid employee deductions at the rate
specified under section 353.34, subdivision 2, from the received date of each invalid salary
transaction through the date the credit or refund is made; and the employer must pay the
refunded employee deductions plus interest to the member;
(2) for a former member who:
(i) is not receiving a retirement annuity or benefit, return the erroneous employee
deductions to the former member through a refund with interest at the rate specified under
section 353.34, subdivision 2, from the received date of each invalid salary transaction
through the date the credit or refund is made; or
(ii) is receiving a retirement annuity or disability benefit, or a person who is
receiving an optional annuity or survivor benefit, for whom it has been determined an
overpayment must be recovered, adjust the payment amount and recover the overpayments
as provided under this section; and
(3) return the invalid employer contributions reported on behalf of a member or
former member to the employer by providing a credit against future contributions payable
by the employer.
(f) In the event that a salary warrant or check from which a deduction for the
retirement fund was taken has been canceled or the amount of the warrant or check
returned to the funds of the department making the payment, a refund of the sum
deducted, or any portion of it that is required to adjust the deductions, must be made
to the department or institution.
(g) If the accrual date of any retirement annuity, survivor benefit, or disability benefit
is within the limitation period specified in paragraph (c), and an overpayment has resulted
by using invalid service or salary, or due to any erroneous calculation procedure, the
association must recalculate the annuity or benefit payable and recover any overpayment
as provided under subdivision 7b.
(h) Notwithstanding the provisions of this subdivision, the association may apply
the Revenue Procedures defined in the federal Internal Revenue Service Employee Plans
Compliance Resolution System and not issue a refund of erroneous employee deductions
and employer contributions or not recover a small overpayment of benefits if the cost to
correct the error would exceed the amount of the member refund or overpayment.
(i) Any fees or penalties assessed by the federal Internal Revenue Service for any
failure by an employer to follow the statutory requirements for reporting eligible members
and salary must be paid by the employer.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 11. Minnesota Statutes 2008, section 353.27, subdivision 10, is amended to read:
    Subd. 10. Employer exclusion reports. (a) The head of a department shall annually
furnish the executive director with an exclusion report listing only those employees in
potentially PERA-eligible positions who were not reported as members of the association
and who worked during the school year for school employees and calendar year for
nonschool employees. The department head must certify the accuracy and completeness
of the exclusion report to the association. The executive director shall prescribe the
manner and forms, including standardized exclusion codes, to be used by a governmental
subdivision in preparing and filing exclusion reports. Also, the executive director shall
also check the exclusion report to ascertain whether any omissions have been made by a
department head in the reporting of new public employees for membership. The executive
director may delegate an association employee under section 353.03, subdivision 3a,
paragraph (b), clause (5), to conduct a field audit to review the payroll records of a
governmental subdivision.
(b) If an employer fails to comply with the reporting requirements under this
subdivision, the executive director may assess a fine of $25 for each failure if the
association staff has notified the employer of the noncompliance and attempted to obtain
the missing data or form from the employer for a period of more than three months.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 12. Minnesota Statutes 2009 Supplement, section 353.371, subdivision 4, is
amended to read:
    Subd. 4. Duration. Postretirement option employment shall may be for an initial
period not to exceed one year. At the end of the initial period, the governing body has sole
discretion to determine if the offer of a postretirement option position will be renewed,
renewed with modifications, or terminated. Postretirement option employment may be
renewed annually, but may not be renewed after the individual attains retirement age as
defined in United States Code, title 42, section 416(l) no more than four renewals may
occur.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 13. Minnesota Statutes 2008, section 353D.01, subdivision 2, is amended to read:
    Subd. 2. Eligibility. (a) Eligibility to participate in the defined contribution plan
is available to:
(1) elected local government officials of a governmental subdivision who elect to
participate in the plan under section 353D.02, subdivision 1, and who, for the elected
service rendered to a governmental subdivision, are not members of the Public Employees
Retirement Association within the meaning of section 353.01, subdivision 7;
(2) physicians who, if they did not elect to participate in the plan under section
353D.02, subdivision 2, would meet the definition of member under section 353.01,
subdivision 7
;
(3) basic and advanced life-support emergency medical service personnel who
are employed by any public ambulance service that elects to participate under section
353D.02, subdivision 3;
(4) members of a municipal rescue squad associated with the city of Litchfield
in Meeker County, or of a county rescue squad associated with Kandiyohi County, if
an independent nonprofit rescue squad corporation, incorporated under chapter 317A,
performing emergency management services, and if not affiliated with a fire department
or ambulance service and if its members are not eligible for membership in that fire
department's or ambulance service's relief association or comparable pension plan;
(5) employees of the Port Authority of the city of St. Paul who elect to participate in
the plan under section 353D.02, subdivision 5, and who are not members of the Public
Employees Retirement Association under section 353.01, subdivision 7;
(6) city managers who elected to be excluded from the general employees retirement
plan of the Public Employees Retirement Association under section 353.028 and who
elected to participate in the public employees defined contribution plan under section
353.028, subdivision 3, paragraph (b); and
(7) volunteer or emergency on-call firefighters serving in a municipal fire department
or an independent nonprofit firefighting corporation who are not covered by the public
employees police and fire retirement plan and who are not covered by a volunteer
firefighters relief association and who elect to participate in the public employees defined
contribution plan.;
(8) elected county sheriffs who are former members of the police and fire plan and
who are receiving a retirement annuity as provided under section 353.651; and
(9) persons who are excluded from membership under section 353.01, subdivision
2b, paragraph (a), clause (25).
(b) For purposes of this chapter, an elected local government official includes
a person appointed to fill a vacancy in an elective office. Service as an elected local
government official only includes service for the governmental subdivision for which the
official was elected by the public at large. Service as an elected local government official
ceases and eligibility to participate terminates when the person ceases to be an elected
official. An elected local government official does not include an elected county sheriff
who must be a member of the police and fire plan as provided under chapter 353.
(c) Individuals otherwise eligible to participate in the plan under this subdivision
who are currently covered by a public or private pension plan because of their employment
or provision of services are not eligible to participate in the public employees defined
contribution plan.
(d) A former participant is a person who has terminated eligible employment or
service and has not withdrawn the value of the person's individual account.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 14. Minnesota Statutes 2008, section 353D.03, subdivision 1, is amended to read:
    Subdivision 1. Local government official contribution Contributions for eligible
participants. An (a) The following classes of eligible elected local government official
participants who elects elect to participate in the public employees defined contribution
plan under section 353D.02 shall contribute an amount equal to five percent of salary as
defined in section 353.01, subdivision 10. A participating:
(1) elected local government official's officials;
(2) physicians; and
(3) persons who are excluded from membership under section 353.01, subdivision
2b, clause (25).
(b) A participant's governmental subdivision shall contribute a matching amount.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 15. Minnesota Statutes 2008, section 353D.04, subdivision 1, is amended to read:
    Subdivision 1. Crediting of account contributions to participant accounts. (a)
Contributions made by or on behalf of a participating elected local government official or
physician participant under section 353D.03, subdivisions 1, 5, and 6, paragraph (a), must
be remitted to the Public Employees Retirement Association and credited to the individual
account established for the participant. Ambulance service
(b) Contributions as provided under section 353D.03, subdivisions 3, and 6,
paragraph (b), must be remitted on a regular basis to the association together with any
member contributions paid or withheld. Those contributions must be credited to the
individual account of each participating member.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 16. Minnesota Statutes 2008, section 353D.04, subdivision 2, is amended to read:
    Subd. 2. Authority to adopt policies correcting erroneous contributions. The
executive director may adopt policies and procedures regarding deductions taken totally
or partially in error by the employer from the salary of an elected official.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 17. Minnesota Statutes 2009 Supplement, section 353F.02, subdivision 4, is
amended to read:
    Subd. 4. Medical facility. "Medical facility" means:
    (1) Bridges Medical Services;
    (2) the City of Cannon Falls Hospital;
    (3) the Chris Jenson Health and Rehabilitation Center in St. Louis County;
(4) Clearwater County Memorial Hospital doing business as Clearwater Health
Services in Bagley;
    (4) (5) the Dassel Lakeside Community Home;
(6) the Douglas County Hospital, with respect to the Mental Health Unit;
    (5) (7) the Fair Oaks Lodge, Wadena;
    (6) (8) the Glencoe Area Health Center;
    (7) (9) Hutchinson Area Health Care;
    (8) (10) the Lakefield Nursing Home;
    (9) (11) the Lakeview Nursing Home in Gaylord;
    (10) (12) the Luverne Public Hospital;
    (11) (13) the Oakland Park Nursing Home;
    (12) (14) the RenVilla Nursing Home;
    (13) (15) the Rice Memorial Hospital in Willmar, with respect to the Department
of Radiology and the Department of Radiation/Oncology;
(14) (16) the St. Peter Community Health Care Center;
    (15) (17) the Waconia-Ridgeview Medical Center;
(16) (18) the Weiner Memorial Medical Center, Inc.; and
(19) the Wheaton Community Hospital; and
(17) (20) the Worthington Regional Hospital.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 18. Minnesota Statutes 2008, section 353F.025, subdivision 1, is amended to read:
    Subdivision 1. Eligibility determination. (a) The chief clerical officer of a
governmental subdivision may submit a resolution from the governing body to the
executive director of the Public Employees Retirement Association which supports
providing coverage under this chapter for employees of that governmental subdivision
who are privatized, and which states that the governing body will pay for actuarial
calculations, as further specified in paragraph (c).
    (b) The governing body must also provide a copy of any applicable purchase or
lease agreement and any other information requested by the executive director to allow the
executive director to verify that under the proposed employer change, the new employer
does not qualify as a governmental subdivision under section 353.01, subdivision 6,
making the employees ineligible for continued coverage as active members of the general
employees retirement plan of the Public Employees Retirement Association.
    (c) Following receipt of a resolution and a determination by the executive director
that the new employer is not a governmental subdivision, the executive director shall
direct the consulting actuary retained under section 356.214 to determine whether the
general employees retirement plan of the Public Employees Retirement Association, if
coverage under this chapter is provided, is expected to receive a net gain or a net loss if
privatization occurs, by determining whether. A net gain is expected if the actuarial
liability of the special benefit coverage provided under this chapter, if extended to the
applicable employees under the privatization, is less than the actuarial gain otherwise to
accrue to the plan. A net loss is expected if the actuarial accrued liability of the special
benefit coverage provided under this chapter, if extended to the applicable employees
under the privatization, is more than the actuarial gain otherwise to accrue to the plan. The
date of the actuarial calculations used to make this determination must be within one year
of the effective date, as defined in section 353F.02, subdivision 3.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 19. Minnesota Statutes 2008, section 353F.025, subdivision 2, is amended to read:
    Subd. 2. Recommendation to legislature. (a) If the actuarial calculations under
subdivision 1, paragraph (c), indicate that a net gain to the general employees retirement
plan of the Public Employees Retirement Association is expected due to the privatization,
or if paragraph (c) applies, the executive director shall forward a recommendation and
supporting documentation to the chair of the Legislative Commission on Pensions and
Retirement, the chair of the Governmental Operations, Reform, Technology and Elections
Committee of the house of representatives, the chair of the State and Local Government
Operations and Oversight Committee of the senate, and the executive director of the
Legislative Commission on Pensions and Retirement. The recommendation must be in
the form of an addition to the definition of "medical facility" under section 353F.02,
subdivision 4
, or to "other public employing unit" under section 353F.02, subdivision 5,
whichever is applicable. The recommendation must be forwarded to the legislature before
January 15 for the recommendation to be considered in that year's legislative session. The
recommendation may be included as part of public pension administrative legislation
under section 356B.05.
    (b) If a medical facility or other public employing unit listed under section 353F.02,
subdivision 4 or 5, fails to privatize within one year of the final enactment date of the
legislation adding the entity to the applicable definition, its inclusion under this chapter is
voided, and the executive director shall include in the subsequent proposed legislation
under paragraph (a) a recommendation that the applicable entity be stricken from the
definition.
(c) If the calculations under subdivision 1, paragraph (c), indicate a net loss, the
executive director shall forward a recommendation that the privatization be included as an
addition under paragraph (a) if the chief clerical officer of the applicable governmental
subdivision submits a resolution from the governing body specifying that a lump sum
payment will be made to the executive director equal to the net loss, plus interest. The
interest must be computed using the applicable preretirement interest rate assumption
under section 356.215, subdivision 8, expressed as a monthly rate, from the date of the
actuarial valuation from which the actuarial accrued liability data was used to determine
the net loss in the actuarial study under subdivision 1, to the date of payment, with annual
compounding. Payment must be made on or after the effective date defined under section
353F.02.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 20. Minnesota Statutes 2008, section 356.96, subdivision 2, is amended to read:
    Subd. 2. Right to review. A determination made by the administration chief
administrative officer of a covered pension plan regarding a person's eligibility, benefits,
or other rights under the plan with which the person does not agree is subject to review
under this section.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 21. Minnesota Statutes 2008, section 356.96, subdivision 3, is amended to read:
    Subd. 3. Notice of determination. If the applicable chief administrative officer
denies an application or a written request, modifies a benefit, or terminates a benefit
of a person claiming a right or potential rights under a covered pension plan, the chief
administrative officer shall notify that person through a written notice containing:
    (1) a statement of the reasons for the determination;
    (2) a notice that the person may petition the governing board of the covered pension
plan for a review of the determination and that a person's petition for review must be filed
in the administrative office of the covered pension plan within 60 days of the receipt
of the written notice of the determination;
    (3) a statement indicating that a failure to petition for review within 60 days
precludes the person from contesting in any other administrative review or court procedure
the issues determined by the chief administrative officer;
    (4) a statement indicating that all relevant materials, documents, affidavits, and other
records that the person wishes to be reviewed in support of the petition must be filed with
and received in the administrative office of the covered pension plan at least 30 15 days
before the date of the hearing under subdivision 10; and
    (5) a copy summary of this section, including all filing requirements and deadlines.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 22. Minnesota Statutes 2009 Supplement, section 356.96, subdivision 5, is
amended to read:
    Subd. 5. Petition for review. (a) A person who claims a right under subdivision 2
may petition for a review of that decision by the governing board of the covered pension
plan.
    (b) A petition under this section must be sent to the chief administrative officer by
mail and must be postmarked no later than 60 days after the person received the notice
required by subdivision 3. The petition must include the person's statement of the reason
or reasons that the person believes the decision of the chief administrative officer should
be reversed or modified. The petition may include all documentation and written materials
that the petitioner deems to be relevant. In developing a record for review by the board
when a decision is appealed, the executive director chief administrative officer may direct
that the applicant participate in a fact-finding session conducted by an administrative law
judge assigned by the Office of Administrative Hearings and, as applicable, participate in
a vocational assessment conducted by a qualified rehabilitation counselor on contract with
the applicable retirement system.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 23. Minnesota Statutes 2008, section 356.96, subdivision 7, is amended to read:
    Subd. 7. Notice of hearing. (a) After receiving a petition, and not less than 30
calendar days from the date of the next regular board meeting, the chief administrative
officer must schedule a timely review of the petition before the governing board of the
covered pension plan. The review must be scheduled to take into consideration any
necessary accommodations to allow the petitioner to participate in the governing board's
review.
    (b) Not less than 15 30 calendar days before the scheduled hearing date, the chief
administrative officer must provide by mail to the petitioner an acknowledgment of the
receipt of the person's petition and a follow-up notice of the time and place of the meeting
at which the governing board is scheduled to consider the petition and must provide a copy
of all relevant documents, evidence, summaries, and recommendations assembled by or
on behalf of the plan administration to be considered by the governing board.
    (c) Except as provided in subdivision 8, paragraph (c), All documents and materials
that the petitioner wishes to be part of the record for review must be filed with the chief
administrative officer and must be received in the offices of the covered pension plan
at least 30 15 days before the date of the meeting at which the petition is scheduled to
be heard.
    (d) A petitioner, may request a continuance of a scheduled hearing if the request
is received by the chief administrative officer within ten calendar days of the scheduled
date of the applicable board meeting, may request a continuance on a scheduled petition.
The chief administrative officer must reschedule the review within 60 days of the date
of the continuance request a reasonable time. Only one continuance may be granted to
any petitioner.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 24. Minnesota Statutes 2008, section 356.96, subdivision 8, is amended to read:
    Subd. 8. Record for review. (a) All evidence, including all records, documents, and
affidavits in the possession of the covered pension plan of which the covered pension plan
desires to avail itself and be considered by the governing board, and all evidence which the
petitioner wishes to present to the governing board, including any evidence which would
otherwise be classified by law as "private," must be made part of the hearing record.
    (b) Not later than The chief administrative officer must provide a copy of the record
to each member of the governing board at least seven days before the scheduled hearing
date, the chief administrative officer must provide a copy of the record to each member
of the governing board.
    (c) At least five days before the hearing, the petitioner may submit to the chief
administrative officer, for submission to the governing board, Any additional document,
affidavit, or other relevant information that was not initially submitted with the petition
the petitioner requests be part of the record may be admitted with the consent of the
governing board.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 25. Laws 2009, chapter 169, article 4, section 49, is amended to read:
    Sec. 49. CITY OF DULUTH AND DULUTH AIRPORT AUTHORITY AND
CITY OF VIRGINIA; CORRECTING ERRONEOUS EMPLOYEE DEDUCTIONS,
EMPLOYER CONTRIBUTIONS AND ADJUSTING OVERPAID BENEFITS.
    Subdivision 1. Application. Notwithstanding any provisions of Minnesota Statutes,
section 353.27, subdivisions 7 and 7b, or Minnesota Statutes 2008, chapters 353 and
356, to the contrary, this section establishes the procedures by which the executive
director of the Public Employees Retirement Association shall adjust erroneous employee
deductions and employer contributions paid on behalf of active employees and former
members by the city of Duluth and, by the Duluth Airport Authority, and by the city
of Virginia on amounts determined by the executive director to be invalid salary under
Minnesota Statutes, section 353.01, subdivision 10, reported between January 1, 1997,
and October 23, 2008, and for adjusting benefits that were paid to former members and
their beneficiaries based upon invalid salary amounts.
    Subd. 2. Refunds of employee deductions. (a) The executive director shall refund
to active employees or former members who are not receiving retirement annuities or
benefits all erroneous employee deductions identified by the city of Duluth or, by the
Duluth Airport Authority, or by the city of Virginia as deductions taken from amounts
determined to be invalid salary. The refunds must include interest at the rate specified in
Minnesota Statutes, section 353.34, subdivision 2, from the date each invalid employee
deduction was received through the date each refund is paid.
(b) The refund payment for active employees must be sent to the applicable
governmental subdivision which must pay the refunded employee deductions plus interest
to the active home addresses of the members who are employees of the city of Duluth
or, who are employees of the Duluth Airport Authority, or who are employees of the city
of Virginia, as applicable.
(c) Refunds to former members must be mailed by the executive director of the
Public Employees Retirement Association to the former member's last known address.
    Subd. 3. Benefit adjustments. (a) For a former member who is receiving a
retirement annuity or disability benefit, or for a person receiving an optional annuity or
survivor benefit, the executive director must:
(1) adjust the annuity or benefit payment to the correct monthly benefit amount
payable by reducing the average salary under Minnesota Statutes, section 353.01,
subdivision 17a
, by the invalid salary amounts;
(2) determine the amount of the overpaid benefits paid from the effective date of
the annuity or benefit payment to the first of the month in which the monthly benefit
amount is corrected;
(3) calculate the amount of employee deductions taken in error on invalid salary,
including interest at the rate specified in Minnesota Statutes, section 353.34, subdivision 2,
from the date each invalid employee deduction was received through the date the annuity
or benefit is adjusted as provided under clause (1); and
(4) determine the net amount of overpaid benefits by reducing the amount of the
overpaid annuity or benefit as determined in clause (2) by the amount of the erroneous
employee deductions with interest as determined in clause (3).
(b) If a former member's erroneous employee deductions plus interest determined
under this section exceeds the amount of the person's overpaid benefits, the balance must
be refunded to the person to whom the annuity or benefit is being paid.
(c) The executive director shall recover the net amount of all overpaid annuities or
benefits as provided under subdivision 4.
    Subd. 4. Employer credits and obligations. (a) The executive director shall
provide a credit without interest to the city of Duluth and, to the Duluth Airport Authority,
and to the city of Virginia, as applicable, for the amount of that governmental subdivision's
erroneous employer contributions. The credit must first be used to offset the net amount of
the overpaid retirement annuities and the disability and survivor benefits that remains after
applying the amount of erroneous employee deductions with interest as provided under
subdivision 3, paragraph (a), clause (4). The remaining erroneous employer contributions,
if any, must be credited against future employer contributions required to be paid by
the applicable governmental subdivision. If the overpaid benefits exceed the employer
contribution credit, the balance of the overpaid benefits is the obligation of the city of
Duluth or, the Duluth Airport Authority, or the city of Virginia, whichever is applicable.
(b) The Public Employees Retirement Association board of trustees shall determine
the period of time and manner for the collection of overpaid retirement annuities and
benefits, if any, from the city of Duluth and, the Duluth Airport Authority, and the city of
Virginia.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 26. Laws 2009, chapter 169, article 4, section 49, the effective date, is amended to
read:
EFFECTIVE DATE.(a) This section is effective for the city of Duluth the day after
the Duluth city council and the chief clerical officer of the city of Duluth timely complete
their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3, for
members who are, and former members who were, employees of the city of Duluth.
(b) This section is effective for the Duluth Airport Authority the day after the Duluth
Airport Authority and the chief clerical officer of the Duluth Airport Authority timely
complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2
and 3, for members who are, and former members who were, employees of the Duluth
Airport Authority.
(c) This section is effective for the city of Virginia the day after the Virginia
city council and the chief clerical officer of the city of Virginia timely complete their
compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3, for members
who are, and former members who were, employees of the city of Virginia. If this section
becomes effective for the city of Virginia, it applies retroactively from June 23, 2009.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 27. Laws 2009, chapter 169, article 5, section 2, the effective date, is amended to
read:
EFFECTIVE DATE.This section is effective the day following final enactment
and expires on June 30, 2011 2014. Individuals must not be appointed to a postretirement
option position after that date.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 28. REPEALER.
(a) Minnesota Statutes 2008, section 353.01, subdivision 40, is repealed effective
July 1, 2010.
(b) Minnesota Statutes 2008, sections 353.46, subdivision 1a; and 353D.03,
subdivision 2, are repealed the day following final enactment.
(c) Minnesota Statutes 2008, section 353D.12, is repealed effective July 1, 2011.

ARTICLE 6
VOLUNTARY STATEWIDE LUMP-SUM VOLUNTEER FIREFIGHTER
RETIREMENT PLAN

    Section 1. Minnesota Statutes 2008, 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 shall 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 shall
must be signed by the municipal clerk or clerk-treasurer of the municipality. The financial
report shall 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 pursuant to 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 retroactively from January 1, 2010.

    Sec. 2. Minnesota Statutes 2009 Supplement, section 353G.05, subdivision 2, is
amended to read:
    Subd. 2. Election of coverage. (a) The process for electing coverage of volunteer
firefighters by the retirement plan is initiated by a request to the executive director for a
cost analysis of the prospective retirement coverage.
(b) If the volunteer firefighters are currently covered by a volunteer firefighters' relief
association governed by chapter 424A, the cost analysis of the prospective retirement
coverage must be requested jointly by the secretary of the volunteer firefighters' relief
association, following approval of the request by the board of the volunteer firefighters'
relief association, and the chief administrative officer of the entity associated with the
relief association, following approval of the request by the governing body of the entity
associated with the relief association. If the relief association is associated with more than
one entity, the chief administrative officer of each associated entity must execute the
request. If the volunteer firefighters are not currently covered by a volunteer firefighters'
relief association, the cost analysis of the prospective retirement coverage must be
requested by the chief administrative officer of the entity operating the fire department.
The request must be made in writing and must be made on a form prescribed by the
executive director.
(c) The cost analysis of the prospective retirement coverage by the statewide
retirement plan must be based on the service pension amount under section 353G.11
closest to the service pension amount provided by the volunteer firefighters' relief
association, if there is one the relief association is a lump-sum defined benefit plan, or
the amount equal to 95 percent of the most current average account balance per relief
association member if the relief association is a defined contribution plan, or to the
lowest service pension amount under section 353G.11 if there is no volunteer firefighters'
relief association, rounded up, and any other service pension amount designated by
the requester or requesters. The cost analysis must be prepared using a mathematical
procedure certified as accurate by an approved actuary retained by the Public Employees
Retirement Association.
(d) If a cost analysis is requested and a volunteer firefighters' relief association exists
that has filed the information required under section 69.051 in a timely fashion, upon
request by the executive director, the state auditor shall provide the most recent data
available on the financial condition of the volunteer firefighters' relief association, the most
recent firefighter demographic data available, and a copy of the current relief association
bylaws. If a cost analysis is requested, but no volunteer firefighters' relief association
exists, the chief administrative officer of the entity operating the fire department shall
provide the demographic information on the volunteer firefighters serving as members
of the fire department requested by the executive director.
(e) If a cost analysis is requested, the executive director of the State Board of
Investment shall review the investment portfolio of the relief association, if applicable,
for compliance with the applicable provisions of chapter 11A and for appropriateness
for retention under the established investment objectives and investment policies of the
State Board of Investment. If the prospective retirement coverage change is approved
under paragraph (f), the State Board of Investment may require that the relief association
liquidate any investment security or other asset which the executive director of the State
Board of Investment has determined to be an ineligible or inappropriate investment for
retention by the State Board of Investment. The security or asset liquidation must occur
before the effective date of the transfer of retirement plan coverage. If requested to do
so by the chief administrative officer of the relief association, the executive director of
the State Board of Investment shall provide advice about the best means to conduct the
liquidation.
(f) Upon receipt of the cost analysis, the governing body of the municipality
or independent nonprofit firefighting corporation associated with the fire department
shall either approve or disapprove the retirement coverage change within 90 days. If
the retirement coverage change is not acted upon within 90 days, it is deemed to be
disapproved. If the retirement coverage change is approved by the applicable governing
body, coverage by the voluntary statewide lump-sum volunteer firefighter retirement plan
is effective on the next following January 1.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.

    Sec. 3. Minnesota Statutes 2009 Supplement, section 353G.06, subdivision 1, is
amended to read:
    Subdivision 1. Special fund disestablishment. (a) On the date immediately prior
to the effective date of the coverage change, the special fund of the applicable volunteer
firefighters' relief association, if one exists, ceases to exist as a pension fund of the
association and legal title to the assets of the special fund transfers to the State Board of
Investment, with the beneficial title to the assets of the special fund remaining in the
applicable volunteer firefighters.
(b) If the market value of the special fund of the volunteer firefighters' relief
association for which retirement coverage changed under this chapter declines in the
interval between the date of the most recent financial report or statement, and the special
fund disestablishment date, the applicable municipality shall transfer an additional amount
to the State Board of Investment equal to that decline. If more than one municipality is
responsible for the direct management of the fire department, the municipalities shall
allocate the additional transfer amount among the various applicable municipalities
one-half in proportion to the population of each municipality and one-half in proportion
to the market value of each municipality.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.

    Sec. 4. Minnesota Statutes 2009 Supplement, section 353G.08, is amended to read:
353G.08 RETIREMENT PLAN FUNDING; DISBURSEMENTS.
    Subdivision 1. Annual funding requirements. (a) Annually, the executive director
shall determine the funding requirements of each account in the voluntary statewide
lump-sum volunteer firefighter retirement plan on or before August 1. The funding
requirements as directed under this section, must be determined using a mathematical
procedure developed and certified as accurate by an approved actuary retained by the
Public Employees Retirement Association and based on present value factors using a six
percent interest rate, without any decrement assumptions. The funding requirements
must be certified to the entity or entities associated with the fire department whose active
firefighters are covered by the retirement plan.
(b) The overall funding balance of each account for the current calendar year must
be determined in the following manner:
(1) The total accrued liability for all active and deferred members of the account as
of December 31 of the current year must be calculated based on the good time service
credit of active and deferred members as of that date.
(2) The total present assets of the account projected to December 31 of the current
year, including receipts by and disbursements from the account anticipated to occur on or
before December 31, must be calculated. To the extent possible, the market value of assets
must be utilized in making this calculation.
(3) The amount of the total present assets calculated under clause (2) must be
subtracted from the amount of the total accrued liability calculated under clause (1). If the
amount of total present assets exceeds the amount of the total accrued liability, then the
account is considered to have a surplus over full funding. If the amount of the total present
assets is less than the amount of the total accrued liability, then the account is considered
to have a deficit from full funding. If the amount of total present assets is equal to the
amount of the total accrued liability, then the special fund is considered to be fully funded.
(c) The financial requirements of each account for the following calendar year must
be determined in the following manner:
(1) The total accrued liability for all active and deferred members of the account
as of December 31 of the calendar year next following the current calendar year must be
calculated based on the good time service used in the calculation under paragraph (b),
clause (1), increased by one year.
(2) The increase in the total accrued liability of the account for the following calendar
year over the total accrued liability of the account for the current year must be calculated.
(3) The amount of anticipated future administrative expenses of the account must be
calculated by multiplying the dollar amount of the administrative expenses for the most
recent prior calendar year by the factor of 1.035.
(4) If the account is fully funded, the financial requirement of the account for the
following calendar year is the total of the amounts calculated under clauses (2) and (3).
(5) If the account has a deficit from full funding, the financial requirement of the
account for the following calendar year is the total of the amounts calculated under clauses
(2) and (3) plus an amount equal to one-tenth of the amount of the deficit from full
funding of the account.
(6) If the account has a surplus over full funding, the financial requirement of
the account for the following calendar year is the financial requirement of the account
calculated as though the account was fully funded under clause (4) and, if the account has
also had a surplus over full funding during the prior two years, additionally reduced by an
amount equal to one-tenth of the amount of the surplus over full funding of the account.
(d) The required contribution of the entity or entities associated with the fire
department whose active firefighters are covered by the retirement plan is the annual
financial requirements of the account of the retirement plan under paragraph (c) reduced
by the amount of any fire state aid payable under sections 69.011 to 69.051 reasonably
anticipated to be received by the retirement plan attributable to the entity or entities during
the following calendar year, and an amount of interest on the assets projected to be
received during the following calendar year calculated at the rate of six percent per annum.
The required contribution must be allocated between the entities if more than one entity
is involved. 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.
(e) The required contribution calculated in paragraph (d) must be paid to the
retirement plan on or before December 31 of the year for which it was calculated. If
the contribution is not received by the retirement plan by December 31, it is payable
with interest at an annual compound rate of six percent from the date due until the date
payment is received by the retirement plan. If the entity does not pay the full amount of
the required contribution, the executive director shall collect the unpaid amount under
section 353.28, subdivision 6.
    Subd. 2. Cash flow funding requirement. If the executive director determines that
an account in the voluntary statewide lump-sum volunteer firefighter retirement plan has
insufficient assets to meet the service pensions determined payable from the account,
the executive director shall certify the amount of the potential service pension shortfall
to the municipality or municipalities and the municipality or municipalities shall make
an additional employer contribution to the account within ten days of the certification.
If more than one municipality is associated with the account, unless the municipalities
agree to a different allocation, the municipalities shall allocate the additional employer
contribution one-half in proportion to the population of each municipality and one-half in
proportion to the market value of the property of each municipality.
    Subd. 3. Authorized account disbursements. (f) The assets of the retirement
fund may only be disbursed for:
(1) the administrative expenses of the retirement plan;
(2) the investment expenses of the retirement fund;
(3) the service pensions payable under section 353G.10, 353G.11, 353G.14, or
353G.15; and
(4) the survivor benefits payable under section 353G.12; and
(5) the disability benefit coverage insurance premiums under section 353G.115.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.

    Sec. 5. Minnesota Statutes 2009 Supplement, section 353G.09, subdivision 3, is
amended to read:
    Subd. 3. Alternative pension eligibility and computation. (a) An active member
of the retirement plan is entitled to an alternative lump-sum service pension from the
retirement plan if the person:
(1) has separated from active service with the fire department for at least 30 days;
(2) has attained the age of at least 50 years or the age for receipt of a service pension
under the benefit plan of the applicable former volunteer firefighters' relief association
as of the date immediately prior to the election of the retirement coverage change,
whichever is later;
(3) has completed at least five years of active service with the fire department and at
least five years in total as a member of the applicable former volunteer firefighters' relief
association or of the retirement plan, but has not rendered at least five years of good time
service credit as a member of the retirement plan; and
(4) applies in a manner prescribed by the executive director for the service pension.
(b) If retirement coverage prior to statewide retirement plan coverage was provided
by a defined benefit plan volunteer firefighters relief association, the alternative lump-sum
service pension is the service pension amount specified in the bylaws of the applicable
former volunteer firefighters' relief association either as of the date immediately prior to
the election of the retirement coverage change or as of the date immediately before the
termination of firefighting services, whichever is earlier, multiplied by the total number
of years of service as a member of that volunteer firefighters' relief association and as
a member of the retirement plan. If retirement coverage prior to statewide retirement
plan coverage was provided by a defined contribution plan volunteer firefighters relief
association, the alternative lump-sum service pension is an amount equal to the person's
account balance as of the date immediately prior to the date on which statewide retirement
plan coverage was first provided to the person plus six percent annual compound interest
from that date until the date immediately prior to the date of retirement.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.

    Sec. 6. Minnesota Statutes 2009 Supplement, section 353G.11, subdivision 1, is
amended to read:
    Subdivision 1. Levels. The retirement plan provides the following levels of service
pension amounts to be selected at the election of coverage, or, if fully funded, thereafter:

Level A
$500 per year of good time service credit

Level B
$750 $600 per year of good time service credit

Level C
$700 per year of good time service credit

Level D
$800 per year of good time service credit

Level E
$900 per year of good time service credit

Level CF
$1,000 per year of good time service credit

Level G
$1,250 per year of good time service credit

Level DH
$1,500 per year of good time service credit

Level EI
$2,000 per year of good time service credit

Level FJ
$2,500 per year of good time service credit

Level GK
$3,000 per year of good time service credit

Level HL
$3,500 per year of good time service credit

Level IM
$4,000 per year of good time service credit

Level JN
$4,500 per year of good time service credit

Level KO
$5,000 per year of good time service credit

Level LP
$5,500 per year of good time service credit

Level MQ
$6,000 per year of good time service credit

Level NR
$6,500 per year of good time service credit

Level OS
$7,000 per year of good time service credit

Level PT
$7,500 per year of good time service credit
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 7. Minnesota Statutes 2009 Supplement, section 353G.11, is amended by adding a
subdivision to read:
    Subd. 1a. Continuation of prior service pension levels. If a municipality or
independent nonprofit firefighting corporation elects to be covered by the retirement
plan prior to January 1, 2010, and selects the $750 per year of good time service credit
service pension amount effective for January 1, 2010, that level continues for the volunteer
firefighters of that municipality or independent nonprofit firefighting corporation until a
different service pension amount is selected under subdivision 2 after January 1, 2010.
EFFECTIVE DATE.This section is effective July 1, 2010.

    Sec. 8. [353G.115] DISABILITY BENEFIT COVERAGE; AUTHORITY FOR
CASUALTY INSURANCE.
(a) Except as provided in paragraph (b), no disability benefit is payable from the
statewide retirement plan.
(b) If the board approves the arrangement, disability coverage for statewide
retirement plan members may be provided through a group disability insurance policy
obtained from an insurance company licensed to do business in this state. The voluntary
statewide lump-sum volunteer retirement plan is authorized to pay the premium for the
disability insurance authorized by this paragraph. The proportional amount of the total
annual disability insurance premium must be added to the required contribution amount
determined under section 353G.08.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.

    Sec. 9. Minnesota Statutes 2009 Supplement, section 424A.08, is amended to read:
424A.08 MUNICIPALITY WITHOUT RELIEF ASSOCIATION;
AUTHORIZED DISBURSEMENTS.
(a) Any qualified municipality which is entitled to receive fire state aid but which
has no volunteer firefighters' relief association directly associated with its fire department
and which has no full-time firefighters with retirement coverage by the public employees
police and fire retirement plan shall deposit the fire state aid in a special account
established for that purpose in the municipal treasury. Disbursement from the special
account may not be made for any purpose except:
(1) payment of the fees, dues and assessments to the Minnesota State Fire
Department Association and to the state Volunteer Firefighters' Benefit Association in
order to entitle its firefighters to membership in and the benefits of these state associations;
(2) payment of the cost of purchasing and maintaining needed equipment for the
fire department; and
(3) payment of the cost of construction, acquisition, repair, or maintenance of
buildings or other premises to house the equipment of the fire department.
(b) A qualified municipality which is entitled to receive fire state aid, which has no
volunteer firefighters' relief association directly associated with its fire department, which
does not participate in the voluntary statewide lump-sum volunteer firefighter retirement
plan under chapter 353G, and which has full-time firefighters with retirement coverage
by the public employees police and fire retirement plan may disburse the fire state aid as
provided in paragraph (a), for the payment of the employer contribution requirement with
respect to firefighters covered by the public employees police and fire retirement plan under
section 353.65, subdivision 3, or for a combination of the two types of disbursements.
(c) A municipality that has no volunteer firefighters' relief association directly
associated with it and that participates in the voluntary statewide lump-sum volunteer
firefighter retirement plan under chapter 353G shall transmit any fire state aid that it
receives to the voluntary statewide lump-sum volunteer firefighter retirement fund.
EFFECTIVE DATE.This section is effective retroactively from January 1, 2010.

ARTICLE 7
TEACHERS RETIREMENT ASSOCIATION SERVICE CREDIT
PROCEDURE REVISIONS

    Section 1. Minnesota Statutes 2008, section 354.05, is amended by adding a
subdivision to read:
    Subd. 41. Annual base salary. (a) "Annual base salary" means:
(1) for an independent school district or educational cooperative, the lowest full-time
Bachelor of Arts (BA) base contract salary for the previous fiscal year for that employing
unit;
(2) for a charter school, the lowest starting annual salary for a full-time licensed
teacher employed during the previous fiscal year for that employing unit; and
(3) for a state agency or professional organization, the lowest starting annual salary
for a full-time Teachers Retirement Association covered position for the previous fiscal
year for that employing unit.
(b) If there is no previous fiscal year data because an employer unit is new and
paragraph (c) does not apply, the annual base salary for the first year of operation will be
as provided in paragraph (a), except that the base contract salary for the current fiscal year,
rather than the previous fiscal year, must be used.
(c) For a new employer unit created as a result of a merger or consolidation, the
annual base salary must be the lowest annual base salary as specified in paragraph (a) for
any of the employer units involved in the merger or consolidation.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 2. Minnesota Statutes 2008, section 354.07, subdivision 5, is amended to read:
    Subd. 5. Records; accounts; interest. The board shall keep a record of the
receipts and disbursements of the fund and a separate account with each member of
the association. The board shall also keep separate accounts for annuity payments, for
employer contributions and all other necessary accounts and reserves. It shall determine
annually the annual interest earnings of the fund which shall include realized capital gains
and losses. Any amount in the capital reserve account on July 1, 1973, shall be transferred
to the employer contribution's account. The annual interest earnings shall be apportioned
and credited to the separate members' accounts except those covered under the provisions
of section 354.44, subdivision 6 or 7. The rate to be used in this distribution computed to
the last full quarter percent shall be determined by dividing the interest earnings by the
total invested assets of the fund. The excess of the annual interest earnings in the excess
earnings reserve which was not credited to the various accounts shall be credited to the
gross interest earnings for the next succeeding year.

    Sec. 3. Minnesota Statutes 2008, section 354.091, is amended to read:
354.091 SERVICE CREDIT.
    Subdivision 1. Definition; monthly base salary. For purposes of this section,
"monthly base salary" means the annual base salary, as defined in section 354.05,
subdivision 41, divided by 12.
    Subd. 2. Service credit annual limit. (a) In computing service credit, No teacher
may receive credit for more than one year of teaching service for any fiscal year.
Additionally, in crediting allowable service:
(1) if a teacher teaches less than five hours in a day, service credit must be given for
the fractional part of the day as the term of service performed bears to five hours;
(2) if a teacher teaches five or more hours in a day, service credit must be given for
only one day;
(3) if a teacher teaches at least 170 full days in any fiscal year, service credit must be
given for a full year of teaching service; and
(4) if a teacher teaches for only a fractional part of the year, service credit must be
given for such fractional part of the year in the same relationship as the period of service
performed bears to 170 days.
(b) A teacher must receive a full year of service credit based on the number of days
in the employer's full school year if that school year is less than 170 days. Teaching
service performed before July 1, 1961, must be computed under the law in effect at the
time it was performed.
(c) A teacher must not lose or gain retirement service credit as a result of the
employer converting to a flexible or alternate work schedule. If the employer converts
to a flexible or alternate work schedule, the forms for reporting teaching service and the
procedures for determining service credit must be determined by the executive director
with the approval of the board of trustees.
    Subd. 3. Service credit calculation. (a) Except as specified in subdivisions 4 and
5, service credit must be calculated monthly by dividing the teacher's monthly salary by
the monthly base salary for the teacher's employing unit and multiplying the result by
11.1 percent.
(b) For purposes of computing service credit, salary must be allocated to each
calendar month based on the pay period begin and end dates. If the pay period covers
more than one calendar month, the salary must be allocated based on the number of days
in each calendar month.
(c) A teacher may not receive more than 11.1 percent of a year's service credit in
a calendar month.
(d) Annual service credit must be calculated by adding the allowable monthly
service credit for all 12 months of the fiscal year, with the result rounded to two decimal
places, subject to the annual limit specified in subdivision 2.
    Subd. 4. Service credit determination for Minnesota State Colleges and
Universities system teachers. (d) For all services rendered on or after July 1, 2003,
service credit for all members employed by the Minnesota State Colleges and Universities
system must be determined:
(1) for full-time employees, by the definition of full-time employment contained in
the collective bargaining agreement for those units listed in section 179A.10, subdivision
2
, or contained in the applicable personnel or salary plan for those positions designated in
section 179A.10, subdivision 1; and
(2) for part-time employees, by the appropriate proration of full-time equivalency
based on the provisions contained in the collective bargaining agreement for those units
listed in section 179A.10, subdivision 2, or contained in the applicable personnel or salary
plan for those positions designated in section 179A.10, subdivision 1, and the applicable
procedures of the Minnesota State Colleges and Universities system; and.
(3) in no case may a member receive more than one year of service credit for any
fiscal year.
    Subd. 5. Service credit procedure, nontraditional schedules. For employer units
that have nontraditional work schedules or pay schedules, the procedure for determining
service credit must be specified by the executive director with the approval of the board of
trustees.
EFFECTIVE DATE.This section is effective for teaching service performed after
June 30, 2012.

    Sec. 4. Minnesota Statutes 2009 Supplement, section 354.52, subdivision 4b, is
amended to read:
    Subd. 4b. Payroll cycle reporting requirements. An employing unit shall provide
the following data to the association for payroll warrants on an ongoing basis within 14
calendar days after the date of the payroll warrant in a format prescribed by the executive
director:
(1) association member number;
(2) employer-assigned employee number;
(3) Social Security number;
(4) amount of each salary deduction;
(5) amount of salary as defined in section 354.05, subdivision 35, from which each
deduction was made;
(6) reason for payment;
(7) service credit;
(8) (7) the beginning and ending dates of the payroll period covered and the date
of actual payment;
(9) (8) fiscal year of salary earnings;
(10) (9) total remittance amount including employee, employer, and additional
employer contributions;
(11) (10) reemployed annuitant salary under section 354.44, subdivision 5; and
(12) (11) other information as may be required by the executive director.
EFFECTIVE DATE.This section is effective July 1, 2012.

    Sec. 5. Minnesota Statutes 2008, section 354.52, is amended by adding a subdivision
to read:
    Subd. 4d. Annual base salary reporting. An employing unit must provide the
following data to the association on or before June 30 of each fiscal year:
(1) annual base salary, as defined in section 354.05, subdivision 41; and
(2) beginning and ending dates for the regular school work year.
EFFECTIVE DATE.This section is effective July 1, 2011.

    Sec. 6. Minnesota Statutes 2008, section 354.52, subdivision 6, is amended to read:
    Subd. 6. Noncompliance consequences. (a) An employing unit that does not
comply with the reporting requirements under subdivision 2a, 4a, or 4b, or 4d, must pay a
fine of $5 per calendar day until the association receives the required data.
(b) If the annual base salary required to be reported under subdivision 4d has not
been settled or determined as of June 16, the fine commences if the annual base salary has
not been reported to the association within 14 days following the settlement date.
EFFECTIVE DATE.This section is effective July 1, 2011.

    Sec. 7. Minnesota Statutes 2008, section 354.66, subdivision 3, is amended to read:
    Subd. 3. Part-time teaching position, defined. (a) For purposes of this section,
the term "part-time teaching position" means a teaching position within the district in
which the teacher is employed for at least 50 full days or a fractional equivalent thereof as
prescribed in section 354.091, and for which the teacher is compensated in for an amount
of at least 30 percent, but not exceeding 80 percent of the compensation established by the
board for a full-time teacher with identical education and experience with the employing
unit.
(b) For a teacher to which subdivision 1c, paragraph (b), applies, the term "part-time
teaching position" means a teaching position within the district in which the teacher is
employed for at least 25 full days or a fractional equivalent thereof as prescribed in section
354.091, and for which the teacher is compensated in for an amount of at least 15 percent,
but not exceeding 40 percent of the compensation established by the board for a full-time
teacher, with identical education and experience with the employing unit.
EFFECTIVE DATE.This section is effective for service provided after June 30,
2012.

ARTICLE 8
MNSCU IRAP ADMINISTRATIVE PROVISIONS

    Section 1. Minnesota Statutes 2008, section 11A.04, is amended to read:
11A.04 DUTIES AND POWERS.
The state board shall:
(1) Act as trustees for each fund for which it invests or manages money in
accordance with the standard of care set forth in section 11A.09 if state assets are involved
and in accordance with chapter 356A if pension assets are involved.
(2) Formulate policies and procedures deemed necessary and appropriate to carry
out its functions. Procedures adopted by the board must allow fund beneficiaries and
members of the public to become informed of proposed board actions. Procedures and
policies of the board are not subject to the Administrative Procedure Act.
(3) Employ an executive director as provided in section 11A.07.
(4) Employ investment advisors and consultants as it deems necessary.
(5) Prescribe policies concerning personal investments of all employees of the board
to prevent conflicts of interest.
(6) Maintain a record of its proceedings.
(7) As it deems necessary, establish advisory committees subject to section 15.059 to
assist the board in carrying out its duties.
(8) Not permit state funds to be used for the underwriting or direct purchase of
municipal securities from the issuer or the issuer's agent.
(9) Direct the commissioner of management and budget to sell property other than
money that has escheated to the state when the board determines that sale of the property
is in the best interest of the state. Escheated property must be sold to the highest bidder in
the manner and upon terms and conditions prescribed by the board.
(10) Undertake any other activities necessary to implement the duties and powers
set forth in this section.
(11) Establish a formula or formulas to measure management performance and
return on investment. Public pension funds in the state shall utilize the formula or
formulas developed by the state board.
(12) Except as otherwise provided in article XI, section 8, of the Constitution of the
state of Minnesota, employ, at its discretion, qualified private firms to invest and manage
the assets of funds over which the state board has investment management responsibility.
There is annually appropriated to the state board, from the assets of the funds for which
the state board utilizes a private investment manager, sums sufficient to pay the costs of
employing private firms. Each year, by January 15, the board shall report to the governor
and legislature on the cost and the investment performance of each investment manager
employed by the board.
(13) Adopt an investment policy statement that includes investment objectives, asset
allocation, and the investment management structure for the retirement fund assets under
its control. The statement may be revised at the discretion of the state board. The state
board shall seek the advice of the council regarding its investment policy statement.
Adoption of the statement is not subject to chapter 14.
(14) Adopt a compensation plan setting the terms and conditions of employment for
unclassified board employees who are not covered by a collective bargaining agreement.
(15) Contract, as necessary, with the board of trustees of the Minnesota State
Universities and Colleges System for the provision of investment review and selection
services under section 354B.25, subdivision 3, and arrange for the receipt of payment
for those services.
There is annually appropriated to the state board, from the assets of the funds for
which the state board provides investment services, sums sufficient to pay the costs of
all necessary expenses for the administration of the board. These sums will be deposited
in the State Board of Investment operating account, which must be established by the
commissioner of management and budget.

    Sec. 2. Minnesota Statutes 2008, section 354B.25, subdivision 1, is amended to read:
    Subdivision 1. General governance. The individual retirement account plan is the
administrative responsibility of the Board of Trustees of the Minnesota State Colleges
and Universities. The Board of Trustees of the Minnesota State Colleges and Universities
may administer the plan directly or may contract out for administrative services with a
qualified third-party plan administrative entity and may contract out for investment review
and selection service.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2008, section 354B.25, subdivision 3, is amended to read:
    Subd. 3. Selection of financial institutions. (a) The investment options provided
under subdivision 2 must be selected by the board. The board may contract with the State
Board of Investment or with a third party to provide the investment review and selection
services. The board must not contract with a third party to provide the investment option
review and selection services if the third party markets, offers, or has other material
interest in investment products. The board must require any third party contracted to
provide investment review and selection services to disclose to the board any contracts
for services and any financial relationships it has with vendors under consideration to
provide investment products under the plan.
In making its selection, at a minimum, the State board of Investment shall consider
the following:
(1) the experience and ability of the financial institution to provide benefits and
products that are suited to meet the needs of plan participants;
(2) the relationship of those benefits and products provided by the financial
institution to their cost;
(3) the financial strength and stability of the financial institution; and
(4) the fees and expenses associated with the investment products in comparison to
other products of similar risk and rates of return.
(b) After selecting a financial institution, the State board of Investment must
periodically review each financial institution and the offered products. The periodic
review must occur at least every three years. In making its review, the State board of
Investment may retain appropriate consulting services to assist it in its periodic review,
establish a budget for the cost of the periodic review process, and charge a proportional
share of these costs to the reviewed financial institution.
(c) Contracts with financial institutions under this section must be executed by the
board and must be approved by the State Board of Investment before execution.
(d) The State Board of Investment shall also establish policies and procedures under
section 11A.04, clause (2), to carry out the provisions of this subdivision.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2008, section 354C.14, is amended to read:
354C.14 INVESTMENT OF DEDUCTIONS AND CONTRIBUTIONS.
(a) The Board of Trustees of the Minnesota State Colleges and Universities shall
invest the deductions and contributions under section 354C.12, after deduction of
administrative expenses under section 354C.12, subdivision 4, in annuity contracts or
custodial accounts from financial institutions selected by the State Board of Investment
under section 354B.25, subdivision 3.
(b) The retirement contributions and death benefits provided by annuity contracts or
custodial accounts purchased by the Board of Trustees of the Minnesota State Colleges
and Universities are owned by the supplemental retirement plan and must be paid in
accordance with those annuity contracts or custodial account agreements.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. REPEALER.
Minnesota Statutes 2008, section 354C.15, is repealed.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 9
ACTUARIAL VALUATION REPORTING DEADLINE DATES

    Section 1. Minnesota Statutes 2008, section 356.215, subdivision 3, is amended to read:
    Subd. 3. Reports. (a) The actuarial valuations required annually must be made as of
the beginning of each fiscal year.
    (b) Two copies of the completed valuation must be delivered to the executive
director of the Legislative Commission on Pensions and Retirement, to the commissioner
of management and budget, and to the Legislative Reference Library. The copies of the
actuarial valuation must be filed with the executive director of the Legislative Commission
on Pensions and Retirement, the commissioner of management and budget, and the
Legislative Reference Library no later than the last day of the sixth month occurring
after the end of the previous fiscal year.
    (c) Two copies of a quadrennial experience study must be filed with the
executive director of the Legislative Commission on Pensions and Retirement, with the
commissioner of management and budget, and with the Legislative Reference Library, not
later than the first last day of the 11th 12th month occurring after the end of the last fiscal
year of the four-year period which the experience study covers.
    (d) For actuarial valuations and experience studies prepared at the direction of
the Legislative Commission on Pensions and Retirement, two copies one copy of the
document must be delivered to the governing or managing board or administrative officials
of the applicable public pension and retirement fund or plan.
EFFECTIVE DATE.This section is effective July 1, 2010.

ARTICLE 10
OPTIONAL ANNUITY REVOCATION FOLLOWING CERTAIN
MARRIAGE DISSOLUTIONS

    Section 1. [356.48] REVOCATION OF OPTIONAL ANNUITY DUE TO
MARRIAGE DISSOLUTION OR ANNULMENT.
    Subdivision 1. Covered plans. This section applies to the following retirement
plans:
(1) the general state employees retirement plan of the Minnesota State Retirement
System established under chapter 352;
(2) the correctional state employees retirement plan of the Minnesota State
Retirement System established under chapter 352;
(3) the State Patrol retirement plan established under chapter 352B;
(4) the unclassified state employees retirement program of the Minnesota State
Retirement System established under chapter 352D;
(5) the general employee retirement plan of the Public Employees Retirement
Association established under chapter 353;
(6) the public employees police and fire retirement plan established under chapter
353;
(7) the local government correctional employees retirement plan of the Public
Employees Retirement Association established under chapter 353E;
(8) the Teachers Retirement Association established under chapter 354; and
(9) the uniform judicial retirement plan established under chapter 490.
    Subd. 2. Treatment. (a) The treatment specified in this section applies if, after
the accrual date of an annuity or benefit from an applicable plan or plans, a marriage
dissolution decree or annulment decree is rendered that specifies that the designation
of an optional annuity must be revoked and if the other requirements specified in this
section are satisfied.
(b) Notwithstanding any law to the contrary, if the applicable pension plan or plans
have provisions of law that revise the monthly benefit amount payable to the primary
annuitant upon the death of the individual named as the optional joint annuitant, the
monthly benefit amount must be recomputed as though the individual that had been named
as the optional joint annuitant died on the date a certified copy of the marriage dissolution
or annulment decree is received by the chief administrative officer. Payment of any benefit
adjustment under this section is prospective only.
    Subd. 3. Restrictions. (a) This section does not apply if the marriage dissolution
decree or annulment decree is not consistent with the requirements under section 518.58.
(b) The pension plan benefit recipient must not designate, and the court may not
require that the member designate, a subsequent optional annuity beneficiary.
(c) This section does not apply if more than one surviving individual was named as
an optional joint annuitant.
    Subd. 4. Submission of documentation. To receive the treatment provided in
this section, an eligible retiree or disabilitant must provide, to the chief administrative
officer of the applicable pension plan, a certified copy of the marriage dissolution or
annulment decree. The retiree or disabilitant and the joint annuitant must also submit a
form, prescribed by the chief administrative officer of the applicable pension plan and
signed by both individuals, requesting the annuity bounce back as provided in subdivision
2. The individuals must also provide any other documentation the chief administrative
officer may request.
EFFECTIVE DATE.This section is effective the day following final enactment and
applies retroactively to any marriage dissolution decree or annulment decree requiring the
revocation of an optional annuity form granted at any time prior to the date of enactment.

    Sec. 2. Minnesota Statutes 2008, section 518.58, subdivision 3, is amended to read:
    Subd. 3. Sale or distribution while proceeding pending. (a) If the court finds
that it is necessary to preserve the marital assets of the parties, the court may order the
sale of the homestead of the parties or the sale of other marital assets, as the individual
circumstances may require, during the pendency of a proceeding for a dissolution of
marriage or an annulment. If the court orders a sale, it may further provide for the
disposition of the funds received from the sale during the pendency of the proceeding.
If liquid or readily liquidated marital property other than property representing vested
pension benefits or rights is available, the court, so far as possible, shall divide the property
representing vested pension benefits or rights by the disposition of an equivalent amount
of the liquid or readily liquidated property.
(b) The court may order a partial distribution of marital assets during the pendency
of a proceeding for a dissolution of marriage or an annulment for good cause shown or
upon the request of both parties, provided that the court shall fully protect the interests
of the other party.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2008, section 518.58, subdivision 4, is amended to read:
    Subd. 4. Pension plans. (a) The division of marital property that represents pension
plan benefits or rights in the form of future pension plan payments:
    (1) is payable only to the extent of the amount of the pension plan benefit payable
under the terms of the plan;
    (2) is not payable for a period that exceeds the time that pension plan benefits are
payable to the pension plan benefit recipient;
    (3) is not payable in a lump-sum amount from defined benefit pension plan assets
attributable in any fashion to a spouse with the status of an active member, deferred
retiree, or benefit recipient of a pension plan;
    (4) if the former spouse to whom the payments are to be made dies prior to the end
of the specified payment period with the right to any remaining payments accruing to an
estate or to more than one survivor, is payable only to a trustee on behalf of the estate or
the group of survivors for subsequent apportionment by the trustee; and
    (5) in the case of defined benefit public pension plan benefits or rights, may not
commence until the public plan member submits a valid application for a public pension
plan benefit and the benefit becomes payable.
    (b) The individual retirement account plans established under chapter 354B may
provide in its plan document, if published and made generally available, for an alternative
marital property division or distribution of individual retirement account plan assets. If an
alternative division or distribution procedure is provided, it applies in place of paragraph
(a), clause (5).
(c) If liquid or readily liquidated marital property other than property representing
vested pension benefits or rights is available, the court, so far as possible, shall divide the
property representing vested pension benefits or rights by the disposition of an equivalent
amount of the liquid or readily liquidated property.
(d) If sufficient liquid or readily liquidated marital property other than property
representing vested pension benefits or rights is not available, the court may order the
revocation of the designation of an optional annuity beneficiary in pension plans specified
in section 356.48 or in any other pension plan in which plan-governing law or governing
documents allow revocation of an optional annuity in marital dissolution or annulment
situations.
EFFECTIVE DATE.(a) This section is effective the day following final enactment.
(b) This section applies retroactively, for plans specified in section 365.48, to any
marriage dissolution decree or annulment decree requiring the revocation of an optional
annuity form granted at any time prior to the date of enactment.

ARTICLE 11
ADMINISTRATIVE CONSOLIDATION OF THE MINNEAPOLIS
EMPLOYEES RETIREMENT FUND INTO THE PUBLIC EMPLOYEES
RETIREMENT ASSOCIATION

    Section 1. Minnesota Statutes 2009 Supplement, section 353.01, subdivision 2a,
is amended to read:
    Subd. 2a. Included employees. (a) Public employees whose salary from
employment in one or more positions within one governmental subdivision exceeds $425
in any month shall participate as members of the association. If the salary is less than
$425 in a subsequent month, the employee retains membership eligibility. Eligible public
employees shall participate as members of the association with retirement coverage by
the public general employees retirement plan or 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, as a condition of their
employment on the first day of employment unless they:
    (1) are specifically excluded under subdivision 2b;
    (2) do not exercise their option to elect retirement coverage in the association as
provided in subdivision 2d, paragraph (a); or
    (3) are employees of the governmental subdivisions listed in subdivision 2d,
paragraph (b), where the governmental subdivision has not elected to participate as a
governmental subdivision covered by the association.
    (b) A public employee 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) Public employees under paragraph (a) include:
(1) physicians under section 353D.01, subdivision 2, who do not elect public
employees defined contribution plan coverage under section 353D.02, subdivision 2;
(2) full-time employees of the Dakota County Agricultural Society; and
(3) 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 elect Public Employee Retirement
Association general plan coverage under Laws 2009, chapter 169, article 12, section 10.
(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.

    Sec. 2. Minnesota Statutes 2008, section 353.01, subdivision 2b, is amended to read:
    Subd. 2b. Excluded employees. The following public employees are not eligible to
participate as members of the association with retirement coverage by the public general
employees retirement plan, the local government correctional employees retirement plan
under chapter 353E, or the public employees police and fire retirement plan:
    (1) public officers, other than county sheriffs, who are elected to a governing body,
or persons who are appointed to fill a vacancy in an elective office of a governing body,
whose term of office commences on or after July 1, 2002, for the service to be rendered
in that elective position;
    (2) election officers or election judges;
    (3) patient and inmate personnel who perform services for a governmental
subdivision;
    (4) except as otherwise specified in subdivision 12a, employees who are hired for
a temporary position as defined under subdivision 12a, and employees who resign from
a nontemporary position and accept a temporary position within 30 days in the same
governmental subdivision;
    (5) employees who are employed by reason of work emergency caused by fire,
flood, storm, or similar disaster;
    (6) employees who by virtue of their employment in one governmental subdivision
are required by law to be a member of and to contribute to any of the plans or funds
administered by the Minnesota State Retirement System, the Teachers Retirement
Association, the Duluth Teachers Retirement Fund Association, the St. Paul Teachers
Retirement Fund Association, the Minneapolis Employees Retirement Fund, or any police
or firefighters relief association governed by section 69.77 that has not consolidated
with the Public Employees Retirement Association, or any local police or firefighters
consolidation account who have not elected the type of benefit coverage provided by the
public employees police and fire fund under sections 353A.01 to 353A.10, or any persons
covered by section 353.665, subdivision 4, 5, or 6, who have not elected public employees
police and fire plan benefit coverage. This clause must not be construed to prevent a person
from being a member of and contributing to the Public Employees Retirement Association
and also belonging to and contributing to another public pension plan or fund for other
service occurring during the same period of time. A person who meets the definition of
"public employee" in subdivision 2 by virtue of other service occurring during the same
period of time becomes a member of the association unless contributions are made to
another public retirement fund on the salary based on the other service or to the Teachers
Retirement Association by a teacher as defined in section 354.05, subdivision 2;
    (7) persons who are members of a religious order and are excluded from coverage
under the federal Old Age, Survivors, Disability, and Health Insurance Program for the
performance of service as specified in United States Code, title 42, section 410(a)(8)(A),
as amended through January 1, 1987, if no irrevocable election of coverage has been made
under section 3121(r) of the Internal Revenue Code of 1954, as amended;
    (8) employees of a governmental subdivision who have not reached the age of
23 and are enrolled on a full-time basis to attend or are attending classes on a full-time
basis at an accredited school, college, or university in an undergraduate, graduate, or
professional-technical program, or a public or charter high school;
    (9) resident physicians, medical interns, and pharmacist residents and pharmacist
interns who are serving in a degree or residency program in public hospitals or clinics;
    (10) students who are serving in an internship or residency program sponsored
by an accredited educational institution;
    (11) persons who hold a part-time adult supplementary technical college license who
render part-time teaching service in a technical college;
    (12) except for employees of Hennepin County or Hennepin Healthcare System,
Inc., foreign citizens working for a governmental subdivision with a work permit of less
than three years, or an H-1b visa valid for less than three years of employment. Upon
notice to the association that the work permit or visa extends beyond the three-year period,
the foreign citizens must be reported for membership from the date of the extension;
    (13) public hospital employees who elected not to participate as members of the
association before 1972 and who did not elect to participate from July 1, 1988, to October
1, 1988;
    (14) except as provided in section 353.86, volunteer ambulance service personnel,
as defined in subdivision 35, but persons who serve as volunteer ambulance service
personnel may still qualify as public employees under subdivision 2 and may be members
of the Public Employees Retirement Association and participants in the public general
employees retirement fund or the public employees police and fire fund, whichever
applies, on the basis of compensation received from public employment service other than
service as volunteer ambulance service personnel;
    (15) except as provided in section 353.87, volunteer firefighters, as defined in
subdivision 36, engaging in activities undertaken as part of volunteer firefighter duties;
provided that a person who is a volunteer firefighter may still qualify as a public
employee under subdivision 2 and may be a member of the Public Employees Retirement
Association and a participant in the public general employees retirement fund or the public
employees police and fire fund, whichever applies, on the basis of compensation received
from public employment activities other than those as a volunteer firefighter;
    (16) pipefitters and associated trades personnel employed by Independent School
District No. 625, St. Paul, with coverage under a collective bargaining agreement by the
pipefitters local 455 pension plan who were either first employed after May 1, 1997, or,
if first employed before May 2, 1997, elected to be excluded under Laws 1997, chapter
241, article 2, section 12;
    (17) electrical workers, plumbers, carpenters, and associated trades personnel
employed by Independent School District No. 625, St. Paul, or the city of St. Paul,
who have retirement coverage under a collective bargaining agreement by the Electrical
Workers Local 110 pension plan, the United Association Plumbers Local 34 pension plan,
or the Carpenters Local 87 pension plan who were either first employed after May 1,
2000, or, if first employed before May 2, 2000, elected to be excluded under Laws 2000,
chapter 461, article 7, section 5;
    (18) bricklayers, allied craftworkers, cement masons, glaziers, glassworkers,
painters, allied tradesworkers, and plasterers employed by the city of St. Paul or
Independent School District No. 625, St. Paul, with coverage under a collective
bargaining agreement by the Bricklayers and Allied Craftworkers Local 1 pension plan,
the Cement Masons Local 633 pension plan, the Glaziers and Glassworkers Local L-1324
pension plan, the Painters and Allied Trades Local 61 pension plan, or the Twin Cities
Plasterers Local 265 pension plan who were either first employed after May 1, 2001, or if
first employed before May 2, 2001, elected to be excluded under Laws 2001, First Special
Session chapter 10, article 10, section 6;
    (19) plumbers employed by the Metropolitan Airports Commission, with coverage
under a collective bargaining agreement by the Plumbers Local 34 pension plan, who either
were first employed after May 1, 2001, or if first employed before May 2, 2001, elected to
be excluded under Laws 2001, First Special Session chapter 10, article 10, section 6;
    (20) employees who are hired after June 30, 2002, to fill seasonal positions under
subdivision 12b which are limited in duration by the employer to 185 consecutive calendar
days or less in each year of employment with the governmental subdivision;
    (21) persons who are provided supported employment or work-study positions
by a governmental subdivision and who participate in an employment or industries
program maintained for the benefit of these persons where the governmental subdivision
limits the position's duration to three years or less, including persons participating in a
federal or state subsidized on-the-job training, work experience, senior citizen, youth, or
unemployment relief program where the training or work experience is not provided as a
part of, or for, future permanent public employment;
    (22) independent contractors and the employees of independent contractors; and
    (23) reemployed annuitants of the association during the course of that
reemployment.

    Sec. 3. Minnesota Statutes 2008, section 353.01, is amended by adding a subdivision
to read:
    Subd. 48. MERF division. "MERF division" means the separate retirement plan
within the general employees retirement plan of the Public Employees Retirement
Association containing the applicable provisions of Minnesota Statutes 2008, chapter
422A.

    Sec. 4. Minnesota Statutes 2008, section 353.01, is amended by adding a subdivision
to read:
    Subd. 49. MERF division account. "MERF division account" means the separate
account within the retirement fund of the general employees retirement fund of the
Public Employees Retirement Association in which the actuarial liabilities of the former
Minneapolis Employees Retirement Fund are held, and in which the assets of the former
Minneapolis Employees Retirement Fund are credited.

    Sec. 5. Minnesota Statutes 2008, section 353.05, is amended to read:
353.05 CUSTODIAN OF FUNDS.
The commissioner of management and budget shall be ex officio treasurer of the
retirement funds of the association, including the MERF division, and the general bond of
the commissioner of management and budget to the state shall must be so conditioned
as to cover all liability for acts as treasurer of these funds. All moneys money of the
association received by the commissioner of management and budget shall must be set
aside in the state treasury to the credit of the proper fund or account. The commissioner
of management and budget shall transmit monthly to the executive director a detailed
statement of all amounts so received and credited to the fund funds, including the MERF
division. Payments out of the fund shall funds, including the MERF division, may only
be made only on warrants issued by the commissioner of management and budget, upon
abstracts signed by the executive director; provided that abstracts for investment may be
signed by the secretary executive director of the State Board of Investment.

    Sec. 6. Minnesota Statutes 2009 Supplement, section 353.06, is amended to read:
353.06 STATE BOARD OF INVESTMENT TO INVEST FUNDS.
The executive director shall from time to time certify to the State Board of
Investment for investment such portions of the retirement fund funds of the association,
including the MERF division, as in its the director's judgment may not be required for
immediate use. The State Board of Investment shall thereupon invest and reinvest the sum
so certified, or transferred, in such securities as are duly authorized as legal investments
for state employees retirement fund under section 11A.24 and shall have has authority to
sell, convey, and exchange such securities and invest and reinvest the securities when it
deems it desirable to do so and shall sell securities upon request of the board of trustees
executive director when such funds are needed for its purposes. All of the provisions
regarding accounting procedures and restrictions and conditions for the purchase and
sale of securities under chapter 11A must apply to the accounting, purchase and sale of
securities for the funds of the Public Employees Retirement fund Association, including
the MERF division.

    Sec. 7. Minnesota Statutes 2008, section 353.27, as amended by Laws 2009, chapter
169, article 1, section 32, and article 4, sections 9, 10, 11, and 12, is amended to read:
353.27 PUBLIC GENERAL EMPLOYEES RETIREMENT FUND.
    Subdivision 1. Income; disbursements. There is a special fund known as the
"public general employees retirement fund," the "retirement fund," or the "fund," which
must include all the assets of the general employees retirement plan of the association.
This fund must be credited with all contributions, all interest and all other income of the
general employees retirement plan of the Public Employees Retirement Association that
are authorized by law. From this fund there is appropriated the payments authorized by
this chapter sections 353.01 to 353.46 in the amounts and at such time provided herein,
including the expenses of administering the general employees retirement plan and fund.
    Subd. 1a. MERF division account established; revenue and disbursements. The
MERF division account is established as a special account. The MERF division account
includes all of the assets of the former Minneapolis Employees Retirement Fund that
were transferred to the administration of the Public Employees Retirement Association
under section 353.50. The special account is credited with the contributions under
section 353.50, subdivision 7, state aid under sections 356.43 and 422A.101, subdivision
3, investment performance on the special account assets, and all other income of the
MERF division authorized by law. The payments of annuities and benefits authorized by
Minnesota Statutes 2008, chapter 422A, in the amounts and at the times provided in
that chapter, and the administrative expenses of the MERF division are appropriated
from the special account.
    Subd. 2. General employees retirement plan; employee contribution. (a) For
a basic member of the general employees retirement plan of the Public Employees
Retirement Association, the employee contribution is 9.10 percent of salary. For a
coordinated member of the general employees retirement plan of the Public Employees
Retirement Association, the employee contribution is six percent of salary plus any
contribution rate adjustment under subdivision 3b.
(b) These contributions must be made by deduction from salary as defined in section
353.01, subdivision 10, in the manner provided in subdivision 4. If any portion of a
member's salary is paid from other than public funds, the member's employee contribution
must be based on the total salary received by the member from all sources.
    Subd. 3. General employees retirement plan; employer contribution. (a) For
a basic member of the general employees retirement plan of the Public Employees
Retirement Association, the employer contribution is 9.10 percent of salary. For a
coordinated member of the general employees retirement plan of the Public Employees
Retirement Association, the employer contribution is six percent of salary plus any
contribution rate adjustment under subdivision 3b.
(b) This contribution must be made from funds available to the employing
subdivision by the means and in the manner provided in section 353.28.
    Subd. 3a. Additional employer contribution. (a) An additional employer
contribution to the general employees retirement fund of the Public Employees Retirement
Association must be made equal to the following applicable percentage of the total salary
amount for "basic members" and for "coordinated members":

Basic Program
Coordinated Program

Effective before January 1, 2006
2.68
.43

Effective January 1, 2006
2.68
.50

Effective January 1, 2009
2.68
.75

Effective January 1, 2010
2.68
1.00
These contributions must be made from funds available to the employing subdivision
by the means and in the manner provided in section 353.28.
(b) The coordinated program contribution rates set forth in paragraph (a) effective
for January 1, 2009, or January 1, 2010, must not be implemented if, following receipt of
the July 1, 2008, or July 1, 2009, annual actuarial valuation reports report under section
356.215, respectively, the actuarially required contributions are equal to or less than the
total rates under this section in effect as of January 1, 2008.
(c) This subdivision is repealed once the actuarial value of the assets of the general
employees retirement plan of the Public Employees Retirement Association equal or
exceed the actuarial accrued liability of the plan as determined by the actuary retained
under sections 356.214 and 356.215. The repeal is effective on the first day of the first full
pay period occurring after March 31 of the calendar year following the issuance of the
actuarial valuation upon which the repeal is based.
    Subd. 3b. Change in employee and employer contributions in certain instances.
(a) For purposes of this section, a contribution sufficiency exists if the total of the
employee contribution under subdivision 2, the employer contribution under subdivision
3, the additional employer contribution under subdivision 3a, and any additional
contribution previously imposed under this subdivision exceeds the total of the normal
cost, the administrative expenses, and the amortization contribution of the general
employees retirement plan as reported in the most recent actuarial valuation of the
retirement plan prepared by the actuary retained under section 356.214 and prepared under
section 356.215 and the standards for actuarial work of the Legislative Commission on
Pensions and Retirement. For purposes of this section, a contribution deficiency exists if
the total of the employee contributions under subdivision 2, the employer contributions
under subdivision 3, the additional employer contribution under subdivision 3a, and any
additional contribution previously imposed under this subdivision is less than the total
of the normal cost, the administrative expenses, and the amortization contribution of the
general employees retirement plan as reported in the most recent actuarial valuation of the
retirement plan prepared by the actuary retained under section 356.214 and prepared under
section 356.215 and the standards for actuarial work of the Legislative Commission on
Pensions and Retirement.
(b) Employee and employer contributions to the general employees retirement plan
under subdivisions 2 and 3 must be adjusted:
(1) if, after July 1, 2010, the regular actuarial valuations of the general employees
retirement plan of the Public Employees Retirement Association under section 356.215
indicate that there is a contribution sufficiency under paragraph (a) equal to or greater
than 0.5 percent of covered payroll for two consecutive years, the coordinated program
employee and employer contribution rates must be decreased as determined under
paragraph (c) to a level such that the sufficiency equals no more than 0.25 percent of
covered payroll based on the most recent actuarial valuation; or
(2) if, after July 1, 2010, the regular actuarial valuations of the general employees
retirement plan of the Public Employees Retirement Association under section 356.215
indicate that there is a deficiency equal to or greater than 0.5 percent of covered payroll for
two consecutive years, the coordinated program employee and employer contribution rates
must be increased as determined under paragraph (c) to a level such that no deficiency
exists based on the most recent actuarial valuation.
(c) The general employees retirement plan contribution rate increase or decrease
must be determined by the executive director of the Public Employees Retirement
Association, must be reported to the chair and the executive director of the Legislative
Commission on Pensions and Retirement on or before the next February 1, and, if the
Legislative Commission on Pensions and Retirement does not recommend against the rate
change or does not recommend a modification in the rate change, is effective on the
next July 1 following the determination by the executive director that a contribution
deficiency or sufficiency has existed for two consecutive fiscal years based on the most
recent actuarial valuations under section 356.215. If the actuarially required contribution
of the general employees retirement plan exceeds or is less than the total support provided
by the combined employee and employer contribution rates by more than 0.5 percent of
covered payroll, the general employees retirement plan coordinated program employee
and employer contribution rates must be adjusted incrementally over one or more years to
a level such that there remains a contribution sufficiency of no more than 0.25 percent
of covered payroll.
(d) No incremental adjustment may exceed 0.25 percent for either the general
employees retirement plan coordinated program employee and employer contribution rates
per year in which any adjustment is implemented. A general employees retirement plan
contribution rate adjustment under this subdivision must not be made until at least two
years have passed since fully implementing a previous adjustment under this subdivision.
(e) The general employees retirement plan contribution sufficiency or deficiency
determination under paragraphs (a) to (d) must be made without the inclusion of the
contributions to, the funded condition of, or the actuarial funding requirements of the
MERF division.
    Subd. 4. Employer reporting requirements; contributions; member status.
(a) A representative authorized by the head of each department shall deduct employee
contributions from the salary of each employee who qualifies for membership in the
general employees retirement plan of the Public Employees Retirement Association or in
the public employees police and fire retirement plan under this chapter and remit payment
in a manner prescribed by the executive director for the aggregate amount of the employee
contributions, the employer contributions and the additional employer contributions to be
received within 14 calendar days. The head of each department or the person's designee
shall for each pay period submit to the association a salary deduction report in the format
prescribed by the executive director. Data required to be submitted as part of salary
deduction reporting must include, but are not limited to:
(1) the legal names and Social Security numbers of employees who are members;
(2) the amount of each employee's salary deduction;
(3) the amount of salary from which each deduction was made;
(4) the beginning and ending dates of the payroll period covered and the date of
actual payment; and
(5) adjustments or corrections covering past pay periods.
(b) Employers must furnish the data required for enrollment for each new employee
who qualifies for membership in the general employees retirement plan of the Public
Employees Retirement Association or in the public employees police and fire retirement
plan in the format prescribed by the executive director. The required enrollment data
on new employees must be submitted to the association prior to or concurrent with the
submission of the initial employee salary deduction. The employer shall also report
to the association all member employment status changes, such as leaves of absence,
terminations, and death, and shall report the effective dates of those changes, on an
ongoing basis for the payroll cycle in which they occur. The employer shall furnish data,
forms, and reports as may be required by the executive director for proper administration
of the retirement system. Before implementing new or different computerized reporting
requirements, the executive director shall give appropriate advance notice to governmental
subdivisions to allow time for system modifications.
(c) Notwithstanding paragraph (a), the association executive director may provide
for less frequent reporting and payments for small employers.
    Subd. 7. Adjustment for erroneous receipts or disbursements. (a) Except
as provided in paragraph (b), erroneous employee deductions and erroneous employer
contributions and additional employer contributions to the general employees retirement
plan of the Public Employees Retirement Association or to the public employees police
and fire retirement plan for a person, who otherwise does not qualify for membership
under this chapter, are considered:
(1) valid if the initial erroneous deduction began before January 1, 1990. Upon
determination of the error by the association, the person may continue membership in the
association while employed in the same position for which erroneous deductions were
taken, or file a written election to terminate membership and apply for a refund upon
termination of public service or defer an annuity under section 353.34; or
(2) invalid, if the initial erroneous employee deduction began on or after January 1,
1990. Upon determination of the error, the association shall refund all erroneous employee
deductions and all erroneous employer contributions as specified in paragraph (e). No
person may claim a right to continued or past membership in the association based on
erroneous deductions which began on or after January 1, 1990.
(b) Erroneous deductions taken from the salary of a person who did not qualify for
membership in the general employees retirement plan of the Public Employees Retirement
Association or in the public employees police and fire retirement plan by virtue of
concurrent employment before July 1, 1978, which required contributions to another
retirement fund or relief association established for the benefit of officers and employees
of a governmental subdivision, are invalid. Upon discovery of the error, the association
shall remove all invalid service and, upon termination of public service, the association
shall refund all erroneous employee deductions to the person, with interest as determined
under section 353.34, subdivision 2, and all erroneous employer contributions without
interest to the employer. This paragraph has both retroactive and prospective application.
(c) Adjustments to correct employer contributions and employee deductions taken
in error from amounts which are not salary under section 353.01, subdivision 10, must
be made as specified in paragraph (e). The period of adjustment must be limited to the
fiscal year in which the error is discovered by the association and the immediate two
preceding fiscal years.
(d) If there is evidence of fraud or other misconduct on the part of the employee or
the employer, the board of trustees may authorize adjustments to the account of a member
or former member to correct erroneous employee deductions and employer contributions
on invalid salary and the recovery of any overpayments for a period longer than provided
for under paragraph (c).
(e) Upon discovery of the receipt of erroneous employee deductions and employer
contributions under paragraph (a), clause (2), or paragraph (c), the association must require
the employer to discontinue the erroneous employee deductions and erroneous employer
contributions reported on behalf of a member. Upon discontinuation, the association must:
(1) for a member, provide a refund or credit to the employer in the amount of the
invalid employee deductions with interest on the invalid employee deductions at the rate
specified under section 353.34, subdivision 2, from the received date of each invalid salary
transaction through the date the credit or refund is made; and the employer must pay the
refunded employee deductions plus interest to the member;
(2) for a former member who:
(i) is not receiving a retirement annuity or benefit, return the erroneous employee
deductions to the former member through a refund with interest at the rate specified under
section 353.34, subdivision 2, from the received date of each invalid salary transaction
through the date the credit or refund is made; or
(ii) is receiving a retirement annuity or disability benefit, or a person who is
receiving an optional annuity or survivor benefit, for whom it has been determined an
overpayment must be recovered, adjust the payment amount and recover the overpayments
as provided under this section; and
(3) return the invalid employer contributions reported on behalf of a member or
former member to the employer by providing a credit against future contributions payable
by the employer.
(f) In the event that a salary warrant or check from which a deduction for the
retirement fund was taken has been canceled or the amount of the warrant or check
returned to the funds of the department making the payment, a refund of the sum
deducted, or any portion of it that is required to adjust the deductions, must be made
to the department or institution.
(g) If the accrual date of any retirement annuity, survivor benefit, or disability benefit
is within the limitation period specified in paragraph (c), and an overpayment has resulted
by using invalid service or salary, or due to any erroneous calculation procedure, the
association must recalculate the annuity or benefit payable and recover any overpayment
as provided under subdivision 7b.
(h) Notwithstanding the provisions of this subdivision, the association may apply
the Revenue Procedures defined in the federal Internal Revenue Service Employee Plans
Compliance Resolution System and not issue a refund of erroneous employee deductions
and employer contributions or not recover a small overpayment of benefits if the cost to
correct the error would exceed the amount of the member refund or overpayment.
(i) Any fees or penalties assessed by the federal Internal Revenue Service for any
failure by an employer to follow the statutory requirements for reporting eligible members
and salary must be paid by the employer.
    Subd. 7a. Deductions or contributions transmitted by error. (a) If employee
deductions and employer contributions under this section, section 353.50, 353.65, or
353E.03 were erroneously transmitted to the association, but should have been transmitted
to another Minnesota public pension plan, the executive director shall transfer the
erroneous employee deductions and employer contributions to the appropriate retirement
fund or individual account, as applicable, without interest. The time limitations specified
in subdivisions 7 and 12 do not apply.
(b) For purposes of this subdivision, a Minnesota public pension plan means a
plan specified in section 356.30, subdivision 3, or the plans governed by chapters 353D
and 354B.
(c) A potential transfer under paragraph (a) that is reasonably determined to cause
the plan to fail to be a qualified plan under section 401(a) of the federal Internal Revenue
Code, as amended, must not be made by the executive director of the association. Within
30 days after being notified by the Public Employees Retirement Association of an
unmade potential transfer under this paragraph, the employer of the affected person
must transmit an amount representing the applicable salary deductions and employer
contributions, without interest, to the retirement fund of the appropriate Minnesota public
pension plan, or to the applicable individual account if the proper coverage is by a defined
contribution plan. The association must provide the employing unit a credit for the amount
of the erroneous salary deductions and employer contributions against future contributions
from the employer. If the employing unit receives a credit under this paragraph, the
employing unit is responsible for refunding to the applicable employee any amount that
had been erroneously deducted from the person's salary.
    Subd. 7b. Recovery of overpayments. (a) In the event the executive director
determines that an overpaid annuity or benefit that from the general employees retirement
plan of the Public Employees Retirement Association, the public employees police and
fire retirement plan, or the local government correctional employees retirement plan is
the result of invalid salary included in the average salary used to calculate the payment
amount must be recovered, the association must determine the amount of the employee
deductions taken in error on the invalid salary, with interest determined in the manner
provided for a former member under subdivision 7, paragraph (e), clause (2), item (i),
and must subtract that amount from the total annuity or benefit overpayment, and the
remaining balance of the overpaid annuity or benefit, if any, must be recovered.
(b) If the invalid employee deductions plus interest exceed the amount of the
overpaid benefits, the balance must be refunded to the person to whom the benefit or
annuity is being paid.
(c) Any invalid employer contributions reported on the invalid salary must be
credited to the employer as provided in subdivision 7, paragraph (e).
(d) If a member or former member, who is receiving a retirement annuity or
disability benefit for which an overpayment is being recovered, dies before recovery of
the overpayment is completed and a joint and survivor optional annuity is payable, the
remaining balance of the overpaid annuity or benefit must continue to be recovered from
the payment to the optional annuity beneficiary.
(e) If the association finds that a refund has been overpaid to a former member,
beneficiary or other person, the amount of the overpayment must be recovered for the
benefit of the respective retirement fund or account.
(f) The board of trustees shall adopt policies directing the period of time and manner
for the collection of any overpaid retirement or optional annuity, and survivor or disability
benefit, or a refund that the executive director determines must be recovered as provided
under this section.
    Subd. 7c. Limitation on additional plan coverage. No deductions for any plan
under this chapter or chapter 353E may be taken from the salary of a person who is
employed by a governmental subdivision under section 353.01, subdivision 6, and who is
receiving disability benefit payments from any plan under this chapter or chapter 353E
unless the person waives the right to further disability benefit payments.
    Subd. 8. District court reporters; salary deductions. Deductions from the salary
of a district court reporter in a judicial district consisting of two or more counties shall
must be made by the auditor of the county in which the bond and official oath of such
district court reporter are filed, from the portion of salary paid by such county.
    Subd. 9. Fee officers; contributions; obligations of employers. Any appointed or
elected officer of a governmental subdivision who was or is a "public employee" within
the meaning of section 353.01 and was or is a member of the fund general employees
retirement plan of the Public Employees Retirement Association and whose salary
was or is paid in whole or in part from revenue derived by fees and assessments, shall
pay employee contribution in the amount, at the time, and in the manner provided in
subdivisions 2 and 4. This subdivision shall does not apply to district court reporters.
The employer contribution as provided in subdivision 3, and the additional employer
contribution as provided in subdivision 3a, with respect to such service shall must be
paid by the governmental subdivision. This subdivision shall have has both retroactive
and prospective application as to all such members; and every employing governmental
subdivision is deemed liable, retroactively and prospectively, for all employer and
additional employer contributions for every such member of the general employees
retirement plan in its employ. Delinquencies under this section shall be are governed
in all respects by section 353.28.
    Subd. 10. Employer exclusion reports. The head of a department shall annually
furnish the executive director with an exclusion report listing only those employees in
potentially PERA-eligible PERA general employees retirement plan-eligible positions
who were not reported as members of the association general employees retirement plan
and who worked during the school year for school employees and calendar year for
nonschool employees. The department head must certify the accuracy and completeness
of the exclusion report to the association. The executive director shall prescribe the
manner and forms, including standardized exclusion codes, to be used by a governmental
subdivision in preparing and filing exclusion reports. The executive director shall also
check the exclusion report to ascertain whether any omissions have been made by a
department head in the reporting of new public employees for membership. The executive
director may delegate an association employee under section 353.03, subdivision 3a,
paragraph (b), clause (5), to conduct a field audit to review the payroll records of a
governmental subdivision.
    Subd. 11. Employers; required to furnish requested information. (a) All
governmental subdivisions shall furnish promptly such other information relative to the
employment status of all employees or former employees, including, but not limited to,
payroll abstracts pertaining to all past and present employees, as may be requested by the
executive director, including schedules of salaries applicable to various categories of
employment.
(b) In the event payroll abstract records have been lost or destroyed, for whatever
reason or in whatever manner, so that such schedules of salaries cannot be furnished
therefrom, the employing governmental subdivision, in lieu thereof, shall furnish to the
association an estimate of the earnings of any employee or former employee for any
period as may be requested by the executive director. If the association is provided a
schedule of estimated earnings, the executive director is authorized to use the same as a
basis for making whatever computations might be necessary for determining obligations
of the employee and employer to the general employees retirement fund plan, the public
employees police and fire retirement plan, or the local government correctional employees
retirement plan. If estimates are not furnished by the employer at the request of the
executive director, the executive director may estimate the obligations of the employee
and employer to the general employees retirement fund, the public employees police and
fire retirement plan, or the local government correctional employees retirement plan based
upon those records that are in its possession.
    Subd. 12. Omitted salary deductions; obligations. (a) In the case of omission
of required deductions for the general employees retirement plan, the public employees
police and fire retirement plan, or the local government correctional employees retirement
plan from the salary of an employee, the department head or designee shall immediately,
upon discovery, report the employee for membership and deduct the employee deductions
under subdivision 4 during the current pay period or during the pay period immediately
following the discovery of the omission. Payment for the omitted obligations may only be
made in accordance with reporting procedures and methods established by the executive
director.
(b) When the entire omission period of an employee does not exceed 60 days, the
governmental subdivision may report and submit payment of the omitted employee
deductions and the omitted employer contributions through the reporting processes under
subdivision 4.
(c) When the omission period of an employee exceeds 60 days, the governmental
subdivision shall furnish to the association sufficient data and documentation upon which
the obligation for omitted employee and employer contributions can be calculated.
The omitted employee deductions must be deducted from the employee's subsequent
salary payment or payments and remitted to the association for deposit in the applicable
retirement fund. The employee shall pay omitted employee deductions due for the 60
days prior to the end of the last pay period in the omission period during which salary
was earned. The employer shall pay any remaining omitted employee deductions and any
omitted employer contributions, plus cumulative interest at an annual rate of 8.5 percent
compounded annually, from the date or dates each omitted employee contribution was
first payable.
(d) An employer shall not hold an employee liable for omitted employee deductions
beyond the pay period dates under paragraph (c), nor attempt to recover from the employee
those employee deductions paid by the employer on behalf of the employee. Omitted
deductions due under paragraph (c) which are not paid by the employee constitute a
liability of the employer that failed to deduct the omitted deductions from the employee's
salary. The employer shall make payment with interest at an annual rate of 8.5 percent
compounded annually. Omitted employee deductions are no longer due if an employee
terminates public service before making payment of omitted employee deductions to
the association, but the employer remains liable to pay omitted employer contributions
plus interest at an annual rate of 8.5 percent compounded annually from the date the
contributions were first payable.
(e) The association may not commence action for the recovery of omitted employee
deductions and employer contributions after the expiration of three calendar years after
the calendar year in which the contributions and deductions were omitted. Except as
provided under paragraph (b), no payment may be made or accepted unless the association
has already commenced action for recovery of omitted deductions. An action for recovery
commences on the date of the mailing of any written correspondence from the association
requesting information from the governmental subdivision upon which to determine
whether or not omitted deductions occurred.
    Subd. 12a. Terminated employees: omitted deductions. A terminated employee
who was a member of the general employees retirement plan of the Public Employees
Retirement Association, the public employees police and fire retirement plan, or the local
government correctional employees retirement plan and who has a period of employment
in which previously omitted employer contributions were made under subdivision 12
but for whom no, or only partial, omitted employee contributions have been made, or
a member who had prior coverage in the association for which previously omitted
employer contributions were made under subdivision 12 but who terminated service
before required omitted employee deductions could be withheld from salary, may pay the
omitted employee deductions for the period on which omitted employer contributions
were previously paid plus interest at an annual rate of 8.5 percent compounded annually.
A terminated employee may pay the omitted employee deductions plus interest within six
months of an initial notification from the association of eligibility to pay those omitted
deductions. If a terminated employee is reemployed in a position covered under a public
pension fund under section 356.30, subdivision 3, and elects to pay omitted employee
deductions, payment must be made no later than six months after a subsequent termination
of public service.
    Subd. 12b. Terminated employees: immediate eligibility. If deductions were
omitted from salary adjustments or final salary of a terminated employee who was a
member of the general employees retirement plan, the public employees police and fire
retirement plan, or the local government correctional employees retirement plan and who
is immediately eligible to draw a monthly benefit, the employer shall pay the omitted
employer and employer additional contributions plus interest on both the employer and
employee amounts due at an annual rate of 8.5 percent compounded annually. The
employee shall pay the employee deductions within six months of an initial notification
from the association of eligibility to pay omitted deductions or the employee forfeits
the right to make the payment.
    Subd. 13. Certain warrants canceled. A warrant payable from the general
employees retirement fund, the public employees police and fire retirement fund, or the
local government correctional retirement fund remaining unpaid for a period of six
months must be canceled into the applicable retirement fund and not canceled into the
state's general fund.
    Subd. 14. Periods before initial coverage date. (a) If an entity is determined to
be a governmental subdivision due to receipt of a written notice of eligibility from the
association with respect to the general employees retirement plan, the public employees
police and fire retirement plan, or the local government correctional retirement plan, that
employer and its employees are subject to the requirements of subdivision 12, effective
retroactively to the date that the executive director of the association determines that
the entity first met the definition of a governmental subdivision, if that date predates
the notice of eligibility.
    (b) If the retroactive time period under paragraph (a) exceeds three years, an
employee is authorized to purchase service credit in the applicable Public Employees
Retirement Association plan for the portion of the period in excess of three years, by
making payment under section 356.551. Notwithstanding any provision of section
356.551, subdivision 2, to the contrary, regarding time limits on purchases, payment of a
service credit purchase amount may be made anytime before the termination of public
service.
    (c) This subdivision does not apply if the applicable employment under paragraph
(a) included coverage by any public or private defined benefit or defined contribution
retirement plan, other than a volunteer firefighters relief association. If this paragraph
applies, an individual is prohibited from purchasing service credit from a Public Employees
Retirement Association plan for any period or periods specified in paragraph (a).

    Sec. 8. Minnesota Statutes 2008, section 353.34, subdivision 1, is amended to read:
    Subdivision 1. Refund or deferred annuity. (a) A former member is entitled
to a refund of accumulated employee deductions under subdivision 2, or to a deferred
annuity under subdivision 3. Application for a refund may not be made before the date of
termination of public service. Except as specified in paragraph (b), a refund must be paid
within 120 days following receipt of the application unless the applicant has again become
a public employee required to be covered by the association.
(b) If an individual was placed on layoff under section 353.01, subdivision 12 or 12c,
a refund is not payable before termination of service under section 353.01, subdivision 11a.
(c) An individual who terminates public service covered by the Public Employees
Retirement Association general employees retirement plan, the MERF division, the
Public Employees Retirement Association police and fire retirement plan, or the public
employees local government corrections service retirement plan, and who is employed
by a different employer and who becomes an active member covered by one of the other
two plans, may receive a refund of employee contributions plus six percent interest
compounded annually from the plan from which the member terminated service.

    Sec. 9. Minnesota Statutes 2008, section 353.34, subdivision 6, is amended to read:
    Subd. 6. Additions to fund. The board of trustees may credit to the general
employees retirement fund any moneys money received in the form of contributions,
donations, gifts, appropriations, bequests, or otherwise.

    Sec. 10. Minnesota Statutes 2008, section 353.37, subdivision 1, is amended to read:
    Subdivision 1. Salary maximums. (a) The annuity of a person otherwise eligible
for an annuity under this chapter from the general employees retirement plan of the Public
Employees Retirement Association, the public employees police and fire retirement plan,
or the local government correctional employees retirement plan must be suspended under
subdivision 2 or reduced under subdivision 3, whichever results in the higher annual
annuity amount, if the person reenters public service as a nonelective employee of a
governmental subdivision in a position covered by this chapter or returns to work as an
employee of a labor organization that represents public employees who are association
members under this chapter and salary for the reemployment service exceeds the annual
maximum earnings allowable for that age for the continued receipt of full benefit amounts
monthly under the federal Old Age, Survivors and Disability Insurance Program as set by
the secretary of health and human services under United States Code, title 42, section 403,
in any calendar year. If the person has not yet reached the minimum age for the receipt
of Social Security benefits, the maximum salary for the person is equal to the annual
maximum earnings allowable for the minimum age for the receipt of Social Security
benefits.
(b) The provisions of paragraph (a) do not apply to the members of the MERF
division.

    Sec. 11. Minnesota Statutes 2008, section 353.37, subdivision 2, is amended to read:
    Subd. 2. Suspension of annuity. (a) The association shall suspend the annuity on
the first of the month after the month in which the salary of the reemployed annuitant
described in subdivision 1, paragraph (a), exceeds the maximums set in subdivision 1,
paragraph (a), based only on those months in which the annuitant is actually employed
in nonelective public service in a position covered under this chapter or employment
with a labor organization that represents public employees who are association members
of a retirement plan under this chapter or chapter 353E.
(b) An annuitant who is elected to public office after retirement may hold that office
and receive an annuity otherwise payable from a retirement plan administered by the
association.

    Sec. 12. Minnesota Statutes 2008, section 353.37, subdivision 3, is amended to read:
    Subd. 3. Reduction of annuity. (a) The association shall reduce the amount
of the annuity of a person who has not reached the retirement age by one-half of the
amount in excess of the applicable reemployment income maximum under subdivision
1, paragraph (a).
(b) There is no reduction upon reemployment, regardless of income, for a person
who has reached the retirement age.

    Sec. 13. Minnesota Statutes 2008, section 353.37, subdivision 4, is amended to read:
    Subd. 4. Resumption of annuity. The association shall resume paying a full
annuity to the reemployed annuitant described in subdivision 1, paragraph (a), at the
start of each calendar year until the salary exceeds the maximums under subdivision 1,
paragraph (a), or on the first of the month following the termination of the employment
which resulted in the suspension of the annuity. The executive director may adopt policies
regarding the suspension and reduction of annuities under this section.

    Sec. 14. Minnesota Statutes 2008, section 353.37, subdivision 5, is amended to read:
    Subd. 5. Effect on annuity. Except as provided under this section, public service
performed by an annuitant described in subdivision 1, paragraph (a), subsequent to
retirement under this chapter from the general employees retirement plan, the public
employees police and fire retirement plan, or the local government correctional employees
retirement plan does not increase or decrease the amount of an annuity. The annuitant shall
not make any further contributions to the association's a defined benefit plan administered
by the association by reason of this subsequent public service.

    Sec. 15. Minnesota Statutes 2008, section 353.46, subdivision 2, is amended to read:
    Subd. 2. Rights of deferred annuitant. The right entitlement of a deferred
annuitant or other former member of the general employees retirement plan of the
Public Employees Retirement Association, the Minneapolis Employees Retirement Fund
division, the public employees police and fire retirement plan, or the local government
correctional employees retirement plan to receive an annuity under the law in effect at the
time such the person terminated public service is herein preserved; provided, however,.
The provisions of section 353.71, subdivision 2, as amended by Laws 1973, chapter 753
shall, apply to a deferred annuitant or other former member who first begins receiving an
annuity after July 1, 1973.

    Sec. 16. Minnesota Statutes 2008, section 353.46, subdivision 6, is amended to read:
    Subd. 6. Computation of benefits for certain coordinated members. Any
coordinated member of the general employees retirement plan of the Public Employees
Retirement Association who prior to, before July 1, 1979, was a member of the former
coordinated program of the former Minneapolis Municipal Employees Retirement
Fund and who prior to, before July 1, 1978, was a member of the basic program of the
Minneapolis Municipal Employees Retirement Fund shall:
(1) be is entitled to receive a retirement annuity when otherwise qualified, the
calculation of which shall must utilize the formula accrual rates specified in section
422A.15, subdivision 1, for that portion of credited service which was rendered prior to
before July 1, 1978, and the formula accrual rates specified in section 353.29, subdivision
3
, for the remainder of credited service, both applied to the average salary as specified
in section 353.29, subdivision 2 353.01, subdivision 17a. The formula accrual rates to
be used in calculating the retirement annuity shall must recognize the service after July
1, 1978, as a member of the former coordinated program of the former Minneapolis
Municipal Employees Retirement Fund and after July 1, 1979, as a member of the
general employees retirement plan of the Public Employees Retirement Association as
a continuation of service rendered prior to before July 1, 1978. The annuity amount
attributable to service as a member of the basic program of the former Minneapolis
Municipal Employees Retirement Fund shall be is payable by from the Minneapolis
Employees Retirement Fund MERF division and the annuity amount attributable to all
other service shall be is payable by from the general employees retirement fund of the
Public Employees Retirement Association; .
(2) retain eligibility when otherwise qualified for a disability benefit from the
Minneapolis Employees Retirement Fund until July 1, 1982, notwithstanding coverage
by the Public Employees Retirement Association, if the member has or would, without
the transfer of retirement coverage from the basic program of the Minneapolis Municipal
Employees Retirement Fund to the coordinated program of the Minneapolis Municipal
Employees Retirement Fund or from the coordinated program of the Minneapolis
Municipal Employees Retirement Fund to the public employees retirement fund, have
sufficient credited service prior to January 1, 1983, to meet the minimum service
requirements for a disability benefit pursuant to section 422A.18. The disability benefit
amount attributable to service as a member of the basic program of the Minneapolis
Municipal Employees Retirement Fund shall be payable by the Minneapolis Employees
Retirement Fund and the disability benefit amount attributable to all other service shall be
payable by the Public Employees Retirement Association.

    Sec. 17. [353.50] MERF CONSOLIDATION ACCOUNT; ESTABLISHMENT
AND OPERATION.
    Subdivision 1. Administrative consolidation. (a) Notwithstanding any provision
of this chapter or chapter 422A to the contrary, the administration of the Minneapolis
Employees Retirement Fund as the MERF division is transferred to the Public Employees
Retirement Association board of trustees. The assets, service credit, and benefit liabilities
of the Minneapolis Employees Retirement Fund transfer to the MERF division account
within the general employees retirement plan of the Public Employees Retirement
Association established by section 353.27, subdivision 1a, on July 1, 2010.
(b) The creation of the MERF division must not be construed to alter the Social
Security or Medicare coverage of any member of the former Minneapolis Employees
Retirement Fund on June 29, 2010, while the person is employed in a position covered
under the MERF division of the Public Employees Retirement Association.
    Subd. 2. Membership transfer. Effective June 30, 2010, the active, inactive, and
retired members of the Minneapolis Employees Retirement Fund are transferred to the
MERF division administered by the Public Employees Retirement Association and are no
longer members of the Minneapolis Employees Retirement Fund.
    Subd. 3. Service credit and benefit liability transfer. (a) All allowable service
credit and salary credit of the members of the Minneapolis Employees Retirement Fund
as specified in the records of the Minneapolis Employees Retirement Fund through June
30, 2010, are transferred to the MERF division of the Public Employees Retirement
Association and are credited by the MERF division. Annuities or benefits of persons
who are active members of the former Minneapolis Employees Retirement Fund on
June 30, 2010, must be calculated under Minnesota Statutes 2008, sections 422A.11;
422A.12; 422A.13; 422A.14; 422A.15; 422A.151; 422A.155; 422A.156; 422A.16;
422A.17; 422A.18; 422A.19; 422A.20; and 422A.23, but are only eligible for automatic
postretirement adjustments after December 31, 2010, under section 356.415.
(b) The liability for the payment of annuities and benefits of the Minneapolis
Employees Retirement Fund retirees and benefit recipients as specified in the records
of the Minneapolis Employees Retirement Fund on June 29, 2010, is transferred to the
MERF division of the Public Employees Retirement Association on June 30, 2010.
    Subd. 4. Records transfer. On June 30, 2010, the executive director of the
Minneapolis Employees Retirement Fund shall transfer all records and documents relating
to the Minneapolis Employees Retirement Fund and its benefit plan 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. 5. Transfer of title to assets. On June 30, 2010, legal title to the assets of
the Minneapolis Employees Retirement Fund transfers to the State Board of Investment
and the assets must be invested under section 11A.14, as assets of the MERF division of
the Public Employees Retirement Association. The MERF division is the successor in
interest to all claims that the former Minneapolis Employees Retirement Fund may have
or may assert against any person and is the successor in interest to all claims which could
have been asserted against the former Minneapolis Employees Retirement Fund, but the
MERF division is not liable for any claim against the former Minneapolis Employees
Retirement Fund, its former governing board, or its former administrative staff acting in a
fiduciary capacity under chapter 356A or under common law, which is founded upon a
claim of breach of fiduciary duty, but where the act or acts constituting the claimed breach
were not undertaken in good faith, the Public Employees Retirement Association may
assert any applicable defense to any claim in any judicial or administrative proceeding
that the former Minneapolis Employees Retirement Fund, its former board, or its
former administrative staff would otherwise have been entitled to assert, and the Public
Employees Retirement Association may assert any applicable defense that it has in its
capacity as a statewide agency.
    Subd. 6. Benefits. (a) The annuities and benefits of, or attributable to, retired,
disabled, deferred, or inactive Minneapolis Employees Retirement Fund members
with that status as of June 30, 2010, with the exception of post-December 31, 2010,
postretirement adjustments, which are governed by paragraph (b), as calculated under
Minnesota Statutes 2008, sections 422A.11; 422A.12; 422A.13; 422A.14; 422A.15;
422A.151; 422A.155; 422A.156; 422A.16; 422A.17; 422A.18; 422A.19; 422A.20; and
422A.23, continue in force after the administrative consolidation under this article.
(b) After December 31, 2010, annuities and benefits from the MERF division are
eligible for annual automatic postretirement adjustments solely under section 356.415.
    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). 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) 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).
(g) The employer supplemental contribution under paragraph (e) or the special
additional employer contribution under paragraph (f) 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) The employer contributions under paragraphs (c), (d), and (e) must be paid as
provided in section 353.28.
(i) 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.
    Subd. 8. Minneapolis Municipal Retirement Association dues. If authorized
by an annuitant or retirement benefit recipient in writing on a form prescribed by the
executive director of the Public Employees Retirement Association, the executive director
shall deduct the dues for the Minneapolis Municipal Retirement Association from the
person's annuity or retirement benefit. This dues deduction authority expires upon the
eventual full consolidation of the MERF account under subdivision 9.
    Subd. 9. Eventual full consolidation. (a) Once the fiscal year end market value
of assets of the MERF division account equals or exceeds 80 percent of the actuarial
accrued liability of the MERF division as calculated by the approved actuary retained by
the Public Employees Retirement Association under section 356.215 and the Standards
for Actuarial Work adopted by the Legislative Commission on Pensions and Retirement,
the MERF division must be merged with the general employees retirement plan of the
Public Employees Retirement Association and the MERF division account ceases as a
separate account within the general employees retirement fund of the Public Employees
Retirement Association.
(b) If the market value of the MERF division account is less than 100 percent of the
actuarial accrued liability of the MERF division under paragraph (a), the total employer
contribution of employing units referenced in subdivision 7, paragraph (e), for the period
after the full consolidation and June 30, 2031, to amortize on a level annual dollar payment
the remaining unfunded actuarial accrued liability of the former MERF division account
on the full consolidation date by June 30, 2031, shall be calculated by the consulting
actuary retained under section 356.214 using the applicable postretirement interest rate
actuarial assumption for the general employees retirement plan under section 356.215.
The actuarial accrued liability of the MERF division must be calculated using the healthy
retired life mortality assumption applicable to the general employees retirement plan.
(c) The merger shall occur as of the first day of the first month after the date on
which the triggering actuarial valuation report is filed with the executive director of the
Legislative Commission on Pensions and Retirement.
(d) The executive director of the Public Employees Retirement Association shall
prepare proposed legislation fully implementing the merger and updating the applicable
provisions of chapters 353 and 356 and transmit the proposed legislation to the executive
director of the Legislative Commission on Pensions and Retirement by the following
February 15.
    Subd. 10. Merger of former MERF membership groups into PERA-general.
If provided for in an agreement between the board of trustees of the Public Employees
Retirement Association and the governing board of an employing unit formerly with
retirement coverage provided for its employees by the former Minneapolis Employees
Retirement Fund, an employing unit may transfer sufficient assets to the general
employees retirement fund to cover the anticipated actuarial accrued liability for its
current or former employees that is in excess of MERF division account assets attributable
to those employees, have those employees be considered full members of the general
employees retirement plan, and be relieved of any further contribution obligation to the
general employees retirement plan for those employees under this section. Any agreement
under this subdivision and any actuarial valuation report related to a merger under this
subdivision must be submitted to the executive director of the Legislative Commission on
Pensions and Retirement for comment prior to the final execution.

    Sec. 18. Minnesota Statutes 2008, section 353.64, subdivision 7, is amended to read:
    Subd. 7. Pension coverage for certain public safety employees of the
Metropolitan Airports Commission. Any person first employed as either a full-time
firefighter or a full-time police officer by the Metropolitan Airports Commission after June
30, 1978, who is not eligible for coverage under the agreement signed between the state
and the secretary of the federal Department of Health and Human Services making the
provisions of the federal Old Age, Survivors, and Disability Insurance Act applicable to
municipal employees because that position is excluded from application pursuant to under
Title 42, United States Code, Sections 418 (d) (5) (A) and 418 (d) (8) (D) and section
355.07, shall not be a member of the Minneapolis Employees Retirement Fund but shall
be is a member of the public employees police and fire fund and shall be is deemed to be a
firefighter or a police officer within the meaning of this section. The Metropolitan Airports
Commission shall make the employer contribution required pursuant to under section
353.65, subdivision 3, with respect to each of its firefighters or police officers covered
by the public employees police and fire fund and shall meet the employers recording and
reporting requirements set forth in section 353.65, subdivision 4.

    Sec. 19. Minnesota Statutes 2008, 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

Minneapolis employees retirement plan
6.0
5.0

Duluth teachers retirement plan
8.5
8.5

St. Paul teachers retirement plan
8.5
8.5

Minneapolis Police Relief Association
6.0
6.0

Fairmont Police Relief Association
5.0
5.0

Minneapolis Fire Department Relief Association
6.0
6.0

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

Minneapolis Police Relief Association
4.0

Fairmont Police Relief Association
3.5


Minneapolis Fire Department Relief
Association
4.0

Virginia Fire Department Relief Association
3.5


Bloomington Fire Department Relief
Association
4.0
    (2) modified single rate future salary increase assumption


plan
future salary
increase assumption




Minneapolis employees
retirement plan
the prior calendar year amount increased
first by 1.0198 percent to prior fiscal year
date and then increased by 4.0 percent
annually for each future year
    (3) (2) select and ultimate future salary increase assumption or graded rate future
salary increase assumption


plan
future salary
increase assumption


general state employees retirement plan
select calculation and
assumption A

correctional state employees retirement plan
assumption H

State Patrol retirement plan
assumption G


general public employees retirement plan
select calculation and
assumption B

public employees police and fire fund retirement plan
assumption C

local government correctional service retirement plan
assumption G

teachers retirement plan
assumption D

Duluth teachers retirement plan
assumption E

St. Paul teachers retirement plan
assumption F
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 and the general public 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, the public employees police
and fire plan, and the local government
correctional service plan; (2) 0.6 percent
for the general state employees retirement
plan and the general public 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
E
F
G
H

16
5.95%
5.95%
11.00%
7.70%
8.00%
6.90%
7.7500%
7.2500%

17
5.90
5.90
11.00
7.65
8.00
6.90
7.7500
7.2500

18
5.85
5.85
11.00
7.60
8.00
6.90
7.7500
7.2500

19
5.80
5.80
11.00
7.55
8.00
6.90
7.7500
7.2500

20
5.75
5.40
11.00
5.50
6.90
6.90
7.7500
7.2500

21
5.75
5.40
11.00
5.50
6.90
6.90
7.1454
6.6454

22
5.75
5.40
10.50
5.50
6.90
6.90
7.0725
6.5725

23
5.75
5.40
10.00
5.50
6.85
6.85
7.0544
6.5544

24
5.75
5.40
9.50
5.50
6.80
6.80
7.0363
6.5363

25
5.75
5.40
9.00
5.50
6.75
6.75
7.0000
6.5000

26
5.75
5.36
8.70
5.50
6.70
6.70
7.0000
6.5000

27
5.75
5.32
8.40
5.50
6.65
6.65
7.0000
6.5000

28
5.75
5.28
8.10
5.50
6.60
6.60
7.0000
6.5000

29
5.75
5.24
7.80
5.50
6.55
6.55
7.0000
6.5000

30
5.75
5.20
7.50
5.50
6.50
6.50
7.0000
6.5000

31
5.75
5.16
7.30
5.50
6.45
6.45
7.0000
6.5000

32
5.75
5.12
7.10
5.50
6.40
6.40
7.0000
6.5000

33
5.75
5.08
6.90
5.50
6.35
6.35
7.0000
6.5000

34
5.75
5.04
6.70
5.50
6.30
6.30
7.0000
6.5000

35
5.75
5.00
6.50
5.50
6.25
6.25
7.0000
6.5000

36
5.75
4.96
6.30
5.50
6.20
6.20
6.9019
6.4019

37
5.75
4.92
6.10
5.50
6.15
6.15
6.8074
6.3074

38
5.75
4.88
5.90
5.40
6.10
6.10
6.7125
6.2125

39
5.75
4.84
5.70
5.30
6.05
6.05
6.6054
6.1054

40
5.75
4.80
5.50
5.20
6.00
6.00
6.5000
6.0000

41
5.75
4.76
5.40
5.10
5.90
5.95
6.3540
5.8540

42
5.75
4.72
5.30
5.00
5.80
5.90
6.2087
5.7087

43
5.65
4.68
5.20
4.90
5.70
5.85
6.0622
5.5622

44
5.55
4.64
5.10
4.80
5.60
5.80
5.9048
5.4078

45
5.45
4.60
5.00
4.70
5.50
5.75
5.7500
5.2500

46
5.35
4.56
4.95
4.60
5.40
5.70
5.6940
5.1940

47
5.25
4.52
4.90
4.50
5.30
5.65
5.6375
5.1375

48
5.15
4.48
4.85
4.50
5.20
5.60
5.5822
5.0822

49
5.05
4.44
4.80
4.50
5.10
5.55
5.5404
5.0404

50
4.95
4.40
4.75
4.50
5.00
5.50
5.5000
5.0000

51
4.85
4.36
4.75
4.50
4.90
5.45
5.4384
4.9384

52
4.75
4.32
4.75
4.50
4.80
5.40
5.3776
4.8776

53
4.65
4.28
4.75
4.50
4.70
5.35
5.3167
4.8167

54
4.55
4.24
4.75
4.50
4.60
5.30
5.2826
4.7826

55
4.45
4.20
4.75
4.50
4.50
5.25
5.2500
4.7500

56
4.35
4.16
4.75
4.50
4.40
5.20
5.2500
4.7500

57
4.25
4.12
4.75
4.50
4.30
5.15
5.2500
4.7500

58
4.25
4.08
4.75
4.60
4.20
5.10
5.2500
4.7500

59
4.25
4.04
4.75
4.70
4.10
5.05
5.2500
4.7500

60
4.25
4.00
4.75
4.80
4.00
5.00
5.2500
4.7500

61
4.25
4.00
4.75
4.90
3.90
5.00
5.2500
4.7500

62
4.25
4.00
4.75
5.00
3.80
5.00
5.2500
4.7500

63
4.25
4.00
4.75
5.10
3.70
5.00
5.2500
4.7500

64
4.25
4.00
4.75
5.20
3.60
5.00
5.2500
4.7500

65
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

66
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

67
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

68
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

69
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

70
4.25
4.00
4.75
5.20
3.50
5.00
5.2500
4.7500

71
4.25
4.00
5.20
    (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
4.50%

correctional state employees retirement plan
4.50

State Patrol retirement plan
4.50

legislators retirement plan
4.50

judges retirement plan
4.00

general public employees retirement plan
4.50

public employees police and fire retirement plan
4.50


local government correctional service retirement
plan
4.50

teachers retirement plan
4.50

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.

    Sec. 20. Minnesota Statutes 2009 Supplement, 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, 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, the additional annual
contribution must be calculated on a level annual dollar amount basis.
    (b) For any retirement plan other than the Minneapolis Employees Retirement Fund,
the general employees a retirement plan of the Public Employees Retirement Association,
and the St. Paul Teachers Retirement Fund Association 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 Minneapolis Employees Retirement
Fund and 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 Minneapolis Employees Retirement Fund MERF division of the Public
Employees Retirement Association, the established date for full funding is June 30, 2020
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 shall 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 retirement plans for which the annual actuarial valuation indicates an
excess of valuation assets over the actuarial accrued liability, the valuation assets in
excess of the actuarial accrued liability must be recognized as a reduction in the current
contribution requirements by an amount equal to the amortization of the excess expressed
as a level percentage of pay over a 30-year period beginning anew with each annual
actuarial valuation of the plan.

    Sec. 21. Minnesota Statutes 2008, section 422A.101, subdivision 3, is amended to read:
    Subd. 3. State contributions. (a) Subject to the limitation set forth in paragraph
(c), the state shall pay to the MERF division account of the Public Employees Retirement
Association with respect to the former Minneapolis Employees Retirement Fund annually
an amount equal to the amount calculated under paragraph (b).
    (b) The payment amount is an amount equal to the financial requirements of the
Minneapolis Employees Retirement Fund MERF division of the Public Employees
Retirement Association reported in the actuarial valuation of the fund general employees
retirement plan of the Public Employees Retirement Association prepared by the actuary
retained under section 356.214 consistent with section 356.215 for the most recent year
but based on a target date for full amortization of the unfunded actuarial accrued liabilities
by June 30, 2020 2031, less the amount of employee contributions required under section
422A.10 353.50, subdivision 7, paragraph (b), and the amount of employer contributions
required under subdivisions 1a, 2, and 2a section 353.50, subdivision 7, paragraphs (c)
and (d). Payments shall must be made September 15 annually.
    (c) The annual state contribution under this subdivision may not exceed $9,000,000,
plus the cost of the annual supplemental benefit determined under Minnesota Statutes
2008, section 356.43, through June 30, 2012, and may not exceed $9,000,000, plus the
cost of the annual supplemental benefit determined under Minnesota Statutes 2008, section
356.43, plus $13,750,000 on September 15, 2011, $13,750,000 on September 15, 2012,
and $15,000,000 on September 15, 2013, and annually thereafter.
    (d) Annually and after June 30, 2012, if the amount determined under paragraph
(b) exceeds $9,000,000 the applicable maximum amount specified in paragraph (c),
the excess must be allocated to and paid to the fund by the employers identified in
Minnesota Statutes 2008, section 422A.101, subdivisions 1a and, 2, other than units of
metropolitan government and 2a. Each employer's share of the excess is proportionate
to the employer's share of the fund's unfunded actuarial accrued liability as disclosed in
the annual actuarial valuation prepared by the actuary retained under section 356.214
compared to the total unfunded actuarial accrued liability as of July 1, 2009, attributed
to all employers identified in Minnesota Statutes 2008, section 422A.101, subdivisions
1a and 2, other than units of metropolitan government. Payments must be made in equal
installments as set forth in paragraph (b).
(e) State contributions under this section end on September 15, 2031, or on
September 1 following the first date on which the current assets of the MERF division
of the Public Employees Retirement Association equal or exceed the actuarial accrued
liability of the MERF division of the Public Employees Retirement Association,
whichever occurs earlier.

    Sec. 22. Minnesota Statutes 2008, section 422A.26, is amended to read:
422A.26 COVERAGE BY THE PUBLIC EMPLOYEES RETIREMENT
ASSOCIATION.
Notwithstanding section 422A.09, or any other law to the contrary, any person
whose employment by, or assumption of a position as an appointed or elected officer
of, the city of Minneapolis, any of the boards, departments, or commissions operated
as a department of the city of Minneapolis or independently if financed in whole or in
part by funds of the city of Minneapolis, the Metropolitan Airports Commission, the
former Minneapolis Employees Retirement Fund, or Special School District Number 1 if
the person is not a member of the Minneapolis Teachers Retirement Fund Association
by virtue of that employment or position, initially commences on or after July 1, 1979
shall be, is a member of the general employees retirement plan of the Public Employees
Retirement Association unless excluded from membership pursuant to under section
353.01, subdivision 2b. In no event shall there be any new members of the contributing
class of the Minneapolis employees fund on or after July 1, 1979.

    Sec. 23. JULY 1, 2010, MERF DIVISION ACTUARIAL VALUATION
ASSUMPTIONS.
The approved actuary retained by the Minneapolis Employees Retirement Fund shall
compare the actuarial assumptions to be used for the July 1, 2010, actuarial valuation of
the general employees retirement plan of the Public Employees Retirement Association
with the actuarial assumptions used to prepare the July 1, 2009, actuarial valuation of the
Minneapolis Employees Retirement Fund and, on or before July 1, 2010, shall recommend
to the approved actuary retained by the Public Employees Retirement Association and to
the Legislative Commission on Pensions and Retirement the actuarial assumptions that
the actuary believes would be appropriate for the MERF division portion of the actuarial
valuation of the general employees retirement plan of the Public Employees Retirement
Association. Any actuarial assumption changes related to the MERF division must be
approved under Minnesota Statutes, section 356.215, subdivision 18.

    Sec. 24. MINNEAPOLIS MUNICIPAL RETIREMENT ASSOCIATION.
(a) The administrative consolidation of the former Minneapolis Employees
Retirement Fund into the general employees retirement plan of the Public Employees
Retirement Association and the merger of the MERF division of the Public Employees
Retirement Association into the general employees retirement plan of the Public
Employees Retirement Association does not affect the function of the Minneapolis
Municipal Retirement Association, a nonprofit corporation, to monitor the administration
of the retirement coverage for former members of the former Minneapolis Employees
Retirement Fund.
(b) Nothing in this article entitles the Minneapolis Municipal Retirement Association
to receive any revenue derived from taxes or obligates the Public Employees Retirement
Association to undertake any special duties with respect to the corporation.

    Sec. 25. TRANSFER OF MERF EMPLOYEES.
(a) Unless the employee elects the severance pay option under paragraph (c),
full-time employees of the Minneapolis Employees Retirement Fund first employed
before June 30, 2008, and employed full time by the Minneapolis Employees Retirement
Fund on June 29, 2010, with the employment title of benefits coordinator, are transferred
to employment by the city of Minneapolis on July 1, 2010. The chief human relations
official of the city of Minneapolis shall place the transferred employee in an appropriate
employment position based on the employee's education and employment experience.
Transferred employees must have their accumulated, but unused, vacation and sick leave
balances as of June 30, 2010, posted to the individual accounts with the new employer.
The transferred employees must receive length of service credit for time served with the
Minneapolis Employees Retirement Fund. The transferred employee must be given the
opportunity as of the date of transfer to be covered for all health and other insurance
benefits offered by the new employer. Upon the transfer of the employee, the Minneapolis
Employees Retirement Fund shall transfer assets to the city of Minneapolis equal to the
present value of any accumulated unused vacation or sick leave balances as of the date
of transfer.
(b) Unless the employee elects the severance pay option under paragraph (c),
full-time employees of the Minneapolis Employees Retirement Fund first employed before
June 30, 2008, and employed full time by the Minneapolis Employees Retirement Fund
on June 29, 2010, with the employment title of accounting manager or accountant II are
transferred to employment by the Public Employees Retirement Association on July 1,
2010. The chief human relations official of the Public Employees Retirement Association
shall place the transferred employee in an appropriate employment position based on the
employee's education and employment experience. Transferred employees must have
their accumulated, but unused, vacation and sick leave balances as of June 30, 2010,
posted to the individual accounts with the new employer. The transferred employees
must receive length of service credit for time served with the Minneapolis Employees
Retirement Fund. The transferred employee must be given the opportunity as of the
date of transfer to be covered for all health and other insurance benefits offered by the
new employer. Upon the transfer of the employee, the executive director of the Public
Employees Retirement Association shall deduct from any assets transferred under section
353.50 an amount equal to the present value of any accumulated unused vacation or sick
leave balances as of the date of transfer.
(c) An employee covered by paragraph (a) or (b) who elects not to transfer to the
new employer unit is granted severance pay in an amount equivalent to one year of salary
based on the last annual salary rate received by the employee. The election must be
made prior to June 30, 2010, and is irrevocable. The severance pay is payable from the
Minneapolis Employees Retirement Fund on June 30, 2010.

    Sec. 26. REVISOR'S INSTRUCTION.
In the next and future editions of Minnesota Statutes, the revisor of statutes shall
renumber Minnesota Statutes, section 422A.101, subdivision 3, as Minnesota Statutes,
section 353.505, and shall renumber Minnesota Statutes, section 422A.26, as Minnesota
Statutes, section 353.855. The revisor of statutes shall make conforming changes in
Minnesota Statutes and Minnesota Rules consistent with the renumbering.

    Sec. 27. REPEALER.
Minnesota Statutes 2008, sections 13.63, subdivision 1; 69.011, subdivision 2a;
356.43; 422A.01, subdivisions 1, 2, 3, 4, 4a, 5, 6, 7, 8, 9, 10, 11, 12, 13a, 17, and 18;
422A.02; 422A.03; 422A.04; 422A.05, subdivisions 1, 2a, 2b, 2c, 2d, 2e, 2f, 5, 6,
and 8; 422A.06, subdivisions 1, 2, 3, 5, 6, and 7; 422A.08, subdivision 1; 422A.09;
422A.10; 422A.101, subdivisions 1, 1a, 2, and 2a; 422A.11; 422A.12; 422A.13; 422A.14,
subdivision 1; 422A.15; 422A.151; 422A.155; 422A.156; 422A.16, subdivisions 1, 2, 3,
4, 5, 6, 7, 8, 9, and 10; 422A.17; 422A.18, subdivisions 1, 2, 3, 4, 5, and 7; 422A.19;
422A.20; 422A.21; 422A.22, subdivisions 1, 3, 4, and 6; 422A.23, subdivisions 1, 2, 5, 6,
7, 8, 9, 10, 11, and 12; 422A.231; 422A.24; and 422A.25, are repealed.
Minnesota Statutes 2009 Supplement, sections 422A.06, subdivision 8; and
422A.08, subdivision 5, are repealed.

    Sec. 28. EFFECTIVE DATE.
Sections 1 to 27 are effective June 30, 2010.

ARTICLE 12
CONFORMING CHANGES RELATED TO THE MERF
ADMINISTRATIVE CONSOLIDATION

    Section 1. Minnesota Statutes 2009 Supplement, section 6.67, is amended to read:
6.67 PUBLIC ACCOUNTANTS; REPORT OF POSSIBLE MISCONDUCT.
    Whenever a public accountant in the course of auditing the books and affairs of a
political subdivision or a local public pension plan governed by section 69.77, sections
69.771 to 69.775, or chapter 354A, 422A, 423B, 423C, or 424A, discovers evidence
pointing to nonfeasance, misfeasance, or malfeasance, on the part of an officer or
employee in the conduct of duties and affairs, the public accountant shall promptly make
a report of such discovery to the state auditor and the county attorney of the county in
which the governmental unit is situated and the public accountant shall also furnish a
copy of the report of audit upon completion to said officers. The county attorney shall
act on such report in the same manner as required by law for reports made to the county
attorney by the state auditor.

    Sec. 2. Minnesota Statutes 2008, section 11A.23, subdivision 4, is amended to read:
    Subd. 4. Covered retirement funds and plans. The provisions of this section shall
apply to the following retirement funds and plans:
(1) Board of Trustees of the Minnesota State Colleges and Universities supplemental
retirement plan established under chapter 354C;
(2) state employees retirement fund established pursuant to chapter 352;
(3) correctional employees retirement plan established pursuant to chapter 352;
(4) State Patrol retirement fund established pursuant to chapter 352B;
(5) unclassified employees retirement plan established pursuant to chapter 352D;
(6) public general employees retirement fund established pursuant to chapter 353;
(7) public employees police and fire fund established pursuant to chapter 353;
(8) teachers' retirement fund established pursuant to chapter 354;
(9) judges' retirement fund established pursuant to chapter 490; and
(10) any other funds required by law to be invested by the board.

    Sec. 3. Minnesota Statutes 2008, section 13D.01, subdivision 1, is amended to read:
    Subdivision 1. In executive branch, local government. All meetings, including
executive sessions, must be open to the public
(a) of a state
(1) agency,
(2) board,
(3) commission, or
(4) department,
when required or permitted by law to transact public business in a meeting;
(b) of the governing body of a
(1) school district however organized,
(2) unorganized territory,
(3) county,
(4) statutory or home rule charter city,
(5) town, or
(6) other public body;
(c) of any
(1) committee,
(2) subcommittee,
(3) board,
(4) department, or
(5) commission,
of a public body; and
(d) of the governing body or a committee of:
(1) a statewide public pension plan defined in section 356A.01, subdivision 24; or
(2) a local public pension plan governed by section 69.77, sections 69.771 to 69.775,
or chapter 354A, 422A, or 423B.

    Sec. 4. Minnesota Statutes 2008, section 43A.17, subdivision 9, is amended to read:
    Subd. 9. Political subdivision compensation limit. (a) The salary and the value of
all other forms of compensation of a person employed by a political subdivision of this
state, excluding a school district, or employed under section 422A.03 may not exceed 110
percent of the salary of the governor as set under section 15A.082, except as provided
in this subdivision. For purposes of this subdivision, "political subdivision of this state"
includes a statutory or home rule charter city, county, town, metropolitan or regional
agency, or other political subdivision, but does not include a hospital, clinic, or health
maintenance organization owned by such a governmental unit.
(b) Beginning in 2006, the limit in paragraph (a) shall must be adjusted annually in
January. The limit shall must equal the limit for the prior year increased by the percentage
increase, if any, in the Consumer Price Index for all-urban consumers from October of the
second prior year to October of the immediately prior year.
(c) Deferred compensation and payroll allocations to purchase an individual annuity
contract for an employee are included in determining the employee's salary. Other forms of
compensation which shall must be included to determine an employee's total compensation
are all other direct and indirect items of compensation which are not specifically excluded
by this subdivision. Other forms of compensation which shall must not be included in a
determination of an employee's total compensation for the purposes of this subdivision are:
(1) employee benefits that are also provided for the majority of all other full-time
employees of the political subdivision, vacation and sick leave allowances, health and
dental insurance, disability insurance, term life insurance, and pension benefits or like
benefits the cost of which is borne by the employee or which is not subject to tax as
income under the Internal Revenue Code of 1986;
(2) dues paid to organizations that are of a civic, professional, educational, or
governmental nature; and
(3) reimbursement for actual expenses incurred by the employee which the
governing body determines to be directly related to the performance of job responsibilities,
including any relocation expenses paid during the initial year of employment.
The value of other forms of compensation shall be is the annual cost to the political
subdivision for the provision of the compensation.
(d) The salary of a medical doctor or doctor of osteopathy occupying a position that
the governing body of the political subdivision has determined requires an M.D. or D.O.
degree is excluded from the limitation in this subdivision.
(e) The commissioner may increase the limitation in this subdivision for a position
that the commissioner has determined requires special expertise necessitating a higher
salary to attract or retain a qualified person. The commissioner shall review each proposed
increase giving due consideration to salary rates paid to other persons with similar
responsibilities in the state and nation. The commissioner may not increase the limitation
until the commissioner has presented the proposed increase to the Legislative Coordinating
Commission and received the commission's recommendation on it. The recommendation
is advisory only. If the commission does not give its recommendation on a proposed
increase within 30 days from its receipt of the proposal, the commission is deemed to have
made no recommendation. If the commissioner grants or granted an increase under this
paragraph, the new limitation shall must be adjusted beginning in August 2005 and in each
subsequent calendar year in January by the percentage increase equal to the percentage
increase, if any, in the Consumer Price Index for all-urban consumers from October of the
second prior year to October of the immediately prior year.

    Sec. 5. Minnesota Statutes 2008, section 43A.316, subdivision 8, is amended to read:
    Subd. 8. Continuation of coverage. (a) A former employee of an employer
participating in the program who is receiving a public pension disability benefit or an
annuity or has met the age and service requirements necessary to receive an annuity under
chapter 353, 353C, 354, 354A, 356, 422A, 423, 423A, or 424, or Minnesota Statutes
2008, chapter 422A, and the former employee's dependents, are eligible to participate in
the program. This participation is at the person's expense unless a collective bargaining
agreement or personnel policy provides otherwise. Premiums for these participants must
be established by the commissioner.
The commissioner may provide policy exclusions for preexisting conditions
only when there is a break in coverage between a participant's coverage under the
employment-based group insurance program and the participant's coverage under this
section. An employer shall notify an employee of the option to participate under this
paragraph no later than the effective date of retirement. The retired employee or the
employer of a participating group on behalf of a current or retired employee shall notify
the commissioner within 30 days of the effective date of retirement of intent to participate
in the program according to the rules established by the commissioner.
(b) The spouse of a deceased employee or former employee may purchase the
benefits provided at premiums established by the commissioner if the spouse was a
dependent under the employee's or former employee's coverage under this section at the
time of the death. The spouse remains eligible to participate in the program as long as
the group that included the deceased employee or former employee participates in the
program. Coverage under this clause must be coordinated with relevant insurance benefits
provided through the federally sponsored Medicare program.
(c) The program benefits must continue in the event of strike permitted by section
179A.18, if the exclusive representative chooses to have coverage continue and the
employee pays the total monthly premiums when due.
(d) A participant who discontinues coverage may not reenroll.
Persons participating under these paragraphs shall make appropriate premium
payments in the time and manner established by the commissioner.

    Sec. 6. Minnesota Statutes 2009 Supplement, 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 with respect to peace officers covered under chapter 422A; 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 a local police relief association to which section 69.77
applies the Minneapolis Police Relief Association, the State Patrol retirement plan, or the
public employees police and fire fund, or the Minneapolis Employees Retirement 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 (2) and (3).
    (j) "Municipal clerk, municipal clerk-treasurer, or county auditor" means 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. In a park district,
the clerk is the secretary of the board of park district commissioners. In the case of the
University of Minnesota, the clerk is that official designated by the Board of Regents.
For the Metropolitan Airports Commission, the clerk is the person designated by the
commission. For the Department of Natural Resources or the Department of Public Safety,
the clerk is the respective commissioner. 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.
(k) "Voluntary statewide lump-sum volunteer firefighter retirement plan" means the
retirement plan established by chapter 353G.

    Sec. 7. Minnesota Statutes 2008, section 69.021, subdivision 10, is amended to read:
    Subd. 10. Reduction in police state aid apportionment. (a) The commissioner of
revenue shall reduce the apportionment of police state aid under subdivisions 5, paragraph
(b), 6, and 7a, for eligible employer units by any excess police state aid.
(b) "Excess police state aid" is:
(1) for counties and for municipalities in which police retirement coverage is
provided wholly by the public employees police and fire fund and all police officers are
members of the plan governed by sections 353.63 to 353.657, the amount in excess of the
employer's total prior calendar year obligation as defined in paragraph (c), as certified by
the executive director of the Public Employees Retirement Association;
(2) for municipalities in which police retirement coverage is provided in part by the
public employees police and fire fund governed by sections 353.63 to 353.657 and in
part by a local police consolidation account governed by chapter 353A, and established
before March 2, 1999, for which the municipality declined merger under section 353.665,
subdivision 1
, or established after March 1, 1999, the amount in excess of the employer's
total prior calendar year obligation as defined in paragraph (c), plus the amount of the
employer's total prior calendar year obligation under section 353A.09, subdivision 5,
paragraphs (a) and (b), as certified by the executive director of the Public Employees
Retirement Association;
(3) for municipalities in which police retirement coverage is provided by the public
employees police and fire plan governed by sections 353.63 to 353.657, in which police
retirement coverage was provided by a police consolidation account under chapter
353A before July 1, 1999, and for which the municipality has an additional municipal
contribution under section 353.665, subdivision 8, paragraph (b), the amount in excess of
the employer's total prior calendar year obligation as defined in paragraph (c), plus the
amount of any additional municipal contribution under section 353.665, subdivision 8,
paragraph (b), until the year 2010, as certified by the executive director of the Public
Employees Retirement Association;
(4) for municipalities in which police retirement coverage is provided in part by the
public employees police and fire fund governed by sections 353.63 to 353.657 and in part
by a local police relief association governed by sections 69.77 and 423A.01, the amount
in excess of the employer's total prior calendar year obligation as defined in paragraph
(c), as certified by the executive director of the public employees retirement association,
plus the amount of the financial requirements of the relief association certified to the
applicable municipality during the prior calendar year under section 69.77, subdivisions 4
and 5, reduced by the amount of member contributions deducted from the covered salary
of the relief association during the prior calendar year under section 69.77, subdivision 3,
as certified by the chief administrative officer of the applicable municipality;
(5) for the Metropolitan Airports Commission, if there are police officers hired
before July 1, 1978, with retirement coverage by the Minneapolis Employees Retirement
Fund remaining, the amount in excess of the commission's total prior calendar year
obligation as defined in paragraph (c), as certified by the executive director of the Public
Employees Retirement Association, plus the amount determined by expressing the
commission's total prior calendar year contribution to the Minneapolis Employees
Retirement Fund under section 422A.101, subdivisions 2 and 2a, as a percentage of
the commission's total prior calendar year covered payroll for commission employees
covered by the Minneapolis Employees Retirement Fund and applying that percentage
to the commission's total prior calendar year covered payroll for commission police
officers covered by the Minneapolis Employees Retirement Fund, as certified by the chief
administrative officer of the Metropolitan Airports Commission; and
(6) for the Department of Natural Resources and for the Department of Public
Safety, the amount in excess of the employer's total prior calendar year obligation under
section 352B.02, subdivision 1c, for plan members who are peace officers under section
69.011, subdivision 1, clause (g), as certified by the executive director of the Minnesota
State Retirement System.
(c) The employer's total prior calendar year obligation with respect to the public
employees police and fire plan is the total prior calendar year obligation under section
353.65, subdivision 3, for police officers as defined in section 353.64, subdivision 2,
and the actual total prior calendar year obligation under section 353.65, subdivision 3,
for firefighters, as defined in section 353.64, subdivision 3, but not to exceed for those
firefighters the applicable following amounts:

Municipality
Maximum Amount

Albert Lea
$54,157.01

Anoka
10,399.31

Apple Valley
5,442.44

Austin
49,864.73

Bemidji
27,671.38

Brooklyn Center
6,605.92

Brooklyn Park
24,002.26

Burnsville
15,956.00

Cloquet
4,260.49

Coon Rapids
39,920.00

Cottage Grove
8,588.48

Crystal
5,855.00

East Grand Forks
51,009.88

Edina
32,251.00

Elk River
5,216.55

Ely
13,584.16

Eveleth
16,288.27

Fergus Falls
6,742.00

Fridley
33,420.64

Golden Valley
11,744.61

Hastings
16,561.00

Hopkins
4,324.23

International Falls
14,400.69

Lakeville
782.35

Lino Lakes
5,324.00

Little Falls
7,889.41

Maple Grove
6,707.54

Maplewood
8,476.69

Minnetonka
10,403.00

Montevideo
1,307.66

Moorhead
68,069.26

New Hope
6,739.72

North St. Paul
4,241.14

Northfield
770.63

Owatonna
37,292.67

Plymouth
6,754.71

Red Wing
3,504.01

Richfield
53,757.96

RosemontRosemount
1,712.55

Roseville
9,854.51

St. Anthony
33,055.00

St. Louis Park
53,643.11

Thief River Falls
28,365.04

Virginia
31,164.46

Waseca
11,135.17

West St. Paul
15,707.20

White Bear Lake
6,521.04

Woodbury
3,613.00

any other municipality
0.00
(d) The total amount of excess police state aid must be deposited in the excess
police state-aid account in the general fund, administered and distributed as provided
in subdivision 11.

    Sec. 8. Minnesota Statutes 2009 Supplement, section 69.031, subdivision 5, is
amended to read:
    Subd. 5. Deposit of state aid. (a) If the municipality or the independent nonprofit
firefighting corporation is covered by the voluntary statewide lump-sum volunteer
firefighter retirement plan under chapter 353G, the executive director shall credit the fire
state aid against future municipal contribution requirements under section 353G.08 and
shall notify the municipality or independent nonprofit firefighting corporation of the fire
state aid so credited at least annually. If the municipality or the independent nonprofit
firefighting corporation is not covered by the voluntary statewide lump-sum volunteer
firefighter retirement plan, the municipal treasurer shall, within 30 days after receipt,
transmit the fire state aid to the treasurer of the duly incorporated firefighters' relief
association if there is one organized and the association has filed a financial report with the
municipality. If the relief association has not filed a financial report with the municipality,
the municipal treasurer shall delay transmission of the fire state aid to the relief association
until the complete financial report is filed. If the municipality or independent nonprofit
firefighting corporation is not covered by the voluntary statewide lump-sum volunteer
firefighter retirement plan, if there is no relief association organized, or if the association
has dissolved or has been removed as trustees of state aid, then the treasurer of the
municipality shall deposit the money in the municipal treasury and the money may be
disbursed only for the purposes and in the manner set forth in section 424A.08 or for the
payment of the employer contribution requirement with respect to firefighters covered by
the public employees police and fire retirement plan under section 353.65, subdivision 3.
(b) The municipal treasurer, upon receipt of the police state aid, shall disburse the
police state aid in the following manner:
(1) For a municipality in which a local police relief association exists and all peace
officers are members of the association, the total state aid must be transmitted to the
treasurer of the relief association within 30 days of the date of receipt, and the treasurer
of the relief association shall immediately deposit the total state aid in the special fund
of the relief association;
(2) For a municipality in which police retirement coverage is provided by the public
employees police and fire fund and all peace officers are members of the fund, including
municipalities covered by section 353.665, the total state aid must be applied toward the
municipality's employer contribution to the public employees police and fire fund under
sections 353.65, subdivision 3, and 353.665, subdivision 8, paragraph (b), if applicable; or
(3) For a municipality other than a city of the first class with a population of more
than 300,000 in which both a police relief association exists and police retirement
coverage is provided in part by the public employees police and fire fund, the municipality
may elect at its option to transmit the total state aid to the treasurer of the relief association
as provided in clause (1), to use the total state aid to apply toward the municipality's
employer contribution to the public employees police and fire fund subject to all the
provisions set forth in clause (2), or to allot the total state aid proportionately to be
transmitted to the police relief association as provided in this subdivision and to apply
toward the municipality's employer contribution to the public employees police and fire
fund subject to the provisions of clause (2) on the basis of the respective number of active
full-time peace officers, as defined in section 69.011, subdivision 1, clause (g).
For a city of the first class with a population of more than 300,000, in addition, the
city may elect to allot the appropriate portion of the total police state aid to apply toward
the employer contribution of the city to the public employees police and fire fund based
on the covered salary of police officers covered by the fund each payroll period and to
transmit the balance to the police relief association; or
(4) For a municipality in which police retirement coverage is provided in part by
the public employees police and fire fund and in part by a local police consolidation
account governed by chapter 353A and established before March 2, 1999, for which the
municipality declined merger under section 353.665, subdivision 1, or established after
March 1, 1999, the total police state aid must be applied towards the municipality's total
employer contribution to the public employees police and fire fund and to the local police
consolidation account under sections 353.65, subdivision 3, and 353A.09, subdivision 5.
(c) The county treasurer, upon receipt of the police state aid for the county, shall
apply the total state aid toward the county's employer contribution to the public employees
police and fire fund under section 353.65, subdivision 3.
(d) The designated Metropolitan Airports Commission official, upon receipt of the
police state aid for the Metropolitan Airports Commission, shall apply the total police
state aid first toward the commission's employer contribution for police officers to the
Minneapolis Employees Retirement Fund under section 422A.101, subdivision 2a, and, if
there is any amount of police state aid remaining, shall apply that remainder toward the
commission's employer contribution for police officers to the public employees police and
fire plan under section 353.65, subdivision 3.
(e) The police state aid apportioned to the Departments of Public Safety and Natural
Resources under section 69.021, subdivision 7a, is appropriated to the commissioner
of management and budget for transfer to the funds and accounts from which the
salaries of peace officers certified under section 69.011, subdivision 2a 2b, are paid.
The commissioner of revenue shall certify to the commissioners of public safety,
natural resources, and management and budget the amounts to be transferred from the
appropriation for police state aid. The commissioners of public safety and natural
resources shall certify to the commissioner of management and budget the amounts to be
credited to each of the funds and accounts from which the peace officers employed by their
respective departments are paid. Each commissioner shall allocate the police state aid first
for employer contributions for employees funded from the general fund and then for
employer contributions for employees funded from other funds. For peace officers whose
salaries are paid from the general fund, the amounts transferred from the appropriation
for police state aid must be canceled to the general fund.

    Sec. 9. Minnesota Statutes 2008, 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 the fund that plan imposed under
section 422A.101, subdivision 3. The additional levy must not exceed the most recent
amount certified by the board of the Minneapolis Employees Retirement Fund 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
422A.101, subdivision 3.
(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, subdivision 3, and may also levy in payable 1994
or later an amount equal to the state aid contribution under section 354A.12, subdivision
3b
. 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.

    Sec. 10. Minnesota Statutes 2008, section 256D.21, is amended to read:
256D.21 CONTINUATION OF BENEFITS; FORMER MINNEAPOLIS
EMPLOYEES.
    Subdivision 1. Continuation of benefits. Each employee of the city of Minneapolis
who is transferred to and employed by the county under the provisions of section 256D.20
and who is a contributing member of a retirement system organized under the provisions
of Minnesota Statutes 2008, chapter 422A, shall continue to be is a member of that system
the MERF division of the Public Employees Retirement Association and is entitled to all
of the applicable benefits conferred thereby by and subject to all the restrictions of chapter
422A, unless the member applies to cancel membership within six months after January
1, 1974 section 353.50.
    Subd. 2. City obligation. The cost to the public of that portion of the retirement
allowances or other benefits accrued while any such employee was in the service of the
city of Minneapolis shall must remain an obligation of the city and a tax shall must be
levied and collected by it to discharge its obligation as provided by chapter 422A in
section 353.50, subdivision 7.
    Subd. 3. County obligation. The cost to the public of the retirement allowances
or other benefits accruing to employees so transferred to and employed by the county
shall be is the obligation of and paid by the county at such time as the retirement board
shall fix and determine in accordance with chapter 422A in section 353.50, subdivision
7. The county shall pay to the municipal general employees retirement fund an amount
certified to the county auditor of the county by the retirement board as the cost of the
retirement allowances and other benefits accruing and owing to such county employees of
the Public Employees Retirement Association those amounts. The cost to the public of
the retirement allowances as herein provided shall coverage under this section must be
paid from the county revenue fund by the county auditor upon receipt of certification from
the retirement board as herein provided, and the county board is authorized to levy and
collect such taxes as may be necessary to pay such costs.

    Sec. 11. Minnesota Statutes 2009 Supplement, section 352.01, subdivision 2b, is
amended to read:
    Subd. 2b. Excluded employees. "State employee" does not include:
    (1) students employed by the University of Minnesota, or the state colleges and
universities, unless approved for coverage by the Board of Regents of the University of
Minnesota or the Board of Trustees of the Minnesota State Colleges and Universities,
whichever is applicable;
    (2) employees who are eligible for membership in the state Teachers Retirement
Association, except employees of the Department of Education who have chosen or may
choose to be covered by the general state employees retirement plan of the Minnesota
State Retirement System instead of the Teachers Retirement Association;
    (3) employees of the University of Minnesota who are excluded from coverage by
action of the Board of Regents;
    (4) officers and enlisted personnel in the National Guard and the naval militia who
are assigned to permanent peacetime duty and who under federal law are or are required to
be members of a federal retirement system;
    (5) election officers;
    (6) persons who are engaged in public work for the state but who are employed
by contractors when the performance of the contract is authorized by the legislature or
other competent authority;
    (7) officers and employees of the senate, or of the house of representatives, or of a
legislative committee or commission who are temporarily employed;
    (8) receivers, jurors, notaries public, and court employees who are not in the judicial
branch as defined in section 43A.02, subdivision 25, except referees and adjusters
employed by the Department of Labor and Industry;
    (9) patient and inmate help in state charitable, penal, and correctional institutions
including the Minnesota Veterans Home;
    (10) persons who are employed for professional services where the service is
incidental to their regular professional duties and whose compensation is paid on a per
diem basis;
    (11) employees of the Sibley House Association;
    (12) the members of any state board or commission who serve the state intermittently
and are paid on a per diem basis; the secretary, secretary-treasurer, and treasurer of those
boards if their compensation is $5,000 or less per year, or, if they are legally prohibited
from serving more than three years; and the board of managers of the State Agricultural
Society and its treasurer unless the treasurer is also its full-time secretary;
    (13) state troopers and persons who are described in section 352B.011, subdivision
10
, clauses (2) to (8);
    (14) temporary employees of the Minnesota State Fair who are employed on or
after July 1 for a period not to extend beyond October 15 of that year; and persons who
are employed at any time by the state fair administration for special events held on the
fairgrounds;
    (15) emergency employees who are in the classified service; except that if an
emergency employee, within the same pay period, becomes a provisional or probationary
employee on other than a temporary basis, the employee must be considered a "state
employee" retroactively to the beginning of the pay period;
    (16) temporary employees in the classified service, and temporary employees in the
unclassified service who are appointed for a definite period of not more than six months
and who are employed less than six months in any one-year period;
    (17) interns hired for six months or less and trainee employees, except those listed in
subdivision 2a, clause (8);
    (18) persons whose compensation is paid on a fee basis or as an independent
contractor;
    (19) state employees who are employed by the Board of Trustees of the Minnesota
State Colleges and Universities in unclassified positions enumerated in section 43A.08,
subdivision 1
, clause (9);
    (20) state employees who in any year have credit for 12 months service as teachers
in the public schools of the state and as teachers are members of the Teachers Retirement
Association or a retirement system in St. Paul, Minneapolis, or Duluth, except for
incidental employment as a state employee that is not covered by one of the teacher
retirement associations or systems;
    (21) employees of the adjutant general who are employed on an unlimited
intermittent or temporary basis in the classified or unclassified service for the support of
Army and Air National Guard training facilities;
    (22) chaplains and nuns who are excluded from coverage under the federal Old
Age, Survivors, Disability, and Health Insurance Program for the performance of service
as specified in United States Code, title 42, section 410(a)(8)(A), as amended, if no
irrevocable election of coverage has been made under section 3121(r) of the Internal
Revenue Code of 1986, as amended through December 31, 1992;
    (23) examination monitors who are employed by departments, agencies,
commissions, and boards to conduct examinations required by law;
    (24) persons who are appointed to serve as members of fact-finding commissions or
adjustment panels, arbitrators, or labor referees under chapter 179;
    (25) temporary employees who are employed for limited periods under any state or
federal program for training or rehabilitation, including persons who are employed for
limited periods from areas of economic distress, but not including skilled and supervisory
personnel and persons having civil service status covered by the system;
    (26) full-time students who are employed by the Minnesota Historical Society
intermittently during part of the year and full-time during the summer months;
    (27) temporary employees who are appointed for not more than six months, of
the Metropolitan Council and of any of its statutory boards, if the board members are
appointed by the Metropolitan Council;
    (28) persons who are employed in positions designated by the Department of
Management and Budget as student workers;
    (29) members of trades who are employed by the successor to the Metropolitan
Waste Control Commission, who have trade union pension plan coverage under a
collective bargaining agreement, and who are first employed after June 1, 1977;
    (30) off-duty peace officers while employed by the Metropolitan Council;
    (31) persons who are employed as full-time police officers by the Metropolitan
Council and as police officers are members of the public employees police and fire fund;
    (32) persons who are employed as full-time firefighters by the Department of Military
Affairs and as firefighters are members of the public employees police and fire fund;
    (33) foreign citizens with a work permit of less than three years, or an H-1b/JV visa
valid for less than three years of employment, unless notice of extension is supplied which
allows them to work for three or more years as of the date the extension is granted, in
which case they are eligible for coverage from the date extended; and
    (34) persons who are employed by the Board of Trustees of the Minnesota State
Colleges and Universities and who elected to remain members of the Public Employees
Retirement Association or of the MERF division of the Public Employees Retirement
Association as the successor of the Minneapolis Employees Retirement Fund, whichever
applies, under Minnesota Statutes 1994, section 136C.75.

    Sec. 12. Minnesota Statutes 2008, section 353.03, subdivision 1, is amended to read:
    Subdivision 1. Management; composition; election. (a) The management of
the Public Employees Retirement fund Association is vested in an 11-member board of
trustees consisting of ten members and the state auditor. The state auditor may designate
a deputy auditor with expertise in pension matters as the auditor's representative on the
board. The governor shall appoint five trustees to four-year terms, one of whom shall be
designated to represent school boards, one to represent cities, one to represent counties,
one who is a retired annuitant, and one who is a public member knowledgeable in pension
matters. The membership of the association, including recipients of retirement annuities
and disability and survivor benefits, shall elect five trustees for terms of four years, one of
whom must be a member of the police and fire fund and one of whom must be a former
member who met the definition of public employee under section 353.01, subdivisions 2
and 2a, for at least five years prior to terminating membership or a member who receives
a disability benefit. Terms expire on January 31 of the fourth year, and positions are
vacant until newly elected members are seated. Except as provided in this subdivision,
trustees elected by the membership of the association must be public employees and
members of the association.
(b) For seven days beginning October 1 of each year preceding a year in which
an election is held, the association shall accept at its office filings in person or by mail
of candidates for the board of trustees. A candidate shall submit at the time of filing a
nominating petition signed by 25 or more members of the association. No name may
be withdrawn from nomination by the nominee after October 15. At the request of a
candidate for an elected position on the board of trustees, the board shall mail a statement
of up to 300 words prepared by the candidate to all persons eligible to vote in the election
of the candidate. The board may adopt policies, subject to review and approval by the
secretary of state under paragraph (e), to govern the form and length of these statements,
timing of mailings, and deadlines for submitting materials to be mailed. The secretary
of state shall resolve disputes between the board and a candidate concerning application
of these policies to a particular statement.
(c) By January 10 of each year in which elections are to be held, the board shall
distribute by mail to the members ballots listing the candidates. No member may vote for
more than one candidate for each board position to be filled. A ballot indicating a vote for
more than one person for any position is void. No special marking may be used on the
ballot to indicate incumbents. Ballots mailed to the association must be postmarked no
later than January 31. The ballot envelopes must be so designated and the ballots must be
counted in a manner that ensures that each vote is secret.
(d) A candidate who receives contributions or makes expenditures in excess of $100,
or has given implicit or explicit consent for any other person to receive contributions or
make expenditures in excess of $100 for the purpose of bringing about the candidate's
election, shall file a report with the campaign finance and public disclosure board
disclosing the source and amount of all contributions to the candidate's campaign. The
campaign finance and public disclosure board shall prescribe forms governing these
disclosures. Expenditures and contributions have the meaning defined in section 10A.01.
These terms do not include the mailing made by the association board on behalf of the
candidate. A candidate shall file a report within 30 days from the day that the results of
the election are announced. The Campaign Finance and Public Disclosure Board shall
maintain these reports and make them available for public inspection in the same manner
as the board maintains and makes available other reports filed with it.
(e) The secretary of state shall review and approve the procedures defined by the
board of trustees for conducting the elections specified in this subdivision, including
board policies adopted under paragraph (b).
(f) The board of trustees and the executive director shall undertake their activities
consistent with chapter 356A.

    Sec. 13. Minnesota Statutes 2008, section 353.71, subdivision 4, is amended to read:
    Subd. 4. Repayment of refund. Any person who has received a refund from the
Public Employees Retirement fund Association and who is a member of any public
retirement system referred to in subdivision 1, may repay such refund to the Public
Employees Retirement fund Association as provided in section 353.35.

    Sec. 14. Minnesota Statutes 2008, section 353.86, subdivision 1, is amended to read:
    Subdivision 1. Participation. Volunteer ambulance service personnel, as defined
in section 353.01, subdivision 35, who are or become members of and participants in
the public general employees retirement fund or the public employees police and fire
fund before July 1, 2002, and make contributions to either of those funds based on
compensation for service other than volunteer ambulance service may elect to participate
in that same fund with respect to compensation received for volunteer ambulance service,
provided that the volunteer ambulance service is not credited to another public or private
pension plan including the public employees retirement plan established by chapter
353D and provided further that the volunteer ambulance service is rendered for the same
governmental unit for which the nonvolunteer ambulance service is rendered.

    Sec. 15. Minnesota Statutes 2008, section 353.86, subdivision 2, is amended to read:
    Subd. 2. Election. Volunteer ambulance service personnel to whom subdivision
1 applies may exercise the election authorized under subdivision 1 within the earlier of
the one-year period beginning on July 1, 1989, and extending through June 30, 1990, or
the one-year period commencing on the first day of the first month following the start of
employment in a position covered by the public general employees retirement fund or the
public employees police and fire fund. The election must be exercised by filing a written
notice on a form prescribed by the executive director of the association.

    Sec. 16. Minnesota Statutes 2008, section 353.87, subdivision 1, is amended to read:
    Subdivision 1. Participation. Except as provided in subdivision 2, a volunteer
firefighter, as defined in section 353.01, subdivision 36, who, on June 30, 1989, was
a member of, and a participant in, the public general employees retirement fund or the
public employees police and fire fund and was making contributions to either of those
funds based, at least in part, on compensation for services performed as a volunteer
firefighter shall continue as a member of, and a participant in, the public general
employees retirement fund or the public employees police and fire fund and compensation
for services performed as a volunteer firefighter shall must be considered salary.

    Sec. 17. Minnesota Statutes 2008, section 353.87, subdivision 2, is amended to read:
    Subd. 2. Option. A volunteer firefighter to whom subdivision 1 applies has the
option to terminate membership and future participation in the public general employees
retirement fund or the public employees police and fire fund upon filing of a written notice
of intention to terminate participation. Notice must be given on a form prescribed by the
executive director of the association and must be filed in the offices of the association not
later than June 30, 1990.

    Sec. 18. Minnesota Statutes 2008, section 353.88, is amended to read:
353.88 PENALTY FOR MEMBERSHIP MISCERTIFICATIONS AND
CERTIFICATION FAILURES.
(a) If the board of trustees of the Public Employees Retirement Association,
upon the recommendation of the executive director, determines that a governmental
subdivision has certified a public employee for membership in the public employees
police and fire retirement plan when the public employee was not eligible for that
retirement plan coverage, the public employee must be covered by the correct retirement
plan for subsequent service, the public employee retains the coverage for the period of
the misclassification, and the governmental subdivision shall pay in a lump sum the
difference in the actuarial present value of the retirement annuities to which the public
employee would have been entitled if the public employee was properly classified. The
governmental subdivision payment is payable within 30 days of the board's determination.
If unpaid, it must be collected under section 353.28. The lump-sum payment must be
deposited in the public general employees retirement fund.
(b) If the executive director of the Public Employees Retirement Association
determines that a governmental subdivision has failed to certify a person for retirement
plan membership and coverage under this chapter, in addition to the procedures under
section 353.27, subdivision 4, 9, 10, 11, 12, 12a, or 12b, the director shall charge a fine of
$25 for each membership certification failure.

    Sec. 19. Minnesota Statutes 2008, section 354.71, is amended to read:
354.71 MINNEAPOLIS EMPLOYEES RETIREMENT FUND STATE AID
REDEDICATED.
    Subdivision 1. Appropriation. The positive difference, if any, between the
actual state aid paid payable to the MERF division account of the Public Employees
Retirement Association with respect to the former Minneapolis Employees Retirement
Fund under section 422A.101, subdivision 3, and $8,065,000 annually is appropriated
from the general fund to the commissioner of management and budget for deposit in
the Teachers Retirement Association to offset all or a portion of the current and future
unfunded actuarial accrued liability of the former Minneapolis Teachers Retirement
Fund Association.
    Subd. 2. Financial requirements. The appropriation in subdivision 1 is available to
the extent that financial requirements of with respect to the MERF division of the Public
Employees Retirement Association as the successor of the former Minneapolis Employees
Retirement Fund under section 422A.101, subdivision 3, 353.50 have been satisfied.

    Sec. 20. Minnesota Statutes 2008, section 354A.011, subdivision 27, is amended to
read:
    Subd. 27. Teacher. (a) "Teacher" means any person who renders service for a public
school district, other than a charter school, located in the corporate limits of Duluth or
St. Paul, as any of the following:
(1) a full-time employee in a position for which a valid license from the state
Department of Education is required;
(2) 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;
(3) a part-time employee in a position for which a valid license from the state
Department of Education is required; or
(4) a part-time employee in a position for which a valid license from the state
Department of Education is required who also renders other nonteaching services for the
school district, unless the board of trustees of the teachers retirement fund association
determines that the combined employment is on the whole so substantially dissimilar to
teaching service that the service may not be covered by the association.
(b) The term does 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 the Teachers Retirement
Association or by another teachers retirement fund association established pursuant to this
chapter or chapter 354;
(3) an employee who is exempt from licensure pursuant to section 122A.30;
(4) an employee who is a teacher in a technical college located in a city of the first
class unless the person elects coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2;
(5) a teacher employed by a charter school, irrespective of the location of the
school; or
(6) an employee who is a part-time teacher in a technical college in a city of the first
class and who has elected coverage by the applicable first class city teacher retirement
fund association under section 354B.21, subdivision 2, but (i) the teaching service is
incidental to the regular nonteaching occupation of the person; (ii) the applicable technical
college stipulates annually in advance that the part-time teaching service will not exceed
300 hours in a fiscal year; and (iii) the part-time teaching actually does not exceed 300
hours in the fiscal year to which the certification applies.

    Sec. 21. Minnesota Statutes 2008, section 354A.39, is amended to read:
354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS; ANNUITY.
Any person who has been a member of the Minnesota State Retirement System, the
Public Employees Retirement Association including the Public Employees Retirement
Association Police and Fire Fund, the Teachers Retirement Association, the Minnesota
State Patrol Retirement Association, the legislators retirement plan, the constitutional
officers retirement plan, the Minneapolis Employees Retirement Fund, the Duluth
Teachers Retirement Fund Association new law coordinated program, the St. Paul
Teachers Retirement Fund Association coordinated program, or any other public employee
retirement system in the state of Minnesota having a like provision, but excluding all other
funds providing retirement benefits for police officers or firefighters shall be, is entitled,
when qualified, to an annuity from each fund if the person's total allowable service in all
of the funds or in any two or more of the funds totals three or more years, provided that
no portion of the allowable service upon which the retirement annuity from one fund is
based is used again in the computation for a retirement annuity from another fund and
provided further that the person has not taken a refund from any of funds or associations
since the person's membership in the fund or association has terminated. The annuity from
each fund or association shall must be determined by the appropriate provisions of the law
governing each fund or association, except that the requirement that a person must have at
least three years of allowable service in the respective fund or association shall does not
apply for the purposes of this section, provided that the aggregate service in two or more
of these funds equals three or more years.

    Sec. 22. Minnesota Statutes 2008, section 355.095, subdivision 1, is amended to read:
    Subdivision 1. Agreement. (a) The director, on behalf of the state, its political
subdivisions, and its other governmental employers, is authorized to enter into an
agreement with the Secretary of Health and Human Services to extend the provisions of
United States Code, title 42, section 426, 426-1, and 1395c, to the employees in paragraph
(b) who meet the requirements of United States Code, title 42, section 418(v)(2) and who
do not have coverage by the federal old age, survivors, and disability insurance program
for that employment under any previous modification of the agreement or previous
Medicare referendum.
(b) The applicable employees are:
(1) employees who are members of one of the retirement plans in Minnesota Statutes
2008, section 356.30, subdivision 3, except clauses (4) and (8), based on continuous
employment since March 31, 1986; and
(2) employees of a special authority or district who have been continuously
employed by the special authority or district since March 31, 1986.

    Sec. 23. Minnesota Statutes 2009 Supplement, section 356.20, subdivision 2, is
amended to read:
    Subd. 2. Covered public pension plans and funds. This section applies to the
following public pension plans:
    (1) the general state employees retirement plan of the Minnesota State Retirement
System;
    (2) the general employees retirement plan of the Public Employees Retirement
Association;
    (3) the Teachers Retirement Association;
    (4) the State Patrol retirement plan;
    (5) the St. Paul Teachers Retirement Fund Association;
    (6) the Duluth Teachers Retirement Fund Association;
    (7) the Minneapolis Employees Retirement Fund;
    (8) (7) the University of Minnesota faculty retirement plan;
    (9) (8) the University of Minnesota faculty supplemental retirement plan;
    (10) (9) the judges retirement fund;
    (11) (10) a police or firefighter's relief association specified or described in section
69.77, subdivision 1a;
    (12) (11) a volunteer firefighter relief association governed by section 69.771,
subdivision 1
;
    (13) (12) the public employees police and fire plan of the Public Employees
Retirement Association;
    (14) (13) the correctional state employees retirement plan of the Minnesota State
Retirement System;
    (15) (14) the local government correctional service retirement plan of the Public
Employees Retirement Association; and
(16) (15) the voluntary statewide lump-sum volunteer firefighter retirement plan.

    Sec. 24. Minnesota Statutes 2008, section 356.214, subdivision 1, is amended to read:
    Subdivision 1. Actuary retention. (a) The governing board or managing or
administrative official of each public pension plan and retirement fund or plan enumerated
in paragraph (b) shall contract with an established actuarial consulting firm to conduct
annual actuarial valuations and related services. The principal from the actuarial
consulting firm on the contract must be an approved actuary under section 356.215,
subdivision 1
, paragraph (c).
    (b) Actuarial services must include the preparation of actuarial valuations and
related actuarial work for the following retirement plans:
    (1) the teachers retirement plan, Teachers Retirement Association;
    (2) the general state employees retirement plan, Minnesota State Retirement System;
    (3) the correctional employees retirement plan, Minnesota State Retirement System;
    (4) the State Patrol retirement plan, Minnesota State Retirement System;
    (5) the judges retirement plan, Minnesota State Retirement System;
    (6) the Minneapolis employees retirement plan, Minneapolis Employees Retirement
Fund;
    (7) (6) the public general employees retirement plan, Public Employees Retirement
Association, including the MERF division;
    (8) (7) the public employees police and fire plan, Public Employees Retirement
Association;
    (9) (8) the Duluth teachers retirement plan, Duluth Teachers Retirement Fund
Association;
    (10) (9) the St. Paul teachers retirement plan, St. Paul Teachers Retirement Fund
Association;
    (11) (10) the legislators retirement plan, Minnesota State Retirement System;
    (12) (11) the elective state officers retirement plan, Minnesota State Retirement
System; and
    (13) (12) local government correctional service retirement plan, Public Employees
Retirement Association.
    (c) The contracts must require completion of the annual actuarial valuation
calculations on a fiscal year basis, with the contents of the actuarial valuation calculations
as specified in section 356.215, and in conformity with the standards for actuarial work
adopted by the Legislative Commission on Pensions and Retirement.
    The contracts must require completion of annual experience data collection and
processing and a quadrennial published experience study for the plans listed in paragraph
(b), clauses (1), (2), and (7) (6), as provided for in the standards for actuarial work
adopted by the commission. The experience data collection, processing, and analysis
must evaluate the following:
    (1) individual salary progression;
    (2) the rate of return on investments based on the current asset value;
    (3) payroll growth;
    (4) mortality;
    (5) retirement age;
    (6) withdrawal; and
    (7) disablement.
    (d) The actuary shall annually prepare a report to the governing or managing board
or administrative official and the legislature, summarizing the results of the actuarial
valuation calculations. The actuary shall include with the report any recommendations
concerning the appropriateness of the support rates to achieve proper funding of
the retirement plans by the required funding dates. The actuary shall, as part of the
quadrennial experience study, include recommendations on the appropriateness of the
actuarial valuation assumptions required for evaluation in the study.
    (e) If the actuarial gain and loss analysis in the actuarial valuation calculations
indicates a persistent pattern of sizable gains or losses, the governing or managing board
or administrative official shall direct the actuary to prepare a special experience study for a
plan listed in paragraph (b), clause (3), (4), (5), (6) (7), (8), (9), (10), (11), or (12), or (13),
in the manner provided for in the standards for actuarial work adopted by the commission.

    Sec. 25. Minnesota Statutes 2008, section 356.30, subdivision 3, is amended to read:
    Subd. 3. Covered plans. This section applies to the following retirement plans:
(1) the general state employees retirement plan of the Minnesota State Retirement
System, established under chapter 352;
(2) the correctional state employees retirement plan of the Minnesota State
Retirement System, established under chapter 352;
(3) the unclassified employees retirement program, established under chapter 352D;
(4) the State Patrol retirement plan, established under chapter 352B;
(5) the legislators retirement plan, established under chapter 3A;
(6) the elective state officers retirement plan, established under chapter 352C;
(7) the general employees retirement plan of the Public Employees Retirement
Association, established under chapter 353, including the MERF division of the Public
Employees Retirement Association;
(8) the public employees police and fire retirement plan of the Public Employees
Retirement Association, established under chapter 353;
(9) the local government correctional service retirement plan of the Public
Employees Retirement Association, established under chapter 353E;
(10) the Teachers Retirement Association, established under chapter 354;
(11) the Minneapolis Employees Retirement Fund, established under chapter 422A;
(12) (11) the St. Paul Teachers Retirement Fund Association, established under
chapter 354A;
(13) (12) the Duluth Teachers Retirement Fund Association, established under
chapter 354A; and
(14) (13) the judges retirement fund, established by chapter 490.

    Sec. 26. Minnesota Statutes 2008, section 356.302, subdivision 1, is amended to read:
    Subdivision 1. Definitions. (a) The terms used in this section are defined in this
subdivision.
(b) "Average salary" means the highest average of covered salary for the appropriate
period of credited service that is required for the calculation of a disability benefit by
the covered retirement plan and that is drawn from any period of credited service and
successive years of covered salary in a covered retirement plan.
(c) "Covered retirement plan" or "plan" means a retirement plan listed in subdivision
7.
(d) "Duty-related" means a disabling illness or injury that occurred while the person
was actively engaged in employment duties or that arose out of the person's active
employment duties.
(e) "General employee retirement plan" means a covered retirement plan listed in
subdivision 7, clauses (1) to (8) (6) and (13) (12).
(f) "Occupationally disabled" means the condition of having a medically
determinable physical or mental impairment that makes a person unable to satisfactorily
perform the minimum requirements of the person's employment position or a substantially
similar employment position.
(g) "Public safety employee retirement plan" means a covered retirement plan listed
in subdivision 7, clauses (9) (7) to (12) (11).
(h) "Totally and permanently disabled" means the condition of having a medically
determinable physical or mental impairment that makes a person unable to engage in any
substantial gainful activity and that is expected to continue or has continued for a period
of at least one year or that is expected to result directly in the person's death.

    Sec. 27. Minnesota Statutes 2008, section 356.302, subdivision 7, is amended to read:
    Subd. 7. Covered retirement plans. This section applies to the following
retirement plans:
(1) the general state employees retirement plan of the Minnesota State Retirement
System, established by chapter 352;
(2) the unclassified state employees retirement program of the Minnesota State
Retirement System, established by chapter 352D;
(3) the general employees retirement plan of the Public Employees Retirement
Association, established by chapter 353, including the MERF division of the Public
Employees Retirement Association;
(4) the Teachers Retirement Association, established by chapter 354;
(5) the Duluth Teachers Retirement Fund Association, established by chapter 354A;
(6) the St. Paul Teachers Retirement Fund Association, established by chapter 354A;
(7) the Minneapolis Employees Retirement Fund, established by chapter 422A;
(8) (7) the state correctional employees retirement plan of the Minnesota State
Retirement System, established by chapter 352;
(9) (8) the State Patrol retirement plan, established by chapter 352B;
(10) (9) the public employees police and fire plan of the Public Employees
Retirement Association, established by chapter 353;
(11) (10) the local government correctional service retirement plan of the Public
Employees Retirement Association, established by chapter 353E; and
(12) (11) the judges retirement plan, established by chapter 490.

    Sec. 28. Minnesota Statutes 2008, section 356.303, subdivision 4, is amended to read:
    Subd. 4. Covered retirement plans. This section applies to the following
retirement plans:
(1) the legislators retirement plan, established by chapter 3A;
(2) the general state employees retirement plan of the Minnesota State Retirement
System, established by chapter 352;
(3) the correctional state employees retirement plan of the Minnesota State
Retirement System, established by chapter 352;
(4) the State Patrol retirement plan, established by chapter 352B;
(5) the elective state officers retirement plan, established by chapter 352C;
(6) the unclassified state employees retirement program, established by chapter
352D;
(7) the general employees retirement plan of the Public Employees Retirement
Association, established by chapter 353, including the MERF division of the Public
Employees Retirement Association;
(8) the public employees police and fire plan of the Public Employees Retirement
Association, established by chapter 353;
(9) the local government correctional service retirement plan of the Public
Employees Retirement Association, established by chapter 353E;
(10) the Teachers Retirement Association, established by chapter 354;
(11) the Duluth Teachers Retirement Fund Association, established by chapter 354A;
(12) the St. Paul Teachers Retirement Fund Association, established by chapter
354A; and
(13) the Minneapolis Employees Retirement Fund, established by chapter 422A; and
(14) (13) the judges retirement fund, established by chapter 490.

    Sec. 29. Minnesota Statutes 2009 Supplement, section 356.32, subdivision 2, is
amended to read:
    Subd. 2. Covered retirement plans. The provisions of this section apply to the
following retirement plans:
(1) the general state employees retirement plan of the Minnesota State Retirement
System, established under chapter 352;
(2) the correctional state employees retirement plan of the Minnesota State
Retirement System, established under chapter 352;
(3) the State Patrol retirement plan, established under chapter 352B;
(4) the general employees retirement plan of the Public Employees Retirement
Association, established under chapter 353, including the MERF division of the Public
Employees Retirement Association;
(5) the public employees police and fire plan of the Public Employees Retirement
Association, established under chapter 353;
(6) the Teachers Retirement Association, established under chapter 354;
(7) the Minneapolis Employees Retirement Fund, established under chapter 422A;
(8) (7) the Duluth Teachers Retirement Fund Association, established under chapter
354A; and
(9) (8) the St. Paul Teachers Retirement Fund Association, established under chapter
354A.

    Sec. 30. Minnesota Statutes 2009 Supplement, section 356.401, subdivision 3, is
amended to read:
    Subd. 3. Covered retirement plans. The provisions of this section apply to the
following retirement plans:
(1) the legislators retirement plan, established by chapter 3A;
(2) the general state employees retirement plan of the Minnesota State Retirement
System, established by chapter 352;
(3) the correctional state employees retirement plan of the Minnesota State
Retirement System, established by chapter 352;
(4) the State Patrol retirement plan, established by chapter 352B;
(5) the elective state officers retirement plan, established by chapter 352C;
(6) the unclassified state employees retirement program, established by chapter
352D;
(7) the general employees retirement plan of the Public Employees Retirement
Association, established by chapter 353, including the MERF division of the Public
Employees Retirement Association;
(8) the public employees police and fire plan of the Public Employees Retirement
Association, established by chapter 353;
(9) the public employees defined contribution plan, established by chapter 353D;
(10) the local government correctional service retirement plan of the Public
Employees Retirement Association, established by chapter 353E;
(11) the voluntary statewide lump-sum volunteer firefighter retirement plan,
established by chapter 353G;
(12) the Teachers Retirement Association, established by chapter 354;
(13) the Duluth Teachers Retirement Fund Association, established by chapter 354A;
(14) the St. Paul Teachers Retirement Fund Association, established by chapter
354A;
(15) the individual retirement account plan, established by chapter 354B;
(16) the higher education supplemental retirement plan, established by chapter 354C;
(17) the Minneapolis Employees Retirement Fund, established by chapter 422A;
(18) (17) the Minneapolis Police Relief Association, established by chapter 423B;
(19) (18) the Minneapolis Firefighters Relief Association, established by chapter
423C; and
(20) (19) the judges retirement fund, established by chapter 490.

    Sec. 31. Minnesota Statutes 2008, section 356.407, subdivision 2, is amended to read:
    Subd. 2. Covered funds. The provisions of this section apply to the following
retirement funds:
(1) the general employees retirement plan of the Public Employees Retirement
Association established under chapter 353, including the MERF division of the Public
Employees Retirement Association;
(2) the public employees police and fire plan of the Public Employees Retirement
Association established under chapter 353;
(3) the State Patrol retirement plan established under chapter 352B;
(4) the legislators retirement plan established under chapter 3A;
(5) the elective state officers retirement plan established under chapter 352C; and
(6) the Teachers Retirement Association established under chapter 354; and.
(7) the Minneapolis Employees Retirement Fund established under chapter 422A.

    Sec. 32. Minnesota Statutes 2009 Supplement, section 356.415, subdivision 2, is
amended to read:
    Subd. 2. Covered retirement plans. The provisions of this section apply to the
following retirement plans:
(1) the legislators retirement plan established under chapter 3A;
(2) the correctional state employees retirement plan of the Minnesota State
Retirement System established under chapter 352;
(3) the general state employees retirement plan of the Minnesota State Retirement
System established under chapter 352;
(4) the State Patrol retirement plan established under chapter 352B;
(5) the elective state officers retirement plan established under chapter 352C;
(6) the general employees retirement plan of the Public Employees Retirement
Association established under chapter 353, including the MERF division of the Public
Employees Retirement Association;
(7) the public employees police and fire retirement plan of the Public Employees
Retirement Association established under chapter 353;
(8) the local government correctional employees retirement plan of the Public
Employees Retirement Association established under chapter 353E;
(9) the teachers retirement plan established under chapter 354; and
(10) the judges retirement plan established under chapter 490.

    Sec. 33. Minnesota Statutes 2008, section 356.431, subdivision 1, is amended to read:
    Subdivision 1. Lump-sum postretirement payment conversion. For benefits paid
after December 31, 2001, to eligible persons under sections section 356.42 and 356.43,
the amount of the most recent lump-sum benefit payable to an eligible recipient under
sections section 356.42 and 356.43 must be divided by 12. The result must be added to
the monthly annuity or benefit otherwise payable to an eligible recipient, must become a
permanent part of the benefit recipient's pension, and must be included in any pension
benefit subject to future increases.

    Sec. 34. Minnesota Statutes 2008, section 356.465, subdivision 3, is amended to read:
    Subd. 3. Covered retirement plans. The provisions of this section apply to the
following retirement plans:
(1) the general state employees retirement plan of the Minnesota State Retirement
System established under chapter 352;
(2) the correctional state employees retirement plan of the Minnesota State
Retirement System established under chapter 352;
(3) the State Patrol retirement plan established under chapter 352B;
(4) the legislators retirement plan established under chapter 3A;
(5) the judges retirement plan established under chapter 490;
(6) the general employees retirement plan of the Public Employees Retirement
Association established under chapter 353, including the MERF division of the Public
Employees Retirement Association;
(7) the public employees police and fire plan of the Public Employees Retirement
Association established under chapter 353;
(8) the teachers retirement plan established under chapter 354;
(9) the Duluth Teachers Retirement Fund Association established under chapter
354A;
(10) the St. Paul Teachers Retirement Fund Association established under chapter
354A;
(11) the Minneapolis Employees Retirement Fund established under chapter 422A;
(12) (11) the Minneapolis Firefighters Relief Association established under chapter
423C;
(13) (12) the Minneapolis Police Relief Association established under chapter
423B; and
(14) (13) the local government correctional service retirement plan of the Public
Employees Retirement Association established under chapter 353E.

    Sec. 35. Minnesota Statutes 2008, section 356.64, is amended to read:
356.64 REAL ESTATE INVESTMENTS.
(a) Notwithstanding any law to the contrary, any public pension plan whose assets
are not invested by the State Board of Investment may invest its funds in Minnesota situs
nonfarm real estate ownership interests or loans secured by mortgages or deeds of trust if
the investment is consistent with section 356A.04.
(b) Except to the extent authorized in the case of the Minneapolis Employees
Retirement Fund under section 422A.05, subdivision 2c, paragraph (a), An investment
otherwise authorized by this section must also comply with the requirements and
limitations of section 11A.24, subdivision 6.

    Sec. 36. Minnesota Statutes 2008, section 356.65, subdivision 2, is amended to read:
    Subd. 2. Disposition of abandoned amounts. Any unclaimed public pension
fund amounts existing in any public pension fund are presumed to be abandoned, but are
not subject to the provisions of sections 345.31 to 345.60. Unless the benefit plan of
the public pension fund specifically provides for a different disposition of unclaimed or
abandoned funds or amounts, any unclaimed public pension fund amounts cancel and
must be credited to the public pension fund. If the unclaimed public pension fund amount
exceeds $25 and the inactive or former member again becomes a member of the applicable
public pension plan or applies for a retirement annuity under section 3A.12, 352.72,
352B.30, 353.71, 354.60, or 356.30, or 422A.16, subdivision 8, whichever applies, the
canceled amount must be restored to the credit of the person.

    Sec. 37. Minnesota Statutes 2008, section 356.91, is amended to read:
356.91 VOLUNTARY MEMBERSHIP DUES DEDUCTION.
    (a) Upon written authorization of a person receiving an annuity from a public
pension fund administered by the Minnesota State Retirement System, or the Public
Employees Retirement Association, or the Minneapolis Employees Retirement Fund, the
executive director of the public pension fund may deduct from the retirement annuity an
amount requested by the annuitant to be paid as dues to any labor organization that is an
exclusive bargaining agent representing public employees or an organization representing
retired public employees of which the annuitant is a member and shall pay the amount to
the organization so designated by the annuitant.
    (b) A pension fund and the plan fiduciaries which authorize or administer deductions
of dues payments under paragraph (a) are not liable for failure to properly deduct or
transmit the dues amounts, provided that the fund and the fiduciaries have acted in good
faith.
    (c) The deductions under paragraph (a) may occur no more frequently than two
times per year and may not be used for political purposes.
    (d) Any labor organization specified in paragraph (a) shall reimburse the public
pension fund for the administrative expense of withholding premium amounts.

    Sec. 38. Minnesota Statutes 2009 Supplement, section 356.96, subdivision 1, is
amended to read:
    Subdivision 1. Definitions. (a) Unless the language or context clearly indicates that
a different meaning is intended, for the purpose of this section, the terms in paragraphs
(b) to (e) have the meanings given them.
    (b) "Chief administrative officer" means the executive director of a covered pension
plan or the executive director's designee or representative.
    (c) "Covered pension plan" means a plan enumerated in section 356.20, subdivision
2
, clauses (1) to (4), (10) (9), and (13) (12) to (16) (15), but does not mean the
deferred compensation plan administered under sections 352.965 and 352.97 or to the
postretirement health care savings plan administered under section 352.98.
    (d) "Governing board" means the Board of Trustees of the Public Employees
Retirement Association, the Board of Trustees of the Teachers Retirement Association, or
the Board of Directors of the Minnesota State Retirement System.
    (e) "Person" includes an active, retired, deferred, or nonvested inactive participant in
a covered pension plan or a beneficiary of a participant, or an individual who has applied
to be a participant or who is or may be a survivor of a participant, or a state agency or
other governmental unit that employs active participants in a covered pension plan.

    Sec. 39. Minnesota Statutes 2008, section 473.511, subdivision 3, is amended to read:
    Subd. 3. Existing sanitary districts, joint sewer boards. Effective January 1,
1971, the corporate existence of the Minneapolis-St. Paul Sanitary District, the North
Suburban Sanitary Sewer District, and any joint board created by agreement among local
government units pursuant to under section 471.59, to provide interceptors and treatment
works for such local government units, shall terminate. All persons regularly employed by
such sanitary districts and joint boards on that date or on any earlier date on which the
former waste control commission pursuant to subdivisions 1 and 2 assumed ownership and
control of any interceptors or treatment works owned or operated by such sanitary districts
and joint boards, and who are employees of the commission on July 1, 1994, shall be are
employees of the council, and may at their option become members of the Minnesota
State Retirement System or may continue as members of a public retirement association
under chapter 422A or any other law, to which they belonged before such date, and shall
retain all pension rights which they may have under such latter laws, and all other rights to
which they are entitled by contract or law. Members of trades who are employed by the
former Metropolitan Waste Control Commission, who have trade union pension coverage
pursuant to under a collective bargaining agreement, and who elected exclusion from
coverage pursuant to under section 473.512, or who are first employed after July 1, 1977,
shall may not be covered by the Minnesota State Retirement System. The council shall
make the employer's contributions to pension funds of its employees. Such employees
shall perform such duties as may be prescribed by the council. All funds of such sanitary
districts and joint boards then on hand, and all subsequent collections of taxes, special
assessments or service charges levied or imposed by or for such sanitary districts or joint
boards shall must be transferred to the council. The local government units otherwise
entitled to such cash, taxes, assessments or service charges shall must be credited with
such amounts, and such credits shall must be offset against any amounts to be paid by
them to the council as provided in section 473.517. The former Metropolitan Waste
Control Commission, and on July 1, 1994, the council shall succeed to and become vested
by action of law with all right, title and interest in and to any property, real or personal,
owned or operated by such sanitary districts and joint boards. Prior to that date the proper
officers of such sanitary districts and joint boards, or the former Metropolitan Waste
Control Commission, shall execute and deliver to the council all deeds, conveyances, bills
of sale, and other documents or instruments required to vest in the council good and
marketable title to all such real or personal property; provided that vesting of the title shall
must occur by operation of law and failure to execute and deliver the documents shall does
not affect the vesting of title in the former Metropolitan Waste Control Commission or the
council on the dates indicated in this subdivision. The council shall become obligated to
pay or assume all bonded or other debt and contract obligations incurred by the former
Metropolitan Waste Control Commission, or by such sanitary districts and joint boards, or
incurred by local government units for the acquisition or betterment of any interceptors or
treatment works owned or operated by such sanitary districts or joint boards.

    Sec. 40. Minnesota Statutes 2008, section 473.606, subdivision 5, is amended to read:
    Subd. 5. Employees, others, affirmative action; prevailing wage. The corporation
shall have the power to appoint engineers and other consultants, attorneys, and such
other officers, agents, and employees as it may see fit, who shall perform such duties and
receive such compensation as the corporation may determine, and be removable at the
pleasure of the corporation. The corporation shall must adopt an affirmative action plan,
which shall be submitted to the appropriate agency or office of the state for review and
approval. The plan shall must include a yearly progress report to the agency or office.
Officers and employees of the corporation who cannot qualify and participate in the
municipal employees retirement fund under chapter 422A, shall be separated from service
at the retirement age applicable to officers or employees of the state of Minnesota in the
classified service of the state civil service as provided in section 43A.34, or as the same
may from time to time be amended, regardless of the provisions of the Veteran's Preference
Act. Whenever the corporation performs any work within the limits of a city of the first
class, or establishes a minimum wage for skilled or unskilled labor in the specifications or
any contract for work within one of the cities, the rate of pay to such skilled and unskilled
labor shall must be the prevailing rate of wage for such labor in that city.

    Sec. 41. Minnesota Statutes 2008, section 475.52, subdivision 6, is amended to read:
    Subd. 6. Certain purposes. Any municipality may issue bonds for paying
judgments against it; for refunding outstanding bonds; for funding floating indebtedness;
for funding actuarial liabilities to pay postemployment benefits to employees or officers
after their termination of service; or for funding all or part of the municipality's current
and future unfunded liability for a pension or retirement fund or plan referred to in
section 356.20, subdivision 2, as those liabilities are most recently computed pursuant
to under sections 356.215 and 356.216. The board of trustees or directors of a pension
fund or relief association referred to in section 69.77 or chapter 422A must consent and
must be a party to any contract made under this section with respect to the fund held by
it for the benefit of and in trust for its members. For purposes of this section, the term
"postemployment benefits" means benefits giving rise to a liability under Statement No.
45 of the Governmental Accounting Standards Board.

    Sec. 42. Minnesota Statutes 2009 Supplement, section 480.181, subdivision 2, is
amended to read:
    Subd. 2. Election to retain insurance and benefits; retirement. (a) Before a
person is transferred to state employment under this section, the person may elect to do
either or both of the following:
(1) keep life insurance; hospital, medical, and dental insurance; and vacation and
sick leave benefits and accumulated time provided by the county instead of receiving
benefits from the state under the judicial branch personnel rules; or
(2) remain a member of the general employees retirement plan of the Public
Employees Retirement Association or the Minneapolis employees retirement fund MERF
division of the Public Employees Retirement Association instead of joining the Minnesota
State Retirement System.
Employees who make an election under clause (1) remain on the county payroll,
but the state shall reimburse the county on a quarterly basis for the salary and cost of the
benefits provided by the county. The state shall make the employer contribution to the
general employees retirement plan of the Public Employees Retirement Association or the
employer contribution under section 422A.101 353.50, subdivision 1a 7, paragraphs (c)
and (d), to the Minneapolis Employees Retirement Fund MERF division of the Public
Employees Retirement Association on behalf of employees who make an election under
clause (2).
(b) An employee who makes an election under paragraph (a), clause (1), may revoke
the election, once, at any time, but if the employee revokes the election, the employee
cannot make another election. An employee who makes an election under paragraph (a),
clause (2), may revoke the election at any time within six months after the person becomes
a state employee. Once an employee revokes this election, the employee cannot make
another election.
(c) The Supreme Court, after consultation with the Judicial Council, the
commissioner of management and budget, and the executive directors of the Public
Employees Retirement Association and the Minnesota State Retirement Association, shall
adopt procedures for making elections under this section.
(d) The Supreme Court shall notify all affected employees of the options available
under this section. The executive directors of the Public Employees Retirement
Association and the Minnesota State Retirement System shall provide counseling to
affected employees on the effect of making an election to remain a member of the Public
Employees Retirement Association.

    Sec. 43. EFFECTIVE DATE.
Sections 1 to 42 are effective June 30, 2010.

ARTICLE 13
VOLUNTEER FIREFIGHTER RELIEF ASSOCIATION MODIFICATIONS

    Section 1. Minnesota Statutes 2009 Supplement, section 69.772, subdivision 6, is
amended to read:
    Subd. 6. Municipal ratification for plan amendments. If the special fund of the
relief association does not have a surplus over full funding pursuant to under subdivision 3,
clause (2), subclause (e), or and if the municipality is required to provide financial support
to the special fund of the relief association pursuant to under this section, the adoption of
or any amendment to the articles of incorporation or bylaws of a relief association which
increases or otherwise affects the retirement coverage provided by or the service pensions
or retirement benefits payable from the special fund of any relief association to which this
section applies is not effective until it is ratified by the governing body of the municipality
in which the relief association is located and the officers of a relief association shall not
seek municipal ratification prior to preparing and certifying an estimate of the expected
increase in the accrued liability and annual accruing liability of the relief association
attributable to the amendment. If the special fund of the relief association has a surplus
over full funding pursuant to under subdivision 3, clause (2), subclause (e), and if the
municipality is not required to provide financial support to the special fund of the relief
association pursuant to under this section, the relief association may adopt or amend its
articles of incorporation or bylaws which increase or otherwise affect the retirement
coverage provided by or the service pensions or retirement benefits payable from the
special fund of the relief association which are effective without municipal ratification so
long as this does not cause the amount of the resulting increase in the accrued liability
of the special fund of the relief association to exceed 90 percent of the amount of the
surplus over full funding reported in the prior year and this does not result in the financial
requirements of the special fund of the relief association exceeding the expected amount
of the future fire state aid to be received by the relief association as determined by the
board of trustees following the preparation of an estimate of the expected increase in the
accrued liability and annual accruing liability of the relief association attributable to the
change. If a relief association adopts or amends its articles of incorporation or bylaws
without municipal ratification pursuant to under this subdivision, and, subsequent to
the amendment or adoption, the financial requirements of the special fund of the relief
association pursuant to under this section are such so as to require financial support from
the municipality, the provision which was implemented without municipal ratification is
no longer effective without municipal ratification and any service pensions or retirement
benefits payable after that date may be paid only in accordance with the articles of
incorporation or bylaws as amended or adopted with municipal ratification.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2009 Supplement, section 69.773, subdivision 6, is
amended to read:
    Subd. 6. Municipal ratification for plan amendments. If the special fund of the
relief association does not have a surplus over full funding pursuant to under subdivision
4, or and if the municipality is required to provide financial support to the special fund of
the relief association pursuant to under this section, the adoption of or any amendment to
the articles of incorporation or bylaws of a relief association which increases or otherwise
affects the retirement coverage provided by or the service pensions or retirement benefits
payable from the special fund of any relief association to which this section applies is not
effective until it is ratified by the governing body of the municipality in which the relief
association is located. If the special fund of the relief association has a surplus over full
funding pursuant to under subdivision 4, and if the municipality is not required to provide
financial support to the special fund of the relief association pursuant to under this section,
the relief association may adopt or amend its articles of incorporation or bylaws which
increase or otherwise affect the retirement coverage provided by or the service pensions
or retirement benefits payable from the special fund of the relief association which are
effective without municipal ratification so long as this does not cause the amount of the
resulting increase in the accrued liability of the special fund of the relief association to
exceed 90 percent of the amount of the surplus over full funding reported in the prior year
and this does not result in the financial requirements of the special fund of the relief
association exceeding the expected amount of the future fire state aid to be received by the
relief association as determined by the board of trustees following the preparation of an
updated actuarial valuation including the proposed change or an estimate of the expected
actuarial impact of the proposed change prepared by the actuary of the relief association.
If a relief association adopts or amends its articles of incorporation or bylaws without
municipal ratification pursuant to this subdivision, and, subsequent to the amendment or
adoption, the financial requirements of the special fund of the relief association pursuant
to under this section are such so as to require financial support from the municipality, the
provision which was implemented without municipal ratification is no longer effective
without municipal ratification and any service pensions or retirement benefits payable after
that date may be paid only in accordance with the articles of incorporation or bylaws as
amended or adopted with municipal ratification.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2008, section 356A.06, subdivision 8, is amended to read:
    Subd. 8. Minimum liquidity requirements. A covered pension plan described by
subdivision 6, paragraph (a) or 7, in order to pay benefits as they come due, shall invest
a portion of its assets in authorized short-term debt obligations that can be immediately
liquidated without accrual of a substantial determinable penalty or loss and that have an
average maturity of no more than 90 days. The chief administrative officer of the plan
shall determine the minimum liquidity requirement of the plan and shall retain appropriate
documentation of that determination for three years from the date of determination.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2009 Supplement, section 424A.01, subdivision 1, is
amended to read:
    Subdivision 1. Minors. (a) No volunteer firefighters' relief association associated
with a municipality or an independent nonprofit firefighting corporation may include as a
relief association member a minor serving as a firefighter, except for members of a youth,
civic, or educational organization or program who participate with uninterrupted adult
supervision, as allowed by federal law and by section 181A.04. Such organizations or
programs include, but are not limited to, Boy Scout Explorer programs or firefighting
degree programs.
(b) No volunteer firefighters' relief association associated with a municipality or an
independent nonprofit firefighting corporation may include as a relief association member
a minor serving as a volunteer firefighter.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2009 Supplement, 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 former active 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 person 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.
(b) (c) If a former firefighter who has received a service pension or disability benefit
returns to active relief association membership under paragraph (a) (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 a minimum period of resumption service specified in
the relief association bylaws the service requirements of section 424A.016, subdivision 3,
or 424A.02, subdivision 2.
(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 resumption
service period 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.
(c) (e) A firefighter who returns to active lump-sum relief association membership
and who qualifies for a service pension under paragraph (b) (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 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.
(d) (f) A firefighter who had not been paid a lump-sum service pension returns
to active relief association membership under paragraph (a) (b), who does not qualify
for a service pension under paragraph (b) (d), 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 years of active service, must have, upon a subsequent cessation of
duties, a service pension calculated for the previous years of service based on 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.
(e) (g) If a firefighter receiving a monthly benefit service pension returns to active
monthly benefit relief association membership under paragraph (a) (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 (b) (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. The 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 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) (h) A firefighter who was not receiving a monthly benefit service pension returns
to active relief association membership under paragraph (a) (b), who does not qualify
for a service pension under paragraph (b) (d), but who does meet the minimum service
requirement of section 424A.02, subdivision 2, based on the firefighter's previous years
of active service, must have, upon a subsequent cessation of duties, a service pension
calculated for the previous years of service based on 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.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2009 Supplement, section 424A.015, is amended by adding
a subdivision to read:
    Subd. 5. Minnesota deferred compensation plan transfers. A relief association
may directly transfer on an institution-to-institution basis the eligible member's
lump-sum pension amount to the requesting member's account in the Minnesota deferred
compensation plan, if:
(1) the governing articles of incorporation or bylaws so provide;
(2) the volunteer firefighter participates in the Minnesota deferred compensation
plan at the time of retirement; and
(3) the applicable retiring firefighter requests in writing that the relief association
do so.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2009 Supplement, section 424A.016, subdivision 4, is
amended to read:
    Subd. 4. Individual accounts. (a) An individual account must be established for
each firefighter who is a member of the relief association.
(b) To each individual active member account must be credited an equal share of:
(1) any amounts of fire state aid received by the relief association;
(2) any amounts of municipal contributions to the relief association raised from
levies on real estate or from other available municipal revenue sources exclusive of fire
state aid; and
(3) any amounts equal to the share of the assets of the special fund to the credit of:
(i) any former member who terminated active service with the fire department to
which the relief association is associated before meeting the minimum service requirement
provided for in subdivision 2, paragraph (b), and has not returned to active service with
the fire department for a period no shorter than five years; or
(ii) any retired member who retired before obtaining a full nonforfeitable interest in
the amounts credited to the individual member account under subdivision 2, paragraph
(b), and any applicable provision of the bylaws of the relief association. In addition, any
investment return on the assets of the special fund must be credited in proportion to the
share of the assets of the special fund to the credit of each individual active member
account. Administrative expenses of the relief association payable from the special
fund may be deducted from individual accounts in a manner specified in the bylaws of
the relief association.
(c) If the bylaws so permit and as the bylaws define, the relief association may credit
any investment return on the assets of the special fund to the accounts of inactive members.
(d) Amounts to be credited to individual accounts must be allocated uniformly for
all years of active service and allocations must be made for all years of service, except for
caps on service credit if so provided in the bylaws of the relief association. The allocation
method may utilize monthly proration 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.
(d) (e) At the time of retirement under subdivision 2 and any applicable provision
of the bylaws of the relief association, a retiring member is entitled to that portion of the
assets of the special fund to the credit of the member in the individual member account
which is nonforfeitable under subdivision 3 and any applicable provision of the bylaws of
the relief association based on the number of years of service to the credit of the retiring
member.
(e) (f) Annually, the secretary of the relief association shall certify the individual
account allocations to the state auditor at the same time that the annual financial statement
or financial report and audit of the relief association, whichever applies, is due under
section 69.051.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 8. Minnesota Statutes 2009 Supplement, section 424A.016, subdivision 7, is
amended to read:
    Subd. 7. Limitation on ancillary benefits. (a) A defined contribution relief
association may only pay an ancillary benefit which would constitute an authorized
disbursement as specified in section 424A.05. The ancillary benefit for active members
must equal the vested or and nonvested amount of the individual account of the member.
(b) For deferred members, the ancillary benefit must equal the vested amount of
the individual account of the member. For the recipient of installment payments of a
service pension, the ancillary benefit must equal the remaining balance in the individual
account of the recipient.
(c)(1) If a survivor or death benefit is payable under the articles of incorporation or
bylaws, the benefit must be paid:
(i) as a survivor benefit to the surviving spouse of the deceased firefighter;
(ii) as a survivor benefit to the surviving children of the deceased firefighter if no
surviving spouse;
(iii) as a survivor benefit to a designated beneficiary of the deceased firefighter if no
surviving spouse or surviving children; or
(iv) 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.
(2) If there are no surviving children, the surviving spouse may waive, in writing,
wholly or partially, the spouse's entitlement to a survivor benefit.
(d) For purposes of this section, for a defined contribution volunteer fire relief
association, a trust created under chapter 501B may be a designated beneficiary. If a trust
payable to the surviving children organized under chapter 501B has been established as
authorized by this section and there is no surviving spouse, the survivor benefit may be
paid to the trust, notwithstanding the requirements of this section.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2009 Supplement, 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 for a lump-sum service pension to a retiring member, 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 the day following final enactment.

    Sec. 10. Minnesota Statutes 2009 Supplement, section 424A.02, subdivision 10,
is amended to read:
    Subd. 10. Local approval of bylaw amendments; filing requirements. (a) Each
defined benefit relief association to which this section applies must file a revised copy
of its governing bylaws with the state auditor upon the adoption of any amendment to
its governing bylaws by the relief association or upon the approval of any amendment
to its governing bylaws granted by the governing body of each municipality served by
the fire department to which the relief association is directly associated. Failure of the
relief association to file a copy of the bylaws or any bylaw amendments with the state
auditor disqualifies the municipality from the distribution of any future fire state aid until
this filing requirement has been completed.
(b) If the special fund of the relief association does not have a surplus over full
funding under section 69.772, subdivision 3, clause (2), subclause (e), or 69.773,
subdivision 4
, and if the municipality is required to provide financial support to the special
fund of the relief association under section 69.772 or 69.773, no bylaw amendment which
would affect the amount of, the manner of payment of, or the conditions for qualification
for service pensions or ancillary benefits or disbursements other than administrative
expenses authorized under section 69.80 payable from the special fund of the relief
association is effective until it has been ratified by the governing body or bodies of the
appropriate municipalities as required under section 69.772, subdivision 6, or 69.773,
subdivision 6. If the special fund of the relief association has a surplus over full funding
under section 69.772, subdivision 3, or 69.773, subdivision 4, and if the municipality is
not required to provide financial support to the special fund under this section, the relief
association may adopt or amend without municipal ratification its articles of incorporation
or bylaws which increase or otherwise affect the service pensions or ancillary benefits
payable from the special fund so long as the changes do not cause the amount of the
resulting increase in the accrued liability of the special fund to exceed 90 percent of the
amount of the surplus over full funding reported in the prior year and the changes do not
result in the financial requirements of the special fund exceeding the expected amount
of the subsequent calendar year's fire state aid to be received by the relief association if
authorized under section 69.772, subdivision 6, or 69.773, subdivision 6.
(c) If the relief association pays only a lump-sum pension, the financial requirements
are to be determined by the board of trustees following the preparation of an estimate
of the expected increase in the accrued liability and annual accruing liability of the
relief association attributable to the change. If the relief association pays a monthly
benefit service pension, the financial requirements are to be determined by the board of
trustees following either an updated actuarial valuation including the proposed change
or an estimate of the expected actuarial impact of the proposed change prepared by the
actuary of the relief association. If a relief association adopts or amends its articles
of incorporation or bylaws without municipal ratification under this subdivision, and,
subsequent to the amendment or adoption, the financial requirements of the special fund
under this section are such so as to require financial support from the municipality, the
provision which was implemented without municipal ratification is no longer effective
without municipal ratification, and any service pensions or ancillary benefits payable after
that date must be paid only in accordance with the articles of incorporation or bylaws as
amended or adopted with municipal ratification.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 11. Minnesota Statutes 2009 Supplement, section 424A.05, subdivision 3, is
amended to read:
    Subd. 3. Authorized disbursements from the special fund. (a) Disbursements
from the special fund may not be made for any purpose other than one of the following:
    (1) for the payment of service pensions to retired members of the relief association if
authorized and paid under law and the bylaws governing the relief association;
(2) for the purchase of an annuity for the applicable person under section 424A.015,
subdivision 3, for the transfer of service pension or benefit amounts to the applicable
person's individual retirement account under section 424A.015, subdivision 4, or to the
applicable person's account in the Minnesota deferred compensation plan under section
424A.015, subdivision 5;
    (2) (3) for the payment of temporary or permanent disability benefits to disabled
members of the relief association if authorized and paid under law and specified in amount
in the bylaws governing the relief association;
    (3) (4) for the payment of survivor benefits to surviving spouses and surviving
children, or if none, to designated beneficiaries, of deceased members of the relief
association, and if no survivors and if no designated beneficiary, or for the payment of a
death benefit to the estate of the deceased active or deferred firefighter, if authorized by
and paid under law and specified in amount in the bylaws governing the relief association;
    (4) (5) for the payment of the fees, dues and assessments to the Minnesota State
Fire Department Association and to the Minnesota Area Relief Association Coalition in
order to entitle relief association members to membership in and the benefits of these
associations or organizations;
(5) (6) for the payment of insurance premiums to the state Volunteer Firefighters
Benefit Association, or an insurance company licensed by the state of Minnesota offering
casualty insurance, in order to entitle relief association members to membership in and the
benefits of the association or organization; and
    (6) (7) for the payment of administrative expenses of the relief association as
authorized under section 69.80.
    (b) For purposes of this chapter, 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 chapter, for a defined contribution volunteer fire relief association, 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 designated beneficiary
may be a trust created under chapter 501B.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 12. Minnesota Statutes 2009 Supplement, section 424A.05, is amended by adding
a subdivision to read:
    Subd. 3a. Corrections of erroneous special fund deposits. Upon notification
of funds deposited in error in the special fund and after presentation of evidence that
the error occurred in good faith, the state auditor may require the relief association to
provide a written legal opinion concluding that the transfer of funds from the special
fund is consistent with federal and state law. Taking into consideration the evidence of
good faith presented and the legal opinion, if any, provided, the state auditor may order
the transfer from the special fund to the appropriate fund or account an amount equal
to the funds deposited in error.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 13. REPEALER.
(a) Minnesota Statutes 2009 Supplement, section 424A.001, subdivision 6, is
repealed.
(b) Laws 2009, chapter 169, article 10, section 32, is repealed.
EFFECTIVE DATE.Paragraph (a) is effective the day following final enactment.
Paragraph (b) is effective retroactively from July 1, 2009.

ARTICLE 14
ONE PERSON/SMALL GROUP PENSION ISSUES

    Section 1. PERA-GENERAL; PURCHASE OF OMITTED INVER GROVE
HEIGHTS SCHOOL DISTRICT OMITTED MEMBER CONTRIBUTIONS.
(a) Notwithstanding any provision of law to the contrary, an eligible person
described in paragraph (b) is entitled to purchase from the general employees retirement
plan of the Public Employees Retirement Association allowable service credit under
Minnesota Statutes, section 353.01, subdivision 16, for the period of omitted member
deductions described in paragraph (c).
(b) An eligible person is a person who:
(1) was born on April 17, 1948;
(2) is a current employee of Independent School District No. 199, Inver Grove
Heights;
(3) is a current member of the general employees retirement plan of the Public
Employees Retirement Association;
(4) was employed by Independent School District No. 199, Inver Grove Heights,
on August 26, 1985; and
(5) was not reported by Independent School District No. 199, Inver Grove Heights,
for retirement coverage by and membership in the general employees retirement plan of
the Public Employees Retirement Association until September 1, 1986.
(c) The period of uncredited service authorized for purchase is the period of August
26, 1985, until August 31, 1986, during which no member contributions for the general
employees retirement plan of the Public Employees Retirement Association were
deducted from the eligible person's salary by Independent School District No. 199, Inver
Grove Heights.
(d) The purchase payment amount payable by the eligible person is four percent of
the eligible person's salary under Minnesota Statutes 1984, section 353.01, subdivision
10, from Independent School District No. 199, Inver Grove Heights, during the period of
August 26, 1985, until August 31, 1986, plus annual compound interest on that amount at
the rate of 8.5 percent from March 1, 1986, until the date on which payment is made to
the Public Employees Retirement Association. The purchase payment amount payable
by Independent School District No. 199, Inver Grove Heights, is the balance of the full
actuarial value prior service credit purchase payment amount determined under Minnesota
Statutes, section 356.551, as of the first day of the month next following the receipt of the
eligible person's payment that is remaining after deducting the purchase payment amount
payable by the eligible person.
(e) The school district purchase payment amount payable under paragraph (d) must
be made on or before the 15th of the month next following the receipt of the eligible
person's payment under paragraph (d). If the school district purchase payment amount is
not paid in a timely fashion, the amount due accrues compound monthly interest at the
rate of 0.71 percent per month from the first day of the month next following the receipt
of the eligible person's payment until the school district purchase payment amount is
received by the Public Employees Retirement Association. If the school district purchase
payment amount is not paid to the Public Employees Retirement Association 90 days
after the receipt of the eligible person's payment, the executive director shall notify
the commissioner of management and budget, the commissioner of education, and the
commissioner of revenue of that unpaid obligation and the unpaid obligation must be
deducted from any state aid otherwise payable to the school district, plus interest.
(f) The eligible person must provide the executive director of the Public Employees
Retirement Association with any relevant requested information pertaining to this service
credit purchase.
(g) Authority to make a service credit purchase under this section expires on June
30, 2011, or upon the termination from public employment under Minnesota Statutes,
section 353.01, subdivision 11a, whichever occurs earlier.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. TEACHERS RETIREMENT ASSOCIATION; SECOND CHANCE
RETIREMENT COVERAGE AUTHORITY FOR IRAP MEMBER.
(a) Notwithstanding any provision of Minnesota Statutes, chapter 352, 353, or
354B or section 356.551 to the contrary, an eligible person described in paragraph (b) is
entitled to elect retirement coverage for Minnesota State Colleges and Universities System
employment by the Teachers Retirement Association under Minnesota Statutes, section
354B.21, subdivisions 2 and 3, despite the time limitation on the election.
(b) An eligible person is a person who:
(1) was born on July 19, 1948;
(2) was employed by Mankato State University in 1969, with retirement coverage in
the general state employees retirement plan of the Minnesota State Retirement System, for
which a refund of member contributions and interest was taken before 2007;
(3) was employed by the city of Austin in the early 1980s, with retirement coverage
in the general employees retirement plan of the Public Employees Retirement Association,
for which a refund of member contributions and interest was taken before 2007;
(4) is employed by the Minnesota State Colleges and Universities System at
Riverland Community College; and
(5) had the person's employment position upgraded by the Minnesota State Colleges
and Universities System on September 9, 2007, and had retirement coverage transferred
by operation of law to the higher education individual retirement account plan.
(c) An election to change retirement coverage from the Minnesota State Colleges
and Universities System individual retirement account plan to the Teachers Retirement
Association must be made by July 1, 2010, and is retroactive to September 9, 2007. If
the election is made, Minnesota Statutes, section 356.551, applies to the purchase of
past service except for subdivision 1, paragraph (c), of that provision, which requires
all refunds to be paid before the service credit purchase. The eligible person's account
in the individual retirement account plan must be liquidated by transfer to the Teachers
Retirement Association fund by August 1, 2010, and used to cover part of the service
credit purchase payment amount. Any remaining payment amount must be paid in a lump
sum to the executive director of the Teachers Retirement Association for deposit in the
Teachers Retirement Association fund by September 1, 2010. Retroactive service credit
in the Teachers Retirement Association must be granted to the eligible person once the
transfers and payments required under this paragraph have been made.
(d) If an eligible person under paragraph (b) elects Teachers Retirement Association
coverage but fails to make the full payment required under paragraph (c), the election of
Teachers Retirement Association coverage is voided and the individual retains coverage
by the Minnesota State Colleges and Universities System individual retirement account
plan. If amounts were transferred under paragraph (c) from the individual retirement
account plan, those amounts must be returned to the individual's account or accounts
under that plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 15
MISCELLANEOUS PROVISIONS

    Section 1. [352.016] UNIVERSITY OF MINNESOTA EMPLOYEES;
FURLOUGH SERVICE AND SALARY CREDIT.
A furloughed employee of the University of Minnesota who is a member of the
general state employees retirement plan of the Minnesota State Retirement System
may obtain allowable service credit and salary credit for the furlough period. The
allowable service and salary credit authorization under this section is a leave of absence
authorization for purposes of section 352.017 and the purchase payment procedure of
section 352.017, subdivision 2, applies.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. [353.012] UNIVERSITY OF MINNESOTA EMPLOYEES; FURLOUGH
SERVICE AND SALARY CREDIT.
A furloughed employee of the University of Minnesota who is a member of the
public employees police and fire plan may obtain allowable service and salary credit
for the furlough period. The allowable service and salary credit authorization is a leave
of absence authorization for purposes of section 353.0161 and the purchase payment
procedure of section 353.0161, subdivision 2, applies.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2008, section 356.216, is amended to read:
356.216 CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE
AND FIRE FUNDS.
(a) The provisions of section 356.215 that govern the contents of actuarial valuations
must apply to any local police or fire pension fund or relief association required to make
an actuarial report under this section, except as follows:
(1) in calculating normal cost and other requirements, if required to be expressed as
a level percentage of covered payroll, the salaries used in computing covered payroll must
be the maximum rate of salary on which retirement and survivorship credits and amounts
of benefits are determined and from which any member contributions are calculated and
deducted;
(2) in lieu of the amortization date specified in section 356.215, subdivision 11,
the appropriate amortization target date specified in section 69.77, subdivision 4, or
69.773, subdivision 4, clause (c), must be used in calculating any required amortization
contribution, except that if the actuarial report for the Bloomington Fire Department Relief
Association indicates an unfunded actuarial accrued liability, the unfunded obligation is
to be amortized on a level dollar basis by December 31 of the year occurring 20 years
later, and if subsequent actuarial valuations for the Bloomington Fire Department Relief
Association determine a net actuarial experience loss incurred during the year which
ended as of the day before the most recent actuarial valuation date, any unfunded liability
due to that loss is to be amortized on a level dollar basis by December 31 of the year
occurring 20 years later and except that the amortization date for the Minneapolis Police
Relief Association is December 31, 2020;
(3) in addition to the tabulation of active members and annuitants provided for in
section 356.215, subdivision 13, the member contributions for active members for the
calendar year and the prospective annual retirement annuities under the benefit plan for
active members must be reported;
(4) actuarial valuations required under section 69.773, subdivision 2, must be made
at least every four years and actuarial valuations required under section 69.77 shall be
made annually;
(5) the actuarial balance sheet showing accrued assets valued at market value if the
actuarial valuation is required to be prepared at least every four years or valued as current
assets under section 356.215, subdivision 1, clause (6) paragraph (f), or paragraph (b),
whichever applies, if the actuarial valuation is required to be prepared annually, actuarial
accrued liabilities, and the unfunded actuarial accrued liability must include the following
required reserves:
(i) for active members:
1. retirement benefits;
2. disability benefits;
3. refund liability due to death or withdrawal;
4. survivors' benefits;
(ii) for deferred annuitants' benefits;
(iii) for former members without vested rights;
(iv) for annuitants;
1. retirement annuities;
2. disability annuities;
3. surviving spouses' annuities;
4. surviving children's annuities;
In addition to those required reserves, separate items must be shown for additional
benefits, if any, which may not be appropriately included in the reserves listed above; and
(6) actuarial valuations are due by the first day of the seventh month after the end of
the fiscal year which the actuarial valuation covers.
(b) For the Minneapolis Firefighters Relief Association or the Minneapolis Police
Relief Association, the following provisions additionally apply:
(1) in calculating the actuarial balance sheet, unfunded actuarial accrued liability,
and amortization contribution of the relief association, "current assets" means the value of
all assets at cost, including realized capital gains and losses, plus or minus, whichever
applies, the average value of total unrealized capital gains or losses for the most recent
three-year period ending with the end of the plan year immediately preceding the actuarial
valuation report transmission date; and
(2) in calculating the applicable portions of the actuarial valuation, an annual
preretirement interest assumption of six percent, an annual postretirement interest
assumption of six percent, and an annual salary increase assumption of four percent must
be used.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 4. Minnesota Statutes 2008, section 356.24, subdivision 1, is amended to read:
    Subdivision 1. Restriction; exceptions. (a) It is unlawful for a school district
or other governmental subdivision or state agency to levy taxes for, or to contribute
public funds to a supplemental pension or deferred compensation plan that is established,
maintained, and operated in addition to a primary pension program for the benefit of the
governmental subdivision employees other than:
    (1) to a supplemental pension plan that was established, maintained, and operated
before May 6, 1971;
    (2) to a plan that provides solely for group health, hospital, disability, or death
benefits;
    (3) to the individual retirement account plan established by chapter 354B;
    (4) to a plan that provides solely for severance pay under section 465.72 to a retiring
or terminating employee;
    (5) for employees other than personnel employed by the Board of Trustees of the
Minnesota State Colleges and Universities and covered under the Higher Education
Supplemental Retirement Plan under chapter 354C, but including city managers covered
by an alternative retirement arrangement under section 353.028, subdivision 3, paragraph
(a), or by the defined contribution plan of the Public Employees Retirement Association
under section 353.028, subdivision 3, paragraph (b), if the supplemental plan coverage is
provided for in a personnel policy of the public employer or in the collective bargaining
agreement between the public employer and the exclusive representative of public
employees in an appropriate unit or in the individual employment contract between a city
and a city manager, and if for each available investment all fees and historic rates of return
for the prior one-, three-, five-, and ten-year periods, or since inception, are disclosed in an
easily comprehended document not to exceed two pages, in an amount matching employee
contributions on a dollar for dollar basis, but not to exceed an employer contribution of
one-half of the available elective deferral permitted per year per employee, under the
Internal Revenue Code:
    (i) to the state of Minnesota deferred compensation plan under section 352.965;
    (ii) in payment of the applicable portion of the contribution made to any investment
eligible under section 403(b) of the Internal Revenue Code, if the employing unit has
complied with any applicable pension plan provisions of the Internal Revenue Code with
respect to the tax-sheltered annuity program during the preceding calendar year; or
    (iii) any other deferred compensation plan offered by the employer under section
457 of the Internal Revenue Code;
    (6) for personnel employed by the Board of Trustees of the Minnesota State Colleges
and Universities and not covered by clause (5), to the supplemental retirement plan under
chapter 354C, if the supplemental plan coverage is provided for in a personnel policy
or in the collective bargaining agreement of the public employer with the exclusive
representative of the covered employees in an appropriate unit, in an amount matching
employee contributions on a dollar for dollar basis, but not to exceed an employer
contribution of $2,700 a year for each employee;
    (7) to a supplemental plan or to a governmental trust to save for postretirement
health care expenses qualified for tax-preferred treatment under the Internal Revenue
Code, if the supplemental plan coverage is provided for in a personnel policy or in the
collective bargaining agreement of a public employer with the exclusive representative of
the covered employees in an appropriate unit;
    (8) to the laborers national industrial pension fund or to a laborers local pension
fund for the employees of a governmental subdivision who are covered by a collective
bargaining agreement that provides for coverage by that fund and that sets forth a fund
contribution rate, but not to exceed an employer contribution of $5,000 per year per
employee;
    (9) to the plumbers and pipefitters national pension fund or to a plumbers and
pipefitters local pension fund for the employees of a governmental subdivision who are
covered by a collective bargaining agreement that provides for coverage by that fund and
that sets forth a fund contribution rate, but not to exceed an employer contribution of
$5,000 per year per employee;
    (10) to the international union of operating engineers pension fund for the employees
of a governmental subdivision who are covered by a collective bargaining agreement that
provides for coverage by that fund and that sets forth a fund contribution rate, but not to
exceed an employer contribution of $5,000 per year per employee;
    (11) to a supplemental plan organized and operated under the federal Internal
Revenue Code, as amended, that is wholly and solely funded by the employee's
accumulated sick leave, accumulated vacation leave, and accumulated severance pay;
    (12) to the International Association of Machinists national pension fund for the
employees of a governmental subdivision who are covered by a collective bargaining
agreement that provides for coverage by that fund and that sets forth a fund contribution
rate, but not to exceed an employer contribution of $5,000 per year per employee; or
    (13) for employees of United Hospital District, Blue Earth, to the state of Minnesota
deferred compensation program, if the employee makes a contribution, in an amount that
does not exceed the total percentage of covered salary under section 353.27, subdivisions
3 and 3a; or
(14) to the alternative retirement plans established by the Hennepin County Medical
Center under section 383B.914, subdivision 5.
    (b) No governmental subdivision may make a contribution to a deferred
compensation plan operating under section 457 of the Internal Revenue Code for volunteer
or emergency on-call firefighters in lieu of providing retirement coverage under the federal
Old Age, Survivors, and Disability Insurance Program.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Laws 2009, chapter 169, article 7, section 4, is amended to read:
    Sec. 4. EFFECTIVE DATE.
Sections 1 to 3 are effective January 1, 2010, and. Sections 1 and 2 expire June
30, 2011.
EFFECTIVE DATE.This section is effective the day following final enactment.
Presented to the governor May 12, 2010
Signed by the governor May 15, 2010, 11:42 p.m.