1.1                                         A bill for an act&#10;1.2      relating to retirement; merging the Minneapolis Teachers Retirement &#10;1.3     Fund Association and the Teachers Retirement Association; modifying the &#10;1.4     postretirement adjustment amount calculation; adjusting contribution rates; &#10;1.5     limiting certain postretirement adjustments; making technical changes; providing &#10;1.6     a benefit increase; making state aid adjustment; amending the powers and &#10;1.7     duties of the State Board of Investment; requiring an analysis; requiring certain &#10;1.8     studies; requiring certain reports; appropriating money; amending Minnesota &#10;1.9     Statutes 2004, sections 11A.07, subdivision 5; 11A.18, subdivision 9; 43A.04, &#10;1.10    subdivision 12; 127A.50, subdivision 1; 128D.10; 352.116, subdivision 1a; &#10;1.11    352.72, subdivision 2; 352B.30, subdivision 2; 353.30, subdivision 5; 353.71, &#10;1.12    subdivision 2; 354.05, subdivisions 2, 13; 354.42, subdivisions 2, 3; 354.55, &#10;1.13    subdivision 11; 354A.011, subdivisions 15a, 27; 354A.021, subdivision &#10;1.14    1; 354A.092; 354A.093, subdivision 1; 354A.095; 354A.096; 354A.12, &#10;1.15    subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30; 354A.31, subdivision 7; 354A.32, &#10;1.16    subdivision 1; 354A.37, subdivision 2; 354A.39; 354A.40, subdivision 1; &#10;1.17    354A.41; 356.20, subdivision 2; 356.214, subdivision 1; 356.215, subdivision 11; &#10;1.18    356.219, by adding subdivisions; 356.30, subdivisions 1, 3; 356.302, subdivision &#10;1.19    7; 356.303, subdivision 4; 356.315, by adding subdivisions; 356.42, subdivision &#10;1.20    3; 356.465, subdivision 3; 423A.02, subdivision 1b; Minnesota Statutes 2005 &#10;1.21    Supplement, sections 11A.04; 11A.07, subdivision 4; 354.44, subdivision 6; &#10;1.22    354A.31, subdivision 4; 356.215, subdivision 8;  Laws 2005, chapter 156, article &#10;1.23    1, section 8; proposing coding for new law in Minnesota Statutes, chapters 128D; &#10;1.24    354; 354A; repealing Minnesota Statutes 2004, sections 354A.051; 354A.105; &#10;1.25    354A.23, subdivision 1; 354A.28.&#10;1.26     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:&#10;&#10;<a id="go.1.0.0"></a>1.27                                           <b>ARTICLE 1</b>&#10;1.28                                    <b>MINNESOTA POSTRETIREMENT</b>&#10;1.29                                    <b>INVESTMENT FUND CHANGES</b>&#10;&#10;<a id="go.1.1.0"></a>1.30        Section 1. Minnesota Statutes 2004, section 11A.18, subdivision 9, is amended to read:&#10;1.31        Subd. 9. <b>Calculation of postretirement adjustment.</b>  (a) Annually, following June &#10;1.32    30, the state board shall use the procedures in paragraphs (b), (c), and (d) to determine &#10;2.1     whether a postretirement adjustment is payable and to determine the amount of any &#10;2.2     postretirement adjustment.&#10;2.3     (b) If the Consumer Price Index for urban wage earners and clerical workers all &#10;2.4     items index published by the Bureau of Labor Statistics of the United States Department &#10;2.5     of Labor increases from June 30 of the preceding year to June 30 of the current year, &#10;2.6     the state board shall certify the percentage increase.  The amount certified must not &#10;2.7     exceed the lesser of the difference between the preretirement interest assumption and &#10;2.8     postretirement interest assumption in section 356.215, subdivision 8, paragraph (a), or &#10;2.9     2.5 percent.  For the Minneapolis Employees Retirement Fund, the amount certified must &#10;2.10    not exceed 3.5 percent.&#10;2.11    (c) In addition to any percentage increase certified under paragraph (b), the board &#10;2.12    shall use the following procedures to determine if a postretirement adjustment is payable &#10;2.13    under this paragraph:&#10;2.14    (1) The state board shall determine the market value of the fund on June 30 of &#10;2.15    that year;&#10;2.16    (2) The amount of reserves required <ins>as of the current June 30 </ins>for the annuity or &#10;2.17    benefit payable to an annuitant and benefit recipient of the participating public pension &#10;2.18    plans or funds must be determined by the <del>commission-retained</del> actuary <del>as of the current </del>&#10;2.19    <del>June 30</del><ins> retained under section 356.214</ins>. An annuitant or benefit recipient who has been &#10;2.20    receiving an annuity or benefit for at least 12 full months as of the current June 30 is &#10;2.21    eligible to receive a full postretirement adjustment.  An annuitant or benefit recipient who &#10;2.22    has been receiving an annuity or benefit for at least one full month, but less than 12 full &#10;2.23    months as of the current June 30, is eligible to receive a partial postretirement adjustment.  &#10;2.24    Each fund shall report separately the amount of the reserves for those annuitants and &#10;2.25    benefit recipients who are eligible to receive a full postretirement benefit adjustment.  This &#10;2.26    amount is known as "eligible reserves."  Each fund shall also report separately the amount &#10;2.27    of the reserves for those annuitants and benefit recipients who are not eligible to receive &#10;2.28    a postretirement adjustment.  This amount is known as "noneligible reserves." For an &#10;2.29    annuitant or benefit recipient who is eligible to receive a partial postretirement adjustment, &#10;2.30    each fund shall report separately as additional "eligible reserves" an amount that bears the &#10;2.31    same ratio to the total reserves required for the annuitant or benefit recipient as the number &#10;2.32    of full months of annuity or benefit receipt as of the current June 30 bears to 12 full &#10;2.33    months.  The remainder of the annuitant's or benefit recipient's reserves must be separately &#10;2.34    reported as additional "noneligible reserves."  The amount of "eligible" and "noneligible" &#10;2.35    required reserves must be certified to the board by the commission-retained actuary as &#10;2.36    soon as is practical following the current June 30;&#10;3.1     (3) The state board shall determine the percentage increase certified under paragraph &#10;3.2     (b) multiplied by the eligible required reserves, as adjusted for mortality gains and losses &#10;3.3     under subdivision 11, determined under clause (2);&#10;3.4     (4) The state board shall add the amount of reserves required for the annuities or &#10;3.5     benefits payable to annuitants and benefit recipients of the participating public pension &#10;3.6     plans or funds as of the current June 30 to the amount determined under clause (3);&#10;3.7     (5) The state board shall subtract the amount determined under clause (4) from the &#10;3.8     market value of the fund determined under clause (1);&#10;3.9     (6) The state board shall adjust the amount determined under clause (5) by the &#10;3.10    cumulative current balance determined <del>pursuant to</del> <ins>under </ins>clause (8) and any negative &#10;3.11    balance carried forward under clause (9);&#10;3.12    (7) A positive amount resulting from the calculations in clauses (1) to (6) is the &#10;3.13    excess market value.  A negative amount is the negative balance;&#10;3.14    (8) The state board shall allocate one-fifth of the excess market value or one-fifth &#10;3.15    of the negative balance to each of five consecutive years, beginning with the fiscal year &#10;3.16    ending the current June 30; and&#10;3.17    (9) To calculate the postretirement adjustment under this paragraph based on &#10;3.18    investment performance for a fiscal year, the state board shall add together all excess &#10;3.19    market value allocated to that year and subtract from the sum all negative balances &#10;3.20    allocated to that year.  If this calculation results in a negative number, the entire negative &#10;3.21    balance must be carried forward and allocated to the next year.  If the resulting amount is &#10;3.22    positive, a postretirement adjustment is payable under this paragraph.  The board shall &#10;3.23    express a positive amount as a percentage of the total eligible required reserves certified to &#10;3.24    the board under clause (2).&#10;3.25    (d) The state board shall determine the amount of any postretirement adjustment &#10;3.26    which is payable using the following procedure:&#10;3.27    (1) The total "eligible" required reserves as of the first of January next following &#10;3.28    the end of the fiscal year for the annuitants and benefit recipients eligible to receive a full &#10;3.29    or partial postretirement adjustment as determined by clause (2) must be certified to the &#10;3.30    state board by the <del>commission-retained</del> actuary<ins> retained under section 356.214</ins>.  The total &#10;3.31    "eligible" required reserves must be determined by the <del>commission-retained</del> actuary &#10;3.32    <ins>retained under section 356.214 </ins>on the assumption that all annuitants and benefit recipients &#10;3.33    eligible to receive a full or partial postretirement adjustment will be alive on the January &#10;3.34    1 in question; and&#10;3.35    (2) The state board shall add the percentage certified under paragraph (b) to any &#10;3.36    positive percentage calculated under paragraph (c).  The board shall not subtract from the &#10;4.1     percentage certified under paragraph (b) any negative amount calculated under paragraph &#10;4.2     (c).  The sum of these percentages must be carried to five decimal places and must be &#10;4.3     certified to each participating public pension fund or plan as the full postretirement &#10;4.4     adjustment percentage. <ins>The full postretirement adjustment percentage certified to each </ins>&#10;4.5     <ins>participating public pension plan or fund must not exceed five percent. For the Minneapolis </ins>&#10;4.6     <ins>Employees Retirement Fund, no maximum percentage adjustment is applicable.</ins>&#10;4.7     (e) A retirement annuity payable in the event of retirement before becoming eligible &#10;4.8     for Social Security benefits as provided in section 352.116, subdivision 3; 353.29, &#10;4.9     subdivision 6; or 354.35 must be treated as the sum of a period certain retirement annuity &#10;4.10    and a life retirement annuity for the purposes of any postretirement adjustment.  The &#10;4.11    period certain retirement annuity plus the life retirement annuity must be the annuity &#10;4.12    amount payable until age 62 or 65, whichever applies.  A postretirement adjustment &#10;4.13    granted on the period certain retirement annuity must terminate when the period certain &#10;4.14    retirement annuity terminates. &#10;&#10;<a id="go.1.2.0"></a>4.15        Sec. 2. <ins><b>[354A.42] ST. PAUL TEACHER INCREASE LIMIT.</b></ins>&#10;4.16    <ins>Notwithstanding any law to the contrary, the St. Paul Teachers Retirement Fund </ins>&#10;4.17    <ins>Association may not pay a postretirement adjustment of more than five percent in any </ins>&#10;4.18    <ins>year, effective July 1, 2010.</ins>&#10;&#10;<a id="go.1.3.0"></a>4.19        Sec. 3. <ins><b>EFFECTIVE DATE.</b></ins>&#10;4.20    <ins>Section 1 is effective July 1, 2010.</ins>&#10;&#10;<a id="go.2.0.0"></a>4.21                                           <b>ARTICLE 2</b>&#10;4.22                                        <b>DEFERRED ANNUITY</b>&#10;4.23                                    <b>AUGMENTATION RATE CHANGE</b>&#10;&#10;<a id="go.2.1.0"></a>4.24        Section 1. Minnesota Statutes 2004, section 352.116, subdivision 1a, is amended to &#10;4.25    read:&#10;4.26        Subd. 1a. <b>Actuarial reduction for early retirement.</b> This subdivision applies to a &#10;4.27    person who has become at least 55 years old and first became a covered employee after &#10;4.28    June 30, 1989, and to any other covered employee who has become at least 55 years &#10;4.29    old and whose annuity is higher when calculated under section  352.115, subdivision 3, &#10;4.30    paragraph (b), in conjunction with this subdivision than when calculated under section  &#10;4.31    352.115, subdivision 3, paragraph (a), in conjunction with subdivision 1. A covered &#10;4.32    employee who retires before the normal retirement age shall be paid the normal retirement &#10;4.33    annuity provided in section  352.115, subdivisions 2 and 3, paragraph (b), reduced so &#10;5.1     that the reduced annuity is the actuarial equivalent of the annuity that would be payable &#10;5.2     to the employee if the employee deferred receipt of the annuity and the annuity amount &#10;5.3     were augmented at an annual rate of three percent compounded annually from the day &#10;5.4     the annuity begins to accrue until the normal retirement age<ins> if the employee became an </ins>&#10;5.5     <ins>employee before July 1, 2006, and at an annual rate of 2.5 percent compounded annually </ins>&#10;5.6     <ins>from the day the annuity begins to accrue until the normal retirement age if the employee </ins>&#10;5.7     <ins>initially becomes an employee after June 30, 2006</ins>. &#10;&#10;<a id="go.2.2.0"></a>5.8         Sec. 2. Minnesota Statutes 2004, section 352.72, subdivision 2, is amended to read:&#10;5.9         Subd. 2. <b>Computation of deferred annuity.</b> (a) The deferred annuity, if any, &#10;5.10    accruing under subdivision 1, or section  352.22, subdivision 3, must be computed as &#10;5.11    provided in section  352.22, subdivision 3, on the basis of allowable service before &#10;5.12    termination of state service and augmented as provided herein. The required reserves &#10;5.13    applicable to a deferred annuity or to an annuity for which a former employee was eligible &#10;5.14    but had not applied or to any deferred segment of an annuity must be determined as of the &#10;5.15    date the benefit begins to accrue and augmented by interest compounded annually from &#10;5.16    the first day of the month following the month in which the employee ceased to be a state &#10;5.17    employee, or July 1, 1971, whichever is later, to the first day of the month in which the &#10;5.18    annuity begins to accrue. The rates of interest used for this purpose must be five percent &#10;5.19    compounded annually until January 1, 1981, and three percent compounded annually &#10;5.20    thereafter until January 1 of the year following the year in which the former employee &#10;5.21    attains age 55<del>.</del><ins>, and</ins> from that date to the effective date of retirement, the rate is five percent &#10;5.22    compounded annually<ins> if the employee became an employee before July 1, 2006, and at </ins>&#10;5.23    <ins>2.5 percent compounded annually if the employee becomes an employee after June 30, </ins>&#10;5.24    <ins>2006</ins>. If a person has more than one period of uninterrupted service, the required reserves &#10;5.25    related to each period must be augmented by interest under this subdivision. The sum &#10;5.26    of the augmented required reserves so determined is the present value of the annuity. &#10;5.27    "Uninterrupted service" for the purpose of this subdivision means periods of covered &#10;5.28    employment during which the employee has not been separated from state service for more &#10;5.29    than two years. If a person repays a refund, the service restored by the repayment must be &#10;5.30    considered continuous with the next period of service for which the employee has credit &#10;5.31    with this system. The formula percentages used for each period of uninterrupted service &#10;5.32    must be those applicable to a new employee. The mortality table and interest assumption &#10;5.33    used to compute the annuity must be those in effect when the employee files application &#10;5.34    for annuity. This section does not reduce the annuity otherwise payable under this chapter. &#10;6.1     (b) The retirement annuity or disability benefit of, or the survivor benefit payable on &#10;6.2     behalf of, a former state employee who terminated service before July 1, 1997, which is &#10;6.3     not first payable until after June 30, 1997, must be increased on an actuarial equivalent &#10;6.4     basis to reflect the change in the postretirement interest rate actuarial assumption under &#10;6.5     section  356.215, subdivision 8, from five percent to six percent under a calculation &#10;6.6     procedure and the tables adopted by the board and approved by the actuary retained by &#10;6.7     the Legislative Commission on Pensions and Retirement. &#10;&#10;<a id="go.2.3.0"></a>6.8         Sec. 3. Minnesota Statutes 2004, section 352B.30, subdivision 2, is amended to read:&#10;6.9         Subd. 2. <b>Computation of deferred annuity.</b> Deferred annuities must be computed &#10;6.10    according to this chapter on the basis of allowable service before termination of service &#10;6.11    and augmented as provided in this chapter. The required reserves applicable to a deferred &#10;6.12    annuity must be augmented by interest compounded annually from the first day of the &#10;6.13    month following the month in which the member terminated service, or July 1, 1971, &#10;6.14    whichever is later, to the first day of the month in which the annuity begins to accrue. The &#10;6.15    rates of interest used for this purpose shall be five percent per year compounded annually &#10;6.16    until January 1, 1981, and after that date three percent per year compounded annually<ins> if </ins>&#10;6.17    <ins>the employee became an employee before July 1, 2006, and at 2.5 percent compounded </ins>&#10;6.18    <ins>annually if the employee becomes an employee after June 30, 2006</ins>. The mortality table &#10;6.19    and interest assumption used to compute the annuity shall be those in effect when the &#10;6.20    member files application for annuity.&#10;&#10;<a id="go.2.4.0"></a>6.21        Sec. 4. Minnesota Statutes 2004, section 353.30, subdivision 5, is amended to read:&#10;6.22        Subd. 5. <b>Actuarial reduction for early retirement.</b> This subdivision applies to a &#10;6.23    member who has become at least 55 years old and first became a public employee after &#10;6.24    June 30, 1989, and to any other member who has become at least 55 years old and whose &#10;6.25    annuity is higher when calculated under section  353.29, subdivision 3, paragraph (b), in &#10;6.26    conjunction with this subdivision than when calculated under section  353.29, subdivision &#10;6.27    3, paragraph (a), in conjunction with subdivision 1, 1a, 1b, or 1c. An employee who &#10;6.28    retires before normal retirement age shall be paid the retirement annuity provided in &#10;6.29    section  353.29, subdivision 3, paragraph (b), reduced so that the reduced annuity is the &#10;6.30    actuarial equivalent of the annuity that would be payable to the employee if the employee &#10;6.31    deferred receipt of the annuity and the annuity amount were augmented at an annual rate &#10;6.32    of three percent compounded annually from the day the annuity begins to accrue until the &#10;6.33    normal retirement age<ins> if the employee became an employee before July 1, 2006, and at 2.5 </ins>&#10;7.1     <ins>percent compounded annually from the day the annuity begins to accrue until the normal </ins>&#10;7.2     <ins>retirement age if the employee initially becomes an employee after June 30, 2006</ins>. &#10;&#10;<a id="go.2.5.0"></a>7.3         Sec. 5. Minnesota Statutes 2004, section 353.71, subdivision 2, is amended to read:&#10;7.4         Subd. 2. <b>Deferred annuity computation; augmentation.</b> (a) The deferred &#10;7.5     annuity accruing under subdivision 1, or under sections  353.34, subdivision 3, and  &#10;7.6     353.68, subdivision 4, must be computed on the basis of allowable service prior to the &#10;7.7     termination of public service and augmented as provided in this paragraph. The required &#10;7.8     reserves applicable to a deferred annuity, or to any deferred segment of an annuity must &#10;7.9     be determined as of the first day of the month following the month in which the former &#10;7.10    member ceased to be a public employee, or July 1, 1971, whichever is later. These &#10;7.11    required reserves must be augmented at the rate of five percent annually compounded &#10;7.12    annually until January 1, 1981, and at the rate of three percent thereafter until January 1 &#10;7.13    of the year following the year in which the former member attains age 55<del>.</del><ins> and</ins> from that &#10;7.14    date to the effective date of retirement, the rate is five percent compounded annually<ins> if </ins>&#10;7.15    <ins>the employee became an employee before July 1, 2006, and at 2.5 percent compounded </ins>&#10;7.16    <ins>annually if the employee becomes an employee after June 30, 2006</ins>. If a person has more &#10;7.17    than one period of uninterrupted service, the required reserves related to each period &#10;7.18    must be augmented as specified in this paragraph. The sum of the augmented required &#10;7.19    reserves is the present value of the annuity. Uninterrupted service for the purpose of this &#10;7.20    subdivision means periods of covered employment during which the employee has not &#10;7.21    been separated from public service for more than two years. If a person repays a refund, &#10;7.22    the restored service must be considered as continuous with the next period of service &#10;7.23    for which the employee has credit with this association. This section must not reduce &#10;7.24    the annuity otherwise payable under this chapter. This paragraph applies to individuals &#10;7.25    who become deferred annuitants on or after July 1, 1971. For a member who became a &#10;7.26    deferred annuitant before July 1, 1971, the paragraph applies from July 1, 1971, if the &#10;7.27    former active member applies for an annuity after July 1, 1973. &#10;7.28    (b) The retirement annuity or disability benefit of, or the survivor benefit payable on &#10;7.29    behalf of, a former member who terminated service before July 1, 1997, or the survivor &#10;7.30    benefit payable on behalf of a basic or police and fire member who was receiving disability &#10;7.31    benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased &#10;7.32    on an actuarial equivalent basis to reflect the change in the postretirement interest rate &#10;7.33    actuarial assumption under section  356.215, subdivision 8, from five percent to six percent &#10;7.34    under a calculation procedure and tables adopted by the board and approved by the actuary &#10;7.35    retained by the Legislative Commission on Pensions and Retirement. &#10;&#10;<a id="go.2.6.0"></a>8.1         Sec. 6. Minnesota Statutes 2005 Supplement, section 354.44, subdivision 6, is &#10;8.2     amended to read:&#10;8.3         Subd. 6. <b>Computation of formula program retirement annuity.</b> (a) The formula &#10;8.4     retirement annuity must be computed in accordance with the applicable provisions of the &#10;8.5     formulas stated in paragraph (b) or (d) on the basis of each member's average salary under &#10;8.6     section 354.05, subdivision 13a, for the period of the member's formula service credit.&#10;8.7     (b) This paragraph, in conjunction with paragraph (c), applies to a person who first &#10;8.8     became a member of the association or a member of a pension fund listed in section &#10;8.9     356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with &#10;8.10    paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The &#10;8.11    average salary as defined in section 354.05, subdivision 13a, multiplied by the following &#10;8.12    percentages per year of formula service credit shall determine the amount of the annuity to &#10;8.13    which the member qualifying therefor is entitled:&#10;<rs_table>8.14                                   Coordinated Member        Basic Member      &#10;8.15                                                             the percent       &#10;8.16                                                             specified in      &#10;8.17                                   the percent specified     section 356.315,  &#10;8.18       Each year of service        in section 356.315,       subdivision 3, per &#10;8.19       during first ten            subdivision 1, per year   year              &#10;8.20                                                             the percent       &#10;8.21                                                             specified in      &#10;8.22                                   the percent specified     section 356.315,  &#10;8.23       Each year of service        in section 356.315,       subdivision 4, per &#10;8.24       thereafter                  subdivision 2, per year   year              &#10;</rs_table>8.25    (c) (i) This paragraph applies only to a person who first became a member of &#10;8.26    the association or a member of a pension fund listed in section 356.30, subdivision 3, &#10;8.27    before July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in &#10;8.28    conjunction with this paragraph than when calculated under paragraph (d), in conjunction &#10;8.29    with paragraph (e).&#10;8.30    (ii) Where any member retires prior to normal retirement age under a formula &#10;8.31    annuity, the member shall be paid a retirement annuity in an amount equal to the normal &#10;8.32    annuity provided in paragraph (b) reduced by one-quarter of one percent for each month &#10;8.33    that the member is under normal retirement age at the time of retirement except that for &#10;9.1     any member who has 30 or more years of allowable service credit, the reduction shall be &#10;9.2     applied only for each month that the member is under age 62.&#10;9.3     (iii) Any member whose attained age plus credited allowable service totals 90 years &#10;9.4     is entitled, upon application, to a retirement annuity in an amount equal to the normal &#10;9.5     annuity provided in paragraph (b), without any reduction by reason of early retirement.&#10;9.6     (d) This paragraph applies to a member who has become at least 55 years old and &#10;9.7     first became a member of the association after June 30, 1989, and to any other member &#10;9.8     who has become at least 55 years old and whose annuity amount when calculated under &#10;9.9     this paragraph and in conjunction with paragraph (e), is higher than it is when calculated &#10;9.10    under paragraph (b), in conjunction with paragraph (c). The average salary, as defined in &#10;9.11    section 354.05, subdivision 13a, multiplied by the percent specified by section 356.315, &#10;9.12    subdivision 4, for each year of service for a basic member and by the percent specified in &#10;9.13    section 356.315, subdivision 2, for each year of service for a coordinated member shall &#10;9.14    determine the amount of the retirement annuity to which the member is entitled.&#10;9.15    (e) This paragraph applies to a person who has become at least 55 years old and first &#10;9.16    becomes a member of the association after June 30, 1989, and to any other member who &#10;9.17    has become at least 55 years old and whose annuity is higher when calculated under &#10;9.18    paragraph (d) in conjunction with this paragraph than when calculated under paragraph &#10;9.19    (b), in conjunction with paragraph (c). An employee who retires under the formula annuity &#10;9.20    before the normal retirement age shall be paid the normal annuity provided in paragraph &#10;9.21    (d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would &#10;9.22    be payable to the employee if the employee deferred receipt of the annuity and the annuity &#10;9.23    amount were augmented at an annual rate of three percent compounded annually from the &#10;9.24    day the annuity begins to accrue until the normal retirement age<ins> if the employee became </ins>&#10;9.25    <ins>an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee </ins>&#10;9.26    <ins>becomes an employee after June 30, 2006</ins>.&#10;9.27    (f) No retirement annuity is payable to a former employee with a salary that exceeds &#10;9.28    95 percent of the governor's salary unless and until the salary figures used in computing &#10;9.29    the highest five successive years average salary under paragraph (a) have been audited by &#10;9.30    the Teachers Retirement Association and determined by the executive director to comply &#10;9.31    with the requirements and limitations of section 354.05, subdivisions 35 and 35a.&#10;&#10;<a id="go.2.7.0"></a>9.32        Sec. 7. Minnesota Statutes 2004, section 354.55, subdivision 11, is amended to read:&#10;9.33        Subd. 11. <b>Deferred annuity; augmentation.</b> (a) Any person covered under section  &#10;9.34    354.44, subdivision 6, who ceases to render teaching service, may leave the person's &#10;9.35    accumulated deductions in the fund for the purpose of receiving a deferred annuity at &#10;10.1    retirement. Eligibility for an annuity under this subdivision is governed pursuant to &#10;10.2    section  354.44, subdivision 1, or  354.60. &#10;10.3    (b) The amount of the deferred retirement annuity is determined by section  354.44, &#10;10.4    subdivision 6, and augmented as provided in this subdivision. The required reserves &#10;10.5    related to that portion of the annuity which had accrued when the member ceased to &#10;10.6    render teaching service must be augmented by interest compounded annually from the &#10;10.7    first day of the month following the month during which the member ceased to render &#10;10.8    teaching service to the effective date of retirement. There shall be no augmentation if &#10;10.9    this period is less than three months or if this period commences prior to July 1, 1971. &#10;10.10   The rates of interest used for this purpose must be five percent compounded annually &#10;10.11   commencing July 1, 1971, until January 1, 1981, and three percent compounded annually &#10;10.12   thereafter until January 1 of the year following the year in which the former member &#10;10.13   attains age 55<del>.</del><ins> and</ins> from that date to the effective date of retirement, the rate is five percent &#10;10.14   compounded annually<ins> if the employee became an employee before July 1, 2006, and at </ins>&#10;10.15   <ins>2.5 percent compounded annually if the employee becomes an employee after June 30, </ins>&#10;10.16   <ins>2006</ins>. If a person has more than one period of uninterrupted service, a separate average &#10;10.17   salary determined under section  354.44, subdivision 6, must be used for each period and &#10;10.18   the required reserves related to each period must be augmented by interest pursuant to &#10;10.19   this subdivision. The sum of the augmented required reserves so determined shall be the &#10;10.20   basis for purchasing the deferred annuity. If a person repays a refund, the service restored &#10;10.21   by the repayment must be considered as continuous with the next period of service for &#10;10.22   which the person has credit with this fund. If a person does not render teaching service in &#10;10.23   any one fiscal year or more consecutive fiscal years and then resumes teaching service, &#10;10.24   the formula percentages used from the date of the resumption of teaching service must be &#10;10.25   those applicable to new members. The mortality table and interest assumption used to &#10;10.26   compute the annuity must be the applicable mortality table established by the board under &#10;10.27   section  354.07, subdivision 1, and the interest rate assumption under section  356.215 in &#10;10.28   effect when the member retires. A period of uninterrupted service for the purposes of this &#10;10.29   subdivision means a period of covered teaching service during which the member has not &#10;10.30   been separated from active service for more than one fiscal year. &#10;10.31   (c) In no case shall the annuity payable under this subdivision be less than the &#10;10.32   amount of annuity payable pursuant to section  354.44, subdivision 6. &#10;10.33   (d) The requirements and provisions for retirement before normal retirement age &#10;10.34   contained in section  354.44, subdivision 6, clause (3) or (5), shall also apply to an &#10;10.35   employee fulfilling the requirements with a combination of service as provided in section  &#10;10.36   354.60. &#10;11.1    (e) The augmentation provided by this subdivision applies to the benefit provided &#10;11.2    in section  354.46, subdivision 2. &#10;11.3    (f) The augmentation provided by this subdivision shall not apply to any period in &#10;11.4    which a person is on an approved leave of absence from an employer unit covered by the &#10;11.5    provisions of this chapter.&#10;11.6    (g) The retirement annuity or disability benefit of, or the survivor benefit payable on &#10;11.7    behalf of, a former teacher who terminated service before July 1, 1997, which is not first &#10;11.8    payable until after June 30, 1997, must be increased on an actuarial equivalent basis to &#10;11.9    reflect the change in the postretirement interest rate actuarial assumption under section  &#10;11.10   356.215, subdivision 8, from five percent to six percent under a calculation procedure and &#10;11.11   tables adopted by the board as recommended by an approved actuary and approved by the &#10;11.12   actuary retained by the Legislative Commission on Pensions and Retirement. &#10;&#10;<a id="go.2.8.0"></a>11.13       Sec. 8. Minnesota Statutes 2004, section 354A.31, subdivision 7, is amended to read:&#10;11.14       Subd. 7. <b>Actuarial reduction for early retirement.</b> This subdivision applies to &#10;11.15   a person who has become at least 55 years old and first becomes a coordinated member &#10;11.16   after June 30, 1989, and to any other coordinated member who has become at least 55 &#10;11.17   years old and whose annuity is higher when calculated using the retirement annuity &#10;11.18   formula percentage in subdivision 4, paragraph (d), and subdivision 4a, paragraph (d), in &#10;11.19   conjunction with this subdivision than when calculated under subdivision 4, paragraph &#10;11.20   (c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6. A coordinated &#10;11.21   member who retires before the full benefit age shall be paid the retirement annuity &#10;11.22   calculated using the retirement annuity formula percentage in subdivision 4, paragraph &#10;11.23   (d), or subdivision 4a, paragraph (d), reduced so that the reduced annuity is the actuarial &#10;11.24   equivalent of the annuity that would be payable to the member if the member deferred &#10;11.25   receipt of the annuity and the annuity amount were augmented at an annual rate of three &#10;11.26   percent compounded annually from the day the annuity begins to accrue until the normal &#10;11.27   retirement age<ins> if the employee became an employee before July 1, 2006, and at 2.5 </ins>&#10;11.28   <ins>percent compounded annually from the day the annuity begins to accrue until the normal </ins>&#10;11.29   <ins>retirement age if the person initially becomes a teacher after June 30, 2006</ins>.&#10;&#10;<a id="go.2.9.0"></a>11.30       Sec. 9. Minnesota Statutes 2004, section 354A.37, subdivision 2, is amended to read:&#10;11.31       Subd. 2. <b>Eligibility for deferred retirement annuity.</b> Any coordinated member &#10;11.32   who ceases to render teaching services for the school district in which the teachers &#10;11.33   retirement fund association is located, with sufficient allowable service credit to meet &#10;11.34   the minimum service requirements specified in section  354A.31, subdivision 1, shall be &#10;12.1    entitled to a deferred retirement annuity in lieu of a refund pursuant to subdivision 1. The &#10;12.2    deferred retirement annuity shall be computed pursuant to section  354A.31 and shall be &#10;12.3    augmented as provided in this subdivision. The deferred annuity shall commence upon &#10;12.4    application after the person on deferred status attains at least the minimum age specified in &#10;12.5    section  354A.31, subdivision 1. &#10;12.6    The monthly annuity amount that had accrued when the member ceased to render &#10;12.7    teaching service must be augmented from the first day of the month following the month &#10;12.8    during which the member ceased to render teaching service to the effective date of &#10;12.9    retirement. There is no augmentation if this period is less than three months. The rate of &#10;12.10   augmentation is three percent compounded annually until January 1 of the year following &#10;12.11   the year in which the former member attains age 55, and five percent compounded &#10;12.12   annually after that date to the effective date of retirement<ins> if the employee became an </ins>&#10;12.13   <ins>employee before July 1, 2006, and at 2.5 percent compounded annually if the employee </ins>&#10;12.14   <ins>becomes an employee after June 30, 2006</ins>. If a person has more than one period of &#10;12.15   uninterrupted service, a separate average salary determined under section  354A.31 must &#10;12.16   be used for each period, and the monthly annuity amount related to each period must be &#10;12.17   augmented as provided in this subdivision. The sum of the augmented monthly annuity &#10;12.18   amounts determines the total deferred annuity payable. If a person repays a refund, the &#10;12.19   service restored by the repayment must be considered as continuous with the next period &#10;12.20   of service for which the person has credit with the fund. If a person does not render &#10;12.21   teaching services in any one fiscal year or more consecutive fiscal years and then resumes &#10;12.22   teaching service, the formula percentages used from the date of resumption of teaching &#10;12.23   service are those applicable to new members. The mortality table and interest assumption &#10;12.24   used to compute the annuity are the table established by the fund to compute other &#10;12.25   annuities, and the interest assumption under section  356.215 in effect when the member &#10;12.26   retires. A period of uninterrupted service for the purpose of this subdivision means a &#10;12.27   period of covered teaching service during which the member has not been separated from &#10;12.28   active service for more than one fiscal year. &#10;12.29   The augmentation provided by this subdivision applies to the benefit provided in &#10;12.30   section  354A.35, subdivision 2. The augmentation provided by this subdivision does &#10;12.31   not apply to any period in which a person is on an approved leave of absence from an &#10;12.32   employer unit. &#10;&#10;<a id="go.2.10.0"></a>12.33       Sec. 10. Minnesota Statutes 2004, section 356.30, subdivision 1, is amended to read:&#10;12.34       Subdivision 1. <b>Eligibility; computation of annuity.</b> (a) Notwithstanding any &#10;12.35   provisions of the laws governing the retirement plans enumerated in subdivision 3, a &#10;13.1    person who has met the qualifications of paragraph (b) may elect to receive a retirement &#10;13.2    annuity from each enumerated retirement plan in which the person has at least one-half &#10;13.3    year of allowable service, based on the allowable service in each plan, subject to the &#10;13.4    provisions of paragraph (c).&#10;13.5    (b) A person may receive, upon retirement, a retirement annuity from each &#10;13.6    enumerated retirement plan in which the person has at least one-half year of allowable &#10;13.7    service, and augmentation of a deferred annuity calculated <ins>at the appropriate rate </ins>under &#10;13.8    the laws governing each public pension plan or fund named in subdivision 3, <ins>based on </ins>&#10;13.9    <ins>the date of the person's initial entry into public employment </ins>from the date the person &#10;13.10   terminated all public service if:&#10;13.11   (1) the person has allowable service totaling an amount that allows the person to &#10;13.12   receive an annuity in any two or more of the enumerated plans; and&#10;13.13   (2) the person has not begun to receive an annuity from any enumerated plan or the &#10;13.14   person has made application for benefits from each applicable plan and the effective &#10;13.15   dates of the retirement annuity with each plan under which the person chooses to receive &#10;13.16   an annuity are within a one-year period.&#10;13.17   (c) The retirement annuity from each plan must be based upon the allowable service, &#10;13.18   accrual rates, and average salary in the applicable plan except as further specified or &#10;13.19   modified in the following clauses:&#10;13.20   (1) the laws governing annuities must be the law in effect on the date of termination &#10;13.21   from the last period of public service under a covered retirement plan with which the &#10;13.22   person earned a minimum of one-half year of allowable service credit during that &#10;13.23   employment;&#10;13.24   (2) the "average salary" on which the annuity from each covered plan in which &#10;13.25   the employee has credit in a formula plan must be based on the employee's highest five &#10;13.26   successive years of covered salary during the entire service in covered plans;&#10;13.27   (3) the accrual rates to be used by each plan must be those percentages prescribed by &#10;13.28   each plan's formula as continued for the respective years of allowable service from one &#10;13.29   plan to the next, recognizing all previous allowable service with the other covered plans;&#10;13.30   (4) the allowable service in all the plans must be combined in determining eligibility &#10;13.31   for and the application of each plan's provisions in respect to reduction in the annuity &#10;13.32   amount for retirement prior to normal retirement age; and&#10;13.33   (5) the annuity amount payable for any allowable service under a nonformula plan &#10;13.34   of a covered plan must not be affected, but such service and covered salary must be used &#10;13.35   in the above calculation.&#10;14.1    (d) This section does not apply to any person whose final termination from the last &#10;14.2    public service under a covered plan was before May 1, 1975.&#10;14.3    (e) For the purpose of computing annuities under this section, the accrual rates &#10;14.4    used by any covered plan, except the public employees police and fire plan, the judges' &#10;14.5    retirement fund, and the State Patrol retirement plan, must not exceed the percent specified &#10;14.6    in section  356.315, subdivision 4, per year of service for any year of service or fraction &#10;14.7    thereof. The formula percentage used by the judges' retirement fund must not exceed the &#10;14.8    percentage rate specified in section  356.315, subdivision 8, per year of service for any &#10;14.9    year of service or fraction thereof. The accrual rate used by the public employees police &#10;14.10   and fire plan and the State Patrol retirement plan must not exceed the percentage rate &#10;14.11   specified in section  356.315, subdivision 6, per year of service for any year of service or &#10;14.12   fraction thereof. The accrual rate or rates used by the legislators retirement plan and the &#10;14.13   elective state officers retirement plan must not exceed 2.5 percent, but this limit does not &#10;14.14   apply to the adjustment provided under section  3A.02, subdivision 1, paragraph (c), or  &#10;14.15   352C.031, paragraph (b). &#10;14.16   (f) Any period of time for which a person has credit in more than one of the covered &#10;14.17   plans must be used only once for the purpose of determining total allowable service.&#10;14.18   (g) If the period of duplicated service credit is more than one-half year, or the person &#10;14.19   has credit for more than one-half year, with each of the plans, each plan must apply its &#10;14.20   formula to a prorated service credit for the period of duplicated service based on a fraction &#10;14.21   of the salary on which deductions were paid to that fund for the period divided by the total &#10;14.22   salary on which deductions were paid to all plans for the period.&#10;14.23   (h) If the period of duplicated service credit is less than one-half year, or when &#10;14.24   added to other service credit with that plan is less than one-half year, the service credit &#10;14.25   must be ignored and a refund of contributions made to the person in accord with that &#10;14.26   plan's refund provisions.&#10;&#10;<a id="go.2.11.0"></a>14.27       Sec. 11. <ins><b>EFFECTIVE DATE.</b></ins>&#10;14.28   <ins>Sections 1 to 10 are effective July 1, 2006.</ins>&#10;&#10;<a id="go.3.0.0"></a>14.29                                          <b>ARTICLE 3</b>&#10;14.30                               <b>TEACHERS RETIREMENT ASSOCIATION</b>&#10;14.31                             <b> COVERAGE AND BENEFIT RESTRUCTURING</b>&#10;&#10;<a id="go.3.1.0"></a>14.32       Section 1. Minnesota Statutes 2004, section 127A.50, subdivision 1, is amended to &#10;14.33   read:&#10;15.1        Subdivision 1. <b>Aid adjustment.</b> Beginning in fiscal year 1998 and each year &#10;15.2    thereafter, the commissioner of education shall adjust state aid payments to school &#10;15.3    operating funds for Independent School District No. 625<del>,</del><ins> and</ins> Independent School District &#10;15.4    No. 709<del>, and Special School District No. 1</del> by the net amount of clauses (1) and (2)<ins>, </ins>&#10;15.5    <ins>for Special School District No. 1 by the net amount of clauses (1), (2), and (4),</ins> and for &#10;15.6    all other districts, including charter schools, but excluding any education organizations &#10;15.7    that are prohibited from receiving direct state aids under section  123A.26 or  125A.75, &#10;15.8    subdivision 7, by the net amount of clauses (1), (2), <del>and</del> (3)<ins>, and (4)</ins>: &#10;15.9    (1) a decrease equal to each district's share of the fiscal year 1997 adjustment &#10;15.10   effected under Minnesota Statutes 1996, section  124.2139; &#10;15.11   (2) an increase equal to one percent of the salaries paid to members of the general &#10;15.12   plan of the Public Employees Retirement Association in fiscal year 1997, multiplied by &#10;15.13   0.35 for fiscal year 1998 and 0.70 each year thereafter;&#10;15.14   (3) a decrease equal to  2.34 percent of the salaries paid to members of the Teachers &#10;15.15   Retirement Association in fiscal year 1997<del>.</del><ins>; and</ins> &#10;15.16   <ins>(4) an increase equal to 0.5 percent of the salaries paid to members of the Teachers </ins>&#10;15.17   <ins>Retirement Association in fiscal year 2007. </ins>&#10;15.18   <ins><b>EFFECTIVE DATE.</b></ins><ins>This section is effective for revenue for fiscal year 2008.</ins>&#10;&#10;<a id="go.3.2.0"></a>15.19       Sec. 2. Minnesota Statutes 2004, section 128D.10, is amended to read:&#10;15.20   <b>128D.10 CONTINUITY ON TENURE, PENSIONS, AND RETIREMENT.</b>&#10;15.21   (a) The tenure, pension, and retirement provisions of any law applicable to &#10;15.22   employees of the special school district of Minneapolis<del>, including employees belonging </del>&#10;15.23   <del>to the municipal employees retirement fund and those belonging to the Minneapolis </del>&#10;15.24   <del>Teachers' Retirement Fund Association</del> <ins>before April 24, 1959, </ins>shall continue to be &#10;15.25   applicable in the same manner and to the same extent to employees of the special &#10;15.26   independent school district<ins> after April 24, 1959, except as otherwise provided in law</ins>.&#10;15.27   (b) The provisions of any general law or laws which are applicable only to &#10;15.28   independent school districts wholly or partially within cities of the first class shall not be &#10;15.29   applicable to the special independent school district of Minneapolis.&#10;15.30   <del>(c) The powers, duties, and corporate structure of the Minneapolis Teachers' </del>&#10;15.31   <del>Retirement Fund Association, and the laws applicable thereto, shall be and remain the </del>&#10;15.32   <del>same in the special independent school district of Minneapolis as at the time of enactment </del>&#10;15.33   <del>of the within law, until changed in accordance with law.</del>&#10;&#10;<a id="go.3.3.0"></a>16.1        Sec. 3. <ins><b>[128D.19] AID REDEDICATION.</b></ins>&#10;16.2    <ins>Notwithstanding any law to the contrary and subject to section 354A.12, subdivision </ins>&#10;16.3    <ins>3c, special direct state aid previously paid to the Minneapolis Teachers Retirement Fund </ins>&#10;16.4    <ins>Association under sections 354A.12, subdivisions 3a and 3b, and 423A.02, must be paid </ins>&#10;16.5    <ins>to the Teachers Retirement Association.</ins>&#10;&#10;<a id="go.3.4.0"></a>16.6        Sec. 4. Minnesota Statutes 2004, section 354.05, subdivision 2, is amended to read:&#10;16.7        Subd. 2. <b>Teacher.</b> (a) "Teacher" means:&#10;16.8    (1) a person who renders service as a teacher, supervisor, principal, superintendent, &#10;16.9    librarian, nurse, counselor, social worker, therapist, or psychologist in a public school of &#10;16.10   the state located outside of the corporate limits of <del>a city of the first class</del><ins> the city of Duluth </ins>&#10;16.11   <ins>or the city of St. Paul</ins>, or in any charter school, irrespective of the location of the school, &#10;16.12   or in any charitable, penal, or correctional institutions of a governmental subdivision, or &#10;16.13   who is engaged in educational administration in connection with the state public school &#10;16.14   system, but excluding the University of Minnesota, whether the position be a public office &#10;16.15   or an employment, and not including the members or officers of any general governing or &#10;16.16   managing board or body;&#10;16.17   (2) an employee of the Teachers Retirement Association;&#10;16.18   (3) a person who renders teaching service on a part-time basis and who also renders &#10;16.19   other services for a single employing unit. A person whose teaching service comprises at &#10;16.20   least 50 percent of the combined employment salary is a member of the association for all &#10;16.21   services with the single employing unit. If the person's teaching service comprises less &#10;16.22   than 50 percent of the combined employment salary, the executive director must determine &#10;16.23   whether all or none of the combined service is covered by the association; or&#10;16.24   (4) a person who is not covered by the plans established under chapter 352D, 354A, &#10;16.25   or 354B and who is employed by the Board of Trustees of the Minnesota State Colleges &#10;16.26   and Universities system in an unclassified position as:&#10;16.27   (i) a president, vice-president, or dean;&#10;16.28   (ii) a manager or a professional in an academic or an academic support program &#10;16.29   other than specified in item (i);&#10;16.30   (iii) an administrative or a service support faculty position; or&#10;16.31   (iv) a teacher or a research assistant.&#10;16.32   (b) "Teacher" does not mean:&#10;16.33   (1) a person who works for a school or institution as an independent contractor as &#10;16.34   defined by the Internal Revenue Service;&#10;17.1    (2) a person who renders part-time teaching service or who is a customized trainer &#10;17.2    as defined by the Minnesota State Colleges and Universities system if (i) the service is &#10;17.3    incidental to the regular nonteaching occupation of the person; and (ii) the employer &#10;17.4    stipulates annually in advance that the part-time teaching service or customized training &#10;17.5    service will not exceed 300 hours in a fiscal year and retains the stipulation in its records; &#10;17.6    and (iii) the part-time teaching service or customized training service actually does not &#10;17.7    exceed 300 hours in a fiscal year; or&#10;17.8    (3) a person exempt from licensure under section  122A.30. &#10;&#10;<a id="go.3.5.0"></a>17.9        Sec. 5. Minnesota Statutes 2004, section 354.05, subdivision 13, is amended to read:&#10;17.10       Subd. 13. <b>Allowable service.</b> "Allowable service" means:&#10;17.11   (1) Any service rendered by a teacher for which on or before July 1, 1957, the &#10;17.12   teacher's account in the retirement fund was credited by reason of employee contributions &#10;17.13   in the form of salary deductions, payments in lieu of salary deductions, or in any other &#10;17.14   manner authorized by Minnesota Statutes 1953, sections  135.01 to  135.13, as amended by &#10;17.15   Laws 1955, chapters 361, 549, 550, 611, or &#10;17.16   (2) Any service rendered by a teacher for which on or before July 1, 1961, the &#10;17.17   teacher elected to obtain credit for service by making payments to the fund pursuant to &#10;17.18   Minnesota Statutes 1980, section  354.09 and section  354.51, or &#10;17.19   (3) Any service rendered by a teacher after July 1, 1957, for any calendar month &#10;17.20   when the member receives salary from which deductions are made, deposited and credited &#10;17.21   in the fund, or&#10;17.22   (4) Any service rendered by a person after July 1, 1957, for any calendar month &#10;17.23   where payments in lieu of salary deductions are made, deposited and credited into the &#10;17.24   fund as provided in Minnesota Statutes 1980, section  354.09, subdivision 4, and section  &#10;17.25   354.53, or &#10;17.26   (5) Any service rendered by a teacher for which the teacher elected to obtain &#10;17.27   credit for service by making payments to the fund pursuant to Minnesota Statutes 1980, &#10;17.28   section  354.09, subdivisions 1 and 4, sections  354.50,  354.51, Minnesota Statutes 1957, &#10;17.29   section  135.41, subdivision 4, Minnesota Statutes 1971, section  354.09, subdivision 2, or &#10;17.30   Minnesota Statutes, 1973 Supplement, section  354.09, subdivision 3, or &#10;17.31   (6) Both service during years of actual membership in the course of which &#10;17.32   contributions were currently made and service in years during which the teacher was not a &#10;17.33   member but for which the teacher later elected to obtain credit by making payments to the &#10;17.34   fund as permitted by any law then in effect, or&#10;18.1    (7) Any service rendered where contributions were made and no allowable service &#10;18.2    credit was established because of the limitations contained in Minnesota Statutes 1957, &#10;18.3    section  135.09, subdivision 2, as determined by the ratio between the amounts of money &#10;18.4    credited to the teacher's account in a fiscal year and the maximum retirement contribution &#10;18.5    allowable for that year, or &#10;18.6    (8) MS 2002 (Expired)&#10;18.7    (9) A period of time during which a teacher who is a state employee was on strike &#10;18.8    without pay, not to exceed a period of one year, if the teacher makes a payment in lieu of &#10;18.9    salary deductions or makes a prior service credit purchase payment, whichever applies. If &#10;18.10   the payment is made within 12 months, the payment by the teacher must be an amount &#10;18.11   equal to the employee and employer contribution rates set forth in section  354.42, &#10;18.12   subdivisions 2 and 3, applied to the teacher's rate of salary in effect on the conclusion of &#10;18.13   the strike for the period of the strike without pay, plus compound interest at a monthly rate &#10;18.14   of 0.71 percent from the last day of the strike until the date of payment. If the payment by &#10;18.15   the employee is not made within 12 months, the payment must be in an amount equal to &#10;18.16   the payment amount determined under section  356.55 or  356.551, whichever applies<ins>, or</ins>&#10;18.17   <ins>(10) A period of service before July 1, 2006, that was properly credited as allowable </ins>&#10;18.18   <ins>service by the Minneapolis Teachers Retirement Fund Association, and that was rendered </ins>&#10;18.19   <ins>by a teacher as an employee of Special School District No. 1, Minneapolis, or by an </ins>&#10;18.20   <ins>employee of the Minneapolis Teachers Retirement Fund Association who was a member </ins>&#10;18.21   <ins>of the Minneapolis Teachers Retirement Fund Association by virtue of that employment, </ins>&#10;18.22   <ins>who has not begun receiving an annuity or other retirement benefit from the former </ins>&#10;18.23   <ins>Minneapolis Teachers Retirement Fund Association calculated in whole or in part on that </ins>&#10;18.24   <ins>service before July 1, 2006, and who has not taken a refund of member contributions </ins>&#10;18.25   <ins>related to that service unless the refund is repaid under section 354.50, subdivision 4</ins>. &#10;18.26   <ins>Service as an employee of Special School District No. 1, Minneapolis on or after July 1, </ins>&#10;18.27   <ins>2006 is "allowable service" only as provided by this chapter.</ins> &#10;&#10;<a id="go.3.6.0"></a>18.28       Sec. 6. Minnesota Statutes 2004, section 354.42, subdivision 2, is amended to read:&#10;18.29       Subd. 2. <b>Employee.</b> <ins>(a) </ins>The employee contribution to the fund is an amount equal &#10;18.30   to<del> 5.0</del><ins> the following percentage of the salary of a member:</ins>&#10;18.31   <ins>(1) after July 1, 2006, for a teacher employed by Special School District No. 1, </ins>&#10;18.32   <ins>Minneapolis, 5.5 percent if the teacher is a coordinated member, and 9.0 percent if the </ins>&#10;18.33   <ins>teacher is a basic member;</ins>&#10;19.1    <ins>(2) for every other teacher, after July 1, 2006, 5.5</ins> percent <del>of</del><ins> if</ins> the <del>salary of every</del><ins> </ins>&#10;19.2    <ins>teacher is a</ins> coordinated member and 9.0 percent <del>of</del><ins> if</ins> the <del>salary of every</del><ins> teacher is a</ins> &#10;19.3    basic member.&#10;19.4    <ins>(b)</ins> This contribution must be made by deduction from salary. Where any portion &#10;19.5    of a member's salary is paid from other than public funds, the member's employee &#10;19.6    contribution must be based on the entire salary received.&#10;&#10;<a id="go.3.7.0"></a>19.7        Sec. 7. Minnesota Statutes 2004, section 354.42, subdivision 3, is amended to read:&#10;19.8        Subd. 3. <b>Employer.</b> <ins>(a) The regular employer contribution to the fund by Special </ins>&#10;19.9    <ins>School District No. 1, Minneapolis, after July 1, 2006, and before July 1, 2007, is an </ins>&#10;19.10   <ins>amount equal to 5.00 percent of the salary of each of its teachers who is a coordinated </ins>&#10;19.11   <ins>member and 9.00 percent of the salary of each of its teachers who is a basic member. After </ins>&#10;19.12   <ins>July 1, 2007, the regular employer contribution to the fund by Special School District No. </ins>&#10;19.13   <ins>1, Minneapolis, is an amount equal to 5.50 percent of salary of each coordinated member </ins>&#10;19.14   <ins>and 9.50 percent of salary of each basic member. The additional employer contribution to </ins>&#10;19.15   <ins>the fund by Special School District No. 1, Minneapolis, after July 1, 2006, is an amount </ins>&#10;19.16   <ins>equal to 3.64 percent of the salary of each teacher who is a coordinated member or is a </ins>&#10;19.17   <ins>basic member.</ins>&#10;19.18   <ins>(b) </ins>The employer contribution to the fund <ins>for every other employer, </ins>is an amount &#10;19.19   equal to 5.0 percent of the salary of each coordinated member and 9.0 percent of the salary &#10;19.20   of each basic member<ins> before July 1, 2007, and 5.5 percent of the salary of each coordinated </ins>&#10;19.21   <ins>member and 9.5 percent of the salary of each basic member after June 30, 2007</ins>.&#10;&#10;<a id="go.3.8.0"></a>19.22       Sec. 8. Minnesota Statutes 2005 Supplement, section 354.44, subdivision 6, is &#10;19.23   amended to read:&#10;19.24       Subd. 6. <b>Computation of formula program retirement annuity.</b> (a) The formula &#10;19.25   retirement annuity must be computed in accordance with the applicable provisions of the &#10;19.26   formulas stated in paragraph (b) or (d) on the basis of each member's average salary under &#10;19.27   section 354.05, subdivision 13a, for the period of the member's formula service credit.&#10;19.28   (b) This paragraph, in conjunction with paragraph (c), applies to a person who first &#10;19.29   became a member of the association or a member of a pension fund listed in section &#10;19.30   356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with &#10;19.31   paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The &#10;19.32   average salary as defined in section 354.05, subdivision 13a, multiplied by the following &#10;19.33   percentages per year of formula service credit shall determine the amount of the annuity to &#10;19.34   which the member qualifying therefor is entitled<ins> for service rendered before July 1, 2006</ins>:&#10;<rs_table>20.1                                   Coordinated Member        Basic Member      &#10;20.2                                                             the percent       &#10;20.3                                                             specified in      &#10;20.4                                   the percent specified     section 356.315,  &#10;20.5       Each year of service        in section 356.315,       subdivision 3, per &#10;20.6       during first ten            subdivision 1, per year   year              &#10;20.7                                                             the percent       &#10;20.8                                                             specified in      &#10;20.9                                   the percent specified     section 356.315,  &#10;20.10      Each year of service        in section 356.315,       subdivision 4, per &#10;20.11      thereafter                  subdivision 2, per year   year              &#10;</rs_table>20.12   <ins>For service rendered on or after July 1, 2006, the average salary as defined in section </ins>&#10;20.13   <ins>354.05, subdivision 13a, multiplied by the following percentages per year of service </ins>&#10;20.14   <ins>credit, determines the amount the annuity to which the member qualifying therefor is:</ins>&#10;<rs_table>20.15                                  <ins>Coordinated Member</ins>        <ins>Basic Member</ins>      &#10;20.16                                                            <ins>the percent </ins>      &#10;20.17                                                            <ins>specified in </ins>     &#10;20.18                                  <ins>the percent specified </ins>    <ins>section 356.315, </ins> &#10;20.19      <ins>Each year of service </ins>       <ins>in section 356.315, </ins>      <ins>subdivision 3, per </ins>&#10;20.20      <ins>during first ten</ins>            <ins>subdivision 1a, per year</ins>  <ins>year</ins>              &#10;20.21                                                            <ins>the percent </ins>      &#10;20.22                                                            <ins>specified in </ins>     &#10;20.23                                  <ins>the percent specified </ins>    <ins>section 356.315, </ins> &#10;20.24      <ins>Each year of service after </ins>   <ins>in section 356.315, </ins>      <ins>subdivision 4, per </ins>&#10;20.25      <ins>ten years of service</ins>        <ins>subdivision 2b, per year</ins>  <ins>year</ins>              &#10;</rs_table>20.26   (c)(i) This paragraph applies only to a person who first became a member of the &#10;20.27   association or a member of a pension fund listed in section 356.30, subdivision 3, before &#10;20.28   July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in &#10;20.29   conjunction with this paragraph than when calculated under paragraph (d), in conjunction &#10;20.30   with paragraph (e).&#10;20.31   (ii) Where any member retires prior to normal retirement age under a formula &#10;20.32   annuity, the member shall be paid a retirement annuity in an amount equal to the normal &#10;20.33   annuity provided in paragraph (b) reduced by one-quarter of one percent for each month &#10;21.1    that the member is under normal retirement age at the time of retirement except that for &#10;21.2    any member who has 30 or more years of allowable service credit, the reduction shall be &#10;21.3    applied only for each month that the member is under age 62.&#10;21.4    (iii) Any member whose attained age plus credited allowable service totals 90 years &#10;21.5    is entitled, upon application, to a retirement annuity in an amount equal to the normal &#10;21.6    annuity provided in paragraph (b), without any reduction by reason of early retirement.&#10;21.7    (d) This paragraph applies to a member who has become at least 55 years old and &#10;21.8    first became a member of the association after June 30, 1989, and to any other member &#10;21.9    who has become at least 55 years old and whose annuity amount when calculated under &#10;21.10   this paragraph and in conjunction with paragraph (e), is higher than it is when calculated &#10;21.11   under paragraph (b), in conjunction with paragraph (c). <ins>For a basic member, </ins>the average &#10;21.12   salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified &#10;21.13   by section 356.315, subdivision 4, for each year of service for a basic member <del>and by </del>&#10;21.14   <del>the percent specified in section </del><del>356.315, subdivision 2</del><del>, for each year of service for a </del>&#10;21.15   <del>coordinated member</del> shall determine the amount of the retirement annuity to which the &#10;21.16   <ins>basic </ins>member is entitled.<ins> The annuity of a basic member who was a member for the </ins>&#10;21.17   <ins>former Minneapolis Teachers Retirement Fund Association as of June 30, 2006, must </ins>&#10;21.18   <ins>be determined according to the annuity formula under the articles of incorporation of </ins>&#10;21.19   <ins>the former Minneapolis Teachers Retirement Fund Association in effect as of that date. </ins>&#10;21.20   <ins>For a coordinated member, the average salary, as defined in section 354.05, subdivision </ins>&#10;21.21   <ins>13a, multiplied by the percent specified in section 356.315, subdivision 2, for each year </ins>&#10;21.22   <ins>of service rendered before July 1, 2006, and by the percent specified in section 356.315, </ins>&#10;21.23   <ins>subdivision 2b, for each year of service rendered on or after July 1, 2006, determines the </ins>&#10;21.24   <ins>amount of the retirement annuity to which the coordinated member is entitled.</ins>&#10;21.25   (e) This paragraph applies to a person who has become at least 55 years old and first &#10;21.26   becomes a member of the association after June 30, 1989, and to any other member who &#10;21.27   has become at least 55 years old and whose annuity is higher when calculated under &#10;21.28   paragraph (d) in conjunction with this paragraph than when calculated under paragraph &#10;21.29   (b), in conjunction with paragraph (c). An employee who retires under the formula annuity &#10;21.30   before the normal retirement age shall be paid the normal annuity provided in paragraph &#10;21.31   (d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would &#10;21.32   be payable to the employee if the employee deferred receipt of the annuity and the annuity &#10;21.33   amount were augmented at an annual rate of three percent compounded annually from the &#10;21.34   day the annuity begins to accrue until the normal retirement age.&#10;21.35   (f) No retirement annuity is payable to a former employee with a salary that exceeds &#10;21.36   95 percent of the governor's salary unless and until the salary figures used in computing &#10;22.1    the highest five successive years average salary under paragraph (a) have been audited by &#10;22.2    the Teachers Retirement Association and determined by the executive director to comply &#10;22.3    with the requirements and limitations of section 354.05, subdivisions 35 and 35a.&#10;&#10;<a id="go.3.9.0"></a>22.4        Sec. 9. <ins><b>[354.70] CONSOLIDATION OF MINNEAPOLIS TEACHERS </b></ins>&#10;22.5    <ins><b>RETIREMENT FUND ASSOCIATION.</b></ins>&#10;22.6        <ins>Subdivision 1.</ins> <ins><b>Membership transfer.</b></ins> <ins>All active, inactive, and retired members of </ins>&#10;22.7    <ins>the Minneapolis Teachers Retirement Fund Association are transferred to the Teachers </ins>&#10;22.8    <ins>Retirement Association and are no longer members of the Minneapolis Teachers </ins>&#10;22.9    <ins>Retirement Fund Association as of July 1, 2006.</ins>&#10;22.10       <ins>Subd. 2.</ins> <ins><b>TRA membership.</b></ins> <ins>A person first hired as a teacher by Special School </ins>&#10;22.11   <ins>District No. 1, Minneapolis, after June 30, 2006, and who is a teacher as defined in </ins>&#10;22.12   <ins>section 354.05, subdivision 2, is a member of the Teachers Retirement Association for the </ins>&#10;22.13   <ins>person's teaching service.</ins>&#10;22.14       <ins>Subd. 3.</ins> <ins><b>Service credit and liability transfer.</b></ins> <ins>All allowable service and salary </ins>&#10;22.15   <ins>credit of the members and other individuals transferred under subdivision 1 as specified in </ins>&#10;22.16   <ins>the records of the Minneapolis Teachers Retirement Fund Association on the transfer date </ins>&#10;22.17   <ins>is allowable service credit under section 354.05, subdivision 13, formula service credit </ins>&#10;22.18   <ins>under section 354.05, subdivision 25, and salary credit under section 354.05, subdivision </ins>&#10;22.19   <ins>35, for the Teachers Retirement Association.</ins>&#10;22.20       <ins>Subd. 4.</ins> <ins><b>Transfer of records.</b></ins> <ins>On or before June 30, 2006, the chief administrative </ins>&#10;22.21   <ins>officer of the Minneapolis Teachers Retirement Fund Association shall transfer all </ins>&#10;22.22   <ins>records and documents relating to the funds and the benefit plans of the association to the </ins>&#10;22.23   <ins>executive director of the Teachers Retirement Association. To the extent possible, original </ins>&#10;22.24   <ins>copies of all records and documents must be transferred.</ins>&#10;22.25       <ins>Subd. 5.</ins> <ins><b>Transfer of assets.</b></ins> <ins>(a) On or before June 30, 2006, the chief administrative </ins>&#10;22.26   <ins>officer of the Minneapolis Teachers Retirement Fund Association shall transfer to the </ins>&#10;22.27   <ins>Teachers Retirement Association the entire assets of the special retirement fund of the </ins>&#10;22.28   <ins>Minneapolis Teachers Retirement Fund Association. The transfer of the assets of the </ins>&#10;22.29   <ins>Minneapolis Teachers Retirement Fund Association special retirement fund must include </ins>&#10;22.30   <ins>any accounts receivable that are determined by the executive director of the State Board of </ins>&#10;22.31   <ins>Investment as reasonably capable of being collected. Legal title to account receivables that </ins>&#10;22.32   <ins>are determined by the executive director of the State Board of Investment as not reasonably </ins>&#10;22.33   <ins>capable of being collected transfers to Special School District No. 1, Minneapolis, as of </ins>&#10;22.34   <ins>the date of the determination of the executive director of the State Board of Investment. </ins>&#10;22.35   <ins>If the account receivables transferred to Special School District No. 1, Minneapolis, </ins>&#10;23.1    <ins>are subsequently recovered by the school district, the superintendent of Special School </ins>&#10;23.2    <ins>District No. 1, Minneapolis, shall transfer the recovered amount to the executive director </ins>&#10;23.3    <ins>of the Teachers Retirement Association, in cash, for deposit in the teachers retirement </ins>&#10;23.4    <ins>fund, less the reasonable expenses of the school district related to the recovery.</ins>&#10;23.5    <ins>(b) As of June 30, 2006, assets of the special retirement fund of the Minneapolis </ins>&#10;23.6    <ins>Teachers Retirement Fund Association are assets of the Teachers Retirement Association </ins>&#10;23.7    <ins>to be invested by the State Board of Investment pursuant to the provisions of section </ins>&#10;23.8    <ins>354.07, subdivision 4. The Teachers Retirement Association is the successor in interest to </ins>&#10;23.9    <ins>all claims which the Minneapolis Teachers Retirement Fund Association may have or may </ins>&#10;23.10   <ins>assert against any person and is the successor in interest to all claims which could have </ins>&#10;23.11   <ins>been asserted against the former Minneapolis Teachers Retirement Fund Association, </ins>&#10;23.12   <ins>subject to the following exceptions and qualifications: </ins>&#10;23.13   <ins>(1)  the Teachers Retirement Association is not liable for any claim against the </ins>&#10;23.14   <ins>Minneapolis Teachers Retirement Fund Association, its former board or board members, </ins>&#10;23.15   <ins>which is founded upon a claim of breach of fiduciary duty, where the act or acts </ins>&#10;23.16   <ins>constituting the claimed breach were not done in good faith;</ins>&#10;23.17   <ins> (2) the Teachers Retirement Association may assert any applicable defense to any </ins>&#10;23.18   <ins>claim in any judicial or administrative proceeding that the former Minneapolis Teachers </ins>&#10;23.19   <ins>Retirement Fund Association or its Board would otherwise have been entitled to assert; </ins>&#10;23.20   <ins>(3) the Teachers Retirement Association may assert any applicable defense that the </ins>&#10;23.21   <ins>Teachers Retirement Association may assert in its capacity as a statewide agency; and </ins>&#10;23.22   <ins>(4) the Teachers Retirement Association shall indemnify any former fiduciary of the </ins>&#10;23.23   <ins>Minneapolis Teachers Retirement Fund Association consistent with the provisions of the </ins>&#10;23.24   <ins>Public Pension Fiduciary Responsibility Act, in section 356A.11.</ins>&#10;23.25   <ins>(c) From the assets of the former Minneapolis Teachers Retirement Fund Association </ins>&#10;23.26   <ins>transferred to the Teachers Retirement Association, an amount equal to the percentage </ins>&#10;23.27   <ins>figure that represents the ratio between the market value of the Minnesota postretirement </ins>&#10;23.28   <ins>investment fund as of June 30, 2006, and the required reserves of the Minnesota post </ins>&#10;23.29   <ins>retirement investment fund as of June 30, 2006, applied to the present value of future </ins>&#10;23.30   <ins>benefits payable to annuitants of the former Minneapolis Teachers Retirement Fund </ins>&#10;23.31   <ins>Association as of June 30, 2006, including any postretirement adjustment from the </ins>&#10;23.32   <ins>Minnesota postretirement investment fund expected to be payable on January 1, 2007, </ins>&#10;23.33   <ins>must be transferred to the Minnesota postretirement investment fund. The executive </ins>&#10;23.34   <ins>director of the State Board of Investment shall estimate this ratio at the time of the </ins>&#10;23.35   <ins>transfer. By January 1, 2007, after all necessary financial information becomes available </ins>&#10;23.36   <ins>to determine the actual funded ratio of the Minnesota postretirement investment fund, the </ins>&#10;24.1    <ins>postretirement investment fund must refund to the Teachers Retirement Association any </ins>&#10;24.2    <ins>excess assets or the Teachers Retirement Association must contribute any deficiency </ins>&#10;24.3    <ins>to the Minnesota postretirement investment fund with interest under section 11A.18, </ins>&#10;24.4    <ins>subdivision 6. The balance of the assets of the former Minneapolis Teachers Retirement </ins>&#10;24.5    <ins>Fund Association after the transfer to the Minnesota postretirement investment fund must </ins>&#10;24.6    <ins>be credited to the Teachers Retirement Association.</ins>&#10;24.7    <ins>If the assets transferred by the Minneapolis Teachers Retirement Fund Association </ins>&#10;24.8    <ins>to the Teachers Retirement Association are insufficient to meet its obligation to the </ins>&#10;24.9    <ins>Minnesota postretirement investment fund, additional assets must be transferred by the </ins>&#10;24.10   <ins>executive director of the Teachers Retirement Association to meet the amount required.</ins>&#10;24.11       <ins>Subd. 6.</ins> <ins><b>Benefit calculation.</b></ins> <ins>(a) For every deferred, inactive, disabled, and retired </ins>&#10;24.12   <ins>member of the Minneapolis Teachers Retirement Fund Association transferred under </ins>&#10;24.13   <ins>subdivision 1, and the survivors of these members, annuities or benefits earned before </ins>&#10;24.14   <ins>the date of the transfer, other than future postretirement adjustments, must be calculated </ins>&#10;24.15   <ins>and paid by the Teachers Retirement Association under the laws, articles of incorporation, </ins>&#10;24.16   <ins>and bylaws of the former Minneapolis Teachers Retirement Fund Association that were </ins>&#10;24.17   <ins>in effect relative to the person on the date of the person's termination of active service </ins>&#10;24.18   <ins>covered by the former Minneapolis Teachers Retirement Fund Association.</ins>&#10;24.19   <ins>(b) Former Minneapolis Teachers Retirement Fund Association members who retired </ins>&#10;24.20   <ins>before July 1, 2006, must receive postretirement adjustments after December 31, 2006, </ins>&#10;24.21   <ins>only as provided in section 11A.18. All other benefit recipients of the former Minneapolis </ins>&#10;24.22   <ins>Teachers Retirement Fund Association must receive postretirement adjustments after </ins>&#10;24.23   <ins>December 31, 2006, only as provided in section 356.41.</ins>&#10;24.24   <ins>(c) This consolidation does not impair or diminish benefits for an active, deferred, </ins>&#10;24.25   <ins>or retired member or a survivor of an active, deferred, or retired member under the </ins>&#10;24.26   <ins>former Minneapolis Teachers Retirement Fund Association in existence at the time of the </ins>&#10;24.27   <ins>consolidation, except that any future guaranteed or investment-related postretirement </ins>&#10;24.28   <ins>adjustments must be paid after July 1, 2006, in accordance with paragraph (b), and all </ins>&#10;24.29   <ins>benefits based on service on or after July 1, 2006 must be determined only by laws </ins>&#10;24.30   <ins>governing the Teachers Retirement Association.</ins>&#10;24.31       <ins>Subd. 7.</ins> <ins><b>Termination of Minneapolis Teachers Retirement Fund Association </b></ins>&#10;24.32   <ins><b>special retirement fund.</b></ins> <ins>(a) As of June 30, 2006, the Minneapolis Teachers Retirement </ins>&#10;24.33   <ins>Fund Association ceases to exist.</ins>&#10;24.34   <ins>(b) Contracts, records, and obligations of the Minneapolis Teachers Retirement Fund </ins>&#10;24.35   <ins>Association special retirement fund existing at the time of consolidation with the Teachers </ins>&#10;24.36   <ins>Retirement Association are transferred to the Teachers Retirement Association pursuant to </ins>&#10;25.1    <ins>the provisions of section 15.039, subdivisions 5 and 5a, except that contracts, records, and </ins>&#10;25.2    <ins>obligations of the Minneapolis Teachers Retirement Fund Association special retirement </ins>&#10;25.3    <ins>fund related to investment and safekeeping of assets are transferred to the State Board </ins>&#10;25.4    <ins>of Investment pursuant to the provisions of section 15.039, subdivisions 5 and 5a. The </ins>&#10;25.5    <ins>State Board of Investment has the authority to pay the investment-related liabilities and </ins>&#10;25.6    <ins>obligations from the assets transferred from the Minnesota Teachers Retirement Fund </ins>&#10;25.7    <ins>Association incurred by the Teachers Retirement Association. The audit or examination of </ins>&#10;25.8    <ins>the Minneapolis Teachers Retirement Fund Association for year-end June 30, 2006 must </ins>&#10;25.9    <ins>be performed by either the State Auditor or the Legislative Auditor under an agreement </ins>&#10;25.10   <ins>with the Teachers Retirement Association. The costs of the audit or examination must </ins>&#10;25.11   <ins>be paid by the Teachers Retirement Association. Between the date of enactment of this </ins>&#10;25.12   <ins>section and June 30, 2006, the Minneapolis Teachers Retirement Fund Association cannot </ins>&#10;25.13   <ins>incur a new or additional enforceable contractual liability or obligation without approval </ins>&#10;25.14   <ins>of the Teachers Retirement Association.</ins>&#10;&#10;<a id="go.3.10.0"></a>25.15       Sec. 10. <ins><b>[354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND STATE </b></ins>&#10;25.16   <ins><b>AID REDEDICATED.</b></ins>&#10;25.17       <ins>Subdivision 1.</ins> <ins><b>Appropriation.</b></ins> <ins>The positive difference, if any, between the actual </ins>&#10;25.18   <ins>state aid paid to the Minneapolis Employees Retirement fund under section 422A.101, </ins>&#10;25.19   <ins>subdivision 3, and $8,065,000 annually is appropriated from the general fund to the </ins>&#10;25.20   <ins>commissioner of finance for deposit in the Teachers Retirement Association to offset all or </ins>&#10;25.21   <ins>a portion of the current and future unfunded actuarial accrued liability of the Minneapolis </ins>&#10;25.22   <ins>Teachers Retirement Fund Association.</ins>&#10;25.23       <ins>Subd. 2.</ins> <ins><b>Financial requirements.</b></ins> <ins>The appropriation in subdivision 1 is available </ins>&#10;25.24   <ins>to the extent that financial requirements of the Minneapolis Employees Retirement Fund </ins>&#10;25.25   <ins>under section 422A.101, subdivision 3, have been satisfied.</ins>&#10;&#10;<a id="go.3.11.0"></a>25.26       Sec. 11. Minnesota Statutes 2004, section 354A.011, subdivision 15a, is amended to &#10;25.27   read:&#10;25.28       Subd. 15a. <b>Normal retirement age.</b> "Normal retirement age" means age 65 for &#10;25.29   a person who first became a member of the coordinated program of the <del>Minneapolis or</del> &#10;25.30   St. Paul Teachers Retirement Fund Association or the new law coordinated program of &#10;25.31   the Duluth Teachers Retirement Fund Association or a member of a pension fund listed &#10;25.32   in section  356.30, subdivision 3, before July 1, 1989. For a person who first became a &#10;25.33   member of the coordinated program of the <del>Minneapolis or</del> St. Paul Teachers Retirement &#10;25.34   Fund Association or the new law coordinated program of the Duluth Teachers Retirement &#10;26.1    Fund Association after June 30, 1989, normal retirement age means the higher of age 65 &#10;26.2    or retirement age, as defined in United States Code, title 42, section 416(l), as amended, &#10;26.3    but not to exceed age 66. For a person who is a member of the basic program of the &#10;26.4    <del>Minneapolis or</del> St. Paul Teachers Retirement Fund Association or the old law coordinated &#10;26.5    program of the Duluth Teachers Retirement Fund Association, normal retirement age &#10;26.6    means the age at which a teacher becomes eligible for a normal retirement annuity &#10;26.7    computed upon meeting the age and service requirements specified in the applicable &#10;26.8    provisions of the articles of incorporation or bylaws of the respective teachers retirement &#10;26.9    fund association. &#10;&#10;<a id="go.3.12.0"></a>26.10       Sec. 12. Minnesota Statutes 2004, section 354A.011, subdivision 27, is amended to &#10;26.11   read:&#10;26.12       Subd. 27. <b>Teacher.</b> (a) "Teacher" means any person who renders service for a public &#10;26.13   school district, other than a charter school, located in the corporate limits of <del>one of</del> the &#10;26.14   <del>cities of the first class which was so classified on January 1, 1979</del><ins> Duluth and St. Paul</ins>, &#10;26.15   as any of the following:&#10;26.16   (1) a full-time employee in a position for which a valid license from the state &#10;26.17   Department of Education is required;&#10;26.18   (2) an employee of the teachers retirement fund association located in the city of &#10;26.19   the first class unless the employee has exercised the option pursuant to Laws 1955, &#10;26.20   chapter 10, section 1, to retain membership in the Minneapolis Employees Retirement &#10;26.21   Fund established pursuant to chapter 422A;&#10;26.22   (3) a part-time employee in a position for which a valid license from the state &#10;26.23   Department of Education is required; or&#10;26.24   (4) a part-time employee in a position for which a valid license from the state &#10;26.25   Department of Education is required who also renders other nonteaching services for the &#10;26.26   school district, unless the board of trustees of the teachers retirement fund association &#10;26.27   determines that the combined employment is on the whole so substantially dissimilar to &#10;26.28   teaching service that the service may not be covered by the association.&#10;26.29   (b) The term does not mean any person who renders service in the school district &#10;26.30   as any of the following:&#10;26.31   (1) an independent contractor or the employee of an independent contractor;&#10;26.32   (2) an employee who is a full-time teacher covered by the Teachers Retirement &#10;26.33   Association or by another teachers retirement fund association established pursuant to this &#10;26.34   chapter or chapter 354;&#10;26.35   (3) an employee exempt from licensure pursuant to section  122A.30; &#10;27.1    (4) an employee who is a teacher in a technical college located in a city of the first &#10;27.2    class unless the person elects coverage by the applicable first class city teacher retirement &#10;27.3    fund association under section  354B.21, subdivision 2; &#10;27.4    (5) a teacher employed by a charter school, irrespective of the location of the &#10;27.5    school; or&#10;27.6    (6) an employee who is a part-time teacher in a technical college in a city of the first &#10;27.7    class and who has elected coverage by the applicable first class city teacher retirement &#10;27.8    fund association under section  354B.21, subdivision 2, but (i) the teaching service is &#10;27.9    incidental to the regular nonteaching occupation of the person; (ii) the applicable technical &#10;27.10   college stipulates annually in advance that the part-time teaching service will not exceed &#10;27.11   300 hours in a fiscal year; and (iii) the part-time teaching actually does not exceed 300 &#10;27.12   hours in the fiscal year to which the certification applies. &#10;&#10;<a id="go.3.13.0"></a>27.13       Sec. 13. Minnesota Statutes 2004, section 354A.021, subdivision 1, is amended to read:&#10;27.14       Subdivision 1. <b>Establishment.</b> There is established a teachers retirement fund &#10;27.15   association in each of the cities of <del>the first class which were so classified on January 1, </del>&#10;27.16   <del>1979</del><ins> Duluth and St. Paul</ins>. The associations shall be known respectively as the "Duluth &#10;27.17   Teachers Retirement Fund Association<del>,</del>" <del>the "Minneapolis Teachers Retirement Fund </del>&#10;27.18   <del>Association"</del> and the "St. Paul Teachers Retirement Fund Association." Each association &#10;27.19   shall be a continuation of the teachers retirement fund association with the same corporate &#10;27.20   name established pursuant to the authorization contained in Laws 1909, chapter 343, &#10;27.21   section 1.&#10;&#10;<a id="go.3.14.0"></a>27.22       Sec. 14. Minnesota Statutes 2004, section 354A.092, is amended to read:&#10;27.23   <b>354A.092 SABBATICAL LEAVE.</b>&#10;27.24   Any teacher in the coordinated program of <del>either the Minneapolis Teachers </del>&#10;27.25   <del>Retirement Fund Association or</del> the St. Paul Teachers Retirement Fund Association or &#10;27.26   any teacher in the new law coordinated program of the Duluth Teachers Retirement &#10;27.27   Fund Association who is granted a sabbatical leave shall be entitled to receive allowable &#10;27.28   service credit in the applicable association for periods of sabbatical leave. To obtain the &#10;27.29   service credit, the teacher on sabbatical leave shall make an employee contribution to the &#10;27.30   applicable association. No teacher shall be entitled to receive more than three years of &#10;27.31   allowable service credit pursuant to this section for a period or periods of sabbatical &#10;27.32   leave during any ten consecutive fiscal or calendar years, whichever is the applicable &#10;27.33   plan year for the teachers retirement fund association. If the teacher granted a sabbatical &#10;27.34   leave makes the employee contribution for a period of sabbatical leave pursuant to this &#10;28.1    section, the employing unit shall make an employer contribution on behalf of the teacher &#10;28.2    to the applicable association for that period of sabbatical leave in the manner described &#10;28.3    in section  354A.12, subdivision 2a. The employee and employer contributions shall be &#10;28.4    in an amount equal to the employee and employer contribution rates in effect for other &#10;28.5    active members of the association covered by the same program applied to a salary figure &#10;28.6    equal to the teacher's actual covered salary for the plan year immediately preceding the &#10;28.7    sabbatical leave period. Payment of the employee contribution authorized pursuant to this &#10;28.8    section shall be made by the teacher on or before June 30 of year next following the year &#10;28.9    in which the sabbatical leave terminated and shall be made without interest. For sabbatical &#10;28.10   leaves taken after June 30, 1986, the required employer contributions shall be paid by the &#10;28.11   employing unit within 30 days after notification by the association of the amount due. &#10;28.12   If the employee contributions for the sabbatical leave period are less than an amount &#10;28.13   equal to the applicable contribution rate applied to a salary figure equal to the teacher's &#10;28.14   actual covered salary for the plan year immediately preceding the sabbatical leave period, &#10;28.15   service credit shall be prorated. The prorated service credit shall be determined by the &#10;28.16   ratio between the amount of the actual payment which was made and the full contribution &#10;28.17   amount payable pursuant to this section. &#10;&#10;<a id="go.3.15.0"></a>28.18       Sec. 15. Minnesota Statutes 2004, section 354A.093, subdivision 1, is amended to read:&#10;28.19       Subdivision 1. <b>Eligibility.</b> Any teacher in the coordinated program of <del>either the </del>&#10;28.20   <del>Minneapolis Teachers Retirement Fund Association or</del> the St. Paul Teachers Retirement &#10;28.21   Fund Association or any teacher in the new law coordinated program of the Duluth &#10;28.22   Teachers Retirement Fund Association who is absent from employment by reason of &#10;28.23   service in the uniformed services as defined in United States Code, title 38, section &#10;28.24   4303(13) and who returns to the employer providing active teaching service upon &#10;28.25   discharge from uniformed service within the time frames required under United States &#10;28.26   Code, title 38, section 4312(e), may receive allowable service credit in the applicable &#10;28.27   association for all or a portion of the period of uniformed service, provided that the teacher &#10;28.28   did not separate from uniformed service with a dishonorable or bad conduct discharge &#10;28.29   or under other than honorable conditions.&#10;&#10;<a id="go.3.16.0"></a>28.30       Sec. 16. Minnesota Statutes 2004, section 354A.095, is amended to read:&#10;28.31   <b>354A.095 PARENTAL AND MATERNITY LEAVE.</b>&#10;28.32   Basic or coordinated members of the St. Paul Teachers Retirement Fund &#10;28.33   Association<del>, the Minneapolis Teachers Retirement Fund Association,</del> and new coordinated &#10;28.34   members of the Duluth Teachers Retirement Fund Association, who are granted parental &#10;29.1    or maternity leave of absence by the employing authority, are entitled to obtain service &#10;29.2    credit not to exceed one year for the period of leave upon payment to the applicable &#10;29.3    fund by the end of the fiscal year following the fiscal year in which the leave of absence &#10;29.4    terminated. The amount of the payment must include the total required employee and &#10;29.5    employer contributions for the period of leave prescribed in section  354A.12. Payment &#10;29.6    must be based on the member's average monthly salary rate upon return to teaching &#10;29.7    service, and is payable without interest. Payment must be accompanied by a certified or &#10;29.8    otherwise adequate copy of the resolution or action of the employing authority granting &#10;29.9    or approving the leave. &#10;&#10;<a id="go.3.17.0"></a>29.10       Sec. 17. Minnesota Statutes 2004, section 354A.096, is amended to read:&#10;29.11   <b>354A.096 MEDICAL LEAVE.</b>&#10;29.12   Any teacher in the coordinated program of <del>either the Minneapolis Teachers </del>&#10;29.13   <del>Retirement Fund Association or</del> the St. Paul Teachers Retirement Fund Association or the &#10;29.14   new law coordinated program of the Duluth Teachers Retirement Fund Association who is &#10;29.15   on an authorized medical leave of absence and subsequently returns to teaching service &#10;29.16   is entitled to receive allowable service credit, not to exceed one year, for the period of &#10;29.17   leave, upon making the prescribed payment to the fund. This payment must include the &#10;29.18   required employee and employer contributions at the rates specified in section  354A.12, &#10;29.19   subdivisions 1 and 2, as applied to the member's average full-time monthly salary rate on &#10;29.20   the date the leave of absence commenced plus annual interest at the rate of 8.5 percent per &#10;29.21   year from the end of the fiscal year during which the leave terminates to the end of the &#10;29.22   month during which payment is made. The member must pay the total amount required &#10;29.23   unless the employing unit, at its option, pays the employer contributions. The total amount &#10;29.24   required must be paid by the end of the fiscal year following the fiscal year in which the &#10;29.25   leave of absence terminated or before the member retires, whichever is earlier. Payment &#10;29.26   must be accompanied by a copy of the resolution or action of the employing authority &#10;29.27   granting the leave and the employing authority, upon granting the leave, must certify &#10;29.28   the leave to the association in a manner specified by the executive director. A member &#10;29.29   may not receive more than one year of allowable service credit during any fiscal year by &#10;29.30   making payment under this section. A member may not receive disability benefits under &#10;29.31   section  354A.36 and receive allowable service credit under this section for the same &#10;29.32   period of time. &#10;&#10;<a id="go.3.18.0"></a>29.33       Sec. 18. Minnesota Statutes 2004, section 354A.12, subdivision 1, is amended to read:&#10;30.1        Subdivision 1. <b>Employee contributions.</b> The contribution required to be paid by &#10;30.2    each member of a teachers retirement fund association shall not be less than the percentage &#10;30.3    of total salary specified below for the applicable association and program:&#10;<rs_table>30.4            Association and Program                               Percentage of                                                                    &#10;30.5                                                                  Total Salary                                                                     &#10;30.6    Duluth Teachers Retirement Association                                                                                                         &#10;30.7                   old law and new law                                                                                                            &#10;30.8                   coordinated programs                           5.5 percent                                                                      &#10;30.9    <del>Minneapolis Teachers Retirement </del>                                                                                                               &#10;30.10   <del>Association</del>                                                                                                                                    &#10;30.11                  <del>basic program</del>                                  <del>8.5 percent</del>                                                                      &#10;30.12                  <del>coordinated program</del>                            <del>5.5 percent</del>                                                                      &#10;30.13   St. Paul Teachers Retirement Association                                                                                                       &#10;30.14                  basic program                                  8 percent                                                                        &#10;30.15                  coordinated program                            5.5 percent                                                                      &#10;</rs_table>30.16   Contributions shall be made by deduction from salary and must be remitted directly &#10;30.17   to the respective teachers retirement fund association at least once each month.&#10;&#10;<a id="go.3.19.0"></a>30.18       Sec. 19. Minnesota Statutes 2004, section 354A.12, subdivision 2, is amended to read:&#10;30.19       Subd. 2. <b>Retirement contribution levy disallowed.</b> Except as provided in &#10;30.20   <del>subdivision 3b and in section   </del><del>423A.02, subdivision 3</del><del>, with respect to the city of </del>&#10;30.21   <del>Minneapolis and special school district No. 1 and in</del> section   423A.02, subdivision 3, with &#10;30.22   respect to independent school district No. 625, notwithstanding any law to the contrary, &#10;30.23   levies for teachers retirement fund associations in <ins>the </ins>cities of <del>the first class</del><ins> Duluth and St. </ins>&#10;30.24   <ins>Paul</ins>, including levies for any employer Social Security taxes for teachers covered by the &#10;30.25   Duluth Teachers Retirement Fund Association or the <del>Minneapolis Teachers Retirement </del>&#10;30.26   <del>Fund Association or the</del> St. Paul Teachers Retirement Fund Association, are disallowed. &#10;&#10;<a id="go.3.20.0"></a>30.27       Sec. 20. Minnesota Statutes 2004, section 354A.12, subdivision 2a, is amended to read:&#10;30.28       Subd. 2a. <b>Employer regular and additional contribution rates.</b> (a) The &#10;30.29   employing units shall make the following employer contributions to teachers retirement &#10;30.30   fund associations:&#10;31.1    (1)  for any coordinated member of a teachers retirement fund association in a city &#10;31.2    of the first class, the employing unit shall pay the employer Social Security taxes in &#10;31.3    accordance with section   355.46, subdivision 3, clause (b); &#10;31.4    (2) for any coordinated member of one of the following teachers retirement fund &#10;31.5    associations in a city of the first class, the employing unit shall make a regular employer &#10;31.6    contribution to the respective retirement fund association in an amount equal to the &#10;31.7    designated percentage of the salary of the coordinated member as provided below:&#10;<rs_table>31.8          Duluth Teachers Retirement                                   &#10;31.9          Fund Association                           4.50 percent      &#10;31.10         <del>Minneapolis Teachers Retirement</del>                              &#10;31.11         <del>Fund Association</del>                           <del>4.50 percent</del>      &#10;31.12         St. Paul Teachers Retirement                                 &#10;31.13         Fund Association                           4.50 percent      &#10;</rs_table>31.14   (3) for any basic member of <del>one of</del> the <del>following</del><ins> St. Paul</ins> Teachers Retirement &#10;31.15   Fund <del>associations in a city of the first class</del><ins> Association</ins>, the employing unit shall make a &#10;31.16   regular employer contribution to the respective retirement fund in an amount equal to <del>the </del>&#10;31.17   <del>designated percentage</del><ins> 8.00 percent</ins> of the salary of the basic member<del> as provided below:</del><ins>;</ins>&#10;<rs_table>31.18         <del>Minneapolis Teachers Retirement</del>                              &#10;31.19         <del>Fund Association</del>                           <del>8.50 percent</del>      &#10;31.20         <del>St. Paul Teachers Retirement</del>                                 &#10;31.21         <del>Fund Association</del>                           <del>8.00 percent</del>      &#10;</rs_table>31.22   (4) for a basic member of <del>a</del><ins> the St. Paul</ins> Teachers Retirement Fund Association<del> in a </del>&#10;31.23   <del>city of the first class</del>, the employing unit shall make an additional employer contribution to &#10;31.24   the respective fund in an amount equal to <del>the designated percentage </del><ins>3.64 percent</ins><ins> </ins>of the &#10;31.25   salary of the basic member<del>, as provided below:</del><ins>;</ins>&#10;<rs_table>31.26         <del>Minneapolis Teachers Retirement</del>                               &#10;31.27         <del>Fund Association</del>                                              &#10;31.28          <del>July 1, 1993 - June 30, 1994</del>              <del>4.85 percent</del>      &#10;31.29          <del>July 1, 1994, and thereafter</del>              <del>3.64 percent</del>      &#10;31.30         <del>St. Paul Teachers Retirement</del>                                  &#10;31.31         <del>Fund Association</del>                                              &#10;32.1           <del>July 1, 1993 - June 30, 1995</del>              <del>4.63 percent</del>      &#10;32.2           <del>July 1, 1995, and thereafter</del>              <del>3.64 percent</del>      &#10;</rs_table>32.3    (5) for a coordinated member of a teachers retirement fund association in a city &#10;32.4    of the first class, the employing unit shall make an additional employer contribution to &#10;32.5    the respective fund in an amount equal to the applicable percentage of the coordinated &#10;32.6    member's salary, as provided below:&#10;<rs_table>32.7          Duluth Teachers Retirement                                    &#10;32.8          Fund Association                            1.29 percent      &#10;32.9          <del>Minneapolis Teachers Retirement</del>                               &#10;32.10         <del>Fund Association</del>                                              &#10;32.11          <del>July 1, 1993 - June 30, 1994</del>              <del>0.50 percent</del>      &#10;32.12          <del>July 1, 1994, and thereafter</del>              <del>3.64 percent</del>      &#10;32.13         St. Paul Teachers Retirement                                  &#10;32.14         Fund Association                                              &#10;32.15          July 1, 1993 - June 30, 1994              0.50 percent      &#10;32.16          July 1, 1994 - June 30, 1995              1.50 percent      &#10;32.17          July 1, 1997, and thereafter              3.84 percent      &#10;</rs_table>32.18   (b) The regular and additional employer contributions must be remitted directly to &#10;32.19   the respective teachers retirement fund association at least once each month. Delinquent &#10;32.20   amounts are payable with interest under the procedure in subdivision 1a.&#10;32.21   (c) Payments of regular and additional employer contributions for school district &#10;32.22   or technical college employees who are paid from normal operating funds must be made &#10;32.23   from the appropriate fund of the district or technical college.&#10;&#10;<a id="go.3.21.0"></a>32.24       Sec. 21. Minnesota Statutes 2004, section 354A.12, subdivision 3a, is amended to read:&#10;32.25       Subd. 3a. <b>Special direct state aid to first class city teachers retirement fund </b>&#10;32.26   <b>associations.</b> (a) In fiscal year 1998, the state shall pay $4,827,000 to the St. Paul &#10;32.27   Teachers Retirement Fund Association, $17,954,000 to the Minneapolis Teachers &#10;32.28   Retirement Fund Association, and $486,000 to the Duluth Teachers Retirement Fund &#10;32.29   Association. In each <del>subsequent</del> fiscal year<ins> after fiscal year 2006</ins>, these payments to the &#10;32.30   first class city teachers retirement fund associations must be $2,827,000 for St. Paul, &#10;33.1    $12,954,000 <ins>to the Teachers Retirement Association </ins>for <ins>the former </ins>Minneapolis<ins> Teachers </ins>&#10;33.2    <ins>Retirement Fund Association</ins>, and $486,000 for Duluth.&#10;33.3    (b) The direct state aids under this subdivision are payable October 1 annually. The &#10;33.4    commissioner of finance shall pay the direct state aid. The amount required under this &#10;33.5    subdivision is appropriated annually from the general fund to the commissioner of finance.&#10;&#10;<a id="go.3.22.0"></a>33.6        Sec. 22. Minnesota Statutes 2004, section 354A.12, subdivision 3b, is amended to read:&#10;33.7        Subd. 3b. <b>Special direct state matching aid to the </b><del><b>Minneapolis</b></del><b> Teachers </b>&#10;33.8    <b>Retirement </b><del><b>Fund</b></del><b> Association.</b> (a) Special School District No. 1 <del>may</del><ins> must</ins> make &#10;33.9    an additional employer contribution to the <del>Minneapolis</del> Teachers Retirement Fund &#10;33.10   Association. The city of Minneapolis <del>may</del><ins> must</ins> make a contribution to the <del>Minneapolis</del> &#10;33.11   Teachers Retirement <del>Fund</del> Association. This contribution <del>may</del><ins> must</ins> be made by a levy &#10;33.12   of the board of estimate and taxation of the city of Minneapolis and the levy, if made, is &#10;33.13   classified as that of a special taxing district for purposes of sections   275.065 and   276.04, &#10;33.14   and for all other property tax purposes. &#10;33.15   (b) <del>For every $1,000</del><ins> $1,125,000 must be</ins> contributed <del>in equal proportion</del> by Special &#10;33.16   School District No. 1 and <ins>$1,125,000 must be contributed </ins>by the city of Minneapolis to &#10;33.17   the <del>Minneapolis</del> Teachers Retirement <del>Fund</del> Association under paragraph (a), <ins>and </ins>the &#10;33.18   state shall pay to the <del>Minneapolis</del> Teachers Retirement <del>Fund</del> Association <del>$1,000, but not </del>&#10;33.19   <del>to exceed</del> $2,500,000 <del>in total in </del><ins>each </ins>fiscal year<del> 1994</del>. The superintendent of Special &#10;33.20   School District No. 1, the mayor of the city of Minneapolis, and the executive director &#10;33.21   of the <del>Minneapolis</del> Teachers Retirement <del>Fund</del> Association shall jointly certify to the &#10;33.22   commissioner of finance the total amount that has been contributed by Special School &#10;33.23   District No. 1 and by the city of Minneapolis to the <del>Minneapolis</del> Teachers Retirement &#10;33.24   <del>Fund</del> Association. Any certification to the commissioner of education must be made &#10;33.25   quarterly. If the total certifications for a fiscal year exceed the maximum annual direct state &#10;33.26   matching aid amount in any quarter, the amount of direct state matching aid payable to the &#10;33.27   <del>Minneapolis</del> Teachers Retirement <del>Fund</del> Association must be limited to the balance of the &#10;33.28   maximum annual direct state matching aid amount available. The amount required under &#10;33.29   this paragraph, subject to the maximum direct state matching aid amount, is appropriated &#10;33.30   annually to the commissioner of finance.&#10;33.31   (c) The commissioner of finance may prescribe the form of the certifications &#10;33.32   required under paragraph (b).&#10;&#10;<a id="go.3.23.0"></a>33.33       Sec. 23. Minnesota Statutes 2004, section 354A.12, subdivision 3c, is amended to read:&#10;34.1        Subd. 3c. <b>Termination of supplemental contributions and direct matching </b>&#10;34.2    <b>and state aid.</b> (a) The supplemental contributions payable to the Minneapolis Teachers &#10;34.3    Retirement Fund Association by Special School District No. 1 and the city of Minneapolis &#10;34.4    under section   423A.02, subdivision 3, <ins>which must continue to be paid to the Teachers </ins>&#10;34.5    <ins>Retirement Association until 2037, </ins>or to the St. Paul Teachers Retirement Fund &#10;34.6    Association by Independent School District No. 625 under section   423A.02, subdivision &#10;34.7    3, or the direct state aids under subdivision 3a to the <del>first class city</del><ins> St. Paul</ins> Teachers &#10;34.8    Retirement <del>associations, and the direct matching and state aid under subdivision 3b to </del>&#10;34.9    <del>the Minneapolis Teachers Retirement</del> Fund Association terminate <del>for the respective fund</del> &#10;34.10   at the end of the fiscal year in which the accrued liability funding ratio for that fund, as &#10;34.11   determined in the most recent actuarial report for that fund by the actuary retained by the &#10;34.12   Legislative Commission on Pensions and Retirement, equals or exceeds the accrued &#10;34.13   liability funding ratio for the teachers retirement association, as determined in the most &#10;34.14   recent actuarial report for the Teachers Retirement Association by the actuary retained by &#10;34.15   the Legislative Commission on Pensions and Retirement. &#10;34.16   (b) If the state direct matching, state supplemental, or state aid is terminated for a &#10;34.17   first class city teachers retirement fund association under paragraph (a), it may not again &#10;34.18   be received by that fund.&#10;34.19   (c) If <del>either the Minneapolis Teachers Retirement Fund Association,</del> the St. &#10;34.20   Paul Teachers Retirement Fund Association<del>, or the Duluth Teachers Retirement Fund </del>&#10;34.21   <del>Association remain</del><ins> is</ins> funded at <del>less than</del> the funding ratio applicable to the Teachers &#10;34.22   Retirement Association when the provisions of paragraph (b) become effective, then any &#10;34.23   state aid <del>not</del><ins> previously</ins> distributed to that association must be immediately transferred to &#10;34.24   the <del>other associations in proportion to the relative sizes of their unfunded actuarial accrued </del>&#10;34.25   <del>liabilities</del><ins> Teachers Retirement Association</ins>.&#10;&#10;<a id="go.3.24.0"></a>34.26       Sec. 24. Minnesota Statutes 2004, section 354A.12, subdivision 3d, is amended to read:&#10;34.27       Subd. 3d. <b>Supplemental administrative expense assessment.</b> (a) The active &#10;34.28   and retired membership of the <del>Minneapolis Teachers Retirement Fund Association and </del>&#10;34.29   <del>of the</del> St. Paul Teachers Retirement Fund Association is responsible for defraying &#10;34.30   supplemental administrative expenses other than investment expenses of the respective &#10;34.31   teacher retirement fund association.&#10;34.32   (b) Investment expenses of the teachers retirement fund association are those &#10;34.33   expenses incurred by or on behalf of the retirement fund in connection with the investment &#10;34.34   of the assets of the retirement fund other than investment security transaction costs. Other &#10;34.35   administrative expenses are all expenses incurred by or on behalf of the retirement fund &#10;35.1    for all other retirement fund functions other than the investment of retirement fund assets. &#10;35.2    Investment and other administrative expenses must be accounted for using generally &#10;35.3    accepted accounting principles and in a manner consistent with the comprehensive annual &#10;35.4    financial report of the teachers retirement fund association for the immediately previous &#10;35.5    fiscal year under section   356.20. &#10;35.6    (c) Supplemental administrative expenses other than investment expenses of <del>a first </del>&#10;35.7    <del>class city teacher</del><ins> the St. Paul Teachers</ins> Retirement Fund Association are those expenses &#10;35.8    for the fiscal year that:&#10;35.9    (1) exceed, for the St. Paul Teachers Retirement Fund Association<ins>,</ins> $443,745<del>, or </del>&#10;35.10   <del>for the Minneapolis Teacher Retirement Fund Association $671,513, plus, in each case,</del> &#10;35.11   an additional amount derived by applying the percentage increase in the Consumer Price &#10;35.12   Index for Urban Wage Earners and Clerical Workers All Items Index published by the &#10;35.13   Bureau of Labor Statistics of the United States Department of Labor since July 1, 2001, to &#10;35.14   the <del>applicable</del> dollar amount; and&#10;35.15   (2)  exceed the amount computed by applying the most recent percentage of &#10;35.16   pay administrative expense amount, other than investment expenses, for the teachers &#10;35.17   retirement association governed by chapter 354 to the covered payroll of the respective &#10;35.18   teachers retirement fund association for the fiscal year.&#10;35.19   (d) The board of trustees of <del>each first class city</del><ins> the St. Paul</ins> Teachers Retirement &#10;35.20   Fund Association shall allocate the total dollar amount of supplemental administrative &#10;35.21   expenses other than investment expenses determined under paragraph (c), clause (2), &#10;35.22   among the various active and retired membership groups of the teachers retirement fund &#10;35.23   association and shall assess the various membership groups their respective share of &#10;35.24   the supplemental administrative expenses other than investment expenses, in amounts &#10;35.25   determined by the board of trustees. The supplemental administrative expense assessments &#10;35.26   must be paid by the membership group in a manner determined by the board of trustees &#10;35.27   of the respective teachers retirement association. Supplemental administrative expenses &#10;35.28   payable by the active members of the pension plan must be picked up by the employer in &#10;35.29   accordance with section   356.62. &#10;35.30   (e) With respect to the St. Paul Teachers Retirement Fund Association, the &#10;35.31   supplemental administrative expense assessment must be fully disclosed to the various &#10;35.32   active and retired membership groups of the teachers retirement fund association. The &#10;35.33   chief administrative officer of the St. Paul Teachers Retirement Fund Association shall &#10;35.34   prepare a supplemental administrative expense assessment disclosure notice, which must &#10;35.35   include the following:&#10;36.1    (1) the total amount of administrative expenses of the St. Paul Teachers Retirement &#10;36.2    Fund Association, the amount of the investment expenses of the St. Paul Teachers &#10;36.3    Retirement Fund Association, and the net remaining amount of administrative expenses of &#10;36.4    the St. Paul Teachers Retirement Fund Association;&#10;36.5    (2) the amount of administrative expenses for the St. Paul Teachers Retirement Fund &#10;36.6    Association that would be equivalent to the teachers retirement association noninvestment &#10;36.7    administrative expense level described in paragraph (c);&#10;36.8    (3) the total amount of supplemental administrative expenses required for assessment &#10;36.9    calculated under paragraph (c);&#10;36.10   (4) the portion of the total amount of the supplemental administrative expense &#10;36.11   assessment allocated to each membership group and the rationale for that allocation;&#10;36.12   (5) the manner of collecting the supplemental administrative expense assessment &#10;36.13   from each membership group, the number of assessment payments required during the &#10;36.14   year, and the amount of each payment or the procedure used to determine each payment; &#10;36.15   and&#10;36.16   (6) any other information that the chief administrative officer determines is necessary &#10;36.17   to fairly portray the manner in which the supplemental administrative expense assessment &#10;36.18   was determined and allocated.&#10;36.19   (f) The disclosure notice must be provided annually in the annual report of the &#10;36.20   association.&#10;36.21   (g)  The supplemental administrative expense assessments must be deposited in the &#10;36.22   applicable teachers retirement fund upon receipt.&#10;36.23   (h)  Any omitted active membership group assessments that remain undeducted &#10;36.24   and unpaid to the teachers retirement fund association for 90 days must be paid by the &#10;36.25   respective school district. The school district may recover any omitted active membership &#10;36.26   group assessment amounts that it has previously paid. The teachers retirement fund &#10;36.27   association shall deduct any omitted retired membership group assessment amounts from &#10;36.28   the benefits next payable after the discovery of the omitted amounts.&#10;&#10;<a id="go.3.25.0"></a>36.29       Sec. 25. Minnesota Statutes 2004, section 354A.30, is amended to read:&#10;36.30   <b>354A.30 </b><del><b>MINNEAPOLIS AND</b></del><b> ST. PAUL TEACHERS RETIREMENT FUND </b>&#10;36.31   <del><b>ASSOCIATIONS</b></del><ins><b> ASSOCIATION</b></ins><b>; COORDINATED PROGRAM.</b>&#10;36.32   There is established a coordinated program within the <del>Minneapolis Teachers </del>&#10;36.33   <del>Retirement Fund Association and a coordinated program within the</del> St. Paul Teachers &#10;36.34   Retirement Fund Association to provide retirement coverage for teachers who are covered &#10;36.35   by an agreement or modification made between the state and the secretary of health, &#10;37.1    education and welfare making the provisions of the federal Old Age, Survivors and &#10;37.2    Disability Insurance Act applicable to certain teachers covered by the teachers retirement &#10;37.3    fund association. The provisions governing the coordinated program shall be sections  &#10;37.4    354A.31 to  354A.41 and any other applicable provisions of this chapter. &#10;&#10;<a id="go.3.26.0"></a>37.5        Sec. 26. Minnesota Statutes 2005 Supplement, section 354A.31, subdivision 4, is &#10;37.6    amended to read:&#10;37.7        Subd. 4. <b>Computation of </b><del><b>the</b></del><b> normal coordinated retirement annuity; </b>&#10;37.8    <del><b>Minneapolis and</b></del><b> St. Paul </b><del><b>funds</b></del><ins><b> fund</b></ins><b>.</b> (a) This subdivision applies to the coordinated &#10;37.9    <del>programs</del><ins> program</ins> of the <del>Minneapolis Teachers Retirement Fund Association and the</del> St. &#10;37.10   Paul Teachers Retirement Fund Association.&#10;37.11   (b) The normal coordinated retirement annuity is an amount equal to a retiring &#10;37.12   coordinated member's average salary under section 354A.011, subdivision 7a, multiplied &#10;37.13   by the retirement annuity formula percentage.&#10;37.14   (c) This paragraph, in conjunction with subdivision 6, applies to a person who first &#10;37.15   became a member or a member in a pension fund listed in section 356.30, subdivision 3, &#10;37.16   before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a &#10;37.17   higher annuity amount, in which case paragraph (d) will apply. The retirement annuity &#10;37.18   formula percentage for purposes of this paragraph is the percent specified in section &#10;37.19   356.315, subdivision 1, per year for each year of coordinated service for the first ten years &#10;37.20   and the percent specified in section 356.315, subdivision 2, for each year of coordinated &#10;37.21   service thereafter.&#10;37.22   (d) This paragraph applies to a person who has become at least 55 years old and who &#10;37.23   first becomes a member after June 30, 1989, and to any other member who has become &#10;37.24   at least 55 years old and whose annuity amount, when calculated under this paragraph &#10;37.25   and in conjunction with subdivision 7 is higher than it is when calculated under paragraph &#10;37.26   (c), in conjunction with the provisions of subdivision 6. The retirement annuity formula &#10;37.27   percentage for purposes of this paragraph is the percent specified in section 356.315, &#10;37.28   subdivision 2, for each year of coordinated service.&#10;&#10;<a id="go.3.27.0"></a>37.29       Sec. 27. Minnesota Statutes 2004, section 354A.32, subdivision 1, is amended to read:&#10;37.30       Subdivision 1. <b>Optional forms generally.</b> The <del>boards</del><ins> board</ins> of the <del>Minneapolis and </del>&#10;37.31   <del>the</del> St. Paul Teachers Retirement Fund <del>Associations</del><ins> Association</ins> shall <del>each</del> establish for the &#10;37.32   coordinated program and the board of the Duluth Teachers Retirement Fund Association &#10;37.33   shall establish for the new law coordinated program an optional retirement annuity which &#10;37.34   shall take the form of a joint and survivor annuity. Each board may also in its discretion &#10;38.1    establish an optional annuity which shall take the form of an annuity payable for a period &#10;38.2    certain and for life thereafter. Each board shall also establish an optional retirement &#10;38.3    annuity that guarantees payment of the balance of the annuity recipient's accumulated &#10;38.4    deductions to a designated beneficiary upon the death of the annuity recipient. Except as &#10;38.5    provided in subdivision 1a, optional annuity forms shall be the actuarial equivalent of the &#10;38.6    normal forms provided in section  354A.31. In establishing these optional annuity forms, &#10;38.7    the board shall obtain the written recommendation of the commission-retained actuary. &#10;38.8    The recommendation shall be a part of the permanent records of the board. &#10;&#10;<a id="go.3.28.0"></a>38.9        Sec. 28. Minnesota Statutes 2004, section 354A.39, is amended to read:&#10;38.10   <b>354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS; ANNUITY.</b>&#10;38.11   Any person who has been a member of the Minnesota State Retirement System, the &#10;38.12   Public Employees Retirement Association including the Public Employees Retirement &#10;38.13   Association Police and Fire Fund, the Teachers Retirement Association, the Minnesota &#10;38.14   State Patrol Retirement Association, the legislators retirement plan, the constitutional &#10;38.15   officers retirement plan, the Minneapolis Employees Retirement Fund, the Duluth &#10;38.16   Teachers Retirement Fund Association new law coordinated program, <del>the Minneapolis </del>&#10;38.17   <del>Teachers Retirement Fund Association coordinated program,</del> the St. Paul Teachers &#10;38.18   Retirement Fund Association coordinated program, or any other public employee &#10;38.19   retirement system in the state of Minnesota having a like provision but excluding all other &#10;38.20   funds providing retirement benefits for police officers or firefighters shall be entitled &#10;38.21   when qualified to an annuity from each fund if the person's total allowable service in all &#10;38.22   of the funds or in any two or more of the funds totals three or more years, provided that &#10;38.23   no portion of the allowable service upon which the retirement annuity from one fund is &#10;38.24   based is used again in the computation for a retirement annuity from another fund and &#10;38.25   provided further that the person has not taken a refund from any of funds or associations &#10;38.26   since the person's membership in the fund or association has terminated. The annuity &#10;38.27   from each fund or association shall be determined by the appropriate provisions of the &#10;38.28   law governing each fund or association, except that the requirement that a person must &#10;38.29   have at least three years of allowable service in the respective fund or association shall not &#10;38.30   apply for the purposes of this section, provided that the aggregate service in two or more &#10;38.31   of these funds equals three or more years.&#10;&#10;<a id="go.3.29.0"></a>38.32       Sec. 29. Minnesota Statutes 2004, section 354A.40, subdivision 1, is amended to read:&#10;38.33       Subdivision 1. <b>Retirement annuity.</b> Any coordinated member of <del>either the </del>&#10;38.34   <del>Minneapolis Teachers Retirement Fund Association or of</del> the St. Paul Teachers Retirement &#10;39.1    Fund Association who has credited service prior to July 1, 1978 shall be entitled to &#10;39.2    receive a retirement annuity when otherwise qualified, the calculation of which shall &#10;39.3    utilize the applicable retirement annuity formula specified in articles of incorporation and &#10;39.4    bylaws of the teachers retirement fund association governing the basic program for that &#10;39.5    portion of credited service which was served prior to July 1, 1978, and the retirement &#10;39.6    annuity formula specified in section  354A.31 for the remainder of the member's credited &#10;39.7    service, both applied to the member's average salary as specified in section  354A.31, &#10;39.8    subdivision 4. The formula percentages to be used in calculating the coordinated portion &#10;39.9    of the retirement annuity or coordinated service under this section shall recognize the &#10;39.10   coordinated service as a continuation of any service prior to July 1, 1978. &#10;&#10;<a id="go.3.30.0"></a>39.11       Sec. 30. Minnesota Statutes 2004, section 354A.41, is amended to read:&#10;39.12   <b>354A.41 ADMINISTRATION OF COORDINATED PROGRAM.</b>&#10;39.13       Subdivision 1. <b>Administrative provisions.</b> The provisions of the articles of &#10;39.14   incorporation and bylaws of the <del>Minneapolis or the</del> St. Paul Teachers Retirement &#10;39.15   Fund Association<del>, whichever is applicable,</del> relating to the administration of the fund &#10;39.16   shall govern the administration of the coordinated <del>program</del><ins> and basic programs</ins> and the &#10;39.17   provisions of the articles of incorporation and bylaws of the Duluth Teachers Retirement &#10;39.18   Fund Association relating to the administration of the fund shall govern the administration &#10;39.19   of the new law coordinated program in instances where the administrative provisions are &#10;39.20   not inconsistent with the provisions of sections  354A.31 to  354A.41, including but not &#10;39.21   limited to provisions relating to the composition and function of the board of trustees, the &#10;39.22   investment of assets of the teachers retirement fund association, and the definition of the &#10;39.23   plan year. <ins>The administrative provisions in the articles of incorporation and the bylaws </ins>&#10;39.24   <ins>of the Minneapolis Teachers Retirement Fund Association pertaining to the granting of </ins>&#10;39.25   <ins>pension benefits of the basic and coordinated programs are no longer in effect after June </ins>&#10;39.26   <ins>30, 2006. </ins>&#10;39.27       Subd. 2. <b>Actuarial valuations.</b> In any actuarial valuation of the <del>Minneapolis </del>&#10;39.28   <del>Teachers Retirement Fund Association, the</del> St. Paul Teachers Retirement Fund &#10;39.29   Association, or the Duluth Teachers Retirement Fund Association under section  356.215 &#10;39.30   prepared by the commission-retained actuary or supplemental actuarial valuation prepared &#10;39.31   by an approved actuary retained by the teachers retirement fund association, there shall &#10;39.32   be included a finding of the condition of the fund showing separately the basic and &#10;39.33   coordinated programs or the old law coordinated and new law coordinated programs, as &#10;39.34   appropriate. The finding shall include the level normal cost and the applicable employee &#10;39.35   and employer contribution rates for each program. &#10;&#10;<a id="go.3.31.0"></a>40.1        Sec. 31. Minnesota Statutes 2004, section 356.20, subdivision 2, is amended to read:&#10;40.2        Subd. 2. <b>Covered public pension plans and funds.</b> This section applies to the &#10;40.3    following public pension plans:&#10;40.4    (1) the general state employees retirement plan of the Minnesota State Retirement &#10;40.5    System;&#10;40.6    (2) the general employees retirement plan of the Public Employees Retirement &#10;40.7    Association;&#10;40.8    (3) the Teachers Retirement Association;&#10;40.9    (4)  the State Patrol retirement plan;&#10;40.10   (5) the <del>Minneapolis Teachers Retirement Fund Association;</del>&#10;40.11   <del>(6) the</del> St. Paul Teachers Retirement Fund Association;&#10;40.12   <del>(7)</del><ins> (6)</ins> the Duluth Teachers Retirement Fund Association;&#10;40.13   <del>(8)</del><ins> (7)</ins> the Minneapolis Employees Retirement Fund;&#10;40.14   <del>(9)</del><ins> (8)</ins> the University of Minnesota faculty retirement plan;&#10;40.15   <del>(10)</del><ins> (9)</ins> the University of Minnesota faculty supplemental retirement plan;&#10;40.16   <del>(11)</del><ins> (10)</ins> the judges retirement fund;&#10;40.17   <del>(12)</del><ins> (11)</ins> a police or firefighter's relief association specified or described in section   &#10;40.18   69.77, subdivision 1a, or   69.771, subdivision 1; &#10;40.19   <del>(13)</del><ins> (12)</ins> the public employees police and fire plan of the Public Employees &#10;40.20   Retirement Association;&#10;40.21   <del>(14)</del><ins> (13)</ins> the correctional state employees retirement plan of the Minnesota State &#10;40.22   Retirement System; and&#10;40.23   <del>(15)</del><ins> (14)</ins> the local government correctional service retirement plan of the Public &#10;40.24   Employees Retirement Association.&#10;&#10;<a id="go.3.32.0"></a>40.25       Sec. 32. Minnesota Statutes 2004, section 356.214, subdivision 1, is amended to read:&#10;40.26       Subdivision 1. <b>Joint retention.</b> (a) The chief administrative officers of the &#10;40.27   Minnesota State Retirement System, the Public Employees Retirement Association, the &#10;40.28   Teachers Retirement Association, the Duluth Teachers Retirement Fund Association, &#10;40.29   <del>the Minneapolis Teachers Retirement Fund Association, </del>the Minneapolis Employees &#10;40.30   Retirement Fund, and the St. Paul Teachers Retirement Fund Association, jointly, on &#10;40.31   behalf of the state, its employees, its taxpayers, and its various public pension plans, &#10;40.32   shall contract with an established actuarial consulting firm to conduct annual actuarial &#10;40.33   valuations and related services for the retirement plans named in paragraph (b). The &#10;40.34   principal from the actuarial consulting firm on the contract must be an approved actuary &#10;40.35   under section  356.215, subdivision 1, paragraph (c). Prior to becoming effective, &#10;41.1    the contract under this section is subject to a review and approval by the Legislative &#10;41.2    Commission on Pensions and Retirement. &#10;41.3    (b) The contract for actuarial services must include the preparation of actuarial &#10;41.4    valuations and related actuarial work for the following retirement plans:&#10;41.5    (1) the teachers retirement plan, Teachers Retirement Association;&#10;41.6    (2) the general state employees retirement plan, Minnesota State Retirement System;&#10;41.7    (3) the correctional employees retirement plan, Minnesota State Retirement System;&#10;41.8    (4) the State Patrol retirement plan, Minnesota State Retirement System;&#10;41.9    (5) the judges retirement plan, Minnesota State Retirement System;&#10;41.10   (6) the Minneapolis employees retirement plan, Minneapolis Employees Retirement &#10;41.11   Fund;&#10;41.12   (7) the public employees retirement plan, Public Employees Retirement Association;&#10;41.13   (8) the public employees police and fire plan, Public Employees Retirement &#10;41.14   Association;&#10;41.15   (9) the Duluth teachers retirement plan, Duluth Teachers Retirement Fund &#10;41.16   Association;&#10;41.17   <del>(10) the Minneapolis teachers retirement plan, Minneapolis Teachers Retirement </del>&#10;41.18   <del>Fund Association;</del>&#10;41.19   <del>(11)</del><ins> (10)</ins> the St. Paul teachers retirement plan, St. Paul Teachers Retirement Fund &#10;41.20   Association;&#10;41.21   <del>(12)</del><ins> (11)</ins> the legislators retirement plan, Minnesota State Retirement System;&#10;41.22   <del>(13)</del><ins> (12)</ins> the elective state officers retirement plan, Minnesota State Retirement &#10;41.23   System; and&#10;41.24   <del>(14)</del><ins> (13)</ins> local government correctional service retirement plan, Public Employees &#10;41.25   Retirement Association.&#10;41.26   (c) The contract must require completion of the annual actuarial valuation &#10;41.27   calculations on a fiscal year basis, with the contents of the actuarial valuation calculations &#10;41.28   as specified in section  356.215, and in conformity with the standards for actuarial work &#10;41.29   adopted by the Legislative Commission on Pensions and Retirement. &#10;41.30   The contract must require completion of annual experience data collection and &#10;41.31   processing and a quadrennial published experience study for the plans listed in paragraph &#10;41.32   (b), clauses (1), (2), and (7), as provided for in the standards for actuarial work adopted by &#10;41.33   the commission. The experience data collection, processing, and analysis must evaluate &#10;41.34   the following:&#10;41.35   (1) individual salary progression;&#10;41.36   (2) the rate of return on investments based on the current asset value;&#10;42.1    (3) payroll growth;&#10;42.2    (4) mortality;&#10;42.3    (5) retirement age;&#10;42.4    (6) withdrawal; and&#10;42.5    (7) disablement.&#10;42.6    The contract must include provisions for the preparation of cost analyses by the &#10;42.7    jointly retained actuary for proposed legislation that include changes in benefit provisions &#10;42.8    or funding policies prior to their consideration by the Legislative Commission on Pensions &#10;42.9    and Retirement.&#10;42.10   (d) The actuary retained by the joint retirement systems shall annually prepare a &#10;42.11   report to the legislature, including a commentary on the actuarial valuation calculations &#10;42.12   for the plans named in paragraph (b) and summarizing the results of the actuarial valuation &#10;42.13   calculations. The actuary shall include with the report the actuary's recommendations &#10;42.14   to the legislature concerning the appropriateness of the support rates to achieve proper &#10;42.15   funding of the retirement plans by the required funding dates. The actuary shall, as part &#10;42.16   of the quadrennial experience study, include recommendations to the legislature on the &#10;42.17   appropriateness of the actuarial valuation assumptions required for evaluation in the study.&#10;42.18   (e) If the actuarial gain and loss analysis in the actuarial valuation calculations &#10;42.19   indicates a persistent pattern of sizable gains or losses, as directed by the joint retirement &#10;42.20   systems or as requested by the chair of the Legislative Commission on Pensions and &#10;42.21   Retirement, the actuary shall prepare a special experience study for a plan listed in &#10;42.22   paragraph (b), clause (3), (4), (5), (6), (8), (9), (10), (11), (12), <del>(13),</del> or <del>(14)</del><ins> (13)</ins>, in the &#10;42.23   manner provided for in the standards for actuarial work adopted by the commission.&#10;42.24   (f) The term of the contract between the joint retirement systems and the actuary &#10;42.25   retained may not exceed five years. The joint retirement system administrative officers &#10;42.26   shall establish procedures for the consideration and selection of contract bidders and &#10;42.27   the requirements for the contents of an actuarial services contract under this section. &#10;42.28   The procedures and requirements must be submitted to the Legislative Commission on &#10;42.29   Pensions and Retirement for review and comment prior to final approval by the joint &#10;42.30   administrators. The contract is subject to the procurement procedures under chapter 16C. &#10;42.31   The consideration of bids and the selection of a consulting actuarial firm by the chief &#10;42.32   administrative officers must occur at a meeting that is open to the public and reasonable &#10;42.33   timely public notice of the date and the time of the meeting and its subject matter must &#10;42.34   be given.&#10;43.1    (g) The actuarial services contract may not limit the ability of the Minnesota &#10;43.2    legislature and its standing committees and commissions to rely on the actuarial results &#10;43.3    of the work prepared under the contract.&#10;43.4    (h) The joint retirement systems shall designate one of the retirement system &#10;43.5    executive directors as the actuarial services contract manager.&#10;&#10;<a id="go.3.33.0"></a>43.6        Sec. 33. Minnesota Statutes 2005 Supplement, section 356.215, subdivision 8, is &#10;43.7    amended to read:&#10;43.8        Subd. 8. <b>Interest and salary assumptions.</b> (a) The actuarial valuation must use &#10;43.9    the applicable following preretirement interest assumption and the applicable following &#10;43.10   postretirement interest assumption:&#10;<rs_table>43.11                                           preretirement                postretirement&#10;43.12                                           interest rate                interest rate&#10;43.13             plan                           assumption                  assumption  &#10;</rs_table><rs_table>43.14   general state employees retirement plan      8.5%                        6.0%  &#10;43.15   correctional state employees retirement                                         &#10;43.16   plan                                       8.5                         6.0   &#10;43.17   State Patrol retirement plan               8.5                         6.0   &#10;43.18   legislators retirement plan                8.5                         6.0   &#10;43.19   elective state officers retirement plan      8.5                         6.0   &#10;43.20   judges retirement plan                     8.5                         6.0   &#10;43.21   general public employees retirement                                          &#10;43.22   plan                                       8.5                         6.0   &#10;43.23   public employees police and fire                                             &#10;43.24   retirement plan                            8.5                         6.0   &#10;43.25   local government correctional service                                         &#10;43.26   retirement plan                            8.5                         6.0   &#10;43.27   teachers retirement plan                   8.5                         6.0   &#10;43.28   Minneapolis employees retirement plan      6.0                         5.0   &#10;43.29   Duluth teachers retirement plan            8.5                         8.5   &#10;43.30   <del>Minneapolis teachers retirement plan</del>       <del>8.5</del>                         <del>8.5</del>   &#10;43.31   St. Paul teachers retirement plan          8.5                         8.5   &#10;44.1    Minneapolis Police Relief Association      6.0                         6.0   &#10;44.2    Fairmont Police Relief Association         5.0                         5.0   &#10;44.3    Minneapolis Fire Department Relief                                           &#10;44.4    Association                                6.0                         6.0   &#10;44.5    Virginia Fire Department Relief                                              &#10;44.6    Association                                5.0                         5.0   &#10;44.7    Bloomington Fire Department Relief                                           &#10;44.8    Association                                6.0                         6.0   &#10;44.9    local monthly benefit volunteer                                              &#10;44.10   firefighters relief associations           5.0                         5.0   &#10;</rs_table>44.11   (b) The actuarial valuation must use the applicable following single rate future salary &#10;44.12   increase assumption, the applicable following modified single rate future salary increase &#10;44.13   assumption, or the applicable following graded rate future salary increase assumption:&#10;44.14   (1) single rate future salary increase assumption&#10;<rs_table>44.15                                                   future salary      &#10;44.16                      plan                      increase assumption   &#10;</rs_table><rs_table>44.17   legislators retirement plan                            5.0%  &#10;44.18   elective state officers retirement plan                5.0   &#10;44.19   judges retirement plan                                 5.0   &#10;44.20   Minneapolis Police Relief Association                  4.0   &#10;44.21   Fairmont Police Relief Association                     3.5   &#10;44.22   Minneapolis Fire Department Relief                           &#10;44.23   Association                                            4.0   &#10;44.24   Virginia Fire Department Relief Association            3.5   &#10;44.25   Bloomington Fire Department Relief                           &#10;44.26   Association                                            4.0   &#10;</rs_table>44.27   (2) modified single rate future salary increase assumption&#10;<rs_table>45.1                                                           future salary             &#10;45.2                 plan                                    increase assumption          &#10;45.3                                               the prior calendar year amount       &#10;45.4                                               increased first by 1.0198 percent to &#10;45.5                                               prior fiscal year date and then increased &#10;45.6    Minneapolis employees                      by 4.0 percent annually for each future &#10;45.7    retirement plan                            year                                 &#10;</rs_table>45.8    (3) select and ultimate future salary increase assumption or graded rate future salary &#10;45.9    increase assumption&#10;<rs_table>45.10                                                 future salary                &#10;45.11                plan                           increase assumption             &#10;45.12   general state employees                                                   &#10;45.13   retirement plan                    select calculation and assumption A     &#10;45.14   correctional state employees                                              &#10;45.15   retirement plan                               assumption <del>H</del><ins>G</ins>                &#10;45.16   State Patrol retirement plan                  assumption <del>H</del><ins>G</ins>                &#10;45.17   general public employees                                                  &#10;45.18   retirement plan                    select calculation and assumption B     &#10;45.19   public employees police and fire                                            &#10;45.20   fund retirement plan                          assumption C                &#10;45.21   local government correctional                                             &#10;45.22   service retirement plan                       assumption <del>H</del><ins>G</ins>                &#10;45.23   teachers retirement plan                      assumption D                &#10;45.24   Duluth teachers retirement plan               assumption E                &#10;45.25   <del>Minneapolis teachers retirement </del>                                           &#10;45.26   <del>plan</del>                                          <del>assumption F</del>                &#10;45.27   St. Paul teachers retirement plan               assumption <del>G</del><ins>F</ins>                &#10;</rs_table>45.28   The select calculation is: during the ten-year &#10;45.29   select period, a designated percent is &#10;45.30   multiplied by the result of ten minus T, &#10;45.31   where T is the number of completed years of &#10;45.32   service, and is added to the applicable future &#10;46.1    salary increase assumption. The designated &#10;46.2    percent is 0.2 percent for the correctional &#10;46.3    state employees retirement plan, the State &#10;46.4    Patrol retirement plan, the public employees &#10;46.5    police and fire plan, and the local government &#10;46.6    correctional service plan; <ins> and </ins>0.3 percent for &#10;46.7    the general state employees retirement plan, &#10;46.8    the general public employees retirement &#10;46.9    plan, the teachers retirement plan, the Duluth &#10;46.10   Teachers Retirement Fund Association, &#10;46.11   and the St. Paul Teachers Retirement &#10;46.12   Fund Association<del>; and 0.4 percent for the </del>&#10;46.13   <del>Minneapolis Teachers Retirement Fund </del>&#10;46.14   <del>Association</del>.&#10;46.15   The ultimate future salary increase assumption is:&#10;<rs_table>46.16   age   A        B        C        D        E        <del>F</del>        <del>G</del><ins>F</ins>       <del>H</del><ins>G</ins>       &#10;46.17   16    6.95%    6.95%    11.50%   8.20%    8.00%    <del>6.50%</del>    6.90%    7.7500   &#10;46.18   17    6.90     6.90     11.50    8.15     8.00     <del>6.50</del>     6.90     7.7500   &#10;46.19   18    6.85     6.85     11.50    8.10     8.00     <del>6.50</del>     6.90     7.7500   &#10;46.20   19    6.80     6.80     11.50    8.05     8.00     <del>6.50</del>     6.90     7.7500   &#10;46.21   20    6.75     6.40     11.50    6.00     6.90     <del>6.50</del>     6.90     7.7500   &#10;46.22   21    6.75     6.40     11.50    6.00     6.90     <del>6.50</del>     6.90     7.1454   &#10;46.23   22    6.75     6.40     11.00    6.00     6.90     <del>6.50</del>     6.90     7.0725   &#10;46.24   23    6.75     6.40     10.50    6.00     6.85     <del>6.50</del>     6.85     7.0544   &#10;46.25   24    6.75     6.40     10.00    6.00     6.80     <del>6.50</del>     6.80     7.0363   &#10;46.26   25    6.75     6.40     9.50     6.00     6.75     <del>6.50</del>     6.75     7.0000   &#10;46.27   26    6.75     6.36     9.20     6.00     6.70     <del>6.50</del>     6.70     7.0000   &#10;46.28   27    6.75     6.32     8.90     6.00     6.65     <del>6.50</del>     6.65     7.0000   &#10;46.29   28    6.75     6.28     8.60     6.00     6.60     <del>6.50</del>     6.60     7.0000   &#10;46.30   29    6.75     6.24     8.30     6.00     6.55     <del>6.50</del>     6.55     7.0000   &#10;46.31   30    6.75     6.20     8.00     6.00     6.50     <del>6.50</del>     6.50     7.0000   &#10;46.32   31    6.75     6.16     7.80     6.00     6.45     <del>6.50</del>     6.45     7.0000   &#10;47.1    32    6.75     6.12     7.60     6.00     6.40     <del>6.50</del>     6.40     7.0000   &#10;47.2    33    6.75     6.08     7.40     6.00     6.35     <del>6.50</del>     6.35     7.0000   &#10;47.3    34    6.75     6.04     7.20     6.00     6.30     <del>6.50</del>     6.30     7.0000   &#10;47.4    35    6.75     6.00     7.00     6.00     6.25     <del>6.50</del>     6.25     7.0000   &#10;47.5    36    6.75     5.96     6.80     6.00     6.20     <del>6.50</del>     6.20     6.9019   &#10;47.6    37    6.75     5.92     6.60     6.00     6.15     <del>6.50</del>     6.15     6.8074   &#10;47.7    38    6.75     5.88     6.40     5.90     6.10     <del>6.50</del>     6.10     6.7125   &#10;47.8    39    6.75     5.84     6.20     5.80     6.05     <del>6.50</del>     6.05     6.6054   &#10;47.9    40    6.75     5.80     6.00     5.70     6.00     <del>6.50</del>     6.00     6.5000   &#10;47.10   41    6.75     5.76     5.90     5.60     5.90     <del>6.50</del>     5.95     6.3540   &#10;47.11   42    6.75     5.72     5.80     5.50     5.80     <del>6.50</del>     5.90     6.2087   &#10;47.12   43    6.65     5.68     5.70     5.40     5.70     <del>6.50</del>     5.85     6.0622   &#10;47.13   44    6.55     5.64     5.60     5.30     5.60     <del>6.50</del>     5.80     5.9048   &#10;47.14   45    6.45     5.60     5.50     5.20     5.50     <del>6.50</del>     5.75     5.7500   &#10;47.15   46    6.35     5.56     5.45     5.10     5.40     <del>6.40</del>     5.70     5.6940   &#10;47.16   47    6.25     5.52     5.40     5.00     5.30     <del>6.30</del>     5.65     5.6375   &#10;47.17   48    6.15     5.48     5.35     5.00     5.20     <del>6.20</del>     5.60     5.5822   &#10;47.18   49    6.05     5.44     5.30     5.00     5.10     <del>6.10</del>     5.55     5.5404   &#10;47.19   50    5.95     5.40     5.25     5.00     5.00     <del>6.00</del>     5.50     5.5000   &#10;47.20   51    5.85     5.36     5.25     5.00     5.00     <del>5.90</del>     5.45     5.4384   &#10;47.21   52    5.75     5.32     5.25     5.00     5.00     <del>5.80</del>     5.40     5.3776   &#10;47.22   53    5.65     5.28     5.25     5.00     5.00     <del>5.70</del>     5.35     5.3167   &#10;47.23   54    5.55     5.24     5.25     5.00     5.00     <del>5.60</del>     5.30     5.2826   &#10;47.24   55    5.45     5.20     5.25     5.00     5.00     <del>5.50</del>     5.25     5.2500   &#10;47.25   56    5.35     5.16     5.25     5.00     5.00     <del>5.40</del>     5.20     5.2500   &#10;47.26   57    5.25     5.12     5.25     5.00     5.00     <del>5.30</del>     5.15     5.2500   &#10;47.27   58    5.25     5.08     5.25     5.10     5.00     <del>5.20</del>     5.10     5.2500   &#10;47.28   59    5.25     5.04     5.25     5.20     5.00     <del>5.10</del>     5.05     5.2500   &#10;47.29   60    5.25     5.00     5.25     5.30     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.1    61    5.25     5.00     5.25     5.40     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.2    62    5.25     5.00     5.25     5.50     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.3    63    5.25     5.00     5.25     5.60     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.4    64    5.25     5.00     5.25     5.70     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.5    65    5.25     5.00     5.25     5.70     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.6    66    5.25     5.00     5.25     5.70     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.7    67    5.25     5.00     5.25     5.70     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.8    68    5.25     5.00     5.25     5.70     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.9    69    5.25     5.00     5.25     5.70     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.10   70    5.25     5.00     5.25     5.70     5.00     <del>5.00</del>     5.00     5.2500   &#10;48.11   71    5.25     5.00              5.70                                         &#10;</rs_table>48.12   (c) The actuarial valuation must use the applicable following payroll growth &#10;48.13   assumption for calculating the amortization requirement for the unfunded actuarial &#10;48.14   accrued liability where the amortization retirement is calculated as a level percentage &#10;48.15   of an increasing payroll:&#10;<rs_table>48.16                                                      payroll growth          &#10;48.17   plan                                                 assumption            &#10;</rs_table><rs_table>48.18   general state employees retirement plan                5.00% &#10;48.19   correctional state employees retirement plan            5.00  &#10;48.20   State Patrol retirement plan                           5.00  &#10;48.21   legislators retirement plan                            5.00  &#10;48.22   elective state officers retirement plan                5.00  &#10;48.23   judges retirement plan                                 5.00  &#10;48.24   general public employees retirement plan               6.00  &#10;48.25   public employees police and fire retirement                   &#10;48.26   plan                                                   6.00  &#10;48.27   local government correctional service                        &#10;48.28   retirement plan                                        6.00  &#10;48.29   teachers retirement plan                               5.00  &#10;48.30   Duluth teachers retirement plan                        5.00  &#10;49.1    <del>Minneapolis teachers retirement plan</del>                   <del>5.00</del>  &#10;49.2    St. Paul teachers retirement plan                      5.00  &#10;</rs_table>&#10;<a id="go.3.34.0"></a>49.3        Sec. 34. Minnesota Statutes 2004, section 356.215, subdivision 11, is amended to read:&#10;49.4        Subd. 11. <b>Amortization contributions.</b> (a) In addition to the exhibit indicating the &#10;49.5    level normal cost, the actuarial valuation must contain an exhibit indicating the additional &#10;49.6    annual contribution sufficient to amortize the unfunded actuarial accrued liability. For &#10;49.7    funds governed by chapters 3A, 352, 352B, 352C, 353, 354, 354A, and 490, the additional &#10;49.8    contribution must be calculated on a level percentage of covered payroll basis by the &#10;49.9    established date for full funding in effect when the valuation is prepared. For funds &#10;49.10   governed by chapter 3A, sections    352.90 through    352.951, chapters 352B, 352C, sections    &#10;49.11   353.63 through    353.68, and chapters 353C, 354A, and 490, the level percent additional &#10;49.12   contribution must be calculated assuming annual payroll growth of 6.5 percent. For funds &#10;49.13   governed by sections    352.01 through    352.86 and chapter 354, the level percent additional &#10;49.14   contribution must be calculated assuming an annual payroll growth of five percent. For the &#10;49.15   fund governed by sections    353.01 through    353.46, the level percent additional contribution &#10;49.16   must be calculated assuming an annual payroll growth of six percent. For all other funds, &#10;49.17   the additional annual contribution must be calculated on a level annual dollar amount basis. &#10;49.18   (b) For any fund other than the Minneapolis Employees Retirement Fund and the &#10;49.19   Public Employees Retirement Association general plan, if there has not been a change in &#10;49.20   the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a &#10;49.21   change in the benefit plan governing annuities and benefits payable from the fund, a &#10;49.22   change in the actuarial cost method used in calculating the actuarial accrued liability of all &#10;49.23   or a portion of the fund, or a combination of the three, which change or changes by itself &#10;49.24   or by themselves without inclusion of any other items of increase or decrease produce a &#10;49.25   net increase in the unfunded actuarial accrued liability of the fund, the established date for &#10;49.26   full funding is the first actuarial valuation date occurring after June 1, 2020.&#10;49.27   (c) For any fund or plan other than the Minneapolis Employees Retirement Fund and &#10;49.28   the Public Employees Retirement Association general plan, if there has been a change in &#10;49.29   any or all of the actuarial assumptions used for calculating the actuarial accrued liability &#10;49.30   of the fund, a change in the benefit plan governing annuities and benefits payable from &#10;49.31   the fund, a change in the actuarial cost method used in calculating the actuarial accrued &#10;49.32   liability of all or a portion of the fund, or a combination of the three, and the change or &#10;49.33   changes, by itself or by themselves and without inclusion of any other items of increase or &#10;50.1    decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the &#10;50.2    established date for full funding must be determined using the following procedure:&#10;50.3    (i) the unfunded actuarial accrued liability of the fund must be determined in &#10;50.4    accordance with the plan provisions governing annuities and retirement benefits and the &#10;50.5    actuarial assumptions in effect before an applicable change;&#10;50.6    (ii) the level annual dollar contribution or level percentage, whichever is applicable, &#10;50.7    needed to amortize the unfunded actuarial accrued liability amount determined under item &#10;50.8    (i) by the established date for full funding in effect before the change must be calculated &#10;50.9    using the interest assumption specified in subdivision 8 in effect before the change;&#10;50.10   (iii) the unfunded actuarial accrued liability of the fund must be determined in &#10;50.11   accordance with any new plan provisions governing annuities and benefits payable from &#10;50.12   the fund and any new actuarial assumptions and the remaining plan provisions governing &#10;50.13   annuities and benefits payable from the fund and actuarial assumptions in effect before &#10;50.14   the change;&#10;50.15   (iv) the level annual dollar contribution or level percentage, whichever is applicable, &#10;50.16   needed to amortize the difference between the unfunded actuarial accrued liability amount &#10;50.17   calculated under item (i) and the unfunded actuarial accrued liability amount calculated &#10;50.18   under item (iii) over a period of 30 years from the end of the plan year in which the &#10;50.19   applicable change is effective must be calculated using the applicable interest assumption &#10;50.20   specified in subdivision 8 in effect after any applicable change;&#10;50.21   (v) the level annual dollar or level percentage amortization contribution under item &#10;50.22   (iv) must be added to the level annual dollar amortization contribution or level percentage &#10;50.23   calculated under item (ii);&#10;50.24   (vi) the period in which the unfunded actuarial accrued liability amount determined &#10;50.25   in item (iii) is amortized by the total level annual dollar or level percentage amortization &#10;50.26   contribution computed under item (v) must be calculated using the interest assumption &#10;50.27   specified in subdivision 8 in effect after any applicable change, rounded to the nearest &#10;50.28   integral number of years, but not to exceed 30 years from the end of the plan year in &#10;50.29   which the determination of the established date for full funding using the procedure set &#10;50.30   forth in this clause is made and not to be less than the period of years beginning in the &#10;50.31   plan year in which the determination of the established date for full funding using the &#10;50.32   procedure set forth in this clause is made and ending by the date for full funding in effect &#10;50.33   before the change; and&#10;50.34   (vii) the period determined under item (vi) must be added to the date as of which &#10;50.35   the actuarial valuation was prepared and the date obtained is the new established date &#10;50.36   for full funding.&#10;51.1    (d) For the Minneapolis Employees Retirement Fund, the established date for full &#10;51.2    funding is June 30, 2020.&#10;51.3    (e) For the general employees retirement plan of the Public Employees Retirement &#10;51.4    Association, the established date for full funding is June 30, 2031.&#10;51.5    (f) <ins>For the Teachers Retirement Association, the established date for full funding is </ins>&#10;51.6    <ins>June 30, 2037.</ins>&#10;51.7    <ins>(g)</ins><ins> </ins>For the retirement plans for which the annual actuarial valuation indicates an &#10;51.8    excess of valuation assets over the actuarial accrued liability, the valuation assets in &#10;51.9    excess of the actuarial accrued liability must be recognized as a reduction in the current &#10;51.10   contribution requirements by an amount equal to the amortization of the excess expressed &#10;51.11   as a level percentage of pay over a 30-year period beginning anew with each annual &#10;51.12   actuarial valuation of the plan.&#10;&#10;<a id="go.3.35.0"></a>51.13       Sec. 35. Minnesota Statutes 2004, section 356.30, subdivision 3, is amended to read:&#10;51.14       Subd. 3. <b>Covered plans.</b> This section applies to the following retirement plans:&#10;51.15   (1) the general state employees retirement plan of the Minnesota State Retirement &#10;51.16   System, established under chapter 352;&#10;51.17   (2) the correctional state employees retirement plan of the Minnesota State &#10;51.18   Retirement System, established under chapter 352;&#10;51.19   (3) the unclassified employees retirement program, established under chapter 352D;&#10;51.20   (4) the State Patrol retirement plan, established under chapter 352B;&#10;51.21   (5) the legislators retirement plan, established under chapter 3A;&#10;51.22   (6) the elective state officers' retirement plan, established under chapter 352C;&#10;51.23   (7) the general employees retirement plan of the Public Employees Retirement &#10;51.24   Association, established under chapter 353;&#10;51.25   (8) the public employees police and fire retirement plan of the Public Employees &#10;51.26   Retirement Association, established under chapter 353;&#10;51.27   (9) the local government correctional service retirement plan of the Public &#10;51.28   Employees Retirement Association, established under chapter 353E;&#10;51.29   (10) the Teachers Retirement Association, established under chapter 354;&#10;51.30   (11) the Minneapolis Employees Retirement Fund, established under chapter 422A;&#10;51.31   <del>(12) the Minneapolis Teachers Retirement Fund Association, established under </del>&#10;51.32   <del>chapter 354A;</del>&#10;51.33   <del>(13)</del><ins> (12)</ins> the St. Paul Teachers Retirement Fund Association, established under &#10;51.34   chapter 354A;&#10;52.1    <del>(14)</del><ins> (13)</ins> the Duluth Teachers Retirement Fund Association, established under &#10;52.2    chapter 354A; and&#10;52.3    <del>(15)</del><ins> (14)</ins> the judges' retirement fund, established by sections  490.121 to  490.132. &#10;&#10;<a id="go.3.36.0"></a>52.4        Sec. 36. Minnesota Statutes 2004, section 356.302, subdivision 7, is amended to read:&#10;52.5        Subd. 7. <b>Covered retirement plans.</b> This section applies to the following &#10;52.6    retirement plans:&#10;52.7    (1) the general state employees retirement plan of the Minnesota State Retirement &#10;52.8    System, established by chapter 352;&#10;52.9    (2) the unclassified state employees retirement program of the Minnesota State &#10;52.10   Retirement System, established by chapter 352D;&#10;52.11   (3) the general employees retirement plan of the Public Employees Retirement &#10;52.12   Association, established by chapter 353;&#10;52.13   (4) the Teachers Retirement Association, established by chapter 354;&#10;52.14   (5) the Duluth Teachers Retirement Fund Association, established by chapter 354A;&#10;52.15   <del>(6) the Minneapolis Teachers Retirement Fund Association, established by chapter </del>&#10;52.16   <del>354A;</del>&#10;52.17   <del>(7)</del><ins> (6)</ins> the St. Paul Teachers Retirement Fund Association, established by chapter &#10;52.18   354A;&#10;52.19   <del>(8)</del><ins> </ins><ins>(7)</ins> the Minneapolis Employees Retirement Fund, established by chapter 422A;&#10;52.20   <del>(9)</del><ins> (8)</ins> the state correctional employees retirement plan of the Minnesota State &#10;52.21   Retirement System, established by chapter 352;&#10;52.22   <del>(10)</del><ins> (9)</ins> the State Patrol retirement plan, established by chapter 352B;&#10;52.23   <del>(11)</del><ins> (10)</ins> the public employees police and fire plan of the Public Employees &#10;52.24   Retirement Association, established by chapter 353;&#10;52.25   <del>(12)</del><ins> (11)</ins> the local government correctional service retirement plan of the Public &#10;52.26   Employees Retirement Association, established by chapter 353E; and&#10;52.27   <del>(13)</del><ins> (12)</ins> the judges' retirement plan, established by sections  490.121 to  490.132. &#10;&#10;<a id="go.3.37.0"></a>52.28       Sec. 37. Minnesota Statutes 2004, section 356.303, subdivision 4, is amended to read:&#10;52.29       Subd. 4. <b>Covered retirement plans.</b> This section applies to the following &#10;52.30   retirement plans:&#10;52.31   (1) the legislators retirement plan, established by chapter 3A;&#10;52.32   (2) the general state employees retirement plan of the Minnesota State Retirement &#10;52.33   System, established by chapter 352;&#10;53.1    (3) the correctional state employees retirement plan of the Minnesota State &#10;53.2    Retirement System, established by chapter 352;&#10;53.3    (4) the State Patrol retirement plan, established by chapter 352B;&#10;53.4    (5) the elective state officers retirement plan, established by chapter 352C;&#10;53.5    (6) the unclassified state employees retirement program, established by chapter &#10;53.6    352D;&#10;53.7    (7) the general employees retirement plan of the Public Employees Retirement &#10;53.8    Association, established by chapter 353;&#10;53.9    (8) the public employees police and fire plan of the Public Employees Retirement &#10;53.10   Association, established by chapter 353;&#10;53.11   (9) the local government correctional service retirement plan of the Public &#10;53.12   Employees Retirement Association, established by chapter 353E;&#10;53.13   (10) the Teachers Retirement Association, established by chapter 354;&#10;53.14   (11) the Duluth Teachers Retirement Fund Association, established by chapter 354A;&#10;53.15   <del>(12) the Minneapolis Teachers Retirement Fund Association, established by chapter </del>&#10;53.16   <del>354A;</del>&#10;53.17   <del>(13)</del><ins> (12)</ins> the St. Paul Teachers Retirement Fund Association, established by chapter &#10;53.18   354A;&#10;53.19   <del>(14)</del><ins> (13)</ins> the Minneapolis Employees Retirement Fund, established by chapter &#10;53.20   422A; and&#10;53.21   <del>(15)</del><ins> (14)</ins> the judges' retirement fund, established by sections  490.121 to  490.132. &#10;&#10;<a id="go.3.38.0"></a>53.22       Sec. 38. Minnesota Statutes 2004, section 356.315, is amended by adding a subdivision &#10;53.23   to read:&#10;53.24       <ins>Subd. 1a.</ins> <ins><b>Coordinated plan members.</b></ins> <ins>The applicable benefit accrual rate is </ins>&#10;53.25   <ins>1.4 percent.</ins>&#10;&#10;<a id="go.3.39.0"></a>53.26       Sec. 39. Minnesota Statutes 2004, section 356.315, is amended by adding a subdivision &#10;53.27   to read:&#10;53.28       <ins>Subd. 2b.</ins> <ins><b>Certain coordinated program members.</b></ins> <ins>The applicable benefit accrual </ins>&#10;53.29   <ins>rate is 1.9 percent.</ins>&#10;&#10;<a id="go.3.40.0"></a>53.30       Sec. 40. Minnesota Statutes 2004, section 356.42, subdivision 3, is amended to read:&#10;53.31       Subd. 3. <b>Covered retirement plans.</b> The postretirement adjustment provided in &#10;53.32   this section applies to the following retirement funds:&#10;54.1    (1) the general employees retirement plans of the Public Employees Retirement &#10;54.2    Association;&#10;54.3    (2) the public employees police and fire plan of the Public Employees Retirement &#10;54.4    Association;&#10;54.5    (3) the teachers retirement association;&#10;54.6    (4) the State Patrol retirement plan;&#10;54.7    (5) the state employees retirement plan of the Minnesota State Retirement System;&#10;54.8    <del>(6) the Minneapolis Teachers Retirement Fund Association established under </del>&#10;54.9    <del>chapter 354A;</del>&#10;54.10   <del>(7)</del><ins> (6)</ins> the St. Paul Teachers Retirement Fund Association established under chapter &#10;54.11   354A; and&#10;54.12   <del>(8)</del><ins> (7)</ins> the Duluth Teachers Retirement Fund Association established under chapter &#10;54.13   354A.&#10;&#10;<a id="go.3.41.0"></a>54.14       Sec. 41. Minnesota Statutes 2004, section 356.465, subdivision 3, is amended to read:&#10;54.15       Subd. 3. <b>Covered retirement plans.</b> The provisions of this section apply to the &#10;54.16   following retirement plans:&#10;54.17   (1) the general state employees retirement plan of the Minnesota State Retirement &#10;54.18   System established under chapter 352;&#10;54.19   (2) the correctional state employees retirement plan of the Minnesota State &#10;54.20   Retirement System established under chapter 352;&#10;54.21   (3) the State Patrol retirement plan established under chapter 352B;&#10;54.22   (4) the legislators retirement plan established under chapter 3A;&#10;54.23   (5) the judges retirement plan established under chapter 490;&#10;54.24   (6) the general employees retirement plan of the Public Employees Retirement &#10;54.25   Association established under chapter 353;&#10;54.26   (7) the public employees police and fire plan of the Public Employees Retirement &#10;54.27   Association established under chapter 353;&#10;54.28   (8) the teachers retirement plan established under chapter 354;&#10;54.29   (9) the Duluth Teachers Retirement Fund Association established under chapter &#10;54.30   354A;&#10;54.31   (10) the St. Paul Teachers Retirement Fund Association established under chapter &#10;54.32   354A;&#10;54.33   <del>(11) the Minneapolis Teachers Retirement Fund Association established under </del>&#10;54.34   <del>chapter 354A;</del>&#10;55.1    <del>(12)</del><ins> (11)</ins> the Minneapolis employees retirement plan established under chapter &#10;55.2    422A;&#10;55.3    <del>(13)</del><ins> </ins><ins>(12)</ins> the Minneapolis Firefighters Relief Association established under chapter &#10;55.4    423C;&#10;55.5    <del>(14)</del><ins> (13)</ins> the Minneapolis Police Relief Association established under chapter &#10;55.6    423B; and&#10;55.7    <del>(15)</del><ins> (14)</ins> the local government correctional service retirement plan of the Public &#10;55.8    Employees Retirement Association established under chapter 353E.&#10;&#10;<a id="go.3.42.0"></a>55.9        Sec. 42. Minnesota Statutes 2004, section 423A.02, subdivision 1b, is amended to read:&#10;55.10       Subd. 1b. <b>Additional amortization state aid.</b> (a) Annually, on October 1, the &#10;55.11   commissioner of revenue shall allocate the additional amortization state aid transferred &#10;55.12   under section   69.021, subdivision 11, to: &#10;55.13   (1) all police or salaried firefighters relief associations governed by and in full &#10;55.14   compliance with the requirements of section   69.77, that had an unfunded actuarial accrued &#10;55.15   liability in the actuarial valuation prepared under sections   356.215 and   356.216 as of the &#10;55.16   preceding December 31; &#10;55.17   (2) all local police or salaried firefighter consolidation accounts governed by chapter &#10;55.18   353A that are certified by the executive director of the public employees retirement &#10;55.19   association as having for the current fiscal year an additional municipal contribution &#10;55.20   amount under section   353A.09, subdivision 5, paragraph (b), and that have implemented &#10;55.21   section   353A.083, subdivision 1, if the effective date of the consolidation preceded May &#10;55.22   24, 1993, and that have implemented section   353A.083, subdivision 2, if the effective date &#10;55.23   of the consolidation preceded June 1, 1995; and &#10;55.24   (3) the municipalities that are required to make an additional municipal contribution &#10;55.25   under section   353.665, subdivision 8, for the duration of the required additional &#10;55.26   contribution. &#10;55.27   (b) The commissioner shall allocate the state aid on the basis of the proportional share &#10;55.28   of the relief association or consolidation account of the total unfunded actuarial accrued &#10;55.29   liability of all recipient relief associations and consolidation accounts as of December 31, &#10;55.30   1993, for relief associations, and as of June 30, 1994, for consolidation accounts.&#10;55.31   (c) Beginning October 1, 2000, and annually thereafter, the commissioner shall &#10;55.32   allocate the state aid, including any state aid in excess of the limitation in subdivision &#10;55.33   4, on the following basis:&#10;56.1    (1) 64.5 percent to the municipalities to which section   353.665, subdivision &#10;56.2    8, paragraph (b), or   353A.09, subdivision 5, paragraph (b), apply for distribution in &#10;56.3    accordance with paragraph (b) and subject to the limitation in subdivision 4; &#10;56.4    (2) 34.2 percent to the city of Minneapolis to fund any unfunded actuarial accrued &#10;56.5    liability in the actuarial valuation prepared under sections   356.215 and   356.216 as of the &#10;56.6    preceding December 31 for the Minneapolis Police Relief Association or the Minneapolis &#10;56.7    Fire Department Relief Association; and &#10;56.8    (3)  1.3 percent to the city of Virginia to fund any unfunded actuarial accrued liability &#10;56.9    in the actuarial valuation prepared under sections   356.215 and   356.216 as of the preceding &#10;56.10   December 31 for the Virginia Fire Department Relief Association. &#10;56.11   If there is no unfunded actuarial accrued liability in both the Minneapolis Police &#10;56.12   Relief Association and the Minneapolis Fire Department Relief Association as disclosed &#10;56.13   in the most recent actuarial valuations for the relief associations prepared under sections   &#10;56.14   356.215 and   356.216, the commissioner shall allocate that 34.2 percent of the aid as &#10;56.15   follows: 49 percent to the <del>Minneapolis</del> Teachers Retirement <del>Fund</del> Association, 21 percent &#10;56.16   to the St. Paul Teachers Retirement Fund Association, and 30 percent as additional &#10;56.17   funding to support minimum fire state aid for volunteer firefighters relief associations. &#10;56.18   If there is no unfunded actuarial accrued liability in the Virginia Fire Department Relief &#10;56.19   Association as disclosed in the most recent actuarial valuation for the relief association &#10;56.20   prepared under sections   356.215 and   356.216, the commissioner shall allocate that 1.3 &#10;56.21   percent of the aid as follows: 49 percent to the <del>Minneapolis</del> Teachers Retirement <del>Fund</del> &#10;56.22   Association, 21 percent to the St. Paul Teachers Retirement Fund Association, and 30 &#10;56.23   percent as additional funding to support minimum fire state aid for volunteer firefighters &#10;56.24   relief associations. The allocation must be made by the commissioner at the same time and &#10;56.25   under the same procedures as specified in subdivision 3. With respect to the <del>Minneapolis </del>&#10;56.26   <del>Teachers Retirement Fund Association or the</del> St. Paul Teachers Retirement Fund &#10;56.27   Association, annually, beginning on July 1, 2005, if the applicable teacher's association &#10;56.28   five-year average time-weighted rate of investment return does not equal or exceed the &#10;56.29   performance of a composite portfolio assumed passively managed (indexed) invested ten &#10;56.30   percent in cash equivalents, 60 percent in bonds and similar debt securities, and 30 percent &#10;56.31   in domestic stock calculated using the formula under section   11A.04, clause (11), the aid &#10;56.32   allocation to that retirement fund under this section ceases until the five-year annual rate &#10;56.33   of investment return equals or exceeds the performance of that composite portfolio. &#10;56.34   (d) The amounts required under this subdivision are annually appropriated to the &#10;56.35   commissioner of revenue.&#10;&#10;<a id="go.3.43.0"></a>57.1        Sec. 43. <ins><b>MTRFA EMPLOYEES.</b></ins>&#10;57.2    <ins>Effective June 30, 2006, the Minneapolis Teachers Retirement Fund Association </ins>&#10;57.3    <ins>employees have their employment with the Minneapolis Teachers Retirement Fund </ins>&#10;57.4    <ins>Association terminated and, effective July 1, 2006,  the Minneapolis Teachers Retirement </ins>&#10;57.5    <ins>Fund Association employees, excluding the Executive Director,  become employees </ins>&#10;57.6    <ins>of the Teachers Retirement Association until December 31, 2007.  The commissioner </ins>&#10;57.7    <ins>of employee relations shall place employees from the former Minneapolis Teachers </ins>&#10;57.8    <ins>Retirement Fund Association into state service in their proper classifications, except that </ins>&#10;57.9    <ins>employees are appointed without examination and must be compensated at their current </ins>&#10;57.10   <ins>hourly salary rate.  Employees must have their accumulated, but unused, vacation leave </ins>&#10;57.11   <ins>balance as of June 30, 2006, posted to their credit by the Teachers Retirement Association </ins>&#10;57.12   <ins>but if the employee has vacation time in excess of the applicable maximum no additional </ins>&#10;57.13   <ins>vacation may accrue until the employee's balance falls below the maximum permitted </ins>&#10;57.14   <ins>by the state for the employee's position. The employees must receive length of service </ins>&#10;57.15   <ins>credit for vacation leave accrual for time served at the Minneapolis Teachers Retirement </ins>&#10;57.16   <ins>Fund Association. Minneapolis Teachers Retirement Fund Association employees who </ins>&#10;57.17   <ins>become employees of the Teachers Retirement Association effective on July 1, 2006 </ins>&#10;57.18   <ins>must be considered to have completed six months of continuous service for vacation use </ins>&#10;57.19   <ins>purposes. Employees of the former Minneapolis Teachers Retirement Fund Association </ins>&#10;57.20   <ins>appointed to the classified service are subject to a probationary period under the collective </ins>&#10;57.21   <ins>bargaining agreement or compensation plan applicable to the employee's position at the </ins>&#10;57.22   <ins>Teachers Retirement Association. Effective July 1, 2006, all transferred employees must </ins>&#10;57.23   <ins>be enrolled in the state employees' group insurance program as provided in Minnesota </ins>&#10;57.24   <ins>Statutes, sections 43A.22 to 43A.31 and the commissioner of employee relations shall </ins>&#10;57.25   <ins>provide open enrollment in all state employee health and dental insurance plans with </ins>&#10;57.26   <ins>no limitation on preexisting conditions except as specified in existing state employee </ins>&#10;57.27   <ins>certificates of coverage.  The commissioner of employee relations shall provide these </ins>&#10;57.28   <ins>transferred employees with the opportunity to purchase optional life and disability </ins>&#10;57.29   <ins>insurance as provided by the state group insurance program in accordance with the </ins>&#10;57.30   <ins>policies of the department of employee relations.</ins>&#10;&#10;<a id="go.3.44.0"></a>57.31       Sec. 44. <ins><b>MTRFA ARTICLES AND BYLAWS; REPEAL; APPLICABILITY.</b></ins>&#10;57.32   <ins>(a) The articles of incorporation and bylaws of the Minneapolis Teachers Retirement </ins>&#10;57.33   <ins>Fund Association are repealed and have application only as provided in section 9, </ins>&#10;57.34   <ins>subdivision 6, and in paragraph (b).</ins>&#10;58.1    <ins>(b) The articles of incorporation and bylaws of the Minneapolis Teachers Retirement </ins>&#10;58.2    <ins>Fund Association only apply to members of the former Minneapolis Teachers Retirement </ins>&#10;58.3    <ins>Fund Association with service credit in the plan on or before June 30, 2006, and apply </ins>&#10;58.4    <ins>solely for purposes of determining the retirement annuity for or benefit on behalf of a </ins>&#10;58.5    <ins>member of the basic program of that retirement plan.</ins>&#10;58.6    <ins>(c) No annuity adjustment or increase under article 30 of the articles of incorporation </ins>&#10;58.7    <ins>of the Minneapolis Teachers Retirement Fund Association is applicable or payable after </ins>&#10;58.8    <ins>June 30, 2006.</ins>&#10;&#10;<a id="go.3.45.0"></a>58.9        Sec. 45. <ins><b> REPEALER.</b></ins>&#10;58.10   <ins>Minnesota Statutes 2004, sections 354A.051; 354A.105; 354A.23, subdivision 1; </ins>&#10;58.11   <ins>and 354A.28,</ins><ins> are repealed effective June 30, 2006.</ins>&#10;&#10;<a id="go.3.46.0"></a>58.12       Sec. 46. <ins><b>EFFECTIVE DATE.</b></ins>&#10;58.13   <ins>Sections 2 to 45 are effective July 1, 2006, except that section 9, subdivision 7, is </ins>&#10;58.14   <ins>effective the day following final enactment.</ins>&#10;&#10;<a id="go.4.0.0"></a>58.15                                          <b>ARTICLE 4</b>&#10;58.16                                  <b>STATE BOARD OF INVESTMENT</b>&#10;&#10;<a id="go.4.1.0"></a>58.17       Section 1. Laws 2005, chapter 156, article 1, section 8, is amended to read:&#10;<rs_table>58.18                                                                            <del>2,167,000</del>&#10;58.19   Sec. 8.<b> INVESTMENT BOARD</b>                               2,167,000           <ins>151,000</ins>&#10;</rs_table>&#10;<a id="go.4.2.0"></a>58.20       Sec. 2. Minnesota Statutes 2005 Supplement, section 11A.04, is amended to read:&#10;58.21   <b>11A.04 DUTIES AND POWERS.</b>&#10;58.22   The state board shall:&#10;58.23   (1) Act as trustees for each fund for which it invests or manages money in &#10;58.24   accordance with the standard of care set forth in section 11A.09 if state assets are involved &#10;58.25   and in accordance with chapter 356A if pension assets are involved.&#10;58.26   (2) Formulate policies and procedures deemed necessary and appropriate to carry &#10;58.27   out its functions. Procedures adopted by the board must allow fund beneficiaries and &#10;58.28   members of the public to become informed of proposed board actions. Procedures and &#10;58.29   policies of the board are not subject to the Administrative Procedure Act.&#10;58.30   (3) Employ an executive director as provided in section 11A.07.&#10;58.31   (4) Employ investment advisors and consultants as it deems necessary.&#10;59.1    (5) Prescribe policies concerning personal investments of all employees of the board &#10;59.2    to prevent conflicts of interest.&#10;59.3    (6) Maintain a record of its proceedings.&#10;59.4    (7) As it deems necessary, establish advisory committees subject to section 15.059 to &#10;59.5    assist the board in carrying out its duties.&#10;59.6    (8) Not permit state funds to be used for the underwriting or direct purchase of &#10;59.7    municipal securities from the issuer or the issuer's agent.&#10;59.8    (9) Direct the commissioner of finance to sell property other than money that has &#10;59.9    escheated to the state when the board determines that sale of the property is in the best &#10;59.10   interest of the state. Escheated property must be sold to the highest bidder in the manner &#10;59.11   and upon terms and conditions prescribed by the board.&#10;59.12   (10) Undertake any other activities necessary to implement the duties and powers &#10;59.13   set forth in this section.&#10;59.14   (11) Establish a formula or formulas to measure management performance and &#10;59.15   return on investment. Public pension funds in the state shall utilize the formula or &#10;59.16   formulas developed by the state board.&#10;59.17   (12) Except as otherwise provided in article XI, section 8, of the Constitution of the &#10;59.18   state of Minnesota, employ, at its discretion, qualified private firms to invest and manage &#10;59.19   the assets of funds over which the state board has investment management responsibility. &#10;59.20   There is annually appropriated to the state board, from the assets of the funds for which &#10;59.21   the state board utilizes a private investment manager, sums sufficient to pay the costs of &#10;59.22   employing private firms. Each year, by January 15, the board shall report to the governor &#10;59.23   and legislature on the cost and the investment performance of each investment manager &#10;59.24   employed by the board.&#10;59.25   (13) Adopt an investment policy statement that includes investment objectives, asset &#10;59.26   allocation, and the investment management structure for the retirement fund assets under &#10;59.27   its control. The statement may be revised at the discretion of the state board. The state &#10;59.28   board shall seek the advice of the council regarding its investment policy statement. &#10;59.29   Adoption of the statement is not subject to chapter 14.&#10;59.30   (14) Adopt a compensation plan setting the terms and conditions of employment for &#10;59.31   unclassified board employees who are not covered by a collective bargaining agreement.&#10;59.32   <ins>There is annually appropriated to the state board, from the assets of the funds for </ins>&#10;59.33   <ins>which the state board provides investment services, sums sufficient to pay the costs of </ins>&#10;59.34   <ins>all necessary expenses for the administration of the board. These sums will be deposited </ins>&#10;59.35   <ins>in the State Board of Investment operating account, which must be established by the </ins>&#10;59.36   <ins>commissioner of finance.</ins>&#10;&#10;<a id="go.4.3.0"></a>60.1        Sec. 3. Minnesota Statutes 2005 Supplement, section 11A.07, subdivision 4, is &#10;60.2    amended to read:&#10;60.3        Subd. 4. <b>Duties and powers.</b> The director, at the direction of the state board, shall:&#10;60.4    (1) plan, direct, coordinate, and execute administrative and investment functions &#10;60.5    in conformity with the policies and directives of the state board and the requirements of &#10;60.6    this chapter and of chapter 356A;&#10;60.7    (2) <ins>prepare and submit biennial and annual budgets to the board and with the </ins>&#10;60.8    <ins>approval of the board submit the budgets to the Department of Finance;</ins>&#10;60.9    <ins>(3) </ins>employ professional and clerical staff as necessary. Employees whose primary &#10;60.10   responsibility is to invest or manage money or employees who hold positions designated &#10;60.11   as unclassified under section 43A.08, subdivision 1a, are in the unclassified service of the &#10;60.12   state. Other employees are in the classified service. Unclassified employees who are &#10;60.13   not covered by a collective bargaining agreement are employed under the terms and &#10;60.14   conditions of the compensation plan approved under section 43A.18, subdivision 3b;&#10;60.15   <del>(3)</del><ins> (4)</ins> report to the state board on all operations under the director's control and &#10;60.16   supervision;&#10;60.17   <del>(4)</del><ins> (5)</ins> maintain accurate and complete records of securities transactions and official &#10;60.18   activities;&#10;60.19   <del>(5)</del><ins> (6)</ins> establish a policy relating to the purchase and sale of securities on the basis of &#10;60.20   competitive offerings or bids. The policy is subject to board approval;&#10;60.21   <del>(6)</del><ins> (7)</ins> cause securities acquired to be kept in the custody of the commissioner of &#10;60.22   finance or other depositories consistent with chapter 356A, as the state board deems &#10;60.23   appropriate;&#10;60.24   <del>(7)</del><ins> (8)</ins> prepare and file with the director of the Legislative Reference Library, by &#10;60.25   December 31 of each year, a report summarizing the activities of the state board, the &#10;60.26   council, and the director during the preceding fiscal year. The report must be prepared &#10;60.27   so as to provide the legislature and the people of the state with a clear, comprehensive &#10;60.28   summary of the portfolio composition, the transactions, the total annual rate of return, and &#10;60.29   the yield to the state treasury and to each of the funds whose assets are invested by the &#10;60.30   state board, and the recipients of business placed or commissions allocated among the &#10;60.31   various commercial banks, investment bankers, and brokerage organizations. The report &#10;60.32   must contain financial statements for funds managed by the board prepared in accordance &#10;60.33   with generally accepted accounting principles;&#10;60.34   <del>(8)</del><ins> (9)</ins> require state officials from any department or agency to produce and provide &#10;60.35   access to any financial documents the state board deems necessary in the conduct of &#10;60.36   its investment activities;&#10;61.1    <del>(9)</del><ins> (10)</ins> receive and expend legislative appropriations;<ins> and</ins>&#10;61.2    <del>(10)</del><ins> (11)</ins> undertake any other activities necessary to implement the duties and &#10;61.3    powers set forth in this subdivision consistent with chapter 356A.&#10;&#10;<a id="go.4.4.0"></a>61.4        Sec. 4. Minnesota Statutes 2004, section 11A.07, subdivision 5, is amended to read:&#10;61.5         Subd. 5. <b>Apportionment of expenses.</b> <del>The executive director shall apportion the </del>&#10;61.6    <del>actual expenses incurred by the board on an accrual basis among the several funds whose </del>&#10;61.7    <del>assets are invested by the board based on the weighted average assets under management </del>&#10;61.8    <del>during each quarter.  The charge to each fund must be calculated, billed, and paid on a </del>&#10;61.9    <del>quarterly basis in accordance with procedures for interdepartmental payments established </del>&#10;61.10   <del>by the commissioner of finance.  The amounts necessary to pay these charges are </del>&#10;61.11   <del>appropriated from the investment earnings of each fund.  Receipts must be credited to the </del>&#10;61.12   <del>general fund as nondedicated receipts.</del><ins> The annual expenses incurred by the State Board </ins>&#10;61.13   <ins>of Investment will be apportioned among the state general fund, the retirement funds </ins>&#10;61.14   <ins>administered by the Minnesota State Retirement System, Public Employees Retirement </ins>&#10;61.15   <ins>Association, and Teachers Retirement Association, and all other funds as follows:</ins>&#10;61.16   <ins>(1) on a biennial basis, the State Board of Investment, in accordance with biennial </ins>&#10;61.17   <ins>budget procedures established by the commissioner of finance, may request a direct </ins>&#10;61.18   <ins>appropriation that represents the portion of the State Board of Investment expenses </ins>&#10;61.19   <ins>necessary to provide investment services to the state general fund.  This appropriation </ins>&#10;61.20   <ins>must be deposited in the State Board of Investment operating account;</ins>&#10;61.21   <ins>(2) the executive director shall apportion the actual expenses incurred by the State </ins>&#10;61.22   <ins>Board of Investment, less the charge to the state general fund, among the funds whose </ins>&#10;61.23   <ins>assets are invested by the State Board of Investment, with the exception of the state general </ins>&#10;61.24   <ins>fund, based on the weighted average assets under management during the fiscal year.  The </ins>&#10;61.25   <ins>amounts necessary to pay these charges are apportioned from the investment earnings of </ins>&#10;61.26   <ins>each fund.  Receipts must be credited to the State Board of Investment operating account;</ins>&#10;61.27   <ins>(3) the actual expenses apportioned and charged to the funds, with the exception </ins>&#10;61.28   <ins>of the state general fund and the retirement funds administered by the Minnesota State </ins>&#10;61.29   <ins>Retirement System, Public Employees Retirement Association, and Teachers Retirement </ins>&#10;61.30   <ins>Association, must be calculated, billed, and paid on a quarterly basis in accordance with </ins>&#10;61.31   <ins>procedures for interdepartmental payments established by the commissioner of finance; </ins>&#10;61.32   <ins>and </ins>&#10;61.33   <ins>(4) the annual estimated expenses to be incurred by the State Board of Investment </ins>&#10;61.34   <ins>that will be payable by the retirement funds administered by the Minnesota State </ins>&#10;61.35   <ins>Retirement System, Public Employees Retirement Association, and Teachers Retirement </ins>&#10;62.1    <ins>Association must be deposited in the State Board of Investment operating account on the </ins>&#10;62.2    <ins>first business day of each fiscal year.  A reconciliation of the actual expenses compared to </ins>&#10;62.3    <ins>the estimated costs must occur at the end of each fiscal year with any surplus or deficit </ins>&#10;62.4    <ins>being credited or debited to each of the respective funds.  The State Board of Investment </ins>&#10;62.5    <ins>must present a statement of accrued actual expenses to each fund at the end of each </ins>&#10;62.6    <ins>quarter during each fiscal year.</ins>&#10;&#10;<a id="go.5.0.0"></a>62.7                                           <b>ARTICLE 5</b>&#10;62.8                                     <b>BUDGET PRESENTATION OF</b>&#10;62.9                                 <b>EMPLOYER PENSION CONTRIBUTIONS</b>&#10;&#10;<a id="go.5.1.0"></a>62.10       Section 1. Minnesota Statutes 2004, section 43A.04, subdivision 12, is amended to &#10;62.11   read:&#10;62.12       Subd. 12. <b>Total compensation reporting.</b> (a) The commissioner, in consultation &#10;62.13   with the commissioner of finance, shall report to the governor and the legislature by &#10;62.14   January 15 each year on executive branch employee salary and benefits. The purpose of &#10;62.15   the report is to assist in effective long-range planning and to provide data necessary to &#10;62.16   compute annual and biennial costs related to the state workforce. The report must use data &#10;62.17   available in the biennial budget system and other necessary sources. The report also must &#10;62.18   be made available to the public in an electronic format.&#10;62.19   (b) The report must be organized by agency. The report must list the salary or &#10;62.20   hourly rate of pay for each agency employee. The report may list the employee by name &#10;62.21   or by an identification number.&#10;62.22   (c) The report must also include an estimate of the average cost to the state of &#10;62.23   providing insurance and other benefits to a state employee.&#10;62.24   <ins>(d) The report must also include the number of employees by agency or department, </ins>&#10;62.25   <ins>separated by retirement plan membership, and for each plan, the total compensation, </ins>&#10;62.26   <ins>the total employee retirement plan contribution, and the total employer retirement plan </ins>&#10;62.27   <ins>contributions.</ins>&#10;&#10;<a id="go.5.2.0"></a>62.28       Sec. 2. <ins><b>EFFECTIVE DATE.</b></ins>&#10;62.29   <ins>Section 1 is effective the day following final enactment.</ins>&#10;&#10;<a id="go.6.0.0"></a>62.30                                          <b>ARTICLE 6</b>&#10;62.31                               <b>INVESTMENT PERFORMANCE REPORTING</b>&#10;&#10;<a id="go.6.1.0"></a>62.32       Section 1. Minnesota Statutes 2004, section 356.219, is amended by adding a &#10;62.33   subdivision to read:&#10;63.1        <ins>Subd. 9.</ins> <ins><b>Data availability.</b></ins> <ins>Any information received by the state auditor under </ins>&#10;63.2    <ins>this section, if the data are public, must be made available to individuals or organizations </ins>&#10;63.3    <ins>which request that information. The state auditor is authorized to charge fees sufficient to </ins>&#10;63.4    <ins>cover the cost of providing the requested information in usable formats.</ins>&#10;&#10;<a id="go.6.2.0"></a>63.5        Sec. 2. Minnesota Statutes 2004, section 356.219, is amended by adding a subdivision &#10;63.6    to read:&#10;63.7        <ins>Subd. 10.</ins> <ins><b>Pension performance reporting.</b></ins> <ins>In addition to report presentations </ins>&#10;63.8    <ins>that the state auditor is required to provide elsewhere in this section, the state auditor </ins>&#10;63.9    <ins>shall provide an analysis comparing the one year and the five year rate of return for each </ins>&#10;63.10   <ins>pension fund and the benchmark rate of return for each fund. The state auditor shall select </ins>&#10;63.11   <ins>the benchmark rate of return based on the best practice in the industry.</ins>&#10;&#10;<a id="go.6.3.0"></a>63.12       Sec. 3. <ins><b>EFFECTIVE DATE.</b></ins>&#10;63.13   <ins>(a) Sections 1 and 2 are effective the day following final enactment.</ins>&#10;63.14   <ins>(b) Section 2 expires on July 1, 2010.</ins>&#10;&#10;<a id="go.7.0.0"></a>63.15                                          <b>ARTICLE 7</b>&#10;63.16                                     <b>STUDY OF COMPARATIVE</b>&#10;63.17                              <b>PUBLIC RETIREMENT PLAN PROVISIONS</b>&#10;&#10;<a id="go.7.1.0"></a>63.18       Section 1. <ins><b>STUDY BY LEGISLATIVE COMMISSION ON PENSIONS AND </b></ins>&#10;63.19   <ins><b>RETIREMENT.</b></ins>&#10;63.20   <ins>(a) The Legislative Commission on Pensions and Retirement shall study the structure </ins>&#10;63.21   <ins>and implications of procedures used by the Minnesota State Retirement System plans, </ins>&#10;63.22   <ins>Public Employees Retirement Association plans, the Teachers Retirement Association, </ins>&#10;63.23   <ins>the Minneapolis Employees Retirement Fund, the first class city teacher retirement fund </ins>&#10;63.24   <ins>associations, and the Minneapolis police and fire relief associations to provide investment </ins>&#10;63.25   <ins>performance based postretirement increases to plan benefit recipients. The study shall </ins>&#10;63.26   <ins>include but not be limited to consideration of the ability of these systems offset the impact </ins>&#10;63.27   <ins>of inflation; the cost, budget, and aid implications of these systems; and consistency </ins>&#10;63.28   <ins>across plans. In addition, the study must compare Minnesota teacher retirement plans </ins>&#10;63.29   <ins>with teacher pension plans in other states on the following items: normal retirement </ins>&#10;63.30   <ins>age; penalties that attach to early retirement; taxation of benefits; and pension benefits, </ins>&#10;63.31   <ins>including, but not limited to, the coordination with Social Security benefits, formula </ins>&#10;63.32   <ins>multipliers, final average salary periods, and special early normal retirement provisions.</ins>&#10;64.1    <ins>(b) The Legislative Commission on Pensions and Retirement shall produce a report </ins>&#10;64.2    <ins>of the findings of the study. The Legislative Commission on Pensions and Retirement </ins>&#10;64.3    <ins>shall include draft proposed legislation to implement any recommended changes included </ins>&#10;64.4    <ins>in the report.</ins>&#10;64.5    <ins>(c) The report must be filed by December 1, 2006, with the chairs of the Senate State </ins>&#10;64.6    <ins>and Local Government Operations Committee, the Senate Finance Committee, the House </ins>&#10;64.7    <ins>Government Operations and Veterans Affairs Committee, the House State Government </ins>&#10;64.8    <ins>Finance Committee, and the House Ways and Means Committee.</ins>&#10;&#10;<a id="go.7.2.0"></a>64.9        Sec. 2. <ins><b>EFFECTIVE DATE.</b></ins>&#10;64.10   <ins>Section 1 is effective the day following final enactment.</ins>&#10;&#10;<a id="go.8.0.0"></a>64.11                                          <b>ARTICLE 8</b>&#10;64.12                                      <b>STUDY OF STATEWIDE</b>&#10;64.13                                  <b>RETIREMENT PLAN STRUCTURE</b>&#10;&#10;<a id="go.8.1.0"></a>64.14       Section 1. <ins><b>STUDY BY LEGISLATIVE COMMISSION ON PENSIONS AND </b></ins>&#10;64.15   <ins><b>RETIREMENT.</b></ins>&#10;64.16   <ins>(a) The Legislative Commission on Pensions and Retirement shall study the structure </ins>&#10;64.17   <ins>of the Minnesota combined investment funds under Minnesota Statutes, section 11A.14, </ins>&#10;64.18   <ins>and the Minnesota postretirement investment fund under Minnesota Statutes, section </ins>&#10;64.19   <ins>11A.18, including transfer requirements between these funds.</ins>&#10;64.20   <ins>(b) The Legislative Commission on Pensions and Retirement shall produce a report </ins>&#10;64.21   <ins>of the findings from the study. The Legislative Commission on Pensions and Retirement </ins>&#10;64.22   <ins>shall include draft proposed legislation to implement any recommended changes included </ins>&#10;64.23   <ins>in the report.</ins>&#10;64.24   <ins>(c) The report must be filed by December 1, 2006, with the chairs of the Senate State </ins>&#10;64.25   <ins>and Local Government Operations Committee, the Senate Finance Committee, the House </ins>&#10;64.26   <ins>Government Operations and Veterans Affairs Committee, the House State Government </ins>&#10;64.27   <ins>Finance Committee, and the House Ways and Means Committee.</ins>&#10;&#10;<a id="go.8.2.0"></a>64.28       Sec. 2. <ins><b>EFFECTIVE DATE.</b></ins>&#10;64.29   <ins>Section 1 is effective the day following final enactment.</ins>&#10;