1.1                          A bill for an act 
  1.2             relating to state employment; establishing the health 
  1.3             care reimbursement plan for state employees; creating 
  1.4             a task force; defining terms; transferring funds; 
  1.5             appropriating money; amending Minnesota Statutes 2000, 
  1.6             sections 352.03, subdivisions 4 and 6; 356A.01, 
  1.7             subdivisions 8 and 24; proposing coding for new law as 
  1.8             Minnesota Statutes, chapter 352G. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 352.03, 
  1.11  subdivision 4, is amended to read: 
  1.12     Subd. 4.  [DUTIES AND POWERS OF BOARD OF DIRECTORS.] (a)  
  1.13  The board shall: 
  1.14     (1) elect a chair; 
  1.15     (2) appoint an executive director; 
  1.16     (3) establish rules to administer this chapter and chapters 
  1.17  3A, 352B, 352C, 352D, 352G, and 490 and transact the business of 
  1.18  the system, subject to the limitations of law; 
  1.19     (4) ~~consider and dispose of, or~~ take ~~any other~~ appropriate 
  1.20  action ~~the board of directors deems appropriate~~ concerning 
  1.21  ~~denials of~~ applications for annuities, ~~or~~ disability benefits, 
  1.22  refunds, and other benefits provided under this chapter and 
  1.23  other chapters referenced in clause (3), and consider complaints 
  1.24  of employees and others ~~pertaining to~~ regarding the retirement 
  1.25  of employees and the operation of the system; 
  1.26     (5) advise the director on any matters relating to the 
  1.27  system and carrying out functions and purposes of this chapter~~.~~  
  2.1   ~~The board's advice shall control~~; and 
  2.2      (6) oversee the administration of the state deferred 
  2.3   compensation plan established in section 352.96. 
  2.4      (b) The director and assistant director must be in the 
  2.5   unclassified service but appointees may be selected from civil 
  2.6   service lists if desired.  The salary of the executive director 
  2.7   must be as provided by section 15A.0815.  The salary of the 
  2.8   assistant director must be set in accordance with section 
  2.9   43A.18, subdivision 3.  
  2.10     Sec. 2.  Minnesota Statutes 2000, section 352.03, 
  2.11  subdivision 6, is amended to read: 
  2.12     Subd. 6.  [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] 
  2.13     (a) The management of the system is vested in the director, 
  2.14  who is the executive and administrative head of the system.  The 
  2.15  director shall be advisor to the board on matters pertaining to 
  2.16  the system and shall also act as the secretary of the board.  
  2.17  The director shall: 
  2.18     (1) attend meetings of the board; 
  2.19     (2) prepare and recommend to the board appropriate rules to 
  2.20  carry out this chapter and all chapters referenced in 
  2.21  subdivision 4, paragraph (a), clause (3); 
  2.22     (3) establish and maintain an adequate system of records 
  2.23  and accounts following recognized accounting principles and 
  2.24  controls; 
  2.25     (4) designate an assistant director with the approval of 
  2.26  the board; 
  2.27     (5) appoint any employees, both permanent and temporary, 
  2.28  that are necessary to carry out the provisions of this 
  2.29  chapter and all chapters referenced in subdivision 4, paragraph 
  2.30  (a), clause (3); 
  2.31     (6) organize the work of the system as the director deems 
  2.32  necessary to fulfill the functions of the system, and define the 
  2.33  duties of its employees and delegate to them any powers or 
  2.34  duties, subject to the control of the director and under 
  2.35  conditions the director may prescribe~~. Appointments to exercise~~ 
  2.36  ~~delegated power must be by written order and shall be filed with~~ 
  3.1   ~~the secretary of state~~; 
  3.2      (7) with the advice and consent of the board, contract for 
  3.3   the services of an approved actuary, professional management 
  3.4   services, and any other consulting services as necessary and fix 
  3.5   the compensation for those services~~.  The contracts are not~~ 
  3.6   ~~subject to competitive bidding under chapter 16C.  Any approved~~ 
  3.7   ~~actuary retained by the executive director shall function as the~~ 
  3.8   ~~actuarial advisor of the board and the executive director, and~~ 
  3.9   ~~may perform actuarial valuations and experience studies to~~ 
  3.10  ~~supplement those performed by the actuary retained by the~~ 
  3.11  ~~legislative commission on pensions and retirement.  Any~~ 
  3.12  ~~supplemental actuarial valuations or experience studies shall be~~ 
  3.13  ~~filed with the executive director of the legislative commission~~ 
  3.14  ~~on pensions and retirement.  Professional management services~~ 
  3.15  ~~may not be contracted for more often than once in six years.~~  
  3.16  ~~Copies of professional management survey reports must be~~ 
  3.17  ~~transmitted to the secretary of the senate, the chief clerk of~~ 
  3.18  ~~the house of representatives, and the legislative reference~~ 
  3.19  ~~library as provided by section 3.195, and to the executive~~ 
  3.20  ~~director of the commission at the time as reports are furnished~~ 
  3.21  ~~to the board.  Only management firms experienced in conducting~~ 
  3.22  ~~management surveys of federal, state, or local public retirement~~ 
  3.23  ~~systems are qualified to contract with the director~~; 
  3.24     (8) with the advice and consent of the board provide 
  3.25  in-service training for the employees of the system; 
  3.26     (9) make refunds of accumulated contributions to former 
  3.27  state employees and to the designated beneficiary, surviving 
  3.28  spouse, legal representative, or next of kin of deceased state 
  3.29  employees or deceased former state employees, as provided ~~in~~ 
  3.30  ~~this chapter~~ by law; 
  3.31     (10) determine the amount of the annuities and disability 
  3.32  benefits of employees covered by the system and authorize 
  3.33  payment of the annuities and benefits beginning as of the dates 
  3.34  on which the annuities and benefits begin to accrue, in 
  3.35  accordance with the provisions of this chapter and chapters 3A, 
  3.36  352B, 352C, 352D, 352E, 352F, 352G, 356, 356A, and 490; 
  4.1      (11) pay annuities, refunds, survivor benefits, salaries, 
  4.2   and necessary operating expenses of the system, including 
  4.3   chapter 352G, as applicable; 
  4.4      (12) certify funds available for investment to the state 
  4.5   board of investment; 
  4.6      (13) with the advice and approval of the board request the 
  4.7   state board of investment to sell securities when the director 
  4.8   determines that funds are needed for the system; 
  4.9      (14) prepare and submit to the board and the legislature an 
  4.10  annual financial report covering the operation of the system, as 
  4.11  required by section 356.20; 
  4.12     (15) prepare and submit biennial and annual budgets to the 
  4.13  board and with the approval of the board submit the budgets to 
  4.14  the department of finance; and 
  4.15     (16) with the approval of the board, perform other duties 
  4.16  required to administer ~~the~~ retirement provisions and other 
  4.17  provisions of this chapter and chapters 3A, 352B, 352C, 352D, 
  4.18  352E, 352F, 352G, 356, 356A, and 490, and to do ~~its~~ the business 
  4.19  of the board. 
  4.20     (b) Any delegation of power under paragraph (a), clause 
  4.21  (6), must be by written order and shall be filed with the 
  4.22  secretary of state. 
  4.23     (c) The contracts for services under paragraph (a), clause 
  4.24  (7), are not subject to competitive bidding under chapter 16C.  
  4.25  Any approved actuary retained by the executive director shall 
  4.26  function as the actuarial advisor to the board and the executive 
  4.27  director, and may perform actuarial valuations and experience 
  4.28  studies to supplement those performed by the actuary retained by 
  4.29  the legislative commission on pensions and retirement.  Any 
  4.30  supplemental actuarial valuations or experience studies shall be 
  4.31  filed with the executive director of the legislative commission 
  4.32  on pensions and retirement.  Professional management services 
  4.33  may not be contracted for more often than once in six years.  
  4.34  Copies of professional management survey reports must be 
  4.35  transmitted to the secretary of the senate, the chief clerk of 
  4.36  the house of representatives, and the legislative reference 
  5.1   library as provided by section 3.195, and to the executive 
  5.2   director of the legislative commission on pensions and 
  5.3   retirement at the same time as reports are furnished to the 
  5.4   board.  Only management firms experienced in conducting 
  5.5   management surveys of federal, state, or local public retirement 
  5.6   systems are qualified to contract with the director. 
  5.7      Sec. 3.  [352G.03] [DEFINITIONS.] 
  5.8      Subdivision 1.  [APPLICATION.] The definitions in this 
  5.9   section apply to this chapter. 
  5.10     Subd. 2.  [ACCUMULATED CONTRIBUTIONS.] "Accumulated 
  5.11  contributions" means the total deductions made from the salary 
  5.12  of an employee into the health care reimbursement plan. 
  5.13     Subd. 3.  [ALLOWABLE SERVICE.] "Allowable service" means 
  5.14  allowable service under chapter 3A, 352, 352B, 352D, 354D, or 
  5.15  490, except any allowable service reinstated by repaying a 
  5.16  refund on or after July 1, 2001.  Allowable service in a plan or 
  5.17  plans provided under chapter 354D does not include service prior 
  5.18  to the effective date of this section. 
  5.19     Subd. 4.  [BOARD.] "Board" means the board of directors of 
  5.20  the Minnesota state retirement system established under section 
  5.21  352.03. 
  5.22     Subd. 5.  [DESIGNATED BENEFICIARY.] "Designated 
  5.23  beneficiary" means the designated beneficiary established by the 
  5.24  included participants or eligible retired employees under the 
  5.25  retirement plan under chapter 3A, 352, 352B, 352D, 354D, or 490. 
  5.26     Subd. 6.  [ELIGIBLE DEFERRED RETIRED EMPLOYEE.] "Eligible 
  5.27  deferred retired employee" means a person who is a former state 
  5.28  employee; who terminated covered service on or after July 1, 
  5.29  2001; who at the date of termination of covered service had at 
  5.30  least 15 years of allowable service; and who was eligible to 
  5.31  immediately receive a retirement annuity under chapter 3A, 352, 
  5.32  352B, 352D, 354D, or 490. 
  5.33     Subd. 7.  [ELIGIBLE DISABILITANT.] "Eligible disabilitant" 
  5.34  means an employee who is a disabilitant under chapter 3A, 352, 
  5.35  352B, 352D, 354D, or 490; who has at least 15 years of allowable 
  5.36  service on the accrual date of the disability; who had a 
  6.1   disability accrual date on or after July 1, 2001; and who is at 
  6.2   least age 60. 
  6.3      Subd. 8.  [ELIGIBLE RETIRED EMPLOYEE.] "Eligible retired 
  6.4   employee" means a former state employee who is drawing monthly 
  6.5   retirement benefits under chapter 3A, 352, 352B, 352D, 354D, or 
  6.6   490; who is at least age 60; who terminated covered service on 
  6.7   or after July 1, 2001; who has at least 15 years of allowable 
  6.8   service; and who was eligible to draw retirement benefits at the 
  6.9   time of separation from state service. 
  6.10     Subd. 9.  [EXECUTIVE DIRECTOR.] "Executive director" means 
  6.11  the executive director of the Minnesota state retirement system 
  6.12  under section 352.03, subdivision 5. 
  6.13     Subd. 10.  [INCLUDED PARTICIPANTS.] "Included participants" 
  6.14  means persons contributing to a retirement plan under chapter 
  6.15  3A, 352, 352B, 352D, 354D, or 490 on or after July 1, 2001. 
  6.16     Subd. 11.  [INELIGIBLE TERMINATED EMPLOYEE.] "Ineligible 
  6.17  terminated employee" means a former state employee who is not 
  6.18  eligible for benefits from the health care reimbursement plan. 
  6.19     Subd. 12.  [SALARY.] "Salary" has the meaning given in 
  6.20  section 352.01, subdivision 13. 
  6.21     Subd. 13.  [STATE EMPLOYEE.] "State employee" means a 
  6.22  person contributing to a retirement plan under chapter 3A, 352, 
  6.23  352B, 352D, 354D, or 490 on or after July 1, 2001. 
  6.24     Sec. 4.  [352G.04] [HEALTH CARE REIMBURSEMENT PLAN.] 
  6.25     Subdivision 1.  [ESTABLISHMENT.] There is established for 
  6.26  state employees the health care reimbursement plan.  The plan is 
  6.27  intended to meet the qualification requirements under the 
  6.28  Internal Revenue Code, section 401(h), to ensure that both 
  6.29  contributions and benefit payments are tax free.  This chapter 
  6.30  must be interpreted and rules for plan governance and operation 
  6.31  must be formulated to comply with the Internal Revenue Code, 
  6.32  section 401(h). 
  6.33     Subd. 2.  [STATE EMPLOYEES COVERED.] Every state employee 
  6.34  is covered by the health care reimbursement plan.  Acceptance of 
  6.35  state employment or continuance in state service in which 
  6.36  contributions are made under chapter 3A, 352, 352B, 352D, 354D, 
  7.1   or 490 is deemed consent to have deductions made from salary for 
  7.2   deposit to the credit of the account of the state employee in 
  7.3   the health care reimbursement plan. 
  7.4      Sec. 5.  [352G.05] [APPEALS PROCEDURE.] 
  7.5      A decision by the executive director may only be appealed 
  7.6   in the manner provided in section 352.031. 
  7.7      Sec. 6.  [352G.06] [STATE EMPLOYEES HEALTH CARE 
  7.8   REIMBURSEMENT FUND.] 
  7.9      Subdivision 1.  [FUND CREATED.] There is created in the 
  7.10  state treasury a special account to be known as the state 
  7.11  employees health care reimbursement fund.  Employee 
  7.12  contributions, employer contributions, investment returns, and 
  7.13  any other receipts authorized by law must be deposited in the 
  7.14  state treasury and credited to the account. 
  7.15     Subd. 2.  [EMPLOYEE CONTRIBUTIONS.] The employee 
  7.16  contribution to the fund equals .5 percent of salary.  The 
  7.17  contribution must be made by deduction from salary as provided 
  7.18  in section 352.04, subdivision 4. 
  7.19     Subd. 3.  [EMPLOYER CONTRIBUTIONS.] The employer 
  7.20  contribution to the fund equals .5 percent of salary.  The 
  7.21  contribution must be made under section 352.04, subdivisions 5 
  7.22  and 6. 
  7.23     Subd. 4.  [OMITTED SALARY DEDUCTIONS.] If the employer of 
  7.24  an included participant fails to take deductions from an 
  7.25  employee's salary as provided in this section, the collection of 
  7.26  omitted deductions must be made in accordance with section 
  7.27  352.04, subdivision 8, paragraphs (a), (b), and (c). 
  7.28     Subd. 5.  [ERRONEOUS DEDUCTIONS; CANCELED WARRANTS.] 
  7.29  Deductions taken from the salary of a state employee for the 
  7.30  health care reimbursement plan in error must, upon discovery and 
  7.31  verification by the department making the deduction, be refunded 
  7.32  to the employee in accordance with section 352.04, subdivision 9.
  7.33     Subd. 6.  [DISBURSEMENTS.] The expenses of the health care 
  7.34  reimbursement plan and any benefits provided by law must be paid 
  7.35  from the health care reimbursement fund.  
  7.36     Sec. 7.  [352G.07] [TREASURER OF THE FUND.] 
  8.1      The state treasurer or the successor of the state treasurer 
  8.2   is ex officio treasurer of the health care reimbursement fund.  
  8.3   The state treasurer or the successor of the state treasurer 
  8.4   shall deliver to the executive director copies of all payroll 
  8.5   abstracts of the state together with the commissioner of 
  8.6   finance's warrants covering the deductions made on the payroll 
  8.7   abstracts for the health care reimbursement plan.  The executive 
  8.8   director shall have a list made of the commissioner of finance's 
  8.9   warrants.  These warrants must then be deposited in the state 
  8.10  treasury and credited to the health care reimbursement fund.  
  8.11  The state treasurer or the successor of the state treasurer 
  8.12  shall pay out of the fund only on warrants issued by the 
  8.13  commissioner of finance, upon abstracts signed by the executive 
  8.14  director, or by the finance officer designated by the executive 
  8.15  director during the disability or the absence of the executive 
  8.16  director.  Abstracts for investments may be signed by the 
  8.17  executive director of the state board of investment. 
  8.18     Sec. 8.  [352G.08] [INVESTMENT BOARD TO INVEST FUND.] 
  8.19     The executive director shall, from time to time, certify to 
  8.20  the state board of investment any portions of the health care 
  8.21  reimbursement fund that in the judgment of the executive 
  8.22  director are not required for immediate use.  The state board of 
  8.23  investment shall invest and reinvest sums so transferred, or 
  8.24  certified, in securities that are duly authorized legal 
  8.25  investments under section 11A.24.  Assets of the health care 
  8.26  reimbursement fund must be accounted for separately from the 
  8.27  retirement funds invested by the investment board. 
  8.28     Sec. 9.  [352G.09] [HEALTH CARE REIMBURSEMENT PLAN 
  8.29  BENEFITS.] 
  8.30     Subdivision 1.  [AGE AND SERVICE REQUIREMENTS.] After 
  8.31  separation from state service, an eligible retired employee is 
  8.32  entitled, upon filing a valid application on a form provided by 
  8.33  the executive director, to benefits from the health care 
  8.34  reimbursement fund as specified in subdivision 2. 
  8.35     Subd. 2.  [BENEFIT SCHEDULE.] An eligible retired employee 
  8.36  under subdivision 1 is entitled to the following monthly benefit 
  9.1   from the health care reimbursement fund depending upon the 
  9.2   benefit effective date.  For purposes of this subdivision, 
  9.3   "benefit effective date" means the accrual date of the 
  9.4   retirement annuity or age 60, whichever is later. 
  9.5        Benefit Effective Date         Monthly Benefit
  9.6        July 1, 2001 - June 30, 2003          $55 
  9.7        July 1, 2003 - June 30, 2004          $64 
  9.8        July 1, 2004 - June 30, 2005          $73 
  9.9        July 1, 2005 - June 30, 2006          $82 
  9.10       July 1, 2006 - June 30, 2007          $92 
  9.11       July 1, 2007 - June 30, 2008         $102 
  9.12       July 1, 2008 - June 30, 2009         $113 
  9.13       July 1, 2009 - June 30, 2010         $123 
  9.14       July 1, 2010 - June 30, 2011         $134 
  9.15       July 1, 2011 - June 30, 2012         $146 
  9.16       July 1, 2012 - June 30, 2013         $158 
  9.17     Subd. 3.  [APPLICATION TO ELIGIBLE DISABLED EMPLOYEES.] (a) 
  9.18  An eligible disabilitant is entitled, upon filing a valid 
  9.19  application on a form provided by the executive director, to 
  9.20  benefits from the health care reimbursement fund as specified in 
  9.21  subdivision 2 for retired employees.  For purposes of this 
  9.22  subdivision, the "benefit effective date" in subdivision 2 means 
  9.23  the accrual date of the disability benefit under the applicable 
  9.24  retirement plan or the date the individual attains age 60, 
  9.25  whichever is later.  
  9.26     (b) Except as indicated in paragraph (c), if an individual 
  9.27  loses entitlement to disability benefits, the benefits payable 
  9.28  under this section terminate when the disability benefit 
  9.29  terminates.  If the individual returns to covered employment and 
  9.30  later qualifies under this chapter as an eligible retired 
  9.31  employee, benefits again commence under subdivision 2 based on 
  9.32  the eligible retired employee's retirement date. 
  9.33     (c) If an eligible disabilitant receiving benefits under 
  9.34  this section is transferred, due to the individual's age, from 
  9.35  disability status to retired status, the existing benefit to the 
  9.36  individual provided by this section continues as modified over 
 10.1   time under section 352G.08. 
 10.2      Subd. 4.  [DEFERRED RETIREES.] An eligible deferred retired 
 10.3   employee is entitled, upon filing a valid application on a form 
 10.4   provided by the executive director, to benefits from the health 
 10.5   care reimbursement fund as specified in subdivision 2 upon 
 10.6   attaining age 60 or upon the accrual date of the retirement 
 10.7   annuity, whichever is later.  For purposes of this subdivision, 
 10.8   the "benefit effective date" in subdivision 2 means the date the 
 10.9   deferred retiree under this subdivision attains age 60 or the 
 10.10  accrual date of retirement annuity, whichever is later.  
 10.11     Subd. 5.  [PAYMENTS.] No monthly payments may accrue or be 
 10.12  made under this section prior to July 1, 2003, and payments, 
 10.13  when they commence, must be based on the schedule in subdivision 
 10.14  2.  Payments may only be made to the eligible retired employee 
 10.15  or eligible disabilitant, as applicable, upon providing 
 10.16  documentation that the money is used to offset health insurance 
 10.17  premiums or any other health expenses to meet the requirements 
 10.18  under the Internal Revenue Code, section 401(h).  At the 
 10.19  discretion of the executive director, payments may be added to 
 10.20  the monthly retirement or disability benefit payable to the 
 10.21  eligible individual. 
 10.22     Subd. 6.  [TERMINATION OF BENEFITS.] Authority to receive 
 10.23  monthly payments under this chapter terminates upon the death of 
 10.24  the eligible retired employee or eligible disabilitant, as 
 10.25  applicable, and must not commence or continue to a survivor or 
 10.26  designated beneficiary. 
 10.27     Subd. 7.  [EXCLUSION FROM PLAN BENEFITS.] Notwithstanding 
 10.28  subdivisions 1, 3, and 4, an individual who receives a benefit 
 10.29  increase under sections 19 to 21 from any retirement plan or 
 10.30  plans included under those sections is not eligible for a 
 10.31  benefit under this section.  If an individual to whom this 
 10.32  subdivision applies is an included participant, as defined in 
 10.33  section 352G.03, subdivision 10, that individual is an 
 10.34  ineligible terminated employee following termination of that 
 10.35  employment.  
 10.36     Sec. 10.  [352G.10] [ANNUAL INCREASES, CALCULATION OF 
 11.1   HEALTH INSURANCE PLAN INFLATION ADJUSTMENT.] 
 11.2      (a) Annually, following June 30, the executive director and 
 11.3   the board of the Minnesota state retirement system shall use the 
 11.4   procedures in paragraph (b) to determine whether an inflation 
 11.5   adjustment is payable and to determine the amount of the 
 11.6   adjustment. 
 11.7      (b) If the medical inflation index increases from June 30 
 11.8   of the preceding year to June 30 of the current year, the 
 11.9   executive director of the Minnesota state retirement system 
 11.10  shall certify to the board the percentage increase.  The amount 
 11.11  certified is the percentage increase in the lesser of the 
 11.12  medical inflation index or five percent.  The board, at its 
 11.13  discretion, may decrease the potential adjustment rate in any 
 11.14  year to maintain the financial integrity of the health insurance 
 11.15  plan, which includes the avoidance of the creation of a 
 11.16  projected unfunded actuarial accrued liability.  The board must 
 11.17  seek advice from an approved actuary under section 356.215, 
 11.18  subdivision 1, in determining whether the inflation adjustment 
 11.19  should be lowered. 
 11.20     (c) If an increase is payable, it must occur the following 
 11.21  January 1.  An eligible retired employee or eligible 
 11.22  disabilitant who has been receiving health insurance 
 11.23  reimbursement benefits for at least 12 months as of the current 
 11.24  June 30 is eligible to receive a full insurance plan inflation 
 11.25  adjustment.  An eligible retired employee or eligible 
 11.26  disabilitant who has been receiving a health insurance benefit 
 11.27  for at least one full month, but less than 12 full months as of 
 11.28  the current June 30, is eligible to receive a prorated inflation 
 11.29  adjustment. 
 11.30     Sec. 11.  [352G.11] [REFUND OF EMPLOYEE CONTRIBUTIONS.] 
 11.31     Subdivision 1.  [REFUND.] An ineligible terminated 
 11.32  employee, an eligible deferred retiree, or an eligible retired 
 11.33  employee who has not yet begun collecting benefits under this 
 11.34  chapter, or a state employee who moves to a state position no 
 11.35  longer covered by chapter 3A, 352, 352B, 352D, 354D, or 490, may 
 11.36  apply for a refund provided in subdivision 2.  A refund is not 
 12.1   payable if the applicant has again become a state employee 
 12.2   required to be covered by this chapter. 
 12.3      Subd. 2.  [AMOUNT OF REFUND.] The refund payable to a 
 12.4   person defined in subdivision 1 is an amount equal to the 
 12.5   employee's accumulated contributions, based upon fiscal year 
 12.6   balances, plus annual compound interest at a rate of five 
 12.7   percent from the date on which the member contribution was paid 
 12.8   until the date on which the refund is paid. 
 12.9      Subd. 3.  [TERMINATION OF RIGHTS.] By accepting a refund as 
 12.10  provided in subdivision 2, all credit for allowable service and 
 12.11  all rights and benefits to which the participant was entitled 
 12.12  under this chapter before accepting the refund terminate. 
 12.13     Subd. 4.  [REPAYMENT OF REFUND.] Rights and benefits 
 12.14  forfeited under subdivision 3 may be restored by repaying all 
 12.15  amounts refunded under subdivision 2 plus annual compound 
 12.16  interest at the rate of 8.5 percent, from the date the refund 
 12.17  under subdivision 2 was paid to the repayment date.  Repayment 
 12.18  under this subdivision must be made before termination of 
 12.19  service following reemployment as a state employee covered by 
 12.20  chapter 3A, 352, 352B, 352D, 354D, or 490, or within one month 
 12.21  following termination of that service. 
 12.22     Sec. 12.  [352G.12] [PAYMENTS UPON DEATH OF INCLUDED 
 12.23  PARTICIPANT.] 
 12.24     Upon the death of an included participant or a prior 
 12.25  included participant for whom no monthly benefits have been paid 
 12.26  under this chapter, the designated beneficiary is entitled to a 
 12.27  refund of the employee's accumulated contributions to the health 
 12.28  care reimbursement fund plus annual compound interest at the 
 12.29  rate of five percent from the date on which the contribution is 
 12.30  made to the date of the refund. 
 12.31     Sec. 13.  [352G.13] [PAYMENTS UPON DEATH OF ELIGIBLE 
 12.32  RETIRED EMPLOYEE.] 
 12.33     Upon the death of an eligible retired employee or eligible 
 12.34  disabled employee who has started receiving payments under this 
 12.35  chapter, the designated beneficiary is entitled to a refund of 
 12.36  the eligible retired employee's or disabled employee's 
 13.1   accumulated contributions plus annual compound interest at the 
 13.2   rate of five percent from the date on which the contribution is 
 13.3   made until the date of the termination of state service less the 
 13.4   monthly benefits that have been paid. 
 13.5      Sec. 14.  [352G.14] [UNLIMITED RIGHT TO AMEND.] 
 13.6      Notwithstanding any other provision of the health care 
 13.7   reimbursement plan, the health care reimbursement plan may be 
 13.8   amended at any time and in any manner for any reason.  This 
 13.9   power to amend includes, but is not limited to, the right to 
 13.10  revise contribution rates, and to reduce or eliminate 
 13.11  prospectively or retroactively any or all health care 
 13.12  reimbursement benefits under the health care reimbursement plan 
 13.13  for persons who may be members, retirees, and other recipients 
 13.14  or otherwise may be entitled to health benefits under the plan.  
 13.15  Benefits may be reduced or eliminated for any or all persons 
 13.16  including members, retirees, and other recipients even if they 
 13.17  have met the service requirement for entitlement to or are 
 13.18  receiving health benefits. 
 13.19     Sec. 15.  [352G.15] [ACTUARIAL REPORTING.] 
 13.20     Subdivision 1.  [REPORT REQUIRED.] The legislative 
 13.21  commission on pensions and retirement shall contract with its 
 13.22  retained actuary for preparation of actuarial valuations under 
 13.23  subdivision 2 and section 18 for the state employees health care 
 13.24  reimbursement fund.  The initial actuarial valuation under this 
 13.25  section is to be determined as of July 1, 2002, and July 1 every 
 13.26  year thereafter.  Any cost associated with this reporting 
 13.27  requirement is an expense of the health care reimbursement plan. 
 13.28     Subd. 2.  [APPLICATION.] Section 356.215 applies to 
 13.29  actuarial reports required under this section, except that: 
 13.30     (1)  notwithstanding section 356.215, subdivision 2 and 3, 
 13.31  the actuarial report required for the health care reimbursement 
 13.32  plan must be provided biennially rather than annually; 
 13.33     (2) in lieu of any interest assumptions indicated in 
 13.34  section 356.215, subdivision 4d, the health care reimbursement 
 13.35  plan must use a preretirement interest assumption of 8.5 percent 
 13.36  and an interest assumption of 3.5 percent following commencement 
 14.1   of the health care reimbursement benefit; 
 14.2      (3) if a salary increase assumption is needed for the 
 14.3   computations, the salary increase assumption used for each 
 14.4   member of the health care reimbursement plan is that specified 
 14.5   for the public pension plan, indicated in section 356.215, 
 14.6   subdivision 4d, paragraph (b), which provides pension coverage 
 14.7   for the applicable individual, and if the pension plan providing 
 14.8   coverage is the unclassified employees retirement plan or any 
 14.9   other plan not included under section 356.215, subdivision 4d, 
 14.10  paragraph (b), the salary increase assumptions for the general 
 14.11  state employees retirement plan must be used; 
 14.12     (4) a payroll growth assumption of five percent must be 
 14.13  used; 
 14.14     (5) amortization contributions are to be computed on a 
 14.15  level percentage of contribution basis with a full funding date 
 14.16  of June 1, 2030; and 
 14.17     (6) the actuary shall assume that any individual who meets 
 14.18  all benefit eligibility requirements has sufficient health 
 14.19  care-related costs to be able to claim the benefit. 
 14.20     Sec. 16.  Minnesota Statutes 2000, section 356A.01, 
 14.21  subdivision 8, is amended to read: 
 14.22     Subd. 8.  [COVERED PENSION PLAN.] "Covered pension plan" 
 14.23  means a pension plan or fund listed in section 356.20, 
 14.24  subdivision 2, ~~or section~~ 356.30, subdivision 3, or ~~a~~ the health 
 14.25  care reimbursement plan ~~established~~ under chapter ~~353D, 354B,~~ 
 14.26  ~~354C, or 354D~~ 352G.  
 14.27     Sec. 17.  Minnesota Statutes 2000, section 356A.01, 
 14.28  subdivision 24, is amended to read: 
 14.29     Subd. 24.  [STATEWIDE PLAN.] "Statewide plan" means any of 
 14.30  the following pension plans: 
 14.31     (1) the Minnesota state retirement system ~~or~~, a pension 
 14.32  plan administered by it, or the health care reimbursement plan 
 14.33  under chapter 352G; 
 14.34     (2) the public employees retirement association or a 
 14.35  pension plan administered by it; and 
 14.36     (3) the teachers retirement association or a pension plan 
 15.1   administered by it. 
 15.2      Sec. 18.  [STUDY REQUIRED.] 
 15.3      Following the first required actuarial report under section 
 15.4   352G.15, the actuary retained by the legislative commission on 
 15.5   pensions and retirement, as part of the report to the 
 15.6   legislative commission on pensions and retirement under section 
 15.7   3.85, subdivision 11, paragraph (d), shall advise the commission 
 15.8   regarding contribution rates, benefit levels, and benefit 
 15.9   phase-in schedules contained in the plan provided under chapter 
 15.10  352G, and any other features of the plan which, in the opinion 
 15.11  of the actuary, warrant legislative action or consideration.  
 15.12  The report shall also include recommendations on actuarial 
 15.13  assumptions, actuarial methods, and actuarial reporting 
 15.14  requirements applicable for the plan.  Any cost associated with 
 15.15  the study is an administrative expense of the health care 
 15.16  reimbursement fund. 
 15.17     Sec. 19.  [CURRENT RETIREES AND DISABILITANTS AT LEAST AGE 
 15.18  60.] 
 15.19     (a) Eligible individuals under paragraph (b) are eligible 
 15.20  to receive the additional payment specified in paragraph (c). 
 15.21     (b) An eligible individual is: 
 15.22     (1) a disabled employee who began receiving monthly 
 15.23  disability benefits before July 1, 2001, under Minnesota 
 15.24  Statutes, chapter 3A, 352, 352B, 352D, or 490; who has at least 
 15.25  15 years of allowable service; who continues entitlement to 
 15.26  those benefits; and who is at least age 60; and 
 15.27     (2) a retiree who began receiving a retirement annuity 
 15.28  before July 1, 2001, under Minnesota Statutes, chapter 3A, 352, 
 15.29  352B, 352D, or 490; who had 15 or more years of allowable 
 15.30  service for purposes of computing the applicable retirement 
 15.31  annuity; who was immediately eligible to draw an annuity upon 
 15.32  termination of covered service; and who is at least age 60. 
 15.33     (c) The payment to an eligible individual under paragraph 
 15.34  (b) is $55 per month.  This additional payment shall be added to 
 15.35  the retired or disabled employee's monthly benefit check and 
 15.36  shall be eligible for future postretirement adjustments under 
 16.1   Minnesota Statutes, section 11A.18, subdivision 9.  
 16.2      (d) Except as indicated in section 22, the present value 
 16.3   necessary to provide this benefit increase to retired and 
 16.4   disabled employees under paragraph (c) must be transferred to 
 16.5   the postretirement fund under Minnesota Statutes, section 
 16.6   11A.18, subdivision 6, from the retirement fund from which the 
 16.7   person is currently receiving the retirement or disability 
 16.8   annuity.  If the retired or disabled employee is receiving 
 16.9   payments from more than one retirement plan in chapters 
 16.10  specified under paragraph (b), the required reserves must be 
 16.11  transferred from the retirement fund related to the retirement 
 16.12  plan in which the person had the most service credit. 
 16.13     (e) The required reserves under paragraph (d) must be 
 16.14  transferred on July 1, 2003.  Any increase due to the operation 
 16.15  of the postretirement fund is first payable on January 1, 2005. 
 16.16     Sec. 20.  [RETIREES AND DISABILITANTS UNDER AGE 60.] 
 16.17     (a) An eligible individual under paragraph (b) is eligible 
 16.18  to receive the additional payment specified in paragraph (c). 
 16.19     (b) An eligible individual is an individual specified in 
 16.20  section 19, paragraph (b), clause (1) or (2), as applicable, 
 16.21  except that the individual has not yet reached age 60. 
 16.22     (c) An eligible individual under paragraph (b) is entitled 
 16.23  to an additional $55 per month upon attaining age 60.  The 
 16.24  present value necessary to provide the benefit increase to those 
 16.25  who become eligible under this section must be transferred to 
 16.26  the postretirement fund when benefits under this section 
 16.27  commence for the applicable individual. 
 16.28     Sec. 21.  [DEFERRED RETIREES.] 
 16.29     A deferred retiree who terminated covered service before 
 16.30  July 1, 2001, and who at the date of termination of covered 
 16.31  service had 15 years of eligible service and was eligible to 
 16.32  immediately receive a retirement annuity under chapter 3A, 352, 
 16.33  352B, 352D, or 490, shall be entitled to an additional $55 per 
 16.34  month upon attaining age 60 or upon the accrual date of the 
 16.35  retirement annuity, whichever is later.  The present value 
 16.36  necessary to provide the benefit increase to those who become 
 17.1   eligible under this section must be transferred to the 
 17.2   postretirement fund when the benefits under this section 
 17.3   commence. 
 17.4      Sec. 22.  [PAYMENT DATE SPECIFIED; ADDITIONAL TRANSFER 
 17.5   PROCEDURES.] 
 17.6      (a) Payments under sections 19 to 21 do not accrue and are 
 17.7   not payable prior to July 1, 2003. 
 17.8      (b) Any postretirement fund transfer requirements under 
 17.9   sections 19 to 21 due to coverage by the unclassified plan 
 17.10  provided under Minnesota Statutes, chapter 352D, is to be 
 17.11  transferred from the active member account for the Minnesota 
 17.12  state retirement system general plan. 
 17.13     (c) Any postretirement fund transfer requirements under 
 17.14  sections 19 to 21 due to service credit in the plan provided 
 17.15  under Minnesota Statutes, chapter 3A, is to be provided from 
 17.16  appropriations under Minnesota Statutes, section 3A.02, 
 17.17  subdivision 3. 
 17.18     Sec. 23.  [APPROPRIATIONS.] 
 17.19     Subdivision 1.  [TRANSFER TO COVER RETIREES AND DISABLED 
 17.20  EMPLOYEES.] A sum sufficient to make the transfers required by 
 17.21  sections 19 to 21 is appropriated from the respective retirement 
 17.22  funds. 
 17.23     Subd. 2.  [EMPLOYER CONTRIBUTIONS.] A sum sufficient to pay 
 17.24  the employer contribution required by section 352G.06, 
 17.25  subdivision 3, for the fiscal year ending June 30, 2002, is 
 17.26  appropriated from the various funds in the state treasury from 
 17.27  which salaries are paid.  The legislature estimates the cost to 
 17.28  the general fund will be $4,408,000.  The commissioner of 
 17.29  finance, in consultation with the commissioner of employee 
 17.30  relations, shall determine the amounts needed, make the 
 17.31  necessary transfers to the various appropriation accounts from 
 17.32  which salaries are paid, and report the amounts transferred to 
 17.33  the chairs of the senate finance committees and the house ways 
 17.34  and means committee. 
 17.35     Sec. 24.  [EFFECTIVE DATE.] 
 17.36     Sections 1 to 23 are effective July 1, 2001.