1.1 	A bill for an act
1.2 	relating to retirement; retirement coverage for school
1.3 	administrators; providing school administrators with
1.4 	an option to elect defined contribution plan coverage;
1.5 	authorizing the Teachers Retirement Association to
1.6 	enter into cooperative agreements with teacher
1.7 	retirement systems of other states for the recognition
1.8 	of combined service for benefit eligibility and
1.9 	benefit calculations; proposing coding for new law in
1.10 	Minnesota Statutes, chapters 354; 354B.
1.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	Section 1. [354.415] SCHOOL ADMINISTRATORS; DEFINED
1.13 	CONTRIBUTION PLAN COVERAGE.
1.14 		Subdivision 1.Definitions. (a) For purposes of this
1.15 	section, the following terms have the meanings given.
1.16 	(b) "School administrator" means a school superintendent,
1.17 	an elementary school principal, a middle school or junior high
1.18 	school principal, a high school principal, a school district
1.19 	service provider administrator, a school district central office
1.20 	administrator, or a special education director.
1.21 	(c) "School district" means an independent school district,
1.22 	a special school district, a cooperative school district, a
1.23 	charter school, or an area learning center.
1.24 	(d) "Governing body" means the primary policy setting and
1.25 	budget setting board of a school district.
1.26 	(e) "Election" means a school administrator election as
1.27 	described in subdivision 2.
1.28 		Subd. 2.School administrator election. (a) A school
2.1 	administrator may elect to be excluded from membership in the
2.2 	Teachers Retirement Association and to be included in the
2.3 	retirement coverage under chapter 354B.
2.4 	(b) The exclusion election must be made within three months
2.5 	following the commencement of employment as a school
2.6 	administrator, in writing on a form prescribed by the executive
2.7 	director of the Teachers Retirement Association, and must be
2.8 	approved by a resolution of the governing body of the school
2.9 	district.  The exclusion election is not effective until it is
2.10 	filed with the executive director of the Teachers Retirement
2.11 	Association.
2.12 	(c) Membership in the Teachers Retirement Association
2.13 	ceases on the date on which the written election is received by
2.14 	the executive director of the Teachers Retirement Association
2.15 	and the exclusion applies to the initial date of employment as a
2.16 	school administrator.  Member and employer contributions from
2.17 	that date must be transferred to the school administrator's
2.18 	account in the individual retirement account plan under chapter
2.19 	354B.
2.20 	(d) An election under this section is irrevocable.  The
2.21 	election form under this section must include a statement that
2.22 	the school administrator will not seek authorization to purchase
2.23 	service credit in the Teachers Retirement Association for any
2.24 	period of excluded service.
2.25 		Subd. 3.Contributions to individual retirement account
2.26 	plan. If an election under this section is made, the member and
2.27 	employer contributions for the applicable school administrator
2.28 	must be deposited in the individual account of the school
2.29 	administrator in the individual retirement account plan under
2.30 	chapter 354B.

2.31 	Sec. 2. [354.515] COOPERATIVE PORTABILITY AGREEMENT WITH
2.32 	OTHER STATE RETIREMENT SYSTEMS.
2.33 		Subdivision 1.Authorization. (a) The Teachers
2.34 	Retirement Association may enter into a cooperative agreement
2.35 	with the Wisconsin retirement system or any other qualified
2.36 	governmental retirement plan to implement the interstate
3.1 	combined service annuity under this section.
3.2 	(b) A qualified governmental retirement plan is:
3.3 	(1) a public employee retirement plan which either provides
3.4 	retirement coverage to teachers exclusively or includes teachers
3.5 	in its active member coverage group;
3.6 	(2) is a defined benefit plan;
3.7 	(3) has regular actuarial valuations generally in
3.8 	conformance with the requirements of section 356.215; and 
3.9 	(4) has been funded over the past five years with total
3.10 	contributions sufficient at least to meet the normal cost
3.11 	requirements of the plan and amortize any unfunded actuarial
3.12 	accrued liability.
3.13 		Subd. 2.Terms of cooperative agreement. (a)
3.14 	Notwithstanding any provision of this chapter or chapter 356 to
3.15 	the contrary, an eligible person who has met the qualifications
3.16 	of paragraph (b) may elect to receive a retirement annuity under
3.17 	this chapter based on the final average salary of the person
3.18 	credited by the Teachers Retirement Association or another
3.19 	qualified governmental retirement plan and the allowable service
3.20 	credited by the Teachers Retirement Association, subject to
3.21 	paragraph (c).
3.22 	(b) An eligible person must have:
3.23 	(1) at least one-half year of allowable service in the
3.24 	Teachers Retirement Association and in the other qualified
3.25 	governmental retirement plan;
3.26 	(2) combined service in the Teachers Retirement Association
3.27 	and the other qualified governmental retirement plan of at least
3.28 	three years or at least the minimum vesting period of the other
3.29 	governmental retirement plan, whichever is longer; and 
3.30 	(3) not begun to receive an annuity from the Teachers
3.31 	Retirement Association or the other qualified governmental
3.32 	retirement plan.
3.33 	(c) The retirement annuity from the Teachers Retirement
3.34 	Association must be based on:
3.35 	(1) the benefit plan in effect on the date of the
3.36 	termination of active teaching service from the Teachers
4.1 	Retirement Association or the other qualified governmental
4.2 	retirement plan, whichever is later; and 
4.3 	(2) the allowable service, benefit accrual rates, and the
4.4 	highest five successive years' average salary during the entire
4.5 	service covered by either the Teachers Retirement Association or
4.6 	the other qualified governmental retirement plan.  The benefit
4.7 	accrual rates used by each plan are those percentages in the
4.8 	benefit plan as a continuation of allowable service from one
4.9 	plan to the next plan, recognizing all previous allowable
4.10 	service with the other plan.  The allowable service credit in
4.11 	all plans is combined in determining eligibility for and the
4.12 	application of any early retirement annuity reduction rates.
4.13 	(d) Any period of teaching service for which an eligible
4.14 	person has credit in both the Teachers Retirement Association
4.15 	and the other qualified governmental retirement plan may be used
4.16 	only once for the purpose of determining total allowable service
4.17 	for a retirement annuity under this section, with duplicated
4.18 	service credit represented by the smaller total dollar amount of
4.19 	member contributions ignored under this section.
4.20 	(e) An eligible person is a person who:
4.21 	(1) elects in writing to have the person's retirement
4.22 	annuity for covered teaching service calculated under this
4.23 	section;
4.24 	(2) has not taken a refund of member contributions from
4.25 	either plan or has repaid those member contribution refunds; and 
4.26 	(3) has sufficient combined teaching service to be eligible
4.27 	for a retirement annuity.
4.28 	(f) Any cooperative agreement under this section must
4.29 	include retroactive application of the portability mechanism to
4.30 	a person who was a Minnesota teacher before July 1, 2005, and
4.31 	subsequently became a teacher in the state of the other
4.32 	qualified governmental retirement plan.
4.33 		Subd. 3.Determination of net annual cooperative
4.34 	agreement actuarial liability. (a) The actuary retained under
4.35 	section 356.214, as part of the annual actuarial valuation of
4.36 	the Teachers Retirement Association, shall calculate the
5.1 	actuarial present value of the additional benefits from the
5.2 	Teachers Retirement Association obtained under this section by
5.3 	retirees of each qualified governmental retirement plan during
5.4 	the plan year.
5.5 	(b) The executive director, annually, shall submit a report
5.6 	to the Legislative Commission on Pensions and Retirement
5.7 	comparing the additional liability results under paragraph (a)
5.8 	with the comparable additional liability results related to the
5.9 	Teachers Retirement Association calculated by the consulting
5.10 	actuary retained by each qualified governmental retirement plan
5.11 	with a cooperative agreement with the Teachers Retirement
5.12 	Association.  If the report indicates that the Teachers
5.13 	Retirement Association has borne a net additional present value
5.14 	of additional benefits with respect to a qualified governmental
5.15 	retirement plan for a given year, the executive director shall
5.16 	request a transfer of assets equal to the net amount.  If the
5.17 	applicable qualified governmental retirement plan does not remit
5.18 	the requested transfer and the subsequent year's report again
5.19 	indicates a net additional liability borne by the Teachers
5.20 	Retirement Association with respect to that qualified
5.21 	governmental retirement plan, the cooperative agreement
5.22 	terminates as of the first day of the month next following
5.23 	notification of the chief administrative officer of the
5.24 	applicable qualified governmental retirement plan of that fact
5.25 	by the executive director of the Teachers Retirement Association.
5.26 		Subd. 4.Cooperative agreement formulation; adoption. (a)
5.27 	The Teachers Retirement Association may approach any qualified
5.28 	governmental retirement plan to consider formulating and
5.29 	adopting a cooperative combined service recognition agreement
5.30 	and may entertain approaches to that end by any qualified
5.31 	governmental retirement plan.
5.32 	(b) A cooperative agreement under this section must:
5.33 	(1) contain, by explicit language or by appropriate
5.34 	reference, the definition of a qualified person and the terms
5.35 	set forth in subdivision 2;
5.36 	(2) require that the actuarial present value of the
6.1 	additional benefits obtained from each qualified governmental
6.2 	retirement plan under the cooperative agreement procedure be
6.3 	calculated by a consulting actuary who meets the definition of
6.4 	section 356.215, subdivision 1, paragraph (c);
6.5 	(3) provide for transfers of the calculated net
6.6 	differential in pension plan liability;
6.7 	(4) be subject to regular audits by an independent
6.8 	certified public accountant; and 
6.9 	(5) be executed by the chief administrative officer of the
6.10 	qualified governmental retirement plan, the chair of the board
6.11 	of the qualified governmental retirement plan, and the governor
6.12 	of the state.

6.13 	Sec. 3. [354B.215] INDIVIDUAL RETIREMENT ACCOUNT PLAN
6.14 	COVERAGE FOR CERTAIN SCHOOL ADMINISTRATORS.
6.15 	School administrators who elect to be excluded from the
6.16 	Teachers Retirement Association under section 354.415 are
6.17 	covered by the individual retirement account plan.
6.18 	Contributions by or on behalf of affected school administrators
6.19 	must be deposited in the applicable individual retirement
6.20 	account.

6.21 	Sec. 4. EFFECTIVE DATE.
 6.22 	Sections 1 to 3 are effective July 1, 2005.