1.1 	A bill for an act
1.2 	relating to retirement; Social Security administration; making technical 
1.3 	corrections; allowing for prospective and retroactive Social Security and 
1.4 	Medicare coverage of certain governmental employees; requiring referenda;
1.5 	amending Minnesota Statutes 2004, sections 355.01, subdivision 3g; 355.02, 
1.6 	subdivisions 1, 3,  by adding subdivisions; proposing coding for new law in 
1.7 	Minnesota Statutes, chapter 355.
1.8 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.9 	Section 1. Minnesota Statutes 2004, section 355.01, subdivision 3g, is amended to read:
1.10 		Subd. 3g.Local governmental subdivision. "Local governmental subdivision" 
1.11 	means:
1.12 	(1) a political subdivision as defined in section 218(b) of the Social Security Act;
1.13 	(2) an instrumentality of the state;
1.14 	(3) an instrumentality of one or more of the political subdivisions of the state~~,~~ 
1.15 	~~including the League of Minnesota Cities~~;
1.16 	(4) an instrumentality of the state and one or more of its political subdivisions;
1.17 	(5) a governmental subdivision as defined in section  353.01, subdivision 6; and 
1.18 	(6) any instrumentality established under a joint powers agreement under section  
1.19 	471.59 wherein the instrumentality is responsible for the employment and the payment of 
1.20 	the salaries of the employees of the instrumentality. 

1.21 	Sec. 2. Minnesota Statutes 2004, section 355.02, subdivision 1, is amended to read:
1.22 		Subdivision 1.General authority. (a) The director, with the approval of the 
1.23 	governor, is hereby authorized to enter into an agreement on behalf of the state, its political 
1.24 	subdivisions and its other governmental employers,  with the federal Secretary of Health 
2.1 	and Human Services, consistent with the terms and provisions of this chapter, for the 
2.2 	purpose of extending the benefits of the federal old age, survivors, and disability insurance 
2.3 	system to employees of the state or any political subdivision thereof who hold positions 
2.4 	covered by a retirement system with respect to services specified in the agreement which 
2.5 	constitute "employment~~,~~." ~~whenever so specifically authorized by the statutory provisions~~ 
2.6 	~~of this state pertaining to any coverage group of such employees to which the agreement~~ 
2.7 	~~may become applicable under the Social Security Act.~~
2.8 	(b) ~~Under this specific authorization~~ The agreement may contain those provisions 
2.9 	relating to coverage, benefits, contributions, effective date, modification and termination 
2.10 	of the agreement, administration, and other appropriate provisions as the director and the 
2.11 	federal Secretary of Health and Human Services shall agree upon, but, except as may be 
2.12 	otherwise required by or under the Social Security Act as to the services to be covered, 
2.13 	such agreement must provide in effect that:
2.14 	(1) benefits will be provided for employees whose services are covered by the 
2.15 	agreement (and their dependents and survivors) on the same basis as though those services 
2.16 	constituted employment within the meaning of title II of the Social Security Act;
2.17 	(2) the state or other employer will pay to the federal Secretary of the Treasury, at 
2.18 	such time or times as may be prescribed under the Social Security Act, contributions 
2.19 	with respect to wages, equal to the sum of the taxes which would be imposed by the 
2.20 	Federal Insurance Contributions Act if the services covered by the agreement constituted 
2.21 	employment within the meaning of that act;
2.22 	(3) the agreement is effective with respect to services in employment covered by the 
2.23 	agreement performed after a date specified therein; and
2.24 	(4) all services which constitute employment and are performed in the employ of 
2.25 	the state or any of its political subdivisions by employees thereof, may be covered by the 
2.26 	agreement ~~whenever so specifically authorized by the statutory provisions of this state~~ 
2.27 	~~pertaining to any coverage group of such employees to which the agreement may become~~ 
2.28 	~~applicable under the Social Security Act~~.

2.29 	Sec. 3. Minnesota Statutes 2004, section 355.02, subdivision 3, is amended to read:
2.30 		Subd. 3.Groups covered by Social Security. (a) The following groups having 
2.31 	coverage under a retirement plan in section 356.30, subdivision 3, except clauses (4) and 
2.32 	(8) must be covered by an agreement or a modification to an agreement between the 
2.33 	director and the federal Secretary of Health and Human Services:
2.34 	(1) constitutional officers;
2.35 	(2) Duluth teachers;
3.1 	(3) educational employees;
3.2 	(4) higher education employees;
3.3 	(5) hospital employees;
3.4 	(6) judges;
3.5 	(7) legislators;
3.6 	(8) Minneapolis teachers;
3.7 	(9) public employees;
3.8 	(10) St. Paul teachers; and
3.9 	(11) ~~special authority or district employees; and~~
3.10 	~~(12)~~ state employees.
3.11 	(b) The following groups must be covered prospectively following the referendum 
3.12 	in subdivision 4 and the modification to the state Social Security agreement under 
3.13 	subdivision 1:
3.14 	(1) special authority or district employees in positions covered by a retirement plan 
3.15 	provided by the employer; and
3.16 	(2) local elected officials of a local governmental subdivision or of a special authority 
3.17 	or district holding positions covered by the defined contribution plan under chapter 353D.
3.18 	(c) Each local governmental subdivision or special authority or district desiring 
3.19 	inclusion in the state Social Security agreement for groups covered by paragraph (b) must 
3.20 	request such coverage by submitting a formal resolution to the director, including therein 
3.21 	the desired starting date for Social Security coverage.
3.22 	(d) For purposes of paragraph (b), clause (2), the defined contribution plan of the 
3.23 	Public Employees Retirement Association is considered a separate retirement system with 
3.24 	respect to each local governmental subdivision or special authority or district, and the 
3.25 	elected officials in a local governmental subdivision or in a special authority or district 
3.26 	must be treated separately and independently from the other governmental subdivisions.

3.27 	Sec. 4. Minnesota Statutes 2004, section 355.02, is amended by adding a subdivision 
3.28 	to read:
3.29 		Subd. 4.Referendum. The director shall authorize and supervise a referendum 
3.30 	under section 218(d)(6)(C) of the Social Security Act to be held on the date or dates set by 
3.31 	the local governmental subdivision or by the special authority or district desiring inclusion 
3.32 	under subdivision 3, paragraph (b). The referendum must permit each eligible employee 
3.33 	the opportunity to elect Social Security coverage. The notice of referendum required by 
3.34 	section 218(d) of the Social Security Act must contain a statement sufficient to inform 
3.35 	the person of the rights which accrue under the Social Security Act and the employee 
4.1 	contribution rates applicable to the program. The cost of the referendum is to be borne 
4.2 	by the governmental subdivision. The director, on receiving satisfactory evidence that 
4.3 	the conditions required by section 218 of the Social Security Act have been met, must 
4.4 	so certify to the Secretary of Health and Human Services.

4.5 	Sec. 5. Minnesota Statutes 2004, section 355.02, is amended by adding a subdivision 
4.6 	to read:
4.7 		Subd. 5.Retroactive Social Security coverage. (a) An employee or elected official 
4.8 	who elects Social Security coverage under subdivision 4 may obtain retroactive coverage 
4.9 	for the period specified in the modification of the agreement if the individual is employed 
4.10 	by the local governmental subdivision or by the special authority or district on the date of 
4.11 	the modification of the agreement. The employee or elected official must pay an amount 
4.12 	equal to the taxes which would have been imposed on the person by the Federal Insurance 
4.13 	Contributions Act had the service been covered at the time performed. The employing 
4.14 	local governmental subdivision or special authority or district must pay the necessary 
4.15 	employer contributions for the retroactive period. Nothing in this section shall require an 
4.16 	employee or elected official to elect retroactive Social Security coverage.

4.17 	Sec. 6. [355.095] OPTIONAL MEDICARE COVERAGE FOR CERTAIN 
4.18 	PUBLIC EMPLOYEES.
4.19 		Subdivision 1.Agreement. (a) The director, on behalf of the state, its political 
4.20 	subdivisions, and its other governmental employers, is authorized to enter into an 
4.21 	agreement with the Secretary of Health and Human Services to extend the provisions of 
4.22 	United States Code, title 42, section 426, 426-1, and 1395c, to the employees in paragraph 
4.23 	(b) who meet the requirements of United States Code, title 42, section 418(v)(2) and who 
4.24 	do not have coverage by the federal old age, survivors, and disability insurance program 
4.25 	for that employment under any previous modification of the agreement or previous 
4.26 	Medicare referendum.
4.27 	(b) The applicable employees are:
4.28 	(1) employees who are members of one of the retirement plans in section 356.30, 
4.29 	subdivision 3, except clauses (4) and (8), based on continuous employment since March 
4.30 	31, 1986; and
4.31 	(2) employees of a special authority or district who have been continuously 
4.32 	employed by the special authority or district since March 31, 1986.
4.33 		Subd. 2.Referendum. (a) Each local governmental subdivision or special authority 
4.34 	or district desiring inclusion in the state Social Security agreement under subdivision 1 
5.1 	must request such coverage by submitting a formal resolution to the director, including 
5.2 	therein the desired starting date for Social Security coverage.
5.3 	(b) The director shall authorize a referendum on the question of extending the 
5.4 	provisions of United States Code, title 42, sections 426, 426-1, and 1395c. The director 
5.5 	shall supervise the referendum in accordance with the requirements of United States Code, 
5.6 	title 42, section 418, on the date or dates set. The cost of such referendum must be borne by 
5.7 	the requesting retirement plan, or the requesting special authority or district. The notice of 
5.8 	the referendum provided to each eligible employee must contain a statement sufficient to 
5.9 	inform the person of the rights available as an employee in Medicare qualified government 
5.10 	employment and the employee contribution rates applicable to the program. The 
5.11 	referendum must permit each eligible employee the opportunity to vote in such referendum 
5.12 	in accordance with the requirements in the Social Security Act. The director, on receiving 
5.13 	satisfactory evidence that the conditions specified in United States Code, title 42, section 
5.14 	418(d)(7) have been met, must so certify to the Secretary of Health and Human Services.
5.15 		Subd. 3.Contributions. Employers must pay the necessary employer contributions 
5.16 	and make the necessary deductions from salary for employees who elect to participate in 
5.17 	the federal Medicare program under this section and as required by federal law.
5.18 		Subd. 4.Retroactive Medicare coverage. (a) An individual who obtains medicare 
5.19 	coverage through the referendum under subdivision 2 may obtain retroactive coverage for 
5.20 	the period specified in the modification of the agreement if employed by the governmental 
5.21 	subdivision or by the special authority or district on the date of the modification of the 
5.22 	agreement. The individual must pay an amount equal to the Medicare taxes which would 
5.23 	have been imposed on the employee had the service been covered at the time performed. 
5.24 	The employing local governmental subdivision or special authority or district must pay 
5.25 	the necessary employer contributions for the retroactive Medicare coverage period. 
5.26 	Nothing in this section shall require an employee or elected official to elect retroactive 
5.27 	Medicare coverage.

5.28 	Sec. 7. EFFECTIVE DATE.
 5.29 	Sections 1 to 6 are effective the day following final enactment.