1.1                          A bill for an act 
  1.2             relating to retirement; increasing pension benefit 
  1.3             accrual rates; adjusting financing for pension plans; 
  1.4             adding supplemental financial conditions information 
  1.5             for pension funds; authorizing defined contribution 
  1.6             early retirement options; reducing appropriations; 
  1.7             appropriating money; amending Minnesota Statutes 1994, 
  1.8             sections 3A.02, subdivision 4; 3A.07; 11A.18, 
  1.9             subdivision 9; 273.1398, by adding a subdivision; 
  1.10            352.04, subdivision 3; 352.115, subdivision 3; 352.72, 
  1.11            subdivision 2; 352.92, subdivisions 1 and 2; 352.93, 
  1.12            subdivisions 2, 2a, 3, and by adding a subdivision; 
  1.13            352.95, subdivisions 1 and 5; 352C.031, subdivision 4; 
  1.14            352C.033; 353.01, subdivisions 2a and 2b; 353.27, 
  1.15            subdivisions 2 and 3a; 353.29, subdivision 3; 353.651, 
  1.16            subdivision 3; 353.656, subdivision 1; 353.71, 
  1.17            subdivision 2; 353A.08, subdivision 1; 353C.06, 
  1.18            subdivisions 3, 4, and by adding a subdivision; 
  1.19            353C.08, subdivision 1; 353C.09; 354.42, subdivisions 
  1.20            2, 3, and 5; 354.53, subdivision 1; 354.55, 
  1.21            subdivision 11; 354A.12, subdivision 3c; 356.215, 
  1.22            subdivision 4, and by adding a subdivision; 356.25; 
  1.23            356.88, by adding a subdivision; and 490.124, 
  1.24            subdivision 1; Minnesota Statutes 1995 Supplement, 
  1.25            sections 3A.02, subdivision 1; 352B.08, subdivision 2; 
  1.26            352B.10, subdivision 1; 352D.02, subdivision 1; 
  1.27            353A.083, by adding a subdivision; 354.44, subdivision 
  1.28            6; 356.215, subdivision 4d; and 356.30, subdivision 1; 
  1.29            proposing coding for new law in Minnesota Statutes, 
  1.30            chapters 124A; 352; 352C; and 356; repealing Minnesota 
  1.31            Statutes 1994, sections 356.70; and 356.88, 
  1.32            subdivision 2. 
  1.33  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.34     Section 1.  Minnesota Statutes 1995 Supplement, section 
  1.35  3A.02, subdivision 1, is amended to read: 
  1.36     Subdivision 1.  [QUALIFICATIONS.] (a) A former legislator 
  1.37  is entitled, upon written application to the director, to 
  1.38  receive a retirement allowance monthly, if the person: 
  1.39     (1) has served at least six full years, without regard to 
  2.1   the application of section 3A.10, subdivision 2, or has served 
  2.2   during all or part of four regular sessions as a member of the 
  2.3   legislature, which service need not be continuous; 
  2.4      (2) has attained the normal retirement age; 
  2.5      (3) has retired as a member of the legislature; and 
  2.6      (4) has made all contributions provided for in section 
  2.7   3A.03, has made payments for past service under subdivision 2, 
  2.8   or has made payments in lieu of contributions under Minnesota 
  2.9   Statutes 1992, section 3A.031, prior to July 1, 1994. 
  2.10     (b) For service rendered before the beginning of the 1979 
  2.11  legislative session, but not to exceed eight years of service, 
  2.12  the retirement allowance is an amount equal to five percent per 
  2.13  year of service of that member's average monthly salary.  For 
  2.14  service in excess of eight years rendered before the beginning 
  2.15  of the 1979 legislative session, and for service rendered after 
  2.16  the beginning of the 1979 legislative session, the retirement 
  2.17  allowance is an amount equal to 2-1/2 percent the amount in 
  2.18  section 356.19, subdivision 4, per year of service of that 
  2.19  member's average monthly salary. 
  2.20     (c) The retirement allowance accrues beginning with the 
  2.21  first day of the month of receipt of the application, but not 
  2.22  before age 60, and for the remainder of the former legislator's 
  2.23  life, if the former legislator is not serving as a member of the 
  2.24  legislature or as a constitutional officer or commissioner as 
  2.25  defined in section 352C.021, subdivisions 2 and 3.  The annuity 
  2.26  shall not begin to accrue prior to retirement as a legislator.  
  2.27  No annuity payment shall be made retroactive for more than 180 
  2.28  days before the date the annuity application is filed with the 
  2.29  director. 
  2.30     (d) Any member who has served during all or part of four 
  2.31  regular sessions is considered to have served eight years as a 
  2.32  member of the legislature. 
  2.33     (e) The retirement allowance ceases with the last payment 
  2.34  that accrued to the retired legislator during the retired 
  2.35  legislator's lifetime, except that the surviving spouse, if any, 
  2.36  is entitled to the retirement allowance for the calendar month 
  3.1   in which the retired legislator died. 
  3.2      Sec. 2.  Minnesota Statutes 1994, section 3A.02, 
  3.3   subdivision 4, is amended to read: 
  3.4      Subd. 4.  [DEFERRED ANNUITIES AUGMENTATION.] The deferred 
  3.5   annuity of any former legislator shall be augmented as provided 
  3.6   herein.  The required reserves applicable to the deferred 
  3.7   annuity, determined as of the date the benefit begins to accrue 
  3.8   using an appropriate mortality table and an interest assumption 
  3.9   of five six percent, shall be augmented from the first of the 
  3.10  month following termination of service, or July 1, 1973, 
  3.11  whichever is later, to the first day of the month in which the 
  3.12  annuity begins to accrue, at the rate of five percent per annum 
  3.13  compounded annually until January 1, 1981, and thereafter at the 
  3.14  rate of three percent per annum compounded annually until 
  3.15  January 1 of the year in which the former legislator attains age 
  3.16  55.  From that date to the effective date of retirement, the 
  3.17  rate is five percent compounded annually. 
  3.18     Sec. 3.  Minnesota Statutes 1994, section 3A.07, is amended 
  3.19  to read: 
  3.20     3A.07 [APPLICATION.] 
  3.21     This chapter applies to members of the legislature in 
  3.22  service upon July 1, 1965, or thereafter, who otherwise meet the 
  3.23  requirements of this chapter.  It does not apply to first-time 
  3.24  members elected after July 1, 1996.  Members elected for the 
  3.25  first time after July 1, 1996, shall be covered by the state 
  3.26  employees unclassified plan as established in chapter 352D and 
  3.27  by the federal old age and survivors insurance system. 
  3.28     Sec. 4.  Minnesota Statutes 1994, section 11A.18, 
  3.29  subdivision 9, is amended to read: 
  3.30     Subd. 9.  [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 
  3.31  Annually, following June 30, the state board shall use the 
  3.32  procedures in paragraphs (b), (c), and (d) to determine whether 
  3.33  a postretirement adjustment is payable and to determine the 
  3.34  amount of any postretirement adjustment. 
  3.35     (b) If the Consumer Price Index for urban wage earners and 
  3.36  clerical workers all items index published by the Bureau of 
  4.1   Labor Statistics of the United States Department of Labor 
  4.2   increases from June 30 of the preceding year to June 30 of the 
  4.3   current year, the state board shall certify the percentage 
  4.4   increase.  The amount certified may not exceed the lesser of the 
  4.5   difference between the preretirement interest assumption and 
  4.6   postretirement interest assumption in section 356.215, 
  4.7   subdivision 4d, paragraph (a), or 3.5 2.5 percent. 
  4.8      (c) In addition to any percentage increase certified under 
  4.9   paragraph (b), the board shall use the following procedures to 
  4.10  determine if a postretirement adjustment is payable under this 
  4.11  paragraph: 
  4.12     (1) The state board shall determine the market value of the 
  4.13  fund on June 30 of that year; 
  4.14     (2) The amount of reserves required for the annuity or 
  4.15  benefit payable to an annuitant and benefit recipient of the 
  4.16  participating public pension plans or funds shall be determined 
  4.17  by the commission-retained actuary as of the current June 30.  
  4.18  An annuitant or benefit recipient who has been receiving an 
  4.19  annuity or benefit for at least 12 full months as of the current 
  4.20  June 30 is eligible to receive a full postretirement 
  4.21  adjustment.  An annuitant or benefit recipient who has been 
  4.22  receiving an annuity or benefit for at least one full month, but 
  4.23  less than 12 full months as of the current June 30, is eligible 
  4.24  to receive a partial postretirement adjustment.  Each fund shall 
  4.25  report separately the amount of the reserves for those 
  4.26  annuitants and benefit recipients who are eligible to receive a 
  4.27  full postretirement benefit adjustment.  This amount is known as 
  4.28  "eligible reserves."  Each fund shall also report separately the 
  4.29  amount of the reserves for those annuitants and benefit 
  4.30  recipients who are not eligible to receive a postretirement 
  4.31  adjustment.  This amount is known as "noneligible reserves."  
  4.32  For an annuitant or benefit recipient who is eligible to receive 
  4.33  a partial postretirement adjustment, each fund shall report 
  4.34  separately as additional "eligible reserves" an amount that 
  4.35  bears the same ratio to the total reserves required for the 
  4.36  annuitant or benefit recipient as the number of full months of 
  5.1   annuity or benefit receipt as of the current June 30 bears to 12 
  5.2   full months.  The remainder of the annuitant's or benefit 
  5.3   recipient's reserves shall be separately reported as additional 
  5.4   "noneligible reserves."  The amount of "eligible" and 
  5.5   "noneligible" required reserves shall be certified to the board 
  5.6   by the commission-retained actuary as soon as is practical 
  5.7   following the current June 30; 
  5.8      (3) The state board shall determine the percentage increase 
  5.9   certified under paragraph (b) multiplied by the eligible 
  5.10  required reserves, as adjusted for mortality gains and losses 
  5.11  under subdivision 11, determined under clause (2); 
  5.12     (4) The state board shall add the amount of reserves 
  5.13  required for the annuities or benefits payable to annuitants and 
  5.14  benefit recipients of the participating public pension plans or 
  5.15  funds as of the current June 30 to the amount determined under 
  5.16  clause (3); 
  5.17     (5) The state board shall subtract the amount determined 
  5.18  under clause (4) from the market value of the fund determined 
  5.19  under clause (1); 
  5.20     (6) The state board shall adjust the amount determined 
  5.21  under clause (5) by the cumulative current balance determined 
  5.22  pursuant to clause (8) and any negative balance carried forward 
  5.23  under clause (9); 
  5.24     (7) A positive amount resulting from the calculations in 
  5.25  clauses (1) to (6) is the excess market value.  A negative 
  5.26  amount is the negative balance; 
  5.27     (8) The state board shall allocate one-fifth of the excess 
  5.28  market value or one-fifth of the negative balance to each of 
  5.29  five consecutive years, beginning with the fiscal year ending 
  5.30  the current June 30; and 
  5.31     (9) To calculate the postretirement adjustment under this 
  5.32  paragraph based on investment performance for a fiscal year, the 
  5.33  state board shall add together all excess market value allocated 
  5.34  to that year and subtract from the sum all negative balances 
  5.35  allocated to that year.  If this calculation results in a 
  5.36  negative number, the entire negative balance must be carried 
  6.1   forward and allocated to the next year.  If the resulting amount 
  6.2   is positive, a postretirement adjustment is payable under this 
  6.3   paragraph.  The board shall express a positive amount as a 
  6.4   percentage of the total eligible required reserves certified to 
  6.5   the board under clause (2).  
  6.6      (d) The state board shall determine the amount of any 
  6.7   postretirement adjustment which is payable using the following 
  6.8   procedure: 
  6.9      (1) The total "eligible" required reserves as of the first 
  6.10  of January next following the end of the fiscal year for the 
  6.11  annuitants and benefit recipients eligible to receive a full or 
  6.12  partial postretirement adjustment as determined by clause (2) 
  6.13  shall be certified to the state board by the commission-retained 
  6.14  actuary.  The total "eligible" required reserves shall be 
  6.15  determined by the commission-retained actuary on the assumption 
  6.16  that all annuitants and benefit recipients eligible to receive a 
  6.17  full or partial postretirement adjustment will be alive on the 
  6.18  January 1 in question; and 
  6.19     (2) The state board shall add the percentage certified 
  6.20  under paragraph (b) to any positive percentage calculated under 
  6.21  paragraph (c).  The board shall not subtract from the percentage 
  6.22  certified under paragraph (b) any negative amount calculated 
  6.23  under paragraph (c).  The sum of these percentages shall be 
  6.24  carried to five decimal places and shall be certified to each 
  6.25  participating public pension fund or plan as the full 
  6.26  postretirement adjustment percentage.  
  6.27     (e) A retirement annuity payable in the event of retirement 
  6.28  before becoming eligible for social security benefits as 
  6.29  provided in section 352.116, subdivision 3; 353.29, subdivision 
  6.30  6; or 354.35 must be treated as the sum of a period certain 
  6.31  retirement annuity and a life retirement annuity for the 
  6.32  purposes of any postretirement adjustment.  The period certain 
  6.33  retirement annuity plus the life retirement annuity shall be the 
  6.34  annuity amount payable until age 62 or 65, whichever applies.  A 
  6.35  postretirement adjustment granted on the period certain 
  6.36  retirement annuity must terminate when the period certain 
  7.1   retirement annuity terminates. 
  7.2      Sec. 5.  [124A.74] [REDUCING AID; TRA.] 
  7.3      Beginning in fiscal year 1997 and continuing for every year 
  7.4   thereafter, the commissioner of children, families, and learning 
  7.5   will reduce payments to school operating funds by an amount 
  7.6   equal to 64 percent of the salaries paid to members of the state 
  7.7   teachers retirement association in fiscal year 1996.  These 
  7.8   reductions shall be taken first from the schools share of the 
  7.9   homestead and agricultural credit aid in excess of the total 
  7.10  amount needed from the district assuming full phase-in of the 
  7.11  special education funding changes authorized in 1995.  If the 
  7.12  amount needed is not available from HACA, the additional amounts 
  7.13  needed may be taken from other aids received by the school 
  7.14  district. 
  7.15     Sec. 6.  Minnesota Statutes 1994, section 273.1398, is 
  7.16  amended by adding a subdivision to read: 
  7.17     Subd. 2e.  Beginning with payments made to cities, 
  7.18  counties, towns, schools, and other local government units in 
  7.19  fiscal year 1997, and continuing for every year thereafter, the 
  7.20  commissioner of revenue will increase HACA payments by an amount 
  7.21  equal to .495 percent of the salaries paid to members of the 
  7.22  general plan of the public employees retirement fund in fiscal 
  7.23  year 1996. 
  7.24     Sec. 7.  Minnesota Statutes 1994, section 352.04, 
  7.25  subdivision 3, is amended to read: 
  7.26     Subd. 3.  [EMPLOYER CONTRIBUTIONS.] (a) The employer 
  7.27  contribution to the fund must be equal to 4.2 4.10 percent of 
  7.28  salary. 
  7.29     (b) By January 1 of each year, the board of directors shall 
  7.30  report to the legislative commission on pensions and retirement, 
  7.31  the chair of the committee on appropriations of the house of 
  7.32  representatives, and the chair of the committee on finance of 
  7.33  the senate on the amount raised by the employer and employee 
  7.34  contribution rates in effect and whether the total amount is 
  7.35  less than, the same as, or more than the actuarial requirement 
  7.36  determined under section 356.215. 
  8.1      (c) If the legislative commission on pensions and 
  8.2   retirement, based on the most recent valuation performed by its 
  8.3   actuary, determines that the total amount raised by the employer 
  8.4   and employee contributions under subdivision 2 and paragraph (b) 
  8.5   is less than the actuarial requirements determined under section 
  8.6   356.215, the employer and employee rates must be increased by 
  8.7   equal amounts as necessary to meet the actuarial requirements.  
  8.8   The employee rate may not exceed 4.15 percent of salary and the 
  8.9   employer rate may not exceed 4.29 percent of salary.  The 
  8.10  increases are effective on the next January 1 following the 
  8.11  determination by the commission.  The executive director of the 
  8.12  Minnesota state retirement system shall notify employing units 
  8.13  of any increases under this paragraph. 
  8.14     Sec. 8.  Minnesota Statutes 1994, section 352.115, 
  8.15  subdivision 3, is amended to read: 
  8.16     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
  8.17  in conjunction with section 352.116, subdivision 1, applies to a 
  8.18  person who became a covered employee or a member of a pension 
  8.19  fund listed in section 356.30, subdivision 3, before July 1, 
  8.20  1989, unless paragraph (b), in conjunction with section 352.116, 
  8.21  subdivision 1a, produces a higher annuity amount, in which case 
  8.22  paragraph (b) will apply.  The employee's average salary, as 
  8.23  defined in subdivision 2, multiplied by one percent the amount 
  8.24  specified in section 356.19, subdivision 1, per year of 
  8.25  allowable service for the first ten years and 1.5 percent the 
  8.26  amount specified in section 356.19, subdivision 2, for each 
  8.27  later year of allowable service and pro rata for completed 
  8.28  months less than a full year shall determine the amount of the 
  8.29  retirement annuity to which the employee is entitled. 
  8.30     (b) This paragraph applies to a person who has become at 
  8.31  least 55 years old and first became a covered employee after 
  8.32  June 30, 1989, and to any other covered employee who has become 
  8.33  at least 55 years old and whose annuity amount, when calculated 
  8.34  under this paragraph and in conjunction with section 352.116, 
  8.35  subdivision 1a, is higher than it is when calculated under 
  8.36  paragraph (a), in conjunction with section 352.116, subdivision 
  9.1   1.  The employee's average salary, as defined in subdivision 2, 
  9.2   multiplied by 1.5 percent the amount specified in section 
  9.3   356.19, subdivision 2, for each year of allowable service and 
  9.4   pro rata for months less than a full year shall determine the 
  9.5   amount of the retirement annuity to which the employee is 
  9.6   entitled. 
  9.7      Sec. 9.  Minnesota Statutes 1994, section 352.72, 
  9.8   subdivision 2, is amended to read: 
  9.9      Subd. 2.  [COMPUTATION OF DEFERRED ANNUITY.] The deferred 
  9.10  annuity, if any, accruing under subdivision 1, or section 
  9.11  352.22, subdivision 3, must be computed as provided in section 
  9.12  352.22, subdivision 3, on the basis of allowable service before 
  9.13  termination of state service and augmented as provided herein.  
  9.14  The required reserves applicable to a deferred annuity or to an 
  9.15  annuity for which a former employee was eligible but had not 
  9.16  applied or to any deferred segment of an annuity must be 
  9.17  determined as of the date the benefit begins to accrue and 
  9.18  augmented by interest compounded annually from the first day of 
  9.19  the month following the month in which the employee ceased to be 
  9.20  a state employee, or July 1, 1971, whichever is later, to the 
  9.21  first day of the month in which the annuity begins to accrue.  
  9.22  The rates of interest used for this purpose must be five percent 
  9.23  compounded annually until January 1, 1981, and three percent 
  9.24  compounded annually thereafter until January 1 of the year 
  9.25  following the year in which the former employee attains age 55.  
  9.26  From that date to the effective date of retirement, the rate is 
  9.27  five percent compounded annually.  If a person has more than one 
  9.28  period of uninterrupted service, the required reserves related 
  9.29  to each period must be augmented by interest under this 
  9.30  subdivision.  The sum of the augmented required reserves so 
  9.31  determined is the present value of the annuity.  "Uninterrupted 
  9.32  service" for the purpose of this subdivision means periods of 
  9.33  covered employment during which the employee has not been 
  9.34  separated from state service for more than two years.  If a 
  9.35  person repays a refund, the service restored by the repayment 
  9.36  must be considered continuous with the next period of service 
 10.1   for which the employee has credit with this system.  The formula 
 10.2   percentages used for each period of uninterrupted service must 
 10.3   be those applicable to a new employee.  The mortality table and 
 10.4   interest assumption used to compute the annuity must be those in 
 10.5   effect when the employee files application for annuity.  This 
 10.6   section shall not reduce the annuity otherwise payable under 
 10.7   this chapter. 
 10.8      The survivor or retirement benefit to a former member or 
 10.9   survivor of a former member who terminated service before July 
 10.10  1, 1996, is determined under the laws in effect on the date of 
 10.11  termination and are increased to reflect the change in the 
 10.12  postretirement fund interest assumption from five percent to six 
 10.13  percent.  The benefit payable under the six percent 
 10.14  postretirement interest assumption must be actuarially 
 10.15  equivalent to the benefit payable under the five percent 
 10.16  interest assumption and must be based on tables adopted by the 
 10.17  board of directors as recommended by an approved actuary, and 
 10.18  approved by the actuary retained by the legislative commission 
 10.19  on pensions and retirement. 
 10.20     Sec. 10.  Minnesota Statutes 1994, section 352.92, 
 10.21  subdivision 1, is amended to read: 
 10.22     Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] Beginning with 
 10.23  the first full pay period after July 1, 1984, in lieu of 
 10.24  employee contributions payable under section 352.04, subdivision 
 10.25  2, contributions by covered correctional employees must be in an 
 10.26  amount equal to 4.90 5.2 percent of salary.  
 10.27     Sec. 11.  Minnesota Statutes 1994, section 352.92, 
 10.28  subdivision 2, is amended to read: 
 10.29     Subd. 2.  [EMPLOYER CONTRIBUTIONS.] (a) In lieu of employer 
 10.30  contributions payable under section 352.04, subdivision 3, the 
 10.31  employer shall contribute for covered correctional employees an 
 10.32  amount equal to 6.27 6.57 percent of salary.  
 10.33     (b) By January 1 of each year, the board of directors shall 
 10.34  report to the legislative commission on pensions and retirement, 
 10.35  the chair of the committee on appropriations of the house of 
 10.36  representatives, and the chair of the committee on finance of 
 11.1   the senate on the amount raised by the employer and employee 
 11.2   contribution rates in effect and whether the total amount is 
 11.3   less than, the same as, or more than the actuarial requirement 
 11.4   determined under section 356.215. 
 11.5      Sec. 12.  Minnesota Statutes 1994, section 352.93, 
 11.6   subdivision 2, is amended to read: 
 11.7      Subd. 2.  [CALCULATING MONTHLY ANNUITY.] The monthly 
 11.8   annuity under this section must be determined by multiplying the 
 11.9   average monthly salary by the number of years, or completed 
 11.10  months, of covered correctional service by 2.5 percent the 
 11.11  amount specified in section 356.19, subdivision 5.  However, the 
 11.12  monthly annuity must not exceed 75 percent of the average 
 11.13  monthly salary.  
 11.14     Sec. 13.  Minnesota Statutes 1994, section 352.93, 
 11.15  subdivision 3, is amended to read: 
 11.16     Subd. 3.  [PAYMENTS; DURATION AND AMOUNT.] The annuity 
 11.17  under this section shall begin to accrue as provided in section 
 11.18  352.115, subdivision 8., and must be paid for an additional 84 
 11.19  full calendar months or to the first of the month following the 
 11.20  month in which the employee attains normal retirement age, 
 11.21  whichever occurs first, except that payment must not cease 
 11.22  before the first of the month following the month in which the 
 11.23  employee becomes 62.  It must then be reduced to the amount as 
 11.24  calculated at normal retirement age under section 352.115, 
 11.25  except that if this amount, when added to that portion of the 
 11.26  social security benefit based on state service the employee 
 11.27  would be eligible to receive at the time, is less than the 
 11.28  benefit payable under subdivision 2, the retired employee shall 
 11.29  receive an amount that when added to the social security benefit 
 11.30  will equal the amount payable under subdivision 2.  If the 
 11.31  employee retired prior to age 55, the reduced benefit as 
 11.32  calculated under section 352.115 must be actuarially reduced as 
 11.33  provided in subdivision 2a.  
 11.34     When an annuity is reduced under this subdivision, the 
 11.35  percentage adjustments, if any, that have been applied to the 
 11.36  original annuity under section 11A.18, before the reduction, 
 12.1   must be compounded and applied to the reduced annuity.  A former 
 12.2   correctional employee employed by the state in a position 
 12.3   covered by the regular plan or the unclassified employees 
 12.4   retirement program between the age of 58 and normal retirement 
 12.5   age shall receive a partial return of correctional contributions 
 12.6   at retirement with six percent interest based on the following 
 12.7   formula: 
 12.8    
 12.9    Employee contributions             Years and complete    
 12.10   contributed as a                   months of regular     
 12.11   correctional employee              service between     
 12.12   in excess of the                   age 58 and the    
 12.13   contributions the                  normal retirement age 
 12.14   employee would have       X        ..................... 
 12.15   contributed as a                   number of years between
 12.16   regular employee                   age 58 and normal 
 12.17                                      retirement age 
 12.18     Sec. 14.  Minnesota Statutes 1994, section 352.93, is 
 12.19  amended by adding a subdivision to read: 
 12.20     Subd. 3a.  The board may establish an optional annuity to 
 12.21  pay a higher amount from the date of retirement until a point an 
 12.22  employee can reasonably be expected to begin drawing social 
 12.23  security benefits, at which time the monthly benefits will be 
 12.24  reduced.  These higher payments must be actuarially equivalent 
 12.25  to the single life annuity as provided under subdivision 2 or 
 12.26  2a.  The optional annuities must be approved by the actuary 
 12.27  retained by the legislative commission on pensions and 
 12.28  retirement. 
 12.29     Sec. 15.  [352.931] [SURVIVOR BENEFITS.] 
 12.30     Subdivision 1.  [SURVIVING SPOUSE BENEFIT.] (a) If an 
 12.31  employee has credit for at least three years allowable service 
 12.32  and dies before an annuity or disability benefit has become 
 12.33  payable, notwithstanding any designation of beneficiary to the 
 12.34  contrary, the surviving spouse of the employee may elect to 
 12.35  receive, in lieu of the refund with interest, an annuity equal 
 12.36  to the joint and 100 percent survivor annuity which the employee 
 13.1   could have qualified for had the employee terminated service on 
 13.2   the date of death. 
 13.3      (b) If the employee was under age 55 and has credit for at 
 13.4   least three years of allowable service credit on the date of 
 13.5   death but did not yet qualify for retirement, the surviving 
 13.6   spouse may elect to receive a 100 percent joint and survivor 
 13.7   annuity based on the age of the employee and surviving spouse at 
 13.8   the time of death.  The annuity is payable using the early 
 13.9   retirement reduction under section 352.93, subdivision 2a, to 
 13.10  age 50 and one-half of the early retirement reduction from age 
 13.11  50 to the age payment begins. 
 13.12     The surviving spouse eligible for surviving spouse benefits 
 13.13  under paragraph (a) may apply for the annuity at any time after 
 13.14  the date on which the deceased employee would have attained the 
 13.15  required age for retirement based on the employee's allowable 
 13.16  service.  The surviving spouse eligible for surviving spouse 
 13.17  benefits under paragraph (b) may apply for the annuity at any 
 13.18  time after the employee's death.  Sections 352.22, subdivision 
 13.19  3, and 352.72, subdivision 2, apply to a deferred annuity or 
 13.20  surviving spouse benefit payable under this subdivision.  The 
 13.21  annuity must cease with the last payment received by the 
 13.22  surviving spouse in the lifetime of the surviving spouse, or 
 13.23  upon expiration of a term certain benefit payment to a surviving 
 13.24  spouse under subdivision 2.  An amount equal to the excess, if 
 13.25  any, of the accumulated contributions credited to the account of 
 13.26  the deceased employee in excess of the total of the benefits 
 13.27  paid and payable to the surviving spouse must be paid to the 
 13.28  decreased employee's last designated beneficiary or, if none, as 
 13.29  specified under section 352.12, subdivision 1. 
 13.30     Any employee may request in writing that this subdivision 
 13.31  not apply and that payment be made only to a designated 
 13.32  beneficiary as otherwise provided by this chapter. 
 13.33     Subd. 2.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In lieu 
 13.34  of the 100 percent optional annuity under subdivision 1, the 
 13.35  surviving spouse of a deceased employee may elect to receive 
 13.36  survivor coverage in a term certain of five, ten, 15, or 20 
 14.1   years, but monthly payments must not exceed 75 percent of the 
 14.2   average high-five monthly salary of the deceased employee.  The 
 14.3   monthly term certain annuity must be actuarially equivalent to 
 14.4   the 100 percent optional annuity under subdivision 1. 
 14.5      If a survivor elects a term certain annuity and dies before 
 14.6   the expiration of the specified term certain period, the 
 14.7   commuted value of the remaining annuity payments must be paid in 
 14.8   a lump sum to the survivor's estate. 
 14.9      Subd. 3.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 14.10  no surviving spouse eligible for benefits under subdivision 2, a 
 14.11  dependent child or children as defined in section 352.01, 
 14.12  subdivision 26, is eligible for monthly payments.  Payments to a 
 14.13  dependent child must be paid from the date of the employee's 
 14.14  death to the date the dependent child attains age 20 if the 
 14.15  child is under age 15.  If the child is 15 years or older on the 
 14.16  date of death, payment must be made for five years.  The payment 
 14.17  to a dependent child is an amount actuarially equivalent to the 
 14.18  value of a 100 percent optional annuity using the age of the 
 14.19  employee and age of the dependent child at the date of death in 
 14.20  lieu of the age of the surviving spouse.  If there is more than 
 14.21  one dependent child, each dependent child shall receive a 
 14.22  proportionate share of the actuarial value of the employee's 
 14.23  account. 
 14.24     Sec. 16.  Minnesota Statutes 1994, section 352.95, 
 14.25  subdivision 1, is amended to read: 
 14.26     Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 14.27  correctional employee who becomes disabled and physically unfit 
 14.28  to perform the duties of the position as a direct result of an 
 14.29  injury, sickness, or other disability incurred in or arising out 
 14.30  of any act of duty that makes the employee physically or 
 14.31  mentally unable to perform the duties, is entitled to a 
 14.32  disability benefit based on covered correctional service only.  
 14.33  The benefit amount must equal 50 percent of the average salary 
 14.34  defined in section 352.93, plus an additional 2-1/2 percent 
 14.35  amount equal to that specified in section 356.19, subdivision 5, 
 14.36  for each year of covered correctional service in excess of 20 21 
 15.1   years, nine months, prorated for completed months. 
 15.2      Sec. 17.  Minnesota Statutes 1994, section 352.95, 
 15.3   subdivision 5, is amended to read: 
 15.4      Subd. 5.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 
 15.5   disability benefit paid to a disabled correctional employee 
 15.6   under this section shall terminate at the end of the month in 
 15.7   which the employee reaches age 62.  If the disabled correctional 
 15.8   employee is still disabled when the employee reaches age 62, the 
 15.9   employee shall be deemed to be a retired employee.  If the 
 15.10  employee had elected an optional annuity under subdivision 1a, 
 15.11  the employee shall receive an annuity in accordance with the 
 15.12  terms of the optional annuity previously elected.  If the 
 15.13  employee had not elected an optional annuity under subdivision 
 15.14  1a, the employee may within 90 days of attaining age 65 or 
 15.15  reaching the five-year anniversary of the effective date of the 
 15.16  disability benefit, whichever is later, either elect to receive 
 15.17  a normal retirement annuity computed in the manner provided in 
 15.18  section 352.115 352.93 or elect to receive an optional annuity 
 15.19  as provided in section 352.116, subdivision 3, based on the same 
 15.20  length of service as used in the calculation of the disability 
 15.21  benefit.  Election of an optional annuity must be made within 90 
 15.22  days before attaining age 65 or reaching the five-year 
 15.23  anniversary of the effective date of the disability benefit, 
 15.24  whichever is later.  The reduction for retirement before normal 
 15.25  retirement age as provided in section 352.116, subdivision 1 or 
 15.26  1a, does not apply.  The savings clause provision of section 
 15.27  352.93, subdivision 3, applies.  If an optional annuity is 
 15.28  elected, the optional annuity shall begin to accrue on the first 
 15.29  of the month following the month in which the employee reaches 
 15.30  age 65 or the five-year anniversary of the effective date of the 
 15.31  disability benefit, whichever is later. 
 15.32     Sec. 18.  Minnesota Statutes 1995 Supplement, section 
 15.33  352B.08, subdivision 2, is amended to read: 
 15.34     Subd. 2.  [NORMAL RETIREMENT ANNUITY.] The annuity must be 
 15.35  paid in monthly installments.  The annuity shall be equal to the 
 15.36  amount determined by multiplying the average monthly salary of 
 16.1   the member by 2.65 percent the amount specified in section 
 16.2   356.19, subdivision 6, for each year and pro rata for completed 
 16.3   months of service.  
 16.4      Sec. 19.  Minnesota Statutes 1995 Supplement, section 
 16.5   352B.10, subdivision 1, is amended to read: 
 16.6      Subdivision 1.  [INJURIES, PAYMENT AMOUNTS.] Any member who 
 16.7   becomes disabled and physically or mentally unfit to perform 
 16.8   duties as a direct result of an injury, sickness, or other 
 16.9   disability incurred in or arising out of any act of duty, shall 
 16.10  receive disability benefits while disabled.  The benefits must 
 16.11  be paid in monthly installments equal to the member's average 
 16.12  monthly salary multiplied by 53 58 percent, plus an additional 
 16.13  2.65 percent amount equal to that specified in section 356.19, 
 16.14  subdivision 6, for each year and pro rata for completed months 
 16.15  of service in excess of 20 years, if any. 
 16.16     Sec. 20.  [352C.011] [APPLICABILITY.] 
 16.17     This chapter applies only to constitutional officers 
 16.18  elected prior to July 1, 1996, to any constitutional office.  
 16.19  Persons elected for the first time to any constitutional office 
 16.20  after July 1, 1996, shall be covered by the state employees 
 16.21  unclassified plan established in chapter 352D and by the federal 
 16.22  old age and survivors insurance system. 
 16.23     Sec. 21.  Minnesota Statutes 1994, section 352C.031, 
 16.24  subdivision 4, is amended to read: 
 16.25     Subd. 4.  [RETIREMENT ALLOWANCE FORMULA.] The average 
 16.26  salary multiplied by 2-1/2 percent the amount specified in 
 16.27  section 356.19, subdivision 4, for each year of allowable 
 16.28  service and pro rata for completed months less than a full year 
 16.29  shall determine the amount of the normal retirement allowance. 
 16.30     Sec. 22.  Minnesota Statutes 1994, section 352C.033, is 
 16.31  amended to read: 
 16.32     352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 
 16.33     The deferred retirement allowance for any former 
 16.34  constitutional officer shall be augmented as provided in this 
 16.35  section.  The required reserves applicable to the deferred 
 16.36  retirement allowance, determined as of the date the retirement 
 17.1   allowance begins to accrue using the appropriate mortality table 
 17.2   and an interest assumption of five six percent, shall be 
 17.3   augmented from the first of the month following termination of 
 17.4   service as a constitutional officer, or January 1, 1979, 
 17.5   whichever is later, to the first day of the month in which the 
 17.6   annuity begins to accrue, at the rate of five percent per annum 
 17.7   compounded annually until January 1, 1981, and thereafter at the 
 17.8   rate of three percent per annum compounded annually until 
 17.9   January 1 of the year in which the former constitutional officer 
 17.10  attains age 55.  From that date to the effective date of 
 17.11  retirement, the rate is five percent compounded annually. 
 17.12     The survivor or retirement benefit to a former member or 
 17.13  survivor of a former member who terminated service before July 
 17.14  1, 1996, is determined under the laws in effect on the date of 
 17.15  termination and are increased to reflect the change in the 
 17.16  postretirement fund interest assumption from five percent to six 
 17.17  percent.  The benefit payable under the six percent 
 17.18  postretirement interest assumption must be actuarially 
 17.19  equivalent to the benefit payable under the five percent 
 17.20  interest assumption and must be based on tables adopted by the 
 17.21  board of directors as recommended by an approved actuary, and 
 17.22  approved by the actuary retained by the legislative commission 
 17.23  on pensions and retirement. 
 17.24     Sec. 23.  Minnesota Statutes 1995 Supplement, section 
 17.25  352D.02, subdivision 1, is amended to read: 
 17.26     Subdivision 1.  [COVERAGE.] (a) Employees enumerated in 
 17.27  paragraph (b), if they are in the unclassified service of the 
 17.28  state or metropolitan council and are eligible for coverage 
 17.29  under the general state employees retirement plan under chapter 
 17.30  352, are participants in the unclassified program under this 
 17.31  chapter unless the employee gives notice to the executive 
 17.32  director of the Minnesota state retirement system within one 
 17.33  year following the commencement of employment in the 
 17.34  unclassified service that the employee desires coverage under 
 17.35  the general state employees retirement plan.  For the purposes 
 17.36  of this chapter, an employee who does not file notice with the 
 18.1   executive director is deemed to have exercised the option to 
 18.2   participate in the unclassified plan. 
 18.3      (b) Enumerated employees are: 
 18.4      (1) first-time constitutional officers elected to any 
 18.5   constitutional office after July 1, 1996; an employee in the 
 18.6   office of the governor, lieutenant governor, secretary of state, 
 18.7   state auditor, state treasurer, attorney general,; or an 
 18.8   employee of the state board of investment; 
 18.9      (2) the head of a department, division, or agency created 
 18.10  by statute in the unclassified service, an acting department 
 18.11  head subsequently appointed to the position, or an employee 
 18.12  enumerated in section 15A.081, subdivision 1 or 15A.083, 
 18.13  subdivision 4; 
 18.14     (3) first-time legislators elected after July 1, 1996, a 
 18.15  permanent, full-time unclassified employee of the legislature or 
 18.16  a commission or agency of the legislature or a temporary 
 18.17  legislative employee having shares in the supplemental 
 18.18  retirement fund as a result of former employment covered by this 
 18.19  chapter, whether or not eligible for coverage under the 
 18.20  Minnesota state retirement system; 
 18.21     (4) a person who is employed in a position established 
 18.22  under section 43A.08, subdivision 1, clause (3), or in a 
 18.23  position authorized under a statute creating or establishing a 
 18.24  department or agency of the state, which is at the deputy or 
 18.25  assistant head of department or agency or director level; 
 18.26     (5) the regional administrator, or executive director of 
 18.27  the metropolitan council, general counsel, division directors, 
 18.28  operations managers, and other positions as designated by the 
 18.29  council, all of which may not exceed 27 positions at the council 
 18.30  and the chair, provided that upon initial designation of all 
 18.31  positions provided for in this clause, no further designations 
 18.32  or redesignations may be made without approval of the board of 
 18.33  directors of the Minnesota state retirement system; 
 18.34     (6) the executive director, associate executive director, 
 18.35  and not to exceed nine positions of the higher education 
 18.36  services office in the unclassified service, as designated by 
 19.1   the higher education services office before January 1, 1992, or 
 19.2   subsequently redesignated with the approval of the board of 
 19.3   directors of the Minnesota state retirement system, unless the 
 19.4   person has elected coverage by the individual retirement account 
 19.5   plan under chapter 354B; 
 19.6      (7) the clerk of the appellate courts appointed under 
 19.7   article VI, section 2, of the Constitution of the state of 
 19.8   Minnesota; 
 19.9      (8) the chief executive officers of correctional facilities 
 19.10  operated by the department of corrections and of hospitals and 
 19.11  nursing homes operated by the department of human services; 
 19.12     (9) an employee whose principal employment is at the state 
 19.13  ceremonial house; 
 19.14     (10) an employee of the Minnesota educational computing 
 19.15  corporation; 
 19.16     (11) an employee of the world trade center board; and 
 19.17     (12) an employee of the state lottery board who is covered 
 19.18  by the managerial plan established under section 43A.18, 
 19.19  subdivision 3. 
 19.20     Sec. 24.  Minnesota Statutes 1994, section 353.01, 
 19.21  subdivision 2a, is amended to read: 
 19.22     Subd. 2a.  [INCLUDED EMPLOYEES.] Public employees whose 
 19.23  salary from one governmental subdivision exceeds $425 in any 
 19.24  month shall participate as members of the association.  If the 
 19.25  salary of an employee is less than $425 in a subsequent month, 
 19.26  the employee retains membership eligibility.  The following 
 19.27  persons are considered public employees: 
 19.28     (1) employees whose annual salary from one governmental 
 19.29  subdivision exceeds a stipulation prepared in advance, in 
 19.30  writing, to be not more than $5,100 per calendar year or per 
 19.31  school year for school employees for employment expected to be 
 19.32  of a full year's duration or more than the prorated portion of 
 19.33  $5,100 per employment period expected to be of less than a full 
 19.34  year's duration.  If compensation from one governmental 
 19.35  subdivision to an employee under this clause exceeds $5,100 per 
 19.36  calendar year or school year after being stipulated in advance 
 20.1   not to exceed that amount, the stipulation is no longer valid 
 20.2   and contributions must be made on behalf of the employee under 
 20.3   section 353.27, subdivision 12, from the month in which the 
 20.4   employee's salary first exceeded $425; 
 20.5      (2) employees whose total salary from concurrent 
 20.6   nontemporary positions in one governmental subdivision exceeds 
 20.7   $425 in any month; 
 20.8      (3) elected officers elected for the first time prior to 
 20.9   July 1, 1996, for service to which they were elected by the 
 20.10  public-at-large, or persons appointed to fill a vacancy in an 
 20.11  elective office, who elect to participate by filing an 
 20.12  application for membership, but not for service on a joint or 
 20.13  regional board that is a governmental subdivision under 
 20.14  subdivision 6, paragraph (a), unless the salary earned for that 
 20.15  service exceeds $425 in any month.  The option to become a 
 20.16  member, once exercised, may not be withdrawn during the 
 20.17  incumbency of the person in office; 
 20.18     (4) members who are appointed by the governor to be a state 
 20.19  department head and elect not to be covered by the Minnesota 
 20.20  state retirement system under section 352.021; 
 20.21     (5) employees of elected officers; 
 20.22     (6) persons who elect to remain members under section 
 20.23  136C.75, or 480.181, subdivision 2; 
 20.24     (7) employees of a school district who receive separate 
 20.25  salaries for driving their own buses; 
 20.26     (8) employees of the Minnesota association of townships 
 20.27  when the board of the association, at its option, certifies to 
 20.28  the executive director that its employees are to be included for 
 20.29  purposes of retirement coverage, in which case coverage of all 
 20.30  employees of the association is permanent; 
 20.31     (9) employees of a county historical society who are county 
 20.32  employees; 
 20.33     (10) employees of a county historical society located in 
 20.34  the county whom the county, at its option, certifies to the 
 20.35  executive director to be county employees for purposes of 
 20.36  retirement coverage under this chapter, which status must be 
 21.1   accorded to all similarly situated county historical society 
 21.2   employees and, once established, must continue as long as a 
 21.3   person is an employee of the county historical society and is 
 21.4   not excluded under subdivision 2b; and 
 21.5      (11) employees who became members before July 1, 1988, 
 21.6   based on the total salary of positions held in more than one 
 21.7   governmental subdivision. 
 21.8      Sec. 25.  Minnesota Statutes 1994, section 353.01, 
 21.9   subdivision 2b, is amended to read: 
 21.10     Subd. 2b.  [EXCLUDED EMPLOYEES.] The following public 
 21.11  employees shall not participate as members of the association: 
 21.12     (1) elected public officers elected for the first time 
 21.13  after July 1, 1996, or persons appointed to fill a vacancy after 
 21.14  July 1, 1996; 
 21.15     (2) elected public officers elected for the first time 
 21.16  prior to July 1, 1996, or persons appointed to fill a vacancy in 
 21.17  an elective office prior to July 1, 1996, who do not elect to 
 21.18  participate in the association by filing an application for 
 21.19  membership; 
 21.20     (2) (3) election officers; 
 21.21     (3) (4) patient and inmate personnel who perform services 
 21.22  in charitable, penal, or correctional institutions of a 
 21.23  governmental subdivision; 
 21.24     (4) (5) employees who are hired for a temporary position 
 21.25  under subdivision 12a, and employees who resign from a 
 21.26  nontemporary position and accept a temporary position within 30 
 21.27  days in the same governmental subdivision, but not those 
 21.28  employees who are hired for an unlimited period but are serving 
 21.29  a probationary period.  If the period of employment extends 
 21.30  beyond six consecutive months and the employee earns more than 
 21.31  $425 from one governmental subdivision in any one calendar 
 21.32  month, the department head shall report the employee for 
 21.33  membership and require employee deductions be made on behalf of 
 21.34  the employee under section 353.27, subdivision 4. 
 21.35     Membership eligibility of an employee who resigns or is 
 21.36  dismissed from a temporary position and within 30 days accepts 
 22.1   another temporary position in the same governmental subdivision 
 22.2   is determined on the total length of employment rather than on 
 22.3   each separate position.  Membership eligibility of an employee 
 22.4   who holds concurrent temporary and nontemporary positions in one 
 22.5   governmental subdivision is determined by the length of 
 22.6   employment and salary of each separate position; 
 22.7      (5) (6) employees whose actual salary from one governmental 
 22.8   subdivision does not exceed $425 per month, or whose annual 
 22.9   salary from one governmental subdivision does not exceed a 
 22.10  stipulation prepared in advance, in writing, that the salary 
 22.11  must not exceed $5,100 per calendar year or per school year for 
 22.12  school employees for employment expected to be of a full year's 
 22.13  duration or more than the prorated portion of $5,100 per 
 22.14  employment period for employment expected to be of less than a 
 22.15  full year's duration; 
 22.16     (6) (7) employees who are employed by reason of work 
 22.17  emergency caused by fire, flood, storm, or similar disaster; 
 22.18     (7) (8) employees who by virtue of their employment in one 
 22.19  governmental subdivision are required by law to be a member of 
 22.20  and to contribute to any of the plans or funds administered by 
 22.21  the Minnesota state retirement system, the teachers retirement 
 22.22  association, the Duluth teachers retirement fund association, 
 22.23  the Minneapolis teachers retirement association, the St. Paul 
 22.24  teachers retirement fund association, the Minneapolis employees 
 22.25  retirement fund, or any police or firefighters relief 
 22.26  association governed by section 69.77 that has not consolidated 
 22.27  with the public employees retirement association, or any police 
 22.28  or firefighters relief association that has consolidated with 
 22.29  the public employees retirement association but whose members 
 22.30  have not elected the type of benefit coverage provided by the 
 22.31  public employees police and fire fund under sections 353A.01 to 
 22.32  353A.10.  This clause must not be construed to prevent a person 
 22.33  from being a member of and contributing to the public employees 
 22.34  retirement association and also belonging to and contributing to 
 22.35  another public pension fund for other service occurring during 
 22.36  the same period of time.  A person who meets the definition of 
 23.1   "public employee" in subdivision 2 by virtue of other service 
 23.2   occurring during the same period of time becomes a member of the 
 23.3   association unless contributions are made to another public 
 23.4   retirement fund on the salary based on the other service or to 
 23.5   the teachers retirement association by a teacher as defined in 
 23.6   section 354.05, subdivision 2; 
 23.7      (8) (9) persons who are excluded from coverage under the 
 23.8   federal Old Age, Survivors, Disability, and Health Insurance 
 23.9   Program for the performance of service as specified in United 
 23.10  States Code, title 42, section 410(a)(8)(A), as amended through 
 23.11  January 1, 1987, if no irrevocable election of coverage has been 
 23.12  made under section 3121(r) of the Internal Revenue Code of 1954, 
 23.13  as amended; 
 23.14     (9) (10) full-time students who are enrolled and are 
 23.15  regularly attending classes at an accredited school, college, or 
 23.16  university and who are part-time employees as defined by a 
 23.17  governmental subdivision; 
 23.18     (10) (11) resident physicians, medical interns, and 
 23.19  pharmacist residents and pharmacist interns who are serving in a 
 23.20  degree or residency program in public hospitals; 
 23.21     (11) (12) students who are serving in an internship or 
 23.22  residency program sponsored by an accredited educational 
 23.23  institution; 
 23.24     (12) (13) persons who hold a part-time adult supplementary 
 23.25  technical college license who render part-time teaching service 
 23.26  in a technical college; 
 23.27     (13) (14) foreign citizens working for a governmental 
 23.28  subdivision with a work permit of less than three years, or an 
 23.29  H-1b visa valid for less than three years of employment.  Upon 
 23.30  notice to the association that the work permit or visa extends 
 23.31  beyond the three-year period, the foreign citizens are eligible 
 23.32  for membership from the date of the extension; 
 23.33     (14) (15) public hospital employees who elected not to 
 23.34  participate as members of the association before 1972 and who 
 23.35  did not elect to participate from July 1, 1988 to October 1, 
 23.36  1988; 
 24.1      (15) (16) except as provided in section 353.86, volunteer 
 24.2   ambulance service personnel, as defined in subdivision 35, but 
 24.3   persons who serve as volunteer ambulance service personnel may 
 24.4   still qualify as public employees under subdivision 2 and may be 
 24.5   members of the public employees retirement association and 
 24.6   participants in the public employees retirement fund or the 
 24.7   public employees police and fire fund on the basis of 
 24.8   compensation received from public employment service other than 
 24.9   service as volunteer ambulance service personnel; and 
 24.10     (16) (17) except as provided in section 353.87, volunteer 
 24.11  firefighters, as defined in subdivision 36, engaging in 
 24.12  activities undertaken as part of volunteer firefighter duties; 
 24.13  provided that a person who is a volunteer firefighter may still 
 24.14  qualify as a public employee under subdivision 2 and may be a 
 24.15  member of the public employees retirement association and a 
 24.16  participant in the public employees retirement fund or the 
 24.17  public employees police and fire fund on the basis of 
 24.18  compensation received from public employment activities other 
 24.19  than those as a volunteer firefighter. 
 24.20     Sec. 26.  Minnesota Statutes 1994, section 353.27, 
 24.21  subdivision 2, is amended to read: 
 24.22     Subd. 2.  [EMPLOYEE CONTRIBUTION.] The employee 
 24.23  contribution shall be an amount (a) for a "basic member" equal 
 24.24  to 8.23 9.25 percent of total salary; and (b) for a "coordinated 
 24.25  member" equal to 4.23 4.75 percent of total salary.  These 
 24.26  contributions shall be made by deduction from salary in the 
 24.27  manner provided in subdivision 4.  Where any portion of a 
 24.28  member's salary is paid from other than public funds, such 
 24.29  member's employee contribution shall be based on the total 
 24.30  salary received from all sources. 
 24.31     Sec. 27.  Minnesota Statutes 1994, section 353.27, 
 24.32  subdivision 3a, is amended to read: 
 24.33     Subd. 3a.  [ADDITIONAL EMPLOYER CONTRIBUTION.] An 
 24.34  additional employer contribution shall be made equal to (a) 
 24.35  2-1/2 percent of the total salary of each "basic member"; and 
 24.36  (b) one-quarter of one percent of the total salary of each 
 25.1   "coordinated member."  If the total financing requirements, as 
 25.2   determined under the provisions of section 356.215 are not 
 25.3   covered by the employer and employee contributions specified in 
 25.4   subdivisions 2 and 3, an additional employer contribution shall 
 25.5   be made equal to the difference between total financing 
 25.6   requirements and the sum of the subdivision 2 and subdivision 3 
 25.7   contributions, but not in an amount greater than .26 percent of 
 25.8   the salary of each covered member.  The board shall annually 
 25.9   adjust the amount of the required additional employer 
 25.10  contribution.  If the adjustment is an increase over the rate 
 25.11  for the preceding year, the adjustment cannot exceed one-fourth 
 25.12  of one percent per year.  This subdivision is repealed effective 
 25.13  July 1, 2021.  These contributions shall be made from funds 
 25.14  available to the employing subdivision by the means and in the 
 25.15  manner provided in section 353.28. 
 25.16     Sec. 28.  Minnesota Statutes 1994, section 353.29, 
 25.17  subdivision 3, is amended to read: 
 25.18     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 25.19  in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
 25.20  1c, applies to any member who first became a public employee or 
 25.21  a member of a pension fund listed in section 356.30, subdivision 
 25.22  3, before July 1, 1989, unless paragraph (b), in conjunction 
 25.23  with section 353.30, subdivision 5, produces a higher annuity 
 25.24  amount, in which case paragraph (b) will apply.  The average 
 25.25  salary as defined in subdivision 2, multiplied by two 
 25.26  percent the amount specified in section 356.19, subdivision 3, 
 25.27  for each year of allowable service for the first ten years and 
 25.28  thereafter by 2.5 percent the amount specified in section 
 25.29  356.19, subdivision 4, per year of allowable service and 
 25.30  completed months less than a full year for the "basic member," 
 25.31  and one percent the amount specified in section 356.19, 
 25.32  subdivision 1, for each year of allowable service for the first 
 25.33  ten years and thereafter by 1.5 percent the amount specified in 
 25.34  section 356.19, subdivision 2, per year of allowable service and 
 25.35  completed months less than a full year for the "coordinated 
 25.36  member," shall determine the amount of the "normal" retirement 
 26.1   annuity. 
 26.2      (b) This paragraph applies to a member who has become at 
 26.3   least 55 years old and first became a public employee after June 
 26.4   30, 1989, and to any other member whose annuity amount, when 
 26.5   calculated under this paragraph and in conjunction with section 
 26.6   353.30, subdivision 5, is higher than it is when calculated 
 26.7   under paragraph (a), in conjunction with section 353.30, 
 26.8   subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined 
 26.9   in subdivision 2, multiplied by 2.5 percent the amount specified 
 26.10  in section 356.19, subdivision 4, for each year of allowable 
 26.11  service and completed months less than a full year for a basic 
 26.12  member and 1.5 percent the amount specified in section 356.19, 
 26.13  subdivision 2, per year of allowable service and completed 
 26.14  months less than a full year for a coordinated member, shall 
 26.15  determine the amount of the normal retirement annuity. 
 26.16     Sec. 29.  Minnesota Statutes 1994, section 353.651, 
 26.17  subdivision 3, is amended to read: 
 26.18     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] The average salary 
 26.19  as defined in subdivision 2, multiplied by 2.65 percent the 
 26.20  amount specified in section 356.19, subdivision 6, per year of 
 26.21  allowable service determines the amount of the normal retirement 
 26.22  annuity.  If the member has earned allowable service for 
 26.23  performing services other than those of a police officer or 
 26.24  firefighter, the annuity representing such service is computed 
 26.25  under sections 353.29 and 353.30. 
 26.26     Sec. 30.  Minnesota Statutes 1994, section 353.656, 
 26.27  subdivision 1, is amended to read: 
 26.28     Subdivision 1.  [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 
 26.29  A member of the police and fire fund who becomes disabled and 
 26.30  physically unfit to perform duties as a police officer or 
 26.31  firefighter subsequent to June 30, 1973, as a direct result of 
 26.32  an injury, sickness, or other disability incurred in or arising 
 26.33  out of any act of duty, which has or is expected to render the 
 26.34  member physically or mentally unable to perform duties as a 
 26.35  police officer or firefighter for a period of at least one year, 
 26.36  shall receive disability benefits during the period of such 
 27.1   disability.  The benefits must be in an amount equal to 53 58 
 27.2   percent of the "average salary" under subdivision 3, plus an 
 27.3   additional 2.65 percent amount specified in section 356.19, 
 27.4   subdivision 6, of said average salary for each year of service 
 27.5   in excess of 20 years.  Should disability under this subdivision 
 27.6   occur before the member has at least five years of allowable 
 27.7   service credit in the police and fire fund, the disability 
 27.8   benefit must be computed on the "average salary" from which 
 27.9   deductions were made for contribution to the police and fire 
 27.10  fund. 
 27.11     Sec. 31.  Minnesota Statutes 1994, section 353.71, 
 27.12  subdivision 2, is amended to read: 
 27.13     Subd. 2.  [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] The 
 27.14  deferred annuity, if any, accruing under subdivision 1, or 
 27.15  sections 353.34, subdivision 3, and 353.68, subdivision 4, shall 
 27.16  be computed in the manner provided in said sections, on the 
 27.17  basis of allowable service prior to termination of public 
 27.18  service and augmented as provided herein.  The required reserves 
 27.19  applicable to a deferred annuity, or to an annuity for which a 
 27.20  former member was eligible but had not applied, or to any 
 27.21  deferred segment of an annuity shall be determined as of the 
 27.22  date the annuity begins to accrue and shall be augmented from 
 27.23  the first day of the month following the month in which the 
 27.24  former member ceased to be a public employee, or July 1, 1971, 
 27.25  whichever is later, to the first day of the month in which the 
 27.26  annuity begins to accrue, at the rate of five percent per annum 
 27.27  compounded annually until January 1, 1981, and at the rate of 
 27.28  three percent thereafter until January 1 of the year following 
 27.29  the year in which the former member attains age 55.  From that 
 27.30  date to the effective date of retirement, the rate is five 
 27.31  percent per annum compounded annually.  If a person has more 
 27.32  than one period of uninterrupted service, the required reserves 
 27.33  related to each period shall be augmented by interest pursuant 
 27.34  to this subdivision.  The sum of the augmented required reserves 
 27.35  so determined shall be the present value of the annuity.  
 27.36  Uninterrupted service for the purpose of this subdivision shall 
 28.1   mean periods of covered employment during which the employee has 
 28.2   not been separated from public service for more than two years.  
 28.3   If a person repays a refund, the service restored thereby shall 
 28.4   be considered as continuous with the next period of service for 
 28.5   which the employee has credit with this association. The formula 
 28.6   percentages used for each period of uninterrupted service shall 
 28.7   be those as would be applicable to a new employee.  This section 
 28.8   shall not reduce the annuity otherwise payable under this 
 28.9   chapter.  This subdivision shall apply to deferred annuitants of 
 28.10  record on July 1, 1971, and to employees who thereafter become 
 28.11  deferred annuitants; it shall also apply from July 1, 1971, to 
 28.12  former members who make application for an annuity after July 1, 
 28.13  1973. 
 28.14     The survivor or retirement benefit to a former member or 
 28.15  survivor of a former member who terminated service before July 
 28.16  1, 1996, is determined under the laws in effect on the date of 
 28.17  termination and are increased to reflect the change in the 
 28.18  postretirement fund interest assumption from five percent to six 
 28.19  percent.  The benefit payable under the six percent 
 28.20  postretirement interest assumption must be actuarially 
 28.21  equivalent to the benefit payable under the five percent 
 28.22  interest assumption and must be based on tables adopted by the 
 28.23  board of trustees as recommended by an approved actuary, and 
 28.24  approved by the actuary retained by the legislative commission 
 28.25  on pensions and retirement. 
 28.26     Sec. 32.  Minnesota Statutes 1994, section 353A.08, 
 28.27  subdivision 1, is amended to read: 
 28.28     Subdivision 1.  [ELECTION OF COVERAGE BY CURRENT RETIREES.] 
 28.29  A person who is receiving a service pension, disability benefit, 
 28.30  or survivorship benefit is eligible to elect benefit coverage 
 28.31  provided under the relevant provisions of the public employees 
 28.32  police and fire fund benefit plan or to retain benefit coverage 
 28.33  provided under the relief association benefit plan in effect on 
 28.34  the effective date of the consolidation.  The relevant 
 28.35  provisions of the public employees police and fire fund benefit 
 28.36  plan for the person electing that benefit coverage are limited 
 29.1   to participation in the Minnesota postretirement investment fund 
 29.2   for any future postretirement adjustments based on the amount of 
 29.3   the benefit or pension payable on December 31, if December 31 is 
 29.4   the effective date of consolidation, or on the December 1 
 29.5   following the effective date of the consolidation, if other than 
 29.6   December 31.  The survivorship benefit payable on behalf of any 
 29.7   service pension or disability benefit recipient who elects 
 29.8   benefit coverage under the public employees police and fire fund 
 29.9   benefit plan must be calculated under the relief association 
 29.10  benefit plan and is subject to participation in the Minnesota 
 29.11  postretirement investment fund for any future postretirement 
 29.12  adjustments based on the amount of the survivorship benefit 
 29.13  payable.  A survivorship benefit payable after June 30, 1996, 
 29.14  that is based on the account of a service benefit recipient 
 29.15  participating in the Minnesota postretirement investment fund 
 29.16  before July 1, 1996, must be permanently increased to reflect 
 29.17  the change in the postretirement fund interest assumption from 
 29.18  five to six percent.  The benefit payable under the six percent 
 29.19  postretirement interest assumption must be actuarially 
 29.20  equivalent to the benefit payable under the five percent 
 29.21  interest assumption and must be based on tables adopted by the 
 29.22  board of trustees as recommended by an approved actuary, and 
 29.23  approved by the actuary retained by the legislative commission 
 29.24  on pensions and retirement. 
 29.25     By electing the public employees police and fire fund 
 29.26  benefit plan, a current service pension or disability benefit 
 29.27  recipient who, as of the first January 1 occurring after the 
 29.28  effective date of consolidation, has been receiving the pension 
 29.29  or benefit for at least seven months, or any survivor benefit 
 29.30  recipient who, as of the first January 1 occurring after the 
 29.31  effective date of consolidation, has been receiving the benefit 
 29.32  on the person's own behalf or in combination with a prior 
 29.33  applicable service pension or disability benefit for at least 
 29.34  seven months is eligible to receive a partial adjustment payable 
 29.35  from the Minnesota postretirement investment fund under section 
 29.36  11A.18, subdivision 9. 
 30.1      The election by any pension or benefit recipient must be 
 30.2   made on or before the deadline established by the board of the 
 30.3   public employees retirement association in a manner that 
 30.4   recognizes the number of persons eligible to make the election 
 30.5   and the anticipated time required to conduct any required 
 30.6   benefit counseling.  
 30.7      Sec. 33.  Minnesota Statutes 1995 Supplement, section 
 30.8   353A.083, is amended by adding a subdivision to read: 
 30.9      Subd. 3.  [PRE-1996 CONSOLIDATIONS.] (a) For any 
 30.10  consolidation account in effect on July 1, 1996, for which the 
 30.11  city has approved the July 1, 1993, police and fire benefit 
 30.12  provisions, the retirement annuity formula and disability 
 30.13  benefits that apply to consolidation account members who have 
 30.14  elected or will elect the benefit plan coverage under section 
 30.15  353A.08 are the relevant provisions of the public employee 
 30.16  police and fire benefit plan under chapter 353. 
 30.17     (b) If the consolidated plan's city has not approved the 
 30.18  July 1, 1993, police and fire plan benefit provisions, the 
 30.19  retirement annuity formula and disability benefits payable to 
 30.20  consolidation account members who have elected or will elect the 
 30.21  benefit plan coverage under section 353A.08 must be increased to 
 30.22  reflect the change in the postretirement fund interest 
 30.23  assumption from five to six percent.  The benefit payable under 
 30.24  the six percent postretirement interest assumption must be 
 30.25  actuarially equivalent to the benefit payable under the five 
 30.26  percent interest assumption and must be based on tables adopted 
 30.27  by the board of trustees as recommended by an approved actuary, 
 30.28  and approved by the actuary retained by the legislative 
 30.29  commission on pensions and retirement. 
 30.30     Sec. 34.  Minnesota Statutes 1994, section 353C.06, 
 30.31  subdivision 3, is amended to read: 
 30.32     Subd. 3.  [ANNUITY AMOUNT.] The average salary as defined 
 30.33  in subdivision 2, multiplied by two percent for each year of 
 30.34  allowable service for the first ten years and 2.5 percent for 
 30.35  each additional year of allowable service, the amount specified 
 30.36  in section 356.19, subdivision 5, and pro rata for completed 
 31.1   months less than a full year, determines the amount of the 
 31.2   normal annuity.  If a person has earned allowable service in the 
 31.3   public employees retirement association or the public employees 
 31.4   police and fire fund prior to participation under this chapter, 
 31.5   the annuity representing such service must be computed in 
 31.6   accordance with the formula under sections 353.29 and 353.30 or 
 31.7   353.651, whichever applies. 
 31.8      Sec. 35.  Minnesota Statutes 1994, section 353C.06, is 
 31.9   amended by adding a subdivision to read: 
 31.10     Subd. 3a.  The board may establish an optional annuity to 
 31.11  pay a higher amount from the date of retirement until a point an 
 31.12  employee can reasonably be expected to begin drawing social 
 31.13  security benefits, at which time the monthly benefits will be 
 31.14  reduced.  These higher payments must be actuarially equivalent 
 31.15  to the single life annuity as provided under subdivision 3.  The 
 31.16  optional annuities must be approved by the actuary retained by 
 31.17  the legislative commission on pensions and retirement. 
 31.18     Sec. 36.  Minnesota Statutes 1994, section 353C.06, 
 31.19  subdivision 4, is amended to read: 
 31.20     Subd. 4.  [ACCRUAL AND DURATION.] The annuity under this 
 31.21  section begins to accrue as provided in section 353.29, 
 31.22  subdivision 7.  The annuity is payable for the life of the 
 31.23  recipient, or in accordance with the terms of any optional 
 31.24  annuity form selected. , and is payable for 84 full calendar 
 31.25  months or to the first of the month following the month in which 
 31.26  the employee attains the normal retirement age, whichever occurs 
 31.27  first.  After a recipient has received the annuity calculated 
 31.28  under this formula for 84 full calendar months or to the first 
 31.29  of the month following the month in which the employee attains 
 31.30  the normal retirement age, whichever occurs first, the benefit 
 31.31  must be recomputed in accordance with the coordinated formula in 
 31.32  sections 353.29 and 353.30, except that if this amount, when 
 31.33  added to the social security benefit based on public service the 
 31.34  employee is eligible to receive at that time, is less than the 
 31.35  benefit payable under subdivision 3, the retired employee is 
 31.36  entitled to receive an amount payable under subdivision 3, less 
 32.1   any amount payable from social security based on public service 
 32.2   used in the benefit calculation.  When an annuity is reduced 
 32.3   under this subdivision, any percentage of adjustments that have 
 32.4   been applied to the original annuity under section 11A.18, 
 32.5   before the reduction, must be compounded and applied to the 
 32.6   reduced annuity. 
 32.7      Sec. 37.  Minnesota Statutes 1994, section 353C.08, 
 32.8   subdivision 1, is amended to read: 
 32.9      Subdivision 1.  [DUTY DISABILITY QUALIFICATION 
 32.10  REQUIREMENTS.] A local government correctional employee who 
 32.11  becomes disabled and physically unfit to perform the duties of 
 32.12  the position as a direct result of an injury, sickness, or other 
 32.13  disability incurred in or arising out of any act of duty that 
 32.14  renders the employee physically or mentally unable to perform 
 32.15  the employee's duties, is entitled to a disability benefit based 
 32.16  on covered service only in an amount equal to 45 46 percent of 
 32.17  the average salary defined in section 353C.06, subdivision 2, 
 32.18  plus an additional 2.5 percent amount specified in section 
 32.19  356.19, subdivision 5, for each year of covered service in 
 32.20  excess of 20 years.  
 32.21     Sec. 38.  Minnesota Statutes 1994, section 353C.09, is 
 32.22  amended to read: 
 32.23     353C.09 [SURVIVING SPOUSE OPTIONAL ANNUITY.] 
 32.24     Subdivision 1.  (a) If a member or former member of the 
 32.25  local government correctional service retirement plan has 
 32.26  attained the age of at least 50 years and has credit for not 
 32.27  less than three years of allowable service, or who has credit 
 32.28  for not less than 30 years of allowable service, regardless of 
 32.29  age attained, dies before the annuity or disability benefit has 
 32.30  become payable, notwithstanding any designation of beneficiary 
 32.31  to the contrary, the surviving spouse may elect to receive, in 
 32.32  lieu of a refund with interest provided in section 353.32, 
 32.33  subdivision 1, an annuity equal to the 100 percent joint and 
 32.34  survivor annuity for which the member could have qualified had 
 32.35  the member terminated service on the date of death.  The 
 32.36  surviving spouse may apply for the annuity at any time after the 
 33.1   date on which the deceased employee would have attained the 
 33.2   required age for retirement based on the employee's allowable 
 33.3   service.  The annuity must be computed on the formulas 
 33.4   under sections 353.29, subdivisions 2 and 3, and 353.30, 
 33.5   subdivisions 1, 1a, 1b, and 1c section 353C.06, subdivision 3.  
 33.6      (b) If the employee was under age 55 and has credit for at 
 33.7   least three years of allowable service credit on the date of 
 33.8   death but did not yet qualify for retirement, the surviving 
 33.9   spouse may elect to receive a 100 percent joint and survivor 
 33.10  annuity based on the age of the employee and surviving spouse at 
 33.11  the time of death.  The annuity is payable using an actuarial 
 33.12  equivalent reduction to age 50 and one-half of the actuarial 
 33.13  equivalent reduction from age 50 to the age payment begins. 
 33.14     The surviving spouse eligible for surviving spouse benefits 
 33.15  under paragraph (a) may apply for the annuity at any time after 
 33.16  the date on which the deceased employee would have attained the 
 33.17  required age for retirement based on the employee's allowable 
 33.18  service.  The surviving spouse eligible for surviving spouse 
 33.19  benefits under paragraph (b) may apply for the annuity at any 
 33.20  time after the employee's death. 
 33.21     (c) Sections 353.34, subdivision 3, and 353.71, subdivision 
 33.22  2, apply to a deferred annuity payable under this subdivision.  
 33.23  No payment may accrue beyond the end of the month in which 
 33.24  entitlement to the annuity has terminated.  An amount equal to 
 33.25  any excess of the accumulated contributions that were credited 
 33.26  to the account of the deceased employee over and above the total 
 33.27  of the annuities paid and payable to the surviving spouse must 
 33.28  be paid to the deceased member's last designated beneficiary or, 
 33.29  if none, to the legal representative of the estate of the 
 33.30  deceased member.  A member may specify in writing that this 
 33.31  subdivision does not apply and that payment must be made only to 
 33.32  the designated beneficiary, as otherwise provided by this 
 33.33  chapter. 
 33.34     Subd. 2.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In lieu 
 33.35  of the 100 percent optional annuity under subdivision 1, the 
 33.36  surviving spouse of a deceased employee may elect to receive 
 34.1   survivor coverage in a term certain of five, ten, 15, or 20 
 34.2   years, but monthly payments must not exceed 75 percent of the 
 34.3   average high-five monthly salary of the deceased employee.  The 
 34.4   monthly term certain annuity must be actuarially equivalent to 
 34.5   the 100 percent optional annuity under subdivision 1. 
 34.6      If a survivor elects a term certain annuity and dies before 
 34.7   the expiration of the specified term certain period, the 
 34.8   commuted value of the remaining annuity payments must be paid in 
 34.9   a lump sum to the survivor's estate.  
 34.10     Subd. 3.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 34.11  no surviving spouse eligible for benefits under subdivision 2, a 
 34.12  dependent child or children as defined in section 353.01, 
 34.13  subdivision 15, is eligible for monthly payments.  Payments to a 
 34.14  dependent child must be paid from the date of the employee's 
 34.15  death to the date the dependent child attains age 20 if the 
 34.16  child is under age 15.  If the child is 15 years or older on the 
 34.17  date of death, payment must be made for five years.  The payment 
 34.18  to a dependent child is an amount actuarially equivalent to the 
 34.19  value of a 100 percent optional annuity using the age of the 
 34.20  employee and age of the dependent child at the date of death in 
 34.21  lieu of the age of the surviving spouse.  If there is more than 
 34.22  one dependent child, each dependent child shall receive a 
 34.23  proportionate share of the actuarial value of the employee's 
 34.24  account. 
 34.25     Sec. 39.  Minnesota Statutes 1994, section 354.42, 
 34.26  subdivision 2, is amended to read: 
 34.27     Subd. 2.  [EMPLOYEE.] The employee contribution to the fund 
 34.28  shall be an amount equal to 6.5 5.05 percent of the salary of 
 34.29  every coordinated member and 10.5 9.05 percent of the salary of 
 34.30  every basic member.  This contribution shall be made by 
 34.31  deduction from salary.  Where any portion of a member's salary 
 34.32  is paid from other than public funds, such member's employee 
 34.33  contribution shall be based on the entire salary received.  
 34.34     Sec. 40.  Minnesota Statutes 1994, section 354.42, 
 34.35  subdivision 3, is amended to read: 
 34.36     Subd. 3.  [EMPLOYER.] The employer contribution to the fund 
 35.1   shall be an amount equal to 4-1/2 5.05 percent of the salary of 
 35.2   each coordinated member and 8-1/2 9.05 percent of the salary of 
 35.3   each basic member.  
 35.4      Sec. 41.  Minnesota Statutes 1994, section 354.42, 
 35.5   subdivision 5, is amended to read: 
 35.6      Subd. 5.  [ADDITIONAL EMPLOYER CONTRIBUTION.] To amortize 
 35.7   the unfunded actuarial accrued liability computed under the 
 35.8   entry age actuarial cost method and disclosed under the annual 
 35.9   actuarial valuations prepared by the commission-retained actuary 
 35.10  under section 356.215, an additional employer contribution shall 
 35.11  be made in the amount of 3.64 percent of the salary of each 
 35.12  member.  If the total financing requirements as determined under 
 35.13  the provisions of section 356.215 are not covered by the 
 35.14  employer and employee contributions specified in subdivisions 2 
 35.15  and 3, an additional employer contribution shall be made equal 
 35.16  to the difference between total financing requirements and the 
 35.17  sum of the subdivision 2 and subdivision 3 contributions, but 
 35.18  not in an amount greater than 2.45 percent of the salary of each 
 35.19  covered member.  The board shall annually adjust the amount of 
 35.20  the required additional employer contribution.  If the 
 35.21  adjustment is an increase over the rate for the preceding year, 
 35.22  the adjustment cannot exceed one-fourth of one percent per year. 
 35.23  This subdivision is repealed effective July 1, 2021.  
 35.24     This contribution must be made in the manner provided in 
 35.25  section 354.52, subdivision 4. 
 35.26     By January 1 of each year, the board of directors shall 
 35.27  report to the legislative commission on pensions and retirement, 
 35.28  the chair of the committee on appropriations of the house of 
 35.29  representatives, and the chair of the committee on finance of 
 35.30  the senate on the amount raised by the additional employer 
 35.31  contribution rate in effect and whether that amount is less 
 35.32  than, the same as, or more than the required amortization 
 35.33  contribution determined under section 356.215. 
 35.34     Sec. 42.  Minnesota Statutes 1995 Supplement, section 
 35.35  354.44, subdivision 6, is amended to read: 
 35.36     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
 36.1   ANNUITY.] (1) The formula retirement annuity hereunder shall be 
 36.2   computed in accordance with the applicable provisions of the 
 36.3   formulas stated in clause (2) or (4) on the basis of each 
 36.4   member's average salary for the period of the member's formula 
 36.5   service credit.  
 36.6      For all years of formula service credit, "average salary," 
 36.7   for the purpose of determining the member's retirement annuity, 
 36.8   means the average salary upon which contributions were made and 
 36.9   upon which payments were made to increase the salary limitation 
 36.10  provided in Minnesota Statutes 1971, section 354.511, for the 
 36.11  highest five successive years of formula service credit 
 36.12  provided, however, that such "average salary" shall not include 
 36.13  any more than the equivalent of 60 monthly salary payments.  
 36.14  Average salary must be based upon all years of formula service 
 36.15  credit if this service credit is less than five years. 
 36.16     (2) This clause, in conjunction with clause (3), applies to 
 36.17  a person who first became a member of the association or a 
 36.18  member of a pension fund listed in section 356.30, subdivision 
 36.19  3, before July 1, 1989, unless clause (4), in conjunction with 
 36.20  clause (5), produces a higher annuity amount, in which case 
 36.21  clause (4) applies.  The average salary as defined in clause 
 36.22  (1), multiplied by the following percentages per year of formula 
 36.23  service credit shall determine the amount of the annuity to 
 36.24  which the member qualifying therefor is entitled: 
 36.25                         Coordinated Member   Basic Member
 36.26  Each year of service     1.13 percent       2.13 percent
 36.27                           the amount         the amount 
 36.28                           specified in       specified in
 36.29                           section 356.19,    section 356.19,
 36.30                           subdivision 1      subdivision 3
 36.31  during first ten         per year           per year
 36.32  Each year of service     1.63 percent       2.63 percent
 36.33                           the amount         the amount
 36.34                           specified in       specified in
 36.35                           section 356.19,    section 356.19,
 36.36                           subdivision 2      subdivision 4
 37.1   thereafter               per year           per year
 37.2      (3)(i) This clause applies only to a person who first 
 37.3   became a member of the association or a member of a pension fund 
 37.4   listed in section 356.30, subdivision 3, before July 1, 1989, 
 37.5   and whose annuity is higher when calculated under clause (2), in 
 37.6   conjunction with this clause than when calculated under clause 
 37.7   (4), in conjunction with clause (5). 
 37.8      (ii) Where any member retires prior to normal retirement 
 37.9   age under a formula annuity, the member shall be paid a 
 37.10  retirement annuity in an amount equal to the normal annuity 
 37.11  provided in clause (2) reduced by one-quarter of one percent for 
 37.12  each month that the member is under normal retirement age at the 
 37.13  time of retirement except that for any member who has 30 or more 
 37.14  years of allowable service credit, the reduction shall be 
 37.15  applied only for each month that the member is under age 62. 
 37.16     (iii) Any member whose attained age plus credited allowable 
 37.17  service totals 90 years is entitled, upon application, to a 
 37.18  retirement annuity in an amount equal to the normal annuity 
 37.19  provided in clause (2), without any reduction by reason of early 
 37.20  retirement. 
 37.21     (4) This clause applies to a member who has become at least 
 37.22  55 years old and first became a member of the association after 
 37.23  June 30, 1989, and to any other member who has become at least 
 37.24  55 years old and whose annuity amount when calculated under this 
 37.25  clause and in conjunction with clause (5), is higher than it is 
 37.26  when calculated under clause (2), in conjunction with clause (3).
 37.27  The average salary, as defined in clause (1) multiplied by 2.63 
 37.28  percent the amount specified by section 356.19, subdivision 4, 
 37.29  for each year of service for a basic member and by 1.63 percent 
 37.30  the amount specified in section 356.19, subdivision 2, for each 
 37.31  year of service for a coordinated member shall determine the 
 37.32  amount of the retirement annuity to which the member is entitled.
 37.33     (5) This clause applies to a person who has become at least 
 37.34  55 years old and first becomes a member of the association after 
 37.35  June 30, 1989, and to any other member who has become at least 
 37.36  55 years old and whose annuity is higher when calculated under 
 38.1   clause (4) in conjunction with this clause than when calculated 
 38.2   under clause (2), in conjunction with clause (3).  An employee 
 38.3   who retires under the formula annuity before the normal 
 38.4   retirement age shall be paid the normal annuity provided in 
 38.5   clause (4) reduced so that the reduced annuity is the actuarial 
 38.6   equivalent of the annuity that would be payable to the employee 
 38.7   if the employee deferred receipt of the annuity and the annuity 
 38.8   amount were augmented at an annual rate of three percent 
 38.9   compounded annually from the day the annuity begins to accrue 
 38.10  until the normal retirement age. 
 38.11     Sec. 43.  Minnesota Statutes 1994, section 354.53, 
 38.12  subdivision 1, is amended to read: 
 38.13     Subdivision 1.  [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 
 38.14  employee given a leave of absence to enter military service and 
 38.15  who returns to teaching service upon discharge from military 
 38.16  service as provided in section 192.262, shall obtain credit for 
 38.17  the period of military service but shall not receive credit for 
 38.18  any voluntary extension of military service at the instance of 
 38.19  the member beyond the initial period of enlistment, induction or 
 38.20  call to active duty.  The member shall obtain credit by paying 
 38.21  into the fund an employee contribution based upon the salary of 
 38.22  the member at the date of return from military service.  The 
 38.23  amount of this contribution shall be as follows: 
 38.24     
 38.25         Period          Basic Member     Coordinated Member
 38.26       July 1, 1973       8 percent          4 percent
 38.27          thru
 38.28       June 30, 1979
 38.29       July 1, 1979
 38.30          and             8.5 percent        4.5 percent
 38.31       thereafter
 38.32     The contributions specified in this subdivision shall be 
 38.33  amounts based on contribution rates in effect at the time 
 38.34  military service was performed multiplied by the number of years 
 38.35  of military service together with interest thereon at an annual 
 38.36  rate of 8.5 percent compounded annually from the time the 
 39.1   military service was rendered to the first date of payment.  The 
 39.2   employer contribution and additional contribution provided in 
 39.3   section 354.42 shall be paid by the unit in the manner provided 
 39.4   in section 354.43. 
 39.5      Sec. 44.  Minnesota Statutes 1994, section 354.55, 
 39.6   subdivision 11, is amended to read: 
 39.7      Subd. 11.  [DEFERRED ANNUITY; AUGMENTATION.] Any person 
 39.8   covered under section 354.44, subdivision 6, who ceases to 
 39.9   render teaching service, may leave the person's accumulated 
 39.10  deductions in the fund for the purpose of receiving a deferred 
 39.11  annuity at retirement.  Eligibility for an annuity under this 
 39.12  subdivision shall be governed pursuant to section 354.44, 
 39.13  subdivision 1, or 354.60. 
 39.14     The amount of the deferred retirement annuity shall be 
 39.15  determined by section 354.44, subdivision 6, and augmented as 
 39.16  provided in this subdivision.  The required reserves related to 
 39.17  that portion of the annuity which had accrued when the member 
 39.18  ceased to render teaching service shall be augmented by interest 
 39.19  compounded annually from the first day of the month following 
 39.20  the month during which the member ceased to render teaching 
 39.21  service to the effective date of retirement.  There shall be no 
 39.22  augmentation if this period is less than three months or if this 
 39.23  period commences prior to July 1, 1971.  The rates of interest 
 39.24  used for this purpose shall be five percent compounded annually 
 39.25  commencing July 1, 1971, until January 1, 1981, and three 
 39.26  percent compounded annually thereafter until January 1 of the 
 39.27  year following the year in which the former member attains age 
 39.28  55.  From that date to the effective date of retirement, the 
 39.29  rate is five percent compounded annually.  If a person has more 
 39.30  than one period of uninterrupted service, a separate average 
 39.31  salary determined under section 354.44, subdivision 6, must be 
 39.32  used for each period and the required reserves related to each 
 39.33  period shall be augmented by interest pursuant to this 
 39.34  subdivision.  The sum of the augmented required reserves so 
 39.35  determined shall be the basis for purchasing the deferred 
 39.36  annuity.  If a person repays a refund, the service restored by 
 40.1   the repayment must be considered as continuous with the next 
 40.2   period of service for which the person has credit with this 
 40.3   fund.  If a person does not render teaching service in any one 
 40.4   fiscal year or more consecutive fiscal years and then resumes 
 40.5   teaching service, the formula percentages used from the date of 
 40.6   the resumption of teaching service shall be those applicable to 
 40.7   new members.  The mortality table and interest assumption used 
 40.8   to compute the annuity shall be the applicable mortality table 
 40.9   established by the board under section 354.07, subdivision 1, 
 40.10  and the interest rate assumption under section 356.215 in effect 
 40.11  when the member retires.  A period of uninterrupted service for 
 40.12  the purposes of this subdivision means a period of covered 
 40.13  teaching service during which the member has not been separated 
 40.14  from active service for more than one fiscal year. 
 40.15     In no case shall the annuity payable under this subdivision 
 40.16  be less than the amount of annuity payable pursuant to section 
 40.17  354.44, subdivision 6. 
 40.18     The requirements and provisions for retirement before 
 40.19  normal retirement age contained in section 354.44, subdivision 
 40.20  6, clause (3) or (5), shall also apply to an employee fulfilling 
 40.21  the requirements with a combination of service as provided in 
 40.22  section 354.60. 
 40.23     The augmentation provided by this subdivision applies to 
 40.24  the benefit provided in section 354.46, subdivision 2. 
 40.25     The augmentation provided by this subdivision shall not 
 40.26  apply to any period in which a person is on an approved leave of 
 40.27  absence from an employer unit covered by the provisions of this 
 40.28  chapter.  
 40.29     The survivor or retirement benefit to a former member or 
 40.30  survivor of a former member who terminated service before July 
 40.31  1, 1996, is determined under the laws in effect on the date of 
 40.32  termination and are increased to reflect the change in the 
 40.33  postretirement fund interest assumption from five percent to six 
 40.34  percent.  The benefit payable under the six percent 
 40.35  postretirement interest assumption must be actuarially 
 40.36  equivalent to the benefit payable under the five percent 
 41.1   interest assumption and must be based on tables adopted by the 
 41.2   board of trustees as recommended by an approved actuary, and 
 41.3   approved by the actuary retained by the legislative commission 
 41.4   on pensions and retirement. 
 41.5      Sec. 45.  Minnesota Statutes 1994, section 354A.12, 
 41.6   subdivision 3c, is amended to read: 
 41.7      Subd. 3c.  [TERMINATION OF DIRECT STATE MATCHING AID.] (a) 
 41.8   The direct state aid under subdivision 3a to the St. Paul 
 41.9   teachers retirement association and the direct state aid under 
 41.10  subdivision 3b to the Minneapolis teachers retirement fund 
 41.11  association terminates for the respective fund at the end of the 
 41.12  fiscal year in which the unfunded accrued liability funding 
 41.13  ratio for that fund, as determined in the most recent actuarial 
 41.14  report for that fund by the actuary retained by the legislative 
 41.15  commission on pensions and retirement, equals or exceeds the 
 41.16  accrued liability funding ratio for the teachers retirement 
 41.17  association, as determined in the most recent actuarial report 
 41.18  for the teachers retirement association by the actuary retained 
 41.19  by the legislative commission on pensions and retirement has 
 41.20  been eliminated, but in no case shall be paid after June 30, 
 41.21  2020. 
 41.22     (b) If the state aid is terminated for the St. Paul 
 41.23  teachers retirement fund association or the Minneapolis teachers 
 41.24  retirement fund association under paragraph (a), it may not 
 41.25  again be received by that fund. 
 41.26     Sec. 46.  [356.19] [RETIREMENT BENEFIT ACCRUAL RATES.] 
 41.27     The benefit accrual rates contained in this section shall 
 41.28  be used to determine benefits in those sections of Minnesota 
 41.29  Statutes in which they are referenced. 
 41.30     Subdivision 1.  [COORDINATED PLAN MEMBERS.] 1.2 percent. 
 41.31     Subd. 2.  [COORDINATED PLAN MEMBERS.] 1.7 percent. 
 41.32     Subd. 3.  [BASIC PLAN MEMBERS.] 2.2 percent. 
 41.33     Subd. 4.  [BASIC PLAN MEMBERS.] 2.7 percent. 
 41.34     Subd. 5.  [CORRECTIONAL PLAN MEMBERS.] 2.3 percent. 
 41.35     Subd. 6.  [STATE TROOPERS PLAN MEMBERS AND POLICE/FIRE PLAN 
 41.36  MEMBERS.] 2.9 percent. 
 42.1      Subd. 7.  [JUDGES RETIREMENT PLAN.] 3.2 percent. 
 42.2      Sec. 47.  Minnesota Statutes 1994, section 356.215, 
 42.3   subdivision 4, is amended to read: 
 42.4      Subd. 4.  [ACTUARIAL VALUATION; CONTENTS.] The actuarial 
 42.5   valuation must be made in conformity with the requirements of 
 42.6   the definition contained in subdivision 1 and the most recent 
 42.7   standards for actuarial work adopted by the legislative 
 42.8   commission on pensions and retirement.  The actuarial valuation 
 42.9   must measure all aspects of the benefit plan of the fund in 
 42.10  accordance with changes in benefit plans, if any, and salaries 
 42.11  reasonably anticipated to be in force during the ensuing fiscal 
 42.12  year.  The actuarial valuation must be prepared in accordance 
 42.13  with the entry age actuarial cost method. 
 42.14     The actuarial valuation required under this section must 
 42.15  include the information required in subdivisions 4a to 4k 4l. 
 42.16     Sec. 48.  Minnesota Statutes 1995 Supplement, section 
 42.17  356.215, subdivision 4d, is amended to read: 
 42.18     Subd. 4d.  [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 
 42.19  governed by chapters 352B, 353C, and by sections 352.90 through 
 42.20  352.951 and 353.63 through 353.68, the actuarial valuation must 
 42.21  use a preretirement interest assumption of 8.5 percent, a 
 42.22  postretirement interest assumption of five six percent, and a 
 42.23  future salary increase assumption of 6.5 percent. 
 42.24     (b) For funds governed by chapter 354A, the actuarial 
 42.25  valuation must use preretirement and postretirement assumptions 
 42.26  of 8.5 percent and a future salary increase assumption of 6.5 
 42.27  percent, but the actuarial valuation must reflect the payment of 
 42.28  postretirement adjustments to retirees, based on the methods 
 42.29  specified in the bylaws of the fund as approved by the 
 42.30  legislature.  For a fund governed by chapter 422A, the actuarial 
 42.31  valuation shall use a preretirement interest assumption of six 
 42.32  percent, a postretirement interest assumption of five percent, 
 42.33  and an assumption that in each future year the salary on which a 
 42.34  retirement or other benefit is based is 1.04 multiplied by the 
 42.35  salary for the preceding year.  
 42.36     (c) For all other funds not specified in paragraph (a), 
 43.1   (b), (d), or (e), the actuarial valuation must use a 
 43.2   preretirement interest assumption of five percent, a 
 43.3   postretirement interest assumption of five percent, and a future 
 43.4   salary increase assumption of 3.5 percent. 
 43.5      (d) For funds governed by chapters 3A, 352C, and 490, the 
 43.6   actuarial valuation must use a preretirement interest assumption 
 43.7   of 8.5 percent, a postretirement interest assumption of five six 
 43.8   percent, and a future salary increase assumption of 6.5 percent 
 43.9   in each future year in which the salary amount payable is not 
 43.10  determinable from section 3.099, 15A.081, subdivision 6, or 
 43.11  15A.083, subdivision 1, whichever applies, or from applicable 
 43.12  compensation council recommendations under section 15A.082. 
 43.13     (e) For funds governed by sections 352.01 through 352.86, 
 43.14  353.01 through 353.46, and chapter 354, the actuarial valuation 
 43.15  must use a preretirement interest assumption of 8.5, a 
 43.16  postretirement interest assumption of five six percent, and a 
 43.17  graded rate future salary increase assumption as follows: 
 43.18          General state   General public   
 43.19            employees       employees         Teachers  
 43.20           retirement      retirement        retirement 
 43.21   age        plan            plan              plan 
 43.22   16        7.2500%         8.71%              7.25%
 43.23   17        7.2500          8.71               7.25 
 43.24   18        7.2500          8.70               7.25 
 43.25   19        7.2500          8.70               7.25 
 43.26   20        7.2500          7.70               7.25 
 43.27   21        7.1454          7.70               7.25 
 43.28   22        7.1094          7.70               7.25 
 43.29   23        7.0725          7.70               7.20 
 43.30   24        7.0363          7.70               7.15 
 43.31   25        7.0000          7.60               7.10 
 43.32   26        7.0000          7.51               7.05 
 43.33   27        7.0000          7.39               7.00 
 43.34   28        7.0000          7.30               7.00 
 43.35   29        7.0000          7.20               7.00 
 43.36   30        7.0000          7.20               7.00 
 44.1    31        7.0000          7.10               7.00 
 44.2    32        7.0000          7.10               7.00 
 44.3    33        7.0000          7.00               7.00 
 44.4    34        7.0000          7.00               7.00 
 44.5    35        7.0000          6.90               7.00 
 44.6    36        6.9019          6.80               7.00 
 44.7    37        6.8074          6.70               7.00 
 44.8    38        6.7125          6.60               6.90 
 44.9    39        6.6054          6.50               6.80 
 44.10   40        6.5000          6.40               6.70 
 44.11   41        6.3540          6.30               6.60 
 44.12   42        6.2087          6.30               6.50 
 44.13   43        6.0622          6.30               6.35 
 44.14   44        5.9048          6.20               6.20 
 44.15   45        5.7500          6.20               6.05 
 44.16   46        5.6940          6.09               5.90 
 44.17   47        5.6375          6.00               5.75 
 44.18   48        5.5822          5.90               5.70 
 44.19   49        5.5405          5.80               5.65 
 44.20   50        5.5000          5.70               5.60 
 44.21   51        5.4384          5.70               5.55 
 44.22   52        5.3776          5.70               5.50 
 44.23   53        5.3167          5.70               5.45 
 44.24   54        5.2826          5.70               5.40 
 44.25   55        5.2500          5.70               5.35 
 44.26   56        5.2500          5.70               5.30 
 44.27   57        5.2500          5.70               5.25 
 44.28   58        5.2500          5.70               5.25 
 44.29   59        5.2500          5.70               5.25 
 44.30   60        5.2500          5.00               5.25 
 44.31   61        5.2500          5.00               5.25 
 44.32   62        5.2500          5.00               5.25 
 44.33   63        5.2500          5.00               5.25 
 44.34   64        5.2500          5.00               5.25 
 44.35   65        5.2500          5.00               5.25 
 44.36   66        5.2500          5.00               5.25 
 45.1    67        5.2500          5.00               5.25 
 45.2    68        5.2500          5.00               5.25 
 45.3    69        5.2500          5.00               5.25 
 45.4    70        5.2500          5.00               5.25 
 45.5      Sec. 49.  Minnesota Statutes 1994, section 356.215, is 
 45.6   amended by adding a subdivision to read: 
 45.7      Subd. 4l.  [EVALUATION OF CONTRIBUTION RATES TO FULLY FUND 
 45.8   PROJECTED PENSION BENEFIT OBLIGATION BY AMORTIZATION TARGET 
 45.9   DATE.] The actuarial valuation must contain a projection by year 
 45.10  to the year 2020 of the projected pension benefit obligation 
 45.11  assuming continuous entry and exit of members from the fund that 
 45.12  is consistent with findings of experience studies examining 
 45.13  employee turnover and entry characteristics.  Assumptions about 
 45.14  new entrants to the fund in future years shall be developed in 
 45.15  consultation with the state demographer and state economist.  
 45.16  The actuarial valuation shall estimate the level percent of 
 45.17  payroll contribution required to fully fund the projected 
 45.18  pension benefit obligation by the amortization target date. 
 45.19     Sec. 50.  Minnesota Statutes 1994, section 356.25, is 
 45.20  amended to read: 
 45.21     356.25 [LOCAL GOVERNMENTAL PENSION FUND PROHIBITIONS; 
 45.22  EXCLUSIONS.] 
 45.23     Subdivision 1.  Notwithstanding any other provision of law 
 45.24  or charter, no city, county, public agency or instrumentality, 
 45.25  or other political subdivision shall, after August 1, 1975, 
 45.26  establish for any of its employees any local pension plan or 
 45.27  fund financed in whole or in part from public funds, other than 
 45.28  a volunteer firefighter's relief association established 
 45.29  pursuant to chapter 424A and governed by sections 69.771 to 
 45.30  69.776. 
 45.31     Subd. 2.  The provision of early retirement options to 
 45.32  employees can under some circumstances be beneficial to public 
 45.33  employers as they downsize, reorganize the delivery of services, 
 45.34  or change the means of delivering services so that greater 
 45.35  efficiencies and effectiveness are achieved.  The employing 
 45.36  entity can best weigh the costs and benefits of offering early 
 46.1   retirement options.  Therefore, the employing entity should have 
 46.2   greater flexibility in offering such options, and should also 
 46.3   have the responsibility to pay for them. 
 46.4      Notwithstanding subdivision 1, a city, county, public 
 46.5   agency or instrumentality, or other political subdivision may 
 46.6   purchase from a licensed annuity company for an employee who is 
 46.7   55 years old or older a supplemental defined contribution 
 46.8   annuity for early retirement if the employee is part of a work 
 46.9   unit within the entity that is reorganizing services, reducing 
 46.10  the number of staff on a planned long-term basis, or changing 
 46.11  the delivery of a service to achieve greater efficiencies or 
 46.12  effectiveness.  The offer by the employer to purchase such a 
 46.13  supplemental annuity shall not extend beyond one year, and can 
 46.14  be made only to employees who retire within the year. 
 46.15     Provision of the supplemental annuity under this 
 46.16  subdivision shall be annually reported to either the legislative 
 46.17  auditor or the state auditor, depending on which one has audit 
 46.18  responsibilities for the entity.  If the auditor finds that the 
 46.19  entity has expended public funds for the purchase of the 
 46.20  supplemental annuity but has not reorganized services, reduced 
 46.21  the number of staff on a long-term basis, or changed the 
 46.22  delivery of services to achieve greater efficiency or 
 46.23  effectiveness, the auditor shall issue a finding that the 
 46.24  provision has been misused.  An entity for which such a finding 
 46.25  has been issued may not offer annuities under this subdivision 
 46.26  for a period of five years after the finding is issued. 
 46.27     Sec. 51.  Minnesota Statutes 1995 Supplement, section 
 46.28  356.30, subdivision 1, is amended to read: 
 46.29     Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 
 46.30  Notwithstanding any provisions to the contrary of the laws 
 46.31  governing the funds enumerated in subdivision 3, a person who 
 46.32  has met the qualifications of clause (2) may elect to receive a 
 46.33  retirement annuity from each fund in which the person has at 
 46.34  least six months allowable service, based on the allowable 
 46.35  service in each fund, subject to the provisions of clause (3).  
 46.36     (2) A person may receive upon retirement a retirement 
 47.1   annuity from each fund in which the person has at least six 
 47.2   months allowable service, and augmentation of a deferred annuity 
 47.3   calculated under the laws governing each public pension plan or 
 47.4   fund named in subdivision 3, from the date the person terminated 
 47.5   all public service if: 
 47.6      (a) the person has allowable service totaling an amount 
 47.7   that allows the person to receive an annuity in any two or more 
 47.8   of the enumerated funds; and 
 47.9      (b) the person has not begun to receive an annuity from any 
 47.10  enumerated fund or the person has made application for benefits 
 47.11  from all funds and the effective dates of the retirement annuity 
 47.12  with each fund under which the person chooses to receive an 
 47.13  annuity are within a one-year period.  
 47.14     (3) The retirement annuity from each fund must be based 
 47.15  upon the allowable service in each fund, except that:  
 47.16     (a) The laws governing annuities must be the law in effect 
 47.17  on the date of termination from the last period of public 
 47.18  service under a covered fund with which the person earned a 
 47.19  minimum of one-half year of allowable service credit during that 
 47.20  employment.  
 47.21     (b) The "average salary" on which the annuity from each 
 47.22  covered fund in which the employee has credit in a formula plan 
 47.23  shall be based on the employee's highest five successive years 
 47.24  of covered salary during the entire service in covered funds.  
 47.25     (c) The formula percentages to be used by each fund must be 
 47.26  those percentages prescribed by each fund's formula as continued 
 47.27  for the respective years of allowable service from one fund to 
 47.28  the next, recognizing all previous allowable service with the 
 47.29  other covered funds.  
 47.30     (d) Allowable service in all the funds must be combined in 
 47.31  determining eligibility for and the application of each fund's 
 47.32  provisions in respect to actuarial reduction in the annuity 
 47.33  amount for retirement prior to normal retirement.  
 47.34     (e) The annuity amount payable for any allowable service 
 47.35  under a nonformula plan of a covered fund must not be affected 
 47.36  but such service and covered salary must be used in the above 
 48.1   calculation.  
 48.2      (f) This section shall not apply to any person whose final 
 48.3   termination from the last public service under a covered fund is 
 48.4   prior to May 1, 1975.  
 48.5      (g) For the purpose of computing annuities under this 
 48.6   section the formula percentages used by any covered fund, except 
 48.7   the basic program of the teachers retirement association, the 
 48.8   public employees police and fire fund, and the state patrol 
 48.9   retirement fund, must not exceed 2-1/2 percent the amount 
 48.10  specified in section 356.19, subdivision 4, per year of service 
 48.11  for any year of service or fraction thereof.  The formula 
 48.12  percentage used by the public employees police and fire fund and 
 48.13  the state patrol retirement fund must not exceed 2.65 
 48.14  percent the amount specified in section 356.19, subdivision 6, 
 48.15  per year of service for any year of service or fraction 
 48.16  thereof.  The formula percentage used by the teachers retirement 
 48.17  association must not exceed 2.63 percent per year of basic 
 48.18  program service for any year of basic program service or 
 48.19  fraction thereof. 
 48.20     (h) Any period of time for which a person has credit in 
 48.21  more than one of the covered funds must be used only once for 
 48.22  the purpose of determining total allowable service.  
 48.23     (i) If the period of duplicated service credit is more than 
 48.24  six months, or the person has credit for more than six months 
 48.25  with each of the funds, each fund shall apply its formula to a 
 48.26  prorated service credit for the period of duplicated service 
 48.27  based on a fraction of the salary on which deductions were paid 
 48.28  to that fund for the period divided by the total salary on which 
 48.29  deductions were paid to all funds for the period.  
 48.30     (j) If the period of duplicated service credit is less than 
 48.31  six months, or when added to other service credit with that fund 
 48.32  is less than six months, the service credit must be ignored and 
 48.33  a refund of contributions made to the person in accord with that 
 48.34  fund's refund provisions.  
 48.35     Sec. 52.  Minnesota Statutes 1994, section 356.88, is 
 48.36  amended by adding a subdivision to read: 
 49.1      Subd. 3.  [FUTURE ACCRUAL RATE CHANGES.] Future changes in 
 49.2   Minnesota Statutes increasing the benefit accrual rates beyond 
 49.3   those effect on July 1, 1996, used to calculate retirement 
 49.4   benefits shall only apply to service credited after the 
 49.5   effective date of future accrual rate change. 
 49.6      Sec. 53.  Minnesota Statutes 1994, section 490.124, 
 49.7   subdivision 1, is amended to read: 
 49.8      Subdivision 1.  [BASIC RETIREMENT ANNUITY.] Except as 
 49.9   qualified hereinafter from and after mandatory retirement date, 
 49.10  normal retirement date, early retirement date, or one year from 
 49.11  the disability retirement date, as the case may be, a retirement 
 49.12  annuity shall be payable to a retiring judge from the judges' 
 49.13  retirement fund in an amount equal to:  (1) 2-1/2 percent of the 
 49.14  amount specified in section 356.19, subdivision 4, times the 
 49.15  judge's final average compensation multiplied by the number of 
 49.16  years and fractions of years of allowable service rendered prior 
 49.17  to July 1, 1980; plus (2) three percent of the amount specified 
 49.18  in section 356.19, subdivision 7, times the judge's final 
 49.19  average compensation multiplied by the number of years and 
 49.20  fractions of years of allowable service rendered after June 30, 
 49.21  1980; provided that the annuity shall not exceed 65 70 percent 
 49.22  of the judge's annual salary for the 12 months immediately 
 49.23  preceding retirement.  
 49.24     A monthly survivor, disability, and retirement benefit 
 49.25  payable on June 30, 1996, is permanently increased effective 
 49.26  July 1, 1996, to reflect the change in the postretirement fund 
 49.27  interest assumption from five to six percent.  The benefit 
 49.28  payable under the six percent postretirement interest assumption 
 49.29  must be actuarially equivalent to the benefit payable under the 
 49.30  five percent interest assumption and must be based on tables 
 49.31  adopted by the board of trustees as recommended by an approved 
 49.32  actuary, and approved by the actuary retained by the legislative 
 49.33  commission on pensions and retirement.  The increase must be 
 49.34  made to disabilitants and survivors who are not participants in 
 49.35  the postretirement fund, but who are eligible for the same 
 49.36  increase as postretirement fund participants. 
 50.1      Sec. 54.  [APPROPRIATION; DEPARTMENT OF CORRECTIONS.] 
 50.2      For fiscal year 1997, $300,000 from the general fund is 
 50.3   added to the base funding for the department of corrections. 
 50.4      Sec. 55.  [APPROPRIATION REDUCTION; MNSCU.] 
 50.5      For fiscal year 1997, the commissioner of finance shall 
 50.6   reduce the base appropriation for the Minnesota state colleges 
 50.7   and universities by an amount equal to .64 percent of the 
 50.8   salaries of employees covered by either the coordinated or basic 
 50.9   retirement plans of the statewide teachers retirement 
 50.10  association. 
 50.11     Sec. 56.  [APPROPRIATION REDUCTION; MISCELLANEOUS.] 
 50.12     For fiscal year 1997, the commissioner of finance shall 
 50.13  reduce the base appropriations of state agencies, the University 
 50.14  of Minnesota, and the Minnesota state colleges and universities, 
 50.15  by an amount equal to .1 percent of the general fund supported 
 50.16  salaries of employees who are members of the general plan of the 
 50.17  Minnesota state retirement system. 
 50.18     Sec. 57.  [REPEALER.] 
 50.19     Minnesota Statutes 1994, sections 356.70; and 356.88, 
 50.20  subdivision 2, are repealed. 
 50.21     Sec. 58.  [EFFECTIVE DATES.] 
 50.22     Section 15 is effective the first full pay period after 
 50.23  December 31, 1996.  Sections 4 and 7 are effective the first 
 50.24  full pay period after June 30, 1996.  Sections 29 and 30 are 
 50.25  effective for all salary paid July 1, 1996, or later.  All other 
 50.26  sections are effective July 1, 1996.