1.1 	A bill for an act
1.2 	relating to retirement; providing for actuarial services to the legislature 
1.3 	and the state; mandating the retention of the consulting actuary for various 
1.4 	retirement-related reports by the Legislative Commission on Pensions and 
1.5 	Retirement; allocating the costs of actuarial services among retirement plans; 
1.6 	creating a revolving fund for actuarial services; appropriating money; making 
1.7 	various conforming changes;amending Minnesota Statutes 2006, sections 
1.8 	3.85, by adding a subdivision; 352.03, subdivision 6; 352.116, subdivision 
1.9 	4; 352.119, subdivision 2; 352.72, subdivision 2; 352.931, subdivision 2; 
1.10 	352B.08, subdivision 3; 352B.26, subdivision 3; 352B.30, subdivision 2; 
1.11 	353.01, subdivision 14; 353.271, subdivision 2; 353.29, subdivision 6; 353.30, 
1.12 	subdivisions 3, 5; 353.71, subdivision 2; 353.88; 353A.08, subdivision 2; 
1.13 	354.06, subdivision 2a; 354.07, subdivision 1; 354.45, subdivision 1; 354.55, 
1.14 	subdivision 11; 354A.011, subdivision 3a; 354A.021, subdivision 7; 354A.31, 
1.15 	subdivision 7; 354A.32, subdivision 1; 354A.33; 354A.37, subdivision 2; 356.20, 
1.16 	subdivisions 3, 4; 356.214; 356.215, subdivisions 1, 2, 2a, 17, 18; 356.551, 
1.17 	subdivision 2; 422A.01, subdivision 7; 422A.04, subdivisions 2, 3; 422A.06, 
1.18 	subdivision 2; 422A.101, subdivisions 1, 1a, 2, 2a; 422A.15, subdivisions 2, 3; 
1.19 	422A.16, subdivision 2; 422A.17; 422A.23, subdivision 12; 422A.231; 490.121, 
1.20 	subdivision 2a; 490.124, subdivision 11; Minnesota Statutes 2007 Supplement, 
1.21 	sections 353.03, subdivision 3a; 354.35, subdivision 2; 354A.12, subdivision 3c; 
1.22 	422A.06, subdivision 8; 422A.101, subdivision 3.
1.23 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.24 	ARTICLE 1
1.25 	ACTUARY RETAINED BY THE LEGISLATIVE COMMISSION 
1.26 	ON PENSIONS AND RETIREMENT

1.27 	Section 1. Minnesota Statutes 2006, section 3.85, is amended by adding a subdivision 
1.28 	to read:
1.29 		Subd. 13.Retention of actuary. The commission shall retain an actuary as 
1.30 	provided under section 356.214.

2.1 	Sec. 2. Minnesota Statutes 2006, section 356.214, is amended to read:
2.2 	356.214 ACTUARIAL VALUATION PREPARATION; ~~JOINT~~ RETENTION 
2.3 	OF CONSULTING ACTUARY.
2.4 		Subdivision 1.Joint retention. (a) The ~~chief administrative officers of the~~ 
2.5 	~~Minnesota State Retirement System, the Public Employees Retirement Association, the~~ 
2.6 	~~Teachers Retirement Association, the Duluth Teachers Retirement Fund Association, the~~ 
2.7 	~~Minneapolis Employees Retirement Fund, and the St. Paul Teachers Retirement Fund~~ 
2.8 	~~Association, jointly~~ Legislative Commission on Pensions and Retirement, on behalf of 
2.9 	the state, its employees, its taxpayers, and its various public pension plans, shall retain an 
2.10 	actuary or shall contract with an established actuarial consulting firm to conduct annual 
2.11 	actuarial valuations and related services for the retirement plans named in paragraph (b). 
2.12 	The retained actuary or the principal from the actuarial consulting firm on the contract 
2.13 	must be an approved actuary under section 356.215, subdivision 1, paragraph (c). ~~Prior to~~ 
2.14 	~~becoming effective, the contract under this section is subject to a review and approval by~~ 
2.15 	~~the Legislative Commission on Pensions and Retirement.~~ 
2.16 	(b) The ~~contract for~~ actuarial services provided by the retained actuary or provided 
2.17 	under contract under this section must include the preparation of actuarial valuations and 
2.18 	related actuarial work for the following retirement plans:
2.19 	(1) the teachers retirement plan, Teachers Retirement Association;
2.20 	(2) the general state employees retirement plan, Minnesota State Retirement System;
2.21 	(3) the correctional employees retirement plan, Minnesota State Retirement System;
2.22 	(4) the State Patrol retirement plan, Minnesota State Retirement System;
2.23 	(5) the judges retirement plan, Minnesota State Retirement System;
2.24 	(6) the Minneapolis employees retirement plan, Minneapolis Employees Retirement 
2.25 	Fund;
2.26 	(7) the public employees retirement plan, Public Employees Retirement Association;
2.27 	(8) the public employees police and fire plan, Public Employees Retirement 
2.28 	Association;
2.29 	(9) the Duluth teachers retirement plan, Duluth Teachers Retirement Fund 
2.30 	Association;
2.31 	(10) the St. Paul teachers retirement plan, St. Paul Teachers Retirement Fund 
2.32 	Association;
2.33 	(11) the legislators retirement plan, Minnesota State Retirement System;
2.34 	(12) the elective state officers retirement plan, Minnesota State Retirement System; 
2.35 	and
3.1 	(13) local government correctional service retirement plan, Public Employees 
3.2 	Retirement Association.
3.3 	(c) The ~~contract must require completion of the~~ annual actuarial valuation 
3.4 	calculations must be completed on a fiscal year basis, with the contents of the actuarial 
3.5 	valuation calculations as specified in section 356.215, and in conformity with the 
3.6 	commission's standards for actuarial work ~~adopted by the Legislative Commission on~~ 
3.7 	~~Pensions and Retirement~~. 
3.8 	~~The contract must require completion of~~ Annual experience data ~~collection~~must be 
3.9 	collected and ~~processing~~processed by the retained actuary or consulting actuarial firm 
3.10 	and a quadrennial published experience study for the plans listed in paragraph (b), clauses 
3.11 	(1), (2), and (7), must be completed as provided for in the standards for actuarial work 
3.12 	adopted by the commission. The experience data collection, processing, and analysis 
3.13 	must evaluate the following:
3.14 	(1) individual salary progression;
3.15 	(2) the rate of return on investments based on the current asset value;
3.16 	(3) payroll growth;
3.17 	(4) mortality;
3.18 	(5) retirement age;
3.19 	(6) withdrawal; and
3.20 	(7) disablement.
3.21 	The ~~contract must include provisions for the preparation of cost analyses by the~~ 
3.22 	~~jointly retained actuary for~~retained actuary or the consulting actuarial firm shall prepare 
3.23 	proposed legislation ~~that include~~, including changes in benefit provisions or funding 
3.24 	policies prior to their consideration by the Legislative Commission on Pensions and 
3.25 	Retirement.
3.26 	(d) The actuary ~~retained by the joint retirement systems~~ shall annually prepare a 
3.27 	report to the legislature, including a commentary on the actuarial valuation calculations 
3.28 	for the plans named in paragraph (b) and summarizing the results of the actuarial valuation 
3.29 	calculations. The actuary shall include with the report the actuary's recommendations 
3.30 	to the legislature concerning the appropriateness of the support rates to achieve proper 
3.31 	funding of the retirement plans by the required funding dates. The actuary shall, as part 
3.32 	of the quadrennial experience study, include recommendations to the legislature on the 
3.33 	appropriateness of the actuarial valuation assumptions required for evaluation in the study.
3.34 	(e) If the actuarial gain and loss analysis in the actuarial valuation calculations 
3.35 	indicates a persistent pattern of sizable gains or losses, as directed by the ~~joint retirement~~ 
3.36 	~~systems~~executive director of the commission or as requested by the chair of the 
4.1 	~~Legislative~~ commission ~~on Pensions and Retirement~~, the actuary shall prepare a special 
4.2 	experience study for a plan listed in paragraph (b), clause (3), (4), (5), (6), (8), (9), (10), 
4.3 	(11), (12), or (13), in the manner provided for in the standards for actuarial work adopted 
4.4 	by the commission.
4.5 	(f) If an actuarial firm is retained, the term of the contract between the ~~joint~~ 
4.6 	~~retirement systems~~commission and the ~~actuary~~actuarial firm retained may not exceed 
4.7 	five years. The ~~joint retirement system administrative officers~~commission shall establish 
4.8 	procedures for the consideration and selection of contract bidders and the requirements 
4.9 	for the contents of an actuarial services contract under this section. ~~The procedures~~ 
4.10 	~~and requirements must be submitted to the Legislative Commission on Pensions and~~ 
4.11 	~~Retirement for review and comment prior to final approval by the joint administrators. The~~ 
4.12 	~~contract is subject to the procurement procedures under chapter 16C.~~ The consideration of 
4.13 	bids and the selection of a consulting actuarial firm ~~by the chief administrative officers~~
4.14 	must occur at a meeting that is open to the public and reasonable timely public notice of 
4.15 	the date and the time of the meeting and its subject matter must be given.
4.16 	(g) ~~The~~An actuarial services contract under this section may not limit the ability 
4.17 	of the Minnesota legislature and its standing committees and commissions to rely on the 
4.18 	actuarial results of the work prepared under the contract.
4.19 	~~(h) The joint retirement systems shall designate one of the retirement system~~ 
4.20 	~~executive directors as the actuarial services contract manager.~~
4.21 		Subd. 2.Actuarial revolving account; allocation of actuarial costs; 
4.22 	appropriation. (a) There is established within the state treasury a Legislative Commission 
4.23 	on Pensions and Retirement revolving account. Actuarial cost assessments under this 
4.24 	subdivision must be credited to the revolving account. The revolving account must be 
4.25 	credited with interest on the balance at the rate earned by the Department of Finance 
4.26 	excess treasury cash account. Amounts in the revolving account are appropriated to the 
4.27 	Legislative Commission on Pensions and Retirement. The revolving account must be 
4.28 	administered and managed by the executive director of the Legislative Commission on 
4.29 	Pensions and Retirement.
4.30 	(b) The ~~actuarial services contract manager~~executive director of the Legislative 
4.31 	Commission on Pensions and Retirement shall assess each retirement plan specified in 
4.32 	subdivision 1, paragraph (b), its appropriate portion of the total compensation paid to the 
4.33 	actuary retained by the joint retirement systems for the actuarial valuation calculations 
4.34 	and quadrennial experience studies. The total assessment is ~~100~~210 percent for fiscal 
4.35 	year 2009 and 110 percent for each subsequent fiscal year of the amount of contract 
4.36 	compensation for the actuarial consulting firm for the preceding year for actuarial 
5.1 	valuation calculations, including any public employees police and fire plan consolidation 
5.2 	accounts of the Public Employees Retirement Association established after March 1, 1999, 
5.3 	annual experience data collection and processing, and quadrennial experience studies.
5.4 	The portion of the total assessment payable by each retirement system or pension 
5.5 	plan must be determined based on each plan's proportion of the actuarial services 
5.6 	required, as determined by the ~~retained~~ actuary, to complete the preceding year's actuarial 
5.7 	valuation calculations, annual experience data collection and processing, and quadrennial 
5.8 	experience studies for all plans.
5.9 	The assessment must be made within 30 days following the end of the fiscal year 
5.10 	and must be reported to the chief administrative officers of the applicable retirement plans. 
5.11 	The amount of the assessment is appropriated from the retirement fund applicable to 
5.12 	the retirement plan.
5.13 	~~(b)~~(c) The ~~actuarial services contract manager~~executive director shall assess each 
5.14 	retirement plan or each interest group which requested the preparation of a cost analysis 
5.15 	for proposed legislation the cost of the actuary retained by the joint retirement systems 
5.16 	incurred in the cost analysis preparation. With respect to interest groups, the ~~actuarial~~ 
5.17 	~~services contract manager~~executive director shall obtain a written commitment for the 
5.18 	payment of the assessment in advance of the cost analysis preparation and may require 
5.19 	an advance deposit or advance payment before authorizing the cost analysis preparation. 
5.20 	The retirement plan or the interest group shall pay the assessment within 30 days of the 
5.21 	date on which the assessment is billed. The amount of the assessment is appropriated 
5.22 	from the retirement fund applicable to the retirement plan for cost analyses requested 
5.23 	by a retirement plan or system.
5.24 	~~(c) The actuarial services contract manager shall assess to the Legislative~~ 
5.25 	~~Commission on Pensions and Retirement the cost of the actuarial cost analysis preparation~~ 
5.26 	~~for the proposed legislation requested by the chair of the Legislative Commission on~~ 
5.27 	~~Pensions and Retirement or by the commission executive director. The commission shall~~ 
5.28 	~~pay the assessment within 30 days of the date on which the assessment is billed.~~
5.29 		Subd. 3.Reporting to ~~commission~~ retirement plans. A copy of the actuarial 
5.30 	valuations, experience studies, and actuarial cost analyses prepared by the actuary 
5.31 	retained ~~by the joint retirement systems~~ under ~~the contract provided for in~~ this section 
5.32 	must be filed with the ~~executive director of the Legislative Commission on Pensions~~ 
5.33 	~~and Retirement~~chief administrative officer of the applicable retirement plan at the same 
5.34 	time that the document is transmitted to ~~the actuarial services contract manager or to~~ any 
5.35 	~~other~~ document recipient.

6.1 	Sec. 3. TEMPORARY PROVISION; CONTINUATION OF EXISTING 
6.2 	CONTRACT.
 6.3 	Unless the consulting actuarial firm exercises an option to terminate the contract 
6.4 	under Minnesota Statutes 2006, section 356.214, in force on the date of enactment under 
6.5 	the terms of that document, the Legislative Commission on Pensions and Retirement is 
6.6 	the successor to the joint retirement plans as the contracting party on behalf of the state 
6.7 	of Minnesota as of July 1, 2008.

6.8 	Sec. 4. EFFECTIVE DATE.
 6.9 	Sections 1 to 3 are effective July 1, 2008.

6.10 	ARTICLE 2
6.11 	CONFORMING CHANGES

6.12 	Section 1. Minnesota Statutes 2006, section 352.03, subdivision 6, is amended to read:
6.13 		Subd. 6.Duties and powers of executive director. (a) The management of the 
6.14 	system is vested in the director, who is the executive and administrative head of the 
6.15 	system. The director shall be ~~advisor~~an adviser to the board on matters pertaining to the 
6.16 	system and shall also act as the secretary of the board. The director shall:
6.17 	(1) attend meetings of the board;
6.18 	(2) prepare and recommend to the board appropriate rules to carry out this chapter;
6.19 	(3) establish and maintain an adequate system of records and accounts following 
6.20 	recognized accounting principles and controls;
6.21 	(4) designate an assistant director with the approval of the board;
6.22 	(5) appoint any employees, both permanent and temporary, that are necessary to 
6.23 	carry out the provisions of this chapter;
6.24 	(6) organize the work of the system as the director deems necessary to fulfill the 
6.25 	functions of the system, and define the duties of its employees and delegate to them any 
6.26 	powers or duties, subject to the control of the director and under conditions the director 
6.27 	may prescribe. Appointments to exercise delegated power must be by written order and 
6.28 	shall be filed with the secretary of state;
6.29 	(7) with the advice and consent of the board, contract for the services of an approved 
6.30 	actuary, professional management services, and any other consulting services as necessary 
6.31 	and fix the compensation for those services;~~. The contracts are not subject to competitive~~ 
6.32 	~~bidding under chapter 16C. Any approved actuary retained by the executive director~~ 
6.33 	~~shall function as the actuarial advisor of the board and the executive director, and may~~ 
6.34 	~~perform actuarial valuations and experience studies to supplement those performed by~~ 
7.1 	~~the actuary retained under section 356.214. Any supplemental actuarial valuations or~~ 
7.2 	~~experience studies shall be filed with the executive director of the Legislative Commission~~ 
7.3 	~~on Pensions and Retirement. Professional management services may not be contracted for~~ 
7.4 	~~more often than once in six years. Copies of professional management survey reports must~~ 
7.5 	~~be transmitted to the secretary of the senate, the chief clerk of the house of representatives,~~ 
7.6 	~~and the Legislative Reference Library as provided by section 3.195, and to the executive~~ 
7.7 	~~director of the commission at the time as reports are furnished to the board. Only~~ 
7.8 	~~management firms experienced in conducting management surveys of federal, state, or~~ 
7.9 	~~local public retirement systems are qualified to contract with the director;~~
7.10 	(8) with the advice and consent of the board, provide in-service training for the 
7.11 	employees of the system;
7.12 	(9) make refunds of accumulated contributions to former state employees and to the 
7.13 	designated beneficiary, surviving spouse, legal representative, or next of kin of deceased 
7.14 	state employees or deceased former state employees, as provided in this chapter;
7.15 	(10) determine the amount of the annuities and disability benefits of employees 
7.16 	covered by the system and authorize payment of the annuities and benefits beginning as 
7.17 	of the dates on which the annuities and benefits begin to accrue, in accordance with the 
7.18 	provisions of this chapter;
7.19 	(11) pay annuities, refunds, survivor benefits, salaries, and necessary operating 
7.20 	expenses of the system;
7.21 	(12) certify funds available for investment to the State Board of Investment;
7.22 	(13) with the advice and approval of the board request the State Board of Investment 
7.23 	to sell securities when the director determines that funds are needed for the system;
7.24 	(14) prepare and submit to the board and the legislature an annual financial report 
7.25 	covering the operation of the system, as required by section 356.20; 
7.26 	(15) prepare and submit biennial and annual budgets to the board and with the 
7.27 	approval of the board submit the budgets to the Department of Finance; and
7.28 	(16) with the approval of the board, perform other duties required to administer the 
7.29 	retirement and other provisions of this chapter and to do its business.
7.30 	(b) Contracts under paragraph (a), clause (7), are not subject to competitive bidding 
7.31 	under chapter 16C.
7.32 	(c) An approved actuary retained by the executive director shall function as the 
7.33 	actuarial adviser of the board and the executive director. The approved actuary may 
7.34 	perform benefit increase cost estimates, actuarial valuations, and experience studies to 
7.35 	supplement those performed by the actuary retained under section 356.214. Supplemental 
8.1 	benefit increase cost estimates, actuarial valuations, and experience studies must be filed 
8.2 	with the executive director of the Legislative Commission on Pensions and Retirement.
8.3 	(d) Professional management services may not be contracted for more often than 
8.4 	once in six years. The executive director shall transmit copies of professional management 
8.5 	survey reports to the secretary of the senate, the chief clerk of the house of representatives, 
8.6 	and the Legislative Reference Library, as provided by section 3.195, and to the executive 
8.7 	director of the commission at the same time as reports are furnished to the board. Only 
8.8 	management firms experienced in conducting management surveys of federal, state, or 
8.9 	local public retirement systems are qualified to contract with the director.

8.10 	Sec. 2. Minnesota Statutes 2006, section 352.116, subdivision 4, is amended to read:
8.11 		Subd. 4.Determining actuarial equivalency. In establishing the procedure for 
8.12 	determining the actuarial equivalency of early retirement annuities as required under 
8.13 	subdivision 1a or in establishing actuarial equivalent optional retirement annuity forms 
8.14 	as required under subdivision 3, the board shall obtain the written ~~recommendation~~
8.15 	certification of the accuracy of the applicable calculation tables from the actuary retained 
8.16 	under section 356.214. The recommendations ~~shall~~must be made a part of the permanent 
8.17 	records of the board.

8.18 	Sec. 3. Minnesota Statutes 2006, section 352.119, subdivision 2, is amended to read:
8.19 		Subd. 2.Valuation of assets; adjustment of benefits. (a) The required reserves for 
8.20 	retirement annuities or disability benefits under this chapter as determined in accordance 
8.21 	with the appropriate mortality table adopted by the board of directors based on experience 
8.22 	of the fund as recommended as accurate by the actuary retained under section 356.214 and 
8.23 	using the postretirement interest rate assumption specified in section 356.215, subdivision 
8.24 	8, must be transferred to the Minnesota postretirement investment fund as of the last 
8.25 	business day of the month in which the retirement annuity or disability benefit begins. 
8.26 	(b) Annuity and benefit payments must be adjusted ~~in accordance with~~as provided 
8.27 	in section 11A.18. 

8.28 	Sec. 4. Minnesota Statutes 2006, section 352.72, subdivision 2, is amended to read:
8.29 		Subd. 2.Computation of deferred annuity. (a) The deferred annuity, if any, 
8.30 	accruing under subdivision 1, or section 352.22, subdivision 3, must be computed as 
8.31 	provided in section 352.22, subdivision 3, on the basis of allowable service before 
8.32 	termination of state service and augmented as provided herein. The required reserves 
8.33 	applicable to a deferred annuity or to an annuity for which a former employee was eligible 
9.1 	but had not applied or to any deferred segment of an annuity must be determined as of the 
9.2 	date the benefit begins to accrue and augmented by interest compounded annually from 
9.3 	the first day of the month following the month in which the employee ceased to be a state 
9.4 	employee, or July 1, 1971, whichever is later, to the first day of the month in which the 
9.5 	annuity begins to accrue. The rates of interest used for this purpose must be five percent 
9.6 	compounded annually until January 1, 1981, and three percent compounded annually 
9.7 	thereafter until January 1 of the year following the year in which the former employee 
9.8 	attains age 55, and from that date to the effective date of retirement, the rate is five percent 
9.9 	compounded annually if the employee became an employee before July 1, 2006, and at 
9.10 	2.5 percent compounded annually if the employee becomes an employee after June 30, 
9.11 	2006. If a person has more than one period of uninterrupted service, the required reserves 
9.12 	related to each period must be augmented by interest under this subdivision. The sum 
9.13 	of the augmented required reserves so determined is the present value of the annuity. 
9.14 	"Uninterrupted service" for the purpose of this subdivision means periods of covered 
9.15 	employment during which the employee has not been separated from state service for more 
9.16 	than two years. If a person repays a refund, the service restored by the repayment must be 
9.17 	considered continuous with the next period of service for which the employee has credit 
9.18 	with this system. The formula percentages used for each period of uninterrupted service 
9.19 	must be those applicable to a new employee. The mortality table and interest assumption 
9.20 	used to compute the annuity must be those in effect when the employee files application 
9.21 	for annuity. This section does not reduce the annuity otherwise payable under this chapter. 
9.22 	(b) The retirement annuity or disability benefit of, or the survivor benefit payable on 
9.23 	behalf of, a former state employee who terminated service before July 1, 1997, which is 
9.24 	not first payable until after June 30, 1997, must be increased on an actuarial equivalent 
9.25 	basis to reflect the change in the postretirement interest rate actuarial assumption under 
9.26 	section 356.215, subdivision 8, from five percent to six percent under a calculation 
9.27 	procedure and the tables adopted by the board and ~~approved~~certified as accurate by the 
9.28 	actuary retained under section 356.214. 

9.29 	Sec. 5. Minnesota Statutes 2006, section 352.931, subdivision 2, is amended to read:
9.30 		Subd. 2.Surviving spouse coverage; term certain. In lieu of the 100 percent 
9.31 	optional annuity under subdivision 1, the surviving spouse of a deceased employee may 
9.32 	elect to receive survivor coverage in a term certain of ten, 15, or 20 years. The monthly 
9.33 	term certain annuity must be actuarially equivalent to the 100 percent optional annuity 
9.34 	under subdivision 1 and must be ~~approved~~certified as accurate by the actuary retained 
9.35 	under section 356.214. The optional annuity ceases upon the expiration of the term certain 
10.1 	period. If a survivor elects a term certain annuity and dies before the expiration of the 
10.2 	specified term certain period, the commuted value of the remaining annuity payments 
10.3 	must be paid in a lump sum to the survivor's estate.

10.4 	Sec. 6. Minnesota Statutes 2006, section 352B.08, subdivision 3, is amended to read:
10.5 		Subd. 3.Optional annuity forms. (a) In lieu of the single life annuity provided in 
10.6 	subdivision 2, the member or former member may elect an optional annuity form. 
10.7 	(b) The board of the Minnesota state retirement system shall establish a joint and 
10.8 	survivor annuity, payable to a designated beneficiary for life, adjusted to the actuarial 
10.9 	equivalent value of the single life annuity. The board shall also establish an additional 
10.10 	optional annuity with an actuarial equivalent value of the single life annuity in the form of 
10.11 	a joint and survivor annuity which provides that the elected annuity be reinstated to the 
10.12 	single life annuity provided in subdivision 2, if after commencing the elected joint and 
10.13 	survivor annuity, the designated beneficiary dies before the member, which reinstatement 
10.14 	is not retroactive but takes effect for the first full month occurring after the death of the 
10.15 	designated beneficiary. The board may also establish other actuarial equivalent value 
10.16 	optional annuity forms. 
10.17 	(c) In establishing actuarial equivalent value optional annuity forms, each optional 
10.18 	annuity form ~~shall~~must have the same present value as a regular single life annuity 
10.19 	using the mortality table adopted by the board and the interest assumption specified in 
10.20 	section 356.215, subdivision 8, and the board shall obtain the written ~~recommendation~~
10.21 	certification of the accuracy of the applicable calculation tables from the actuary retained 
10.22 	under section 356.214. These ~~recommendations~~certificates shall be a part of the 
10.23 	permanent records of the board. 

10.24 	Sec. 7. Minnesota Statutes 2006, section 352B.26, subdivision 3, is amended to read:
10.25 		Subd. 3.Valuation of assets; adjustment of benefits. (a) For former members 
10.26 	beginning receipt of annuities and qualified recipients of joint and survivor annuities and 
10.27 	surviving spouse benefits, the required reserves must be determined in accordance with 
10.28 	the appropriate mortality table adopted by the board of directors of the Minnesota State 
10.29 	Retirement System based on the experience of the fund as recommended as accurate 
10.30 	by the actuary retained under section 356.214 and using the postretirement interest 
10.31 	rate assumption specified in section 356.215, subdivision 8. Assets representing the 
10.32 	required reserves for these annuities must be transferred to the Minnesota postretirement 
10.33 	investment fund as of the last business day of the month in which the retirement annuity 
10.34 	begins as specified in section 11A.18. 
11.1 	(b) Annuity payments must be adjusted in accordance with section 11A.18. 
11.2 	(c) An increase in annuity payments under this section must be made automatically 
11.3 	unless written notice is filed by the annuitant with the executive director of the Minnesota 
11.4 	State Retirement System requesting that the increase not be made.

11.5 	Sec. 8. Minnesota Statutes 2006, section 352B.30, subdivision 2, is amended to read:
11.6 		Subd. 2.Computation of deferred annuity. Deferred annuities must be computed 
11.7 	according to this chapter on the basis of allowable service before termination of service 
11.8 	and augmented as provided in this chapter. The required reserves applicable to a deferred 
11.9 	annuity must be augmented by interest compounded annually from the first day of the 
11.10 	month following the month in which the member terminated service, or July 1, 1971, 
11.11 	whichever is later, to the first day of the month in which the annuity begins to accrue. The 
11.12 	rates of interest used for this purpose shall be five percent per year compounded annually 
11.13 	until January 1, 1981, and after that date three percent per year compounded annually if 
11.14 	the employee became an employee before July 1, 2006, and at 2.5 percent compounded 
11.15 	annually if the employee becomes an employee after June 30, 2006. The mortality table 
11.16 	and interest assumption used to compute the annuity ~~shall~~must be those in effect when 
11.17 	the member files application for annuity.

11.18 	Sec. 9. Minnesota Statutes 2006, section 353.01, subdivision 14, is amended to read:
11.19 		Subd. 14.Actuarial equivalent. "Actuarial equivalent" means the condition of one 
11.20 	annuity or benefit having an equal actuarial present value as another annuity or benefit, 
11.21 	determined as of a given date with each actuarial present value based on the appropriate 
11.22 	mortality table adopted by the board of trustees based on the experience of the fund as 
11.23 	~~recommended~~certified by the actuary retained under section 356.214, and approved under 
11.24 	section 356.215, subdivision 18, and using the applicable preretirement or postretirement 
11.25 	interest rate assumption specified in section 356.215, subdivision 8.

11.26 	Sec. 10. Minnesota Statutes 2007 Supplement, section 353.03, subdivision 3a, is 
11.27 	amended to read:
11.28 		Subd. 3a.Executive director. (a) Appointment. The board shall appoint an 
11.29 	executive director on the basis of education, experience in the retirement field, and 
11.30 	leadership ability. The executive director must have had at least five years' experience in 
11.31 	an executive level management position, which has included responsibility for pensions, 
11.32 	deferred compensation, or employee benefits. The executive director serves at the pleasure 
11.33 	of the board. The salary of the executive director is as provided by section 15A.0815. 
12.1 	(b)  Duties. The management of the association is vested in the executive director 
12.2 	who shall be the executive and administrative head of the association. The executive 
12.3 	director shall act as an adviser to the board on all matters pertaining to the association and 
12.4 	shall also act as the secretary of the board. The executive director shall: 
12.5 	(1) attend all meetings of the board;
12.6 	(2) prepare and recommend to the board appropriate rules to carry out the provisions 
12.7 	of this chapter;
12.8 	(3) establish and maintain an adequate system of records and accounts following 
12.9 	recognized accounting principles and controls;
12.10 	(4) designate, with the approval of the board, up to two persons who may serve in 
12.11 	the unclassified service and whose salaries are set in accordance with section 43A.18, 
12.12 	subdivision 3, appoint a confidential secretary in the unclassified service, and appoint 
12.13 	employees to carry out this chapter, who are subject to chapters 43A and 179A in the same 
12.14 	manner as are executive branch employees; 
12.15 	(5) organize the work of the association as the director deems necessary to fulfill 
12.16 	the functions of the association, and define the duties of its employees and delegate to 
12.17 	them any powers or duties, subject to the control of, and under such conditions as, the 
12.18 	executive director may prescribe;
12.19 	(6) with the approval of the board, contract for the services of an approved actuary, 
12.20 	professional management services, and any other consulting services as necessary 
12.21 	to fulfill the purposes of this chapter;~~. All contracts are subject to chapter 16C. The~~ 
12.22 	~~commissioner of administration shall not approve, and the association shall not enter~~ 
12.23 	~~into, any contract to provide lobbying services or legislative advocacy of any kind.~~ 
12.24 	~~Any approved actuary retained by the executive director shall function as the actuarial~~ 
12.25 	~~advisor of the board and the executive director and may perform actuarial valuations and~~ 
12.26 	~~experience studies to supplement those performed by the actuary retained under section~~ 
12.27 	~~356.214. Any supplemental actuarial valuations or experience studies shall be filed with~~ 
12.28 	~~the executive director of the Legislative Commission on Pensions and Retirement. Copies~~ 
12.29 	~~of professional management survey reports shall be transmitted to the secretary of the~~ 
12.30 	~~senate, the chief clerk of the house of representatives, and the Legislative Reference~~ 
12.31 	~~Library as provided by section 3.195, and to the executive director of the commission at~~ 
12.32 	~~the same time as reports are furnished to the board. Only management firms experienced~~ 
12.33 	~~in conducting management surveys of federal, state, or local public retirement systems~~ 
12.34 	~~shall be qualified to contract with the director hereunder;~~
12.35 	(7) with the approval of the board provide in-service training for the employees 
12.36 	of the association;
13.1 	(8) make refunds of accumulated contributions to former members and to the 
13.2 	designated beneficiary, surviving spouse, legal representative or next of kin of deceased 
13.3 	members or deceased former members, as provided in this chapter;
13.4 	(9) determine the amount of the annuities and disability benefits of members covered 
13.5 	by the association and authorize payment of the annuities and benefits beginning as of 
13.6 	the dates on which the annuities and benefits begin to accrue, in accordance with the 
13.7 	provisions of this chapter;
13.8 	(10) pay annuities, refunds, survivor benefits, salaries, and necessary operating 
13.9 	expenses of the association;
13.10 	(11) prepare and submit to the board and the legislature an annual financial report 
13.11 	covering the operation of the association, as required by section 356.20; 
13.12 	(12) prepare and submit biennial and annual budgets to the board for its approval 
13.13 	and submit the approved budgets to the Department of Finance for approval by the 
13.14 	commissioner;
13.15 	(13) reduce all or part of the accrued interest payable under section 353.27, 
13.16 	subdivisions 12, 12a, and 12b, or 353.28, subdivision 5, upon receipt of proof by the 
13.17 	association of an unreasonable processing delay or other extenuating circumstances of 
13.18 	the employing unit. The executive director shall prescribe and submit for approval by the 
13.19 	board the conditions under which such interest may be reduced; and 
13.20 	(14) with the approval of the board, perform such other duties as may be required for 
13.21 	the administration of the association and the other provisions of this chapter and for the 
13.22 	transaction of its business.
13.23 	(c) Contract limitations. Contracts under paragraph (b), clause (6), are subject to 
13.24 	chapter 16C. The commissioner of administration shall not approve, and the association 
13.25 	may not enter into, any contract to provide lobbying services or legislative advocacy 
13.26 	of any kind. The approved actuary retained by the executive director shall function as 
13.27 	the actuarial adviser of the board and of the executive director and may perform benefit 
13.28 	increase cost estimates, actuarial valuations, and experience studies to supplement 
13.29 	those performed by the actuary retained under section 356.214. Supplemental benefit 
13.30 	increase cost estimates, actuarial valuations, and experience studies must be filed with the 
13.31 	executive director of the Legislative Commission on Pensions and Retirement. Copies 
13.32 	of provisional management survey reports must be transmitted to the secretary of the 
13.33 	senate, the chief clerk of the house of representatives, and the Legislative Reference 
13.34 	Library, as provided by section 3.195, and to the executive director of the commission at 
13.35 	the same time as reports are furnished to the board. Only management firms experienced 
14.1 	in conducting management surveys of federal, state, or local public retirement systems 
14.2 	are qualified to contract with the director.

14.3 	Sec. 11. Minnesota Statutes 2006, section 353.271, subdivision 2, is amended to read:
14.4 		Subd. 2.Valuation of assets; adjustment of benefits. (a) The required reserves for 
14.5 	retirement annuities payable as provided in this chapter other than those payable from the 
14.6 	various local relief association consolidation accounts, as determined in accordance with 
14.7 	the appropriate mortality table adopted by the board of trustees based on the experience 
14.8 	of the fund as recommended as accurate by the actuary retained under section 356.214, 
14.9 	and approved under section 356.215, subdivision 18, and using the postretirement interest 
14.10 	rate assumption specified in section 356.215, subdivision 8, must be transferred to the 
14.11 	Minnesota postretirement investment fund as of the last business day of the month in 
14.12 	which the retirement annuity begins.
14.13 	(b) Annuity payments must be adjusted ~~in accordance with the provisions of~~as 
14.14 	provided in section 11A.18.
14.15 	(c) Increases in payments under this section must be made automatically unless the 
14.16 	intended recipient files written notice with the executive director of the Public Employees 
14.17 	Retirement Association requesting that the increase not be made.

14.18 	Sec. 12. Minnesota Statutes 2006, section 353.29, subdivision 6, is amended to read:
14.19 		Subd. 6.Retirement before eligibility for Social Security benefits. A member 
14.20 	or former member who retires before becoming eligible for Social Security retirement 
14.21 	benefits may elect to receive an optional retirement annuity from the association that 
14.22 	provides for different annuity amounts over different periods of retirement. The election of 
14.23 	this optional retirement annuity must be exercised by making a written application to the 
14.24 	~~board of trustees~~ executive director. The optional annuity must take the form of an annuity 
14.25 	payable for the period before the annuitant becomes eligible for Social Security old age 
14.26 	retirement benefits in a greater amount than the amount of the annuity calculated under 
14.27 	subdivisions 2 and 3 on the basis of the age of the annuitant at retirement. The optional 
14.28 	annuity must be the actuarial equivalent of the normal retirement annuity computed on 
14.29 	the basis of age at retirement. This greater amount must be paid until the annuitant 
14.30 	reaches age 62, at which time the payment from the association must be reduced. The 
14.31 	board of trustees shall establish the method of computing the optional retirement annuity 
14.32 	under this subdivision. In establishing the method of computing the optional retirement 
14.33 	annuity, the board of trustees shall obtain the written ~~approval~~recommendation of the 
15.1 	actuary retained under section 356.214 as to the accuracy of the computation method. The 
15.2 	recommendations must be a part of the permanent records of the board of trustees.

15.3 	Sec. 13. Minnesota Statutes 2006, section 353.30, subdivision 3, is amended to read:
15.4 		Subd. 3.Optional retirement annuity forms. (a) The board of trustees shall 
15.5 	establish optional annuities which ~~shall~~must take the form of a joint and survivor annuity. 
15.6 	Except as provided in subdivision 3a, the optional annuity forms ~~shall~~must be actuarially 
15.7 	equivalent to the forms provided in section 353.29 and subdivisions 1, 1a, 1b, 1c, and 5. 
15.8 	(b) In establishing those optional forms, the board shall obtain the written 
15.9 	~~recommendation~~certification of the actuary retained under section 356.214. The 
15.10 	~~recommendations shall~~certification must be a part of the permanent records of the board. 
15.11 	A member or former member may select an optional form of annuity in lieu of accepting 
15.12 	any other form of annuity which might otherwise be available. 

15.13 	Sec. 14. Minnesota Statutes 2006, section 353.30, subdivision 5, is amended to read:
15.14 		Subd. 5.Actuarial reduction for early retirement. (a) This subdivision applies to 
15.15 	a member who has become at least 55 years old and first became a public employee after 
15.16 	June 30, 1989, and to any other member who has become at least 55 years old and whose 
15.17 	annuity is higher when calculated under section 353.29, subdivision 3, paragraph (b), in 
15.18 	conjunction with this subdivision than when calculated under section 353.29, subdivision 
15.19 	3, paragraph (a), in conjunction with subdivision 1, 1a, 1b, or 1c. 
15.20 	(b) An employee who retires before normal retirement age shall be paid the 
15.21 	retirement annuity provided in section 353.29, subdivision 3, paragraph (b), reduced so 
15.22 	that the reduced annuity is the actuarial equivalent of the annuity that would be payable 
15.23 	to the employee if the employee deferred receipt of the annuity and the annuity amount 
15.24 	were augmented at an annual rate of three percent compounded annually from the day 
15.25 	the annuity begins to accrue until the normal retirement age if the employee became an 
15.26 	employee before July 1, 2006, and at 2.5 percent compounded annually from the day the 
15.27 	annuity begins to accrue until the normal retirement age if the employee initially becomes 
15.28 	an employee after June 30, 2006. 
15.29 	(c) The board shall establish the procedure for determining actuarial equivalency 
15.30 	after obtaining a certification that the procedure was accurate from the actuary retained 
15.31 	under section 356.214.

15.32 	Sec. 15. Minnesota Statutes 2006, section 353.71, subdivision 2, is amended to read:
16.1 		Subd. 2.Deferred annuity computation; augmentation. (a) The deferred 
16.2 	annuity accruing under subdivision 1, or under sections 353.34, subdivision 3, and 
16.3 	353.68, subdivision 4, must be computed on the basis of allowable service prior to the 
16.4 	termination of public service and augmented as provided in this paragraph. The required 
16.5 	reserves applicable to a deferred annuity, or to any deferred segment of an annuity must 
16.6 	be determined as of the first day of the month following the month in which the former 
16.7 	member ceased to be a public employee, or July 1, 1971, whichever is later. These 
16.8 	required reserves must be augmented at the rate of five percent annually compounded 
16.9 	annually until January 1, 1981, and at the rate of three percent thereafter until January 1 
16.10 	of the year following the year in which the former member attains age 55 and from that 
16.11 	date to the effective date of retirement, the rate is five percent compounded annually if 
16.12 	the employee became an employee before July 1, 2006, and at 2.5 percent compounded 
16.13 	annually if the employee becomes an employee after June 30, 2006. If a person has more 
16.14 	than one period of uninterrupted service, the required reserves related to each period 
16.15 	must be augmented as specified in this paragraph. The sum of the augmented required 
16.16 	reserves is the present value of the annuity. Uninterrupted service for the purpose of this 
16.17 	subdivision means periods of covered employment during which the employee has not 
16.18 	been separated from public service for more than two years. If a person repays a refund, 
16.19 	the restored service must be considered as continuous with the next period of service 
16.20 	for which the employee has credit with this association. This section must not reduce 
16.21 	the annuity otherwise payable under this chapter. This paragraph applies to individuals 
16.22 	who become deferred annuitants on or after July 1, 1971. For a member who became a 
16.23 	deferred annuitant before July 1, 1971, the paragraph applies from July 1, 1971, if the 
16.24 	former active member applies for an annuity after July 1, 1973. 
16.25 	(b) The retirement annuity or disability benefit of, or the survivor benefit payable on 
16.26 	behalf of, a former member who terminated service before July 1, 1997, or the survivor 
16.27 	benefit payable on behalf of a basic or police and fire member who was receiving disability 
16.28 	benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased 
16.29 	on an actuarial equivalent basis to reflect the change in the postretirement interest rate 
16.30 	actuarial assumption under section 356.215, subdivision 8, from five percent to six percent 
16.31 	under a calculation procedure and tables adopted by the board and ~~approved~~certified as 
16.32 	accurate by the actuary retained under section 356.214. 

16.33 	Sec. 16. Minnesota Statutes 2006, section 353.88, is amended to read:
16.34 	353.88 PENALTY FOR MEMBERSHIP MISCERTIFICATIONS AND 
16.35 	CERTIFICATION FAILURES.
17.1 	(a) If the board of trustees of the Public Employees Retirement Association, upon 
17.2 	the recommendation of the executive director, determines that a governmental subdivision 
17.3 	has certified a public employee for membership in the public employees police and 
17.4 	fire retirement plan when the public employee was not eligible for that retirement 
17.5 	plan coverage, the public employee must be covered by the correct retirement plan 
17.6 	for subsequent service, the public employee retains the coverage for the period of the 
17.7 	misclassification, and the governmental subdivision shall pay in a lump sum the difference 
17.8 	in the actuarial present value of the retirement annuities to which the public employee 
17.9 	would have been entitled if the public employee was properly classified as calculated 
17.10 	by the actuary retained under section 356.214. The governmental subdivision payment 
17.11 	is payable within 30 days of the board's determination. If unpaid, it must be collected 
17.12 	under section 353.28. The lump sum payment must be deposited in the public employees 
17.13 	retirement fund. 
17.14 	(b) If the executive director of the Public Employees Retirement Association 
17.15 	determines that a governmental subdivision has failed to certify a person for retirement 
17.16 	plan membership and coverage under this chapter, in addition to the procedures under 
17.17 	section 353.27, subdivision 4, 9, 10, 11, 12, 12a, or 12b, the director shall charge a fine of 
17.18 	$25 for each membership certification failure. 

17.19 	Sec. 17. Minnesota Statutes 2006, section 353A.08, subdivision 2, is amended to read:
17.20 		Subd. 2.Election of coverage by current deferred retirees. (a) Any person who 
17.21 	has terminated active employment as a police officer or firefighter, whichever applies, 
17.22 	with the municipality, has sufficient credit for service to entitle the person to an eventual 
17.23 	service pension and has not taken a refund of accumulated member contributions, if 
17.24 	applicable, ~~shall have~~has the option to elect to have benefit coverage provided under the 
17.25 	relevant provisions of the public employees police and fire fund benefit plan or to retain 
17.26 	benefit coverage provided by the relief association benefit plan in effect on the effective 
17.27 	date of consolidation. The relevant provisions of the public employees police and fire 
17.28 	fund benefit plan for the person electing that benefit coverage ~~shall be~~are the provisions 
17.29 	specified in subdivision 1.
17.30 	The election ~~shall~~must be made when the person files an application for receipt of 
17.31 	the deferred service pension and shall accompany that application.
17.32 	(b) The retirement annuity for a deferred member of a consolidated local relief 
17.33 	association which consolidated before July 1, 1997, who elected the relevant provisions 
17.34 	of the public employees police and fire fund benefit plan under subdivision 1 must be 
17.35 	increased on an actuarial equivalent basis to reflect the change in the postretirement 
18.1 	interest rate actuarial assumption under section 356.215, subdivision 8, from five percent 
18.2 	to six percent under a calculation procedure and tables adopted by the board of trustees of 
18.3 	the Public Employees Retirement Association and ~~approved~~certified as accurate by the 
18.4 	actuary retained under section 356.214. 

18.5 	Sec. 18. Minnesota Statutes 2006, section 354.06, subdivision 2a, is amended to read:
18.6 		Subd. 2a.Duties of executive director. (a) The management of the association is 
18.7 	vested in the executive director who ~~shall be~~is the executive and administrative head of 
18.8 	the association. The executive director shall act as ~~advisor~~an adviser to the board on all 
18.9 	matters pertaining to the association and shall also act as the secretary of the board. The 
18.10 	executive director shall:
18.11 	(1) attend all meetings of the board;
18.12 	(2) prepare and recommend to the board appropriate rules to carry out the provisions 
18.13 	of this chapter;
18.14 	(3) establish and maintain an adequate system of records and accounts following 
18.15 	recognized accounting principles and controls;
18.16 	(4) designate an assistant executive director in the unclassified service and two 
18.17 	assistant executive directors in the classified service with the approval of the board, and 
18.18 	appoint such employees, both permanent and temporary, as are necessary to carry out the 
18.19 	provisions of this chapter;
18.20 	(5) organize the work of the association as the director deems necessary to fulfill the 
18.21 	functions of the association, and define the duties of its employees and delegate to them 
18.22 	any powers or duties, subject to the director's control and under such conditions as the 
18.23 	director may prescribe;
18.24 	(6) with the approval of the board, contract and set the compensation for the services 
18.25 	of an approved actuary, professional management services, and any other consulting 
18.26 	services;~~. These contracts are not subject to the competitive bidding procedure prescribed~~ 
18.27 	~~by chapter 16C. An approved actuary retained by the executive director shall function as~~ 
18.28 	~~the actuarial advisor of the board and the executive director and may perform actuarial~~ 
18.29 	~~valuations and experience studies to supplement those performed by the actuary retained~~ 
18.30 	~~under section 356.214. Any supplemental actuarial valuations or experience studies shall~~ 
18.31 	~~be filed with the executive director of the Legislative Commission on Pensions and~~ 
18.32 	~~Retirement. Copies of professional management survey reports must be transmitted to the~~ 
18.33 	~~secretary of the senate, the chief clerk of the house of representatives, and the Legislative~~ 
18.34 	~~Reference Library as provided by section 3.195, and to the executive director of the~~ 
18.35 	~~commission at the same time as reports are furnished to the board. Only management~~ 
19.1 	~~firms experienced in conducting management surveys of federal, state, or local public~~ 
19.2 	~~retirement systems are qualified to contract with the executive director;~~
19.3 	(7) with the approval of the board, provide in-service training for the employees 
19.4 	of the association;
19.5 	(8) make refunds of accumulated contributions to former members and to the 
19.6 	designated beneficiary, surviving spouse, legal representative, or next of kin of deceased 
19.7 	members or deceased former members, under this chapter;
19.8 	(9) determine the amount of the annuities and disability benefits of members covered 
19.9 	by the association and authorize payment of the annuities and benefits beginning as of the 
19.10 	dates on which the annuities and benefits begin to accrue, under this chapter;
19.11 	(10) pay annuities, refunds, survivor benefits, salaries, and necessary operating 
19.12 	expenses of the association;
19.13 	(11) prepare and submit to the board and the legislature an annual financial report 
19.14 	covering the operation of the association, as required by section 356.20; 
19.15 	(12) certify funds available for investment to the State Board of Investment;
19.16 	(13) with the advice and approval of the board, request the State Board of Investment 
19.17 	to sell securities on determining that funds are needed for the purposes of the association;
19.18 	(14) prepare and submit biennial and annual budgets to the board and with the 
19.19 	approval of the board submit those budgets to the Department of Finance; and
19.20 	(15) with the approval of the board, perform such other duties as may be required for 
19.21 	the administration of the association and the other provisions of this chapter and for the 
19.22 	transaction of its business. 
19.23 	(b) The executive director may:
19.24 	~~(i)~~(1) reduce all or part of the accrued interest and fines payable by an employing 
19.25 	unit for reporting requirements under section 354.52, based on an evaluation of any 
19.26 	extenuating circumstances of the employing unit; 
19.27 	~~(ii)~~(2) assign association employees to conduct field audits of an employing unit to 
19.28 	ensure compliance with the provisions of this chapter; and
19.29 	~~(iii)~~(3) recover overpayments, if not repaid to the association, by suspending 
19.30 	or reducing the payment of a retirement annuity, refund, disability benefit, survivor 
19.31 	benefit, or optional annuity under this chapter until the overpayment, plus interest, has 
19.32 	been recovered.
19.33 	(c) Contracts under paragraph (a), clause (6), are not subject to the competitive 
19.34 	bidding procedure prescribed by chapter 16C.
19.35 	(d) An approved actuary retained by the executive director shall function as the 
19.36 	actuarial adviser of the board and the executive director and may perform benefit increase 
20.1 	cost estimates, actuarial valuations, and experience studies to supplement those performed 
20.2 	by the actuary retained under section 356.214. Supplemental benefit increase cost 
20.3 	estimates, actuarial valuations, and experience studies must be filed with the executive 
20.4 	director of the Legislative Commission on Pensions and Retirement.
20.5 	(e) The executive director shall transmit copies of professional management survey 
20.6 	reports to the secretary of the senate, the chief clerk of the house of representatives, and 
20.7 	the Legislative Reference Library, as provided by section 3.195, and to the executive 
20.8 	director of the commission at the same time as reports are furnished to the board. Only 
20.9 	management firms experienced in conducting management surveys of federal, state, or 
20.10 	local public retirement systems are qualified to contract with the executive director.

20.11 	Sec. 19. Minnesota Statutes 2006, section 354.07, subdivision 1, is amended to read:
20.12 		Subdivision 1.General powers of board. The board has the power to frame bylaws 
20.13 	for its own government and for the management of the association not inconsistent with the 
20.14 	laws of the state and to modify them at its pleasure; to adopt, alter, and enforce reasonable 
20.15 	rules not inconsistent with the laws of the state for the administration and management of 
20.16 	the association, for the payment and collection of payments from members, and for the 
20.17 	payment of withdrawals and benefits; to pass upon and allow or disallow applications for 
20.18 	membership in the association and for credit for teaching service; to pass upon and allow 
20.19 	or disallow claims for withdrawals, pensions, or benefits payable by the fund; to adopt 
20.20 	an appropriate mortality table based on experience of the association as ~~recommended~~
20.21 	certified as accurate by the actuary retained under section 356.214 and using the applicable 
20.22 	postretirement interest assumption specified in section 356.215, subdivision 8; to provide 
20.23 	for the payment out of the fund of necessary expenses for the administration by the 
20.24 	association and of claims for withdrawals, pensions, or benefits allowed. 

20.25 	Sec. 20. Minnesota Statutes 2007 Supplement, section 354.35, subdivision 2, is 
20.26 	amended to read:
20.27 		Subd. 2.Election of accelerated annuity. (a) Any coordinated member who retires 
20.28 	before normal retirement age may elect to receive an optional accelerated retirement 
20.29 	annuity from the association which provides for different annuity amounts over different 
20.30 	periods of retirement. The optional accelerated retirement annuity must take the form of 
20.31 	an annuity payable for the period before the member attains age 65, or normal retirement 
20.32 	age, in a greater amount than the amount of the annuity calculated under section 354.44 on 
20.33 	the basis of the age of the member at retirement, but the optional accelerated retirement 
20.34 	annuity must be the actuarial equivalent of the member's annuity computed on the basis of 
21.1 	the member's age at retirement. The greater amount must be paid until the retiree reaches 
21.2 	age 65, or normal retirement age, and at that time the payment from the association must 
21.3 	be reduced. For each year the retiree is under age 65, or normal retirement age, up to five 
21.4 	percent of the total life annuity required reserves may be used to accelerate the optional 
21.5 	retirement annuity under this section. 
21.6 	(b) Members who retire before age 62 may elect to have the annuity under this 
21.7 	subdivision accelerated to age 62 rather than normal retirement age or age 65.
21.8 	(c) The method of computing the optional accelerated retirement annuity provided 
21.9 	in this subdivision is established by the board of trustees. In establishing the method 
21.10 	of computing the optional accelerated retirement annuity or any modification of that 
21.11 	procedure, the board of trustees must obtain the written ~~approval~~certification of accuracy 
21.12 	from the actuary retained under section 356.214. The written ~~approval~~certification must 
21.13 	be a part of the permanent records of the board of trustees. The election of an optional 
21.14 	accelerated retirement annuity is exercised by making an application on a form provided 
21.15 	by the executive director. 

21.16 	Sec. 21. Minnesota Statutes 2006, section 354.45, subdivision 1, is amended to read:
21.17 		Subdivision 1.Optional annuity forms. The retirement board shall establish 
21.18 	optional annuities at retirement which ~~shall~~must take the form of an annuity payable for a 
21.19 	period certain and for life thereafter or the form of a joint and survivor annuity. The board 
21.20 	shall also establish an optional annuity which ~~shall~~must take the form of a guaranteed 
21.21 	refund annuity paying the annuitant a fixed amount for life with the guarantee that in the 
21.22 	event of death the balance of the accumulated deductions and interest accrued to the date 
21.23 	of retirement ~~will be paid~~is payable to the designated beneficiary. Except as provided 
21.24 	in subdivision 1a, any optional annuity forms ~~shall~~must be actuarially equivalent to the 
21.25 	normal forms provided in section 354.44. In establishing these optional annuity forms, the 
21.26 	board shall obtain the written ~~recommendation~~certification of accuracy of the actuary 
21.27 	retained under section 356.214. The ~~recommendations shall~~certification must be a part of 
21.28 	the permanent records of the board. 

21.29 	Sec. 22. Minnesota Statutes 2006, section 354.55, subdivision 11, is amended to read:
21.30 		Subd. 11.Deferred annuity; augmentation. (a) Any person covered under section 
21.31 	354.44, subdivision 6, who ceases to render teaching service, may leave the person's 
21.32 	accumulated deductions in the fund for the purpose of receiving a deferred annuity at 
21.33 	retirement. Eligibility for an annuity under this subdivision is governed pursuant to 
21.34 	section 354.44, subdivision 1, or 354.60. 
22.1 	(b) The amount of the deferred retirement annuity is determined by section 354.44, 
22.2 	subdivision 6, and augmented as provided in this subdivision. The required reserves 
22.3 	related to that portion of the annuity which had accrued when the member ceased to 
22.4 	render teaching service must be augmented by interest compounded annually from the 
22.5 	first day of the month following the month during which the member ceased to render 
22.6 	teaching service to the effective date of retirement. There ~~shall be~~is no augmentation if 
22.7 	this period is less than three months or if this period commences prior to July 1, 1971. 
22.8 	The rates of interest used for this purpose must be five percent compounded annually 
22.9 	commencing July 1, 1971, until January 1, 1981, and three percent compounded annually 
22.10 	thereafter until January 1 of the year following the year in which the former member 
22.11 	attains age 55 and from that date to the effective date of retirement, the rate is five percent 
22.12 	compounded annually if the employee became an employee before July 1, 2006, and at 
22.13 	2.5 percent compounded annually if the employee becomes an employee after June 30, 
22.14 	2006. If a person has more than one period of uninterrupted service, a separate average 
22.15 	salary determined under section 354.44, subdivision 6, must be used for each period and 
22.16 	the required reserves related to each period must be augmented by interest pursuant to this 
22.17 	subdivision. The sum of the augmented required reserves so determined ~~shall be~~is the 
22.18 	basis for purchasing the deferred annuity. If a person repays a refund, the service restored 
22.19 	by the repayment must be considered as continuous with the next period of service for 
22.20 	which the person has credit with this fund. If a person does not render teaching service in 
22.21 	any one fiscal year or more consecutive fiscal years and then resumes teaching service, 
22.22 	the formula percentages used from the date of the resumption of teaching service must be 
22.23 	those applicable to new members. The mortality table and interest assumption used to 
22.24 	compute the annuity must be the applicable mortality table established by the board under 
22.25 	section 354.07, subdivision 1, and the interest rate assumption under section 356.215 in 
22.26 	effect when the member retires. A period of uninterrupted service for the purposes of this 
22.27 	subdivision means a period of covered teaching service during which the member has not 
22.28 	been separated from active service for more than one fiscal year. 
22.29 	(c) In no case ~~shall~~may the annuity payable under this subdivision be less than the 
22.30 	amount of annuity payable pursuant to section 354.44, subdivision 6. 
22.31 	(d) The requirements and provisions for retirement before normal retirement age 
22.32 	contained in section 354.44, subdivision 6, clause (3) or (5), ~~shall~~ also apply to an 
22.33 	employee fulfilling the requirements with a combination of service as provided in section 
22.34 	354.60. 
22.35 	(e) The augmentation provided by this subdivision applies to the benefit provided 
22.36 	in section 354.46, subdivision 2. 
23.1 	(f) The augmentation provided by this subdivision ~~shall~~does not apply to any period 
23.2 	in which a person is on an approved leave of absence from an employer unit covered 
23.3 	by the provisions of this chapter.
23.4 	(g) The retirement annuity or disability benefit of, or the survivor benefit payable on 
23.5 	behalf of, a former teacher who terminated service before July 1, 1997, which is not first 
23.6 	payable until after June 30, 1997, must be increased on an actuarial equivalent basis to 
23.7 	reflect the change in the postretirement interest rate actuarial assumption under section 
23.8 	356.215, subdivision 8, from five percent to six percent under a calculation procedure and 
23.9 	tables adopted by the board as ~~recommended~~certified as accurate by ~~an approved actuary~~ 
23.10 	~~and approved by~~ the actuary retained under section 356.214. 

23.11 	Sec. 23. Minnesota Statutes 2006, section 354A.011, subdivision 3a, is amended to 
23.12 	read:
23.13 		Subd. 3a.Actuarial equivalent. "Actuarial equivalent" means the condition of one 
23.14 	annuity or benefit having an equal actuarial present value as another annuity or benefit, 
23.15 	determined as of a given date with each actuarial present value based on the appropriate 
23.16 	mortality table adopted by the appropriate board of trustees based on the experience of 
23.17 	that retirement fund association as ~~recommended~~certified as accurate by the actuary 
23.18 	retained under section 356.214, and approved under section 356.215, subdivision 18, and 
23.19 	using the applicable preretirement or postretirement interest rate assumption specified in 
23.20 	section 356.215, subdivision 8.

23.21 	Sec. 24. Minnesota Statutes 2006, section 354A.021, subdivision 7, is amended to read:
23.22 		Subd. 7.Actuarial consultant. The board of trustees or directors of each teachers 
23.23 	retirement fund association may contract for the services of an approved actuary and fix 
23.24 	the reasonable compensation for those services. ~~Any~~An approved actuary retained by 
23.25 	the board ~~shall function as~~is the actuarial ~~advisor~~adviser to the board and may perform 
23.26 	benefit increase cost estimates, actuarial valuations, and experience studies to supplement 
23.27 	those performed by the actuary retained under section 356.214. ~~Any~~ Supplemental benefit 
23.28 	increase cost estimates, actuarial valuations ~~or~~, and  experience studies must be filed with 
23.29 	the executive director of the Legislative Commission on Pensions and Retirement. 

23.30 	Sec. 25. Minnesota Statutes 2007 Supplement, section 354A.12, subdivision 3c, 
23.31 	is amended to read:
23.32 		Subd. 3c.Termination of supplemental contributions and direct matching 
23.33 	and state aid. (a) The supplemental contributions payable to the Minneapolis Teachers 
24.1 	Retirement Fund Association by Special School District No. 1 and the city of Minneapolis 
24.2 	under section 423A.02, subdivision 3, must continue to be paid to the Teachers Retirement 
24.3 	Association until 2037. The supplemental contributions payable to the St. Paul Teachers 
24.4 	Retirement Fund Association by Independent School District No. 625 under section 
24.5 	423A.02, subdivision 3, or the direct state aids under subdivision 3a to the St. Paul 
24.6 	Teachers Retirement Fund Association terminate at the end of the fiscal year in which the 
24.7 	accrued liability funding ratio for that fund, as determined in the most recent actuarial 
24.8 	report for that fund by the actuary retained under section 356.214, equals or exceeds the 
24.9 	accrued liability funding ratio for the teachers retirement association, as determined in 
24.10 	the most recent actuarial report for the Teachers Retirement Association by the actuary 
24.11 	retained under section 356.214. 
24.12 	(b) If the state direct matching, state supplemental, or state aid is terminated for a 
24.13 	first class city teachers retirement fund association under paragraph (a), it may not again 
24.14 	be received by that fund.
24.15 	(c) If the St. Paul Teachers Retirement Fund Association is funded at or in excess of 
24.16 	the funding ratio applicable to the Teachers Retirement Association when the provisions 
24.17 	of paragraph (b) become effective, then any state aid previously distributed to that 
24.18 	association must be immediately transferred to the Teachers Retirement Association.

24.19 	Sec. 26. Minnesota Statutes 2006, section 354A.31, subdivision 7, is amended to read:
24.20 		Subd. 7.Actuarial reduction for early retirement. This subdivision applies to 
24.21 	a person who has become at least 55 years old and first becomes a coordinated member 
24.22 	after June 30, 1989, and to any other coordinated member who has become at least 55 
24.23 	years old and whose annuity is higher when calculated using the retirement annuity 
24.24 	formula percentage in subdivision 4, paragraph (d), and subdivision 4a, paragraph (d), in 
24.25 	conjunction with this subdivision than when calculated under subdivision 4, paragraph 
24.26 	(c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6. A coordinated 
24.27 	member who retires before the full benefit age ~~shall~~must be paid the retirement annuity 
24.28 	calculated using the retirement annuity formula percentage in subdivision 4, paragraph 
24.29 	(d), or subdivision 4a, paragraph (d), reduced so that the ~~reduced~~resulting annuity is the 
24.30 	actuarial equivalent of the annuity that would be payable to the member if the member 
24.31 	deferred receipt of the annuity and the annuity amount were augmented at an annual rate 
24.32 	of three percent compounded annually from the day the annuity begins to accrue until the 
24.33 	normal retirement age if the employee became an employee before July 1, 2006, and at 
24.34 	2.5 percent compounded annually from the day the annuity begins to accrue until the 
24.35 	normal retirement age if the person initially becomes a teacher after June 30, 2006. The 
25.1 	actuarial equivalency must be determined using a procedure certified as accurate by the 
25.2 	actuary retained under section 356.214.

25.3 	Sec. 27. Minnesota Statutes 2006, section 354A.32, subdivision 1, is amended to read:
25.4 		Subdivision 1.Optional forms generally. The board of the St. Paul Teachers 
25.5 	Retirement Fund Association shall establish for the coordinated program and the board 
25.6 	of the Duluth Teachers Retirement Fund Association shall establish for the new law 
25.7 	coordinated program an optional retirement annuity which ~~shall~~must take the form of a 
25.8 	joint and survivor annuity. Each board may also, in its discretion, establish an optional 
25.9 	annuity which ~~shall take~~takes the form of an annuity payable for a period certain and for 
25.10 	life thereafter. Each board ~~shall~~must also establish an optional retirement annuity that 
25.11 	guarantees payment of the balance of the annuity recipient's accumulated deductions to 
25.12 	a designated beneficiary upon the death of the annuity recipient. Except as provided in 
25.13 	subdivision 1a, optional annuity forms ~~shall~~must be the actuarial equivalent of the normal 
25.14 	forms provided in section 354A.31. In establishing these optional annuity forms, the board 
25.15 	shall obtain the written ~~recommendation~~certification of the accuracy of the actuarial 
25.16 	equivalence determination procedure from the actuary retained under section 356.214. The 
25.17 	recommendation ~~shall~~must be retained as a part of the permanent records of the board. 

25.18 	Sec. 28. Minnesota Statutes 2006, section 354A.33, is amended to read:
25.19 	354A.33 SOCIAL SECURITY LEVELING ADJUSTMENT OPTION.
25.20 	Any coordinated member who retires ~~prior to~~before the ~~time~~date on which the 
25.21 	member becomes eligible for Social Security old age retirement benefits ~~shall be~~is 
25.22 	entitled to elect to receive a Social Security leveling adjustment optional annuity from the 
25.23 	teachers retirement fund association. The Social Security leveling adjustment optional 
25.24 	annuity ~~shall~~must be established by the board of the teachers retirement fund association. 
25.25 	~~It shall~~The option must take the form of an annuity payable for the period ~~prior to~~
25.26 	before the member's becoming eligible for Social Security old age retirement benefits in 
25.27 	an amount greater than the amount of the member's annuity calculated ~~pursuant to~~under 
25.28 	section 354A.31 on the basis of the age of the member at retirement but equal insofar as 
25.29 	possible to the Social Security old age retirement benefit and the adjusted retirement 
25.30 	annuity amounts payable immediately subsequent to becoming eligible for Social Security 
25.31 	old age retirement benefits in an amount less than the amount of the member's annuity 
25.32 	calculated ~~pursuant to~~under section 354A.31 on the basis of the age of the member at 
25.33 	retirement. The optional form ~~shall~~must be the actuarial equivalent to the normal forms 
25.34 	provided in section 354A.31. In establishing the optional form, the board shall obtain 
26.1 	the written ~~recommendation~~certification of the actuary retained under section 356.214
26.2 	and the ~~recommendation shall~~certification must be retained as a part of the permanent 
26.3 	records of the board. 

26.4 	Sec. 29. Minnesota Statutes 2006, section 354A.37, subdivision 2, is amended to read:
26.5 		Subd. 2.Eligibility for deferred retirement annuity. Any coordinated member 
26.6 	who ceases to render teaching services for the school district in which the teachers 
26.7 	retirement fund association is located, with sufficient allowable service credit to meet the 
26.8 	minimum service requirements specified in section 354A.31, subdivision 1, ~~shall be~~is 
26.9 	entitled to a deferred retirement annuity in lieu of a refund ~~pursuant to~~under subdivision 
26.10 	1. The deferred retirement annuity ~~shall~~must be computed ~~pursuant to~~under section 
26.11 	354A.31 and ~~shall~~must be augmented as provided in this subdivision. The deferred 
26.12 	annuity ~~shall~~must commence upon application after the person on deferred status attains 
26.13 	at least the minimum age specified in section 354A.31, subdivision 1. 
26.14 	The monthly annuity amount that had accrued when the member ceased to render 
26.15 	teaching service must be augmented from the first day of the month following the 
26.16 	month during which the member ceased to render teaching service to the effective 
26.17 	date of retirement. There is no augmentation if this period is less than three months. 
26.18 	The rate of augmentation is three percent compounded annually until January 1 of the 
26.19 	year following the year in which the former member attains age 55, and five percent 
26.20 	compounded annually after that date to the effective date of retirement if the employee 
26.21 	became an employee before July 1, 2006, and at 2.5 percent compounded annually if 
26.22 	the employee becomes an employee after June 30, 2006. If a person has more than one 
26.23 	period of uninterrupted service, a separate average salary determined under section 
26.24 	354A.31 must be used for each period, and the monthly annuity amount related to each 
26.25 	period must be augmented as provided in this subdivision. The sum of the augmented 
26.26 	monthly annuity amounts determines the total deferred annuity payable. If a person repays 
26.27 	a refund, the service restored by the repayment must be considered as continuous with the 
26.28 	next period of service for which the person has credit with the fund. If a person does not 
26.29 	render teaching services in any one fiscal year or more consecutive fiscal years and then 
26.30 	resumes teaching service, the formula percentages used from the date of resumption of 
26.31 	teaching service are those applicable to new members. The mortality table and interest 
26.32 	assumption used to compute the annuity are the table established by the fund to compute 
26.33 	other annuities, and the interest assumption under section 356.215 in effect when the 
26.34 	member retires. The calculation procedure must be certified as accurate by the actuary 
26.35 	retained under section 356.214. A period of uninterrupted service for the purpose of this 
27.1 	subdivision means a period of covered teaching service during which the member has not 
27.2 	been separated from active service for more than one fiscal year. 
27.3 	The augmentation provided by this subdivision applies to the benefit provided in 
27.4 	section 354A.35, subdivision 2. The augmentation provided by this subdivision does 
27.5 	not apply to any period in which a person is on an approved leave of absence from an 
27.6 	employer unit. 

27.7 	Sec. 30. Minnesota Statutes 2006, section 356.20, subdivision 3, is amended to read:
27.8 		Subd. 3.Filing requirement. The financial report is a public record. A copy of the 
27.9 	report or a synopsis of the report containing the information required by this section must 
27.10 	be distributed annually to each member of the ~~fund~~retirement plan and to the governing 
27.11 	body of each governmental subdivision of the state which makes employers contributions 
27.12 	thereto or in whose behalf taxes are levied for the employers' contribution. A signed copy 
27.13 	of the report must be delivered to the executive director of the Legislative Commission 
27.14 	on Pensions and Retirement and to the Legislative Reference Library not later than six 
27.15 	months after the close of each fiscal year or one month following the completion and 
27.16 	delivery to the retirement ~~fund~~plan of the actuarial valuation report of the fund by the 
27.17 	actuary retained under section 356.214, if applicable, whichever is later.

27.18 	Sec. 31. Minnesota Statutes 2006, section 356.20, subdivision 4, is amended to read:
27.19 		Subd. 4.Contents of financial report. (a) The financial report required by 
27.20 	this section must contain financial statements and disclosures that indicate the financial 
27.21 	operations and position of the retirement plan and fund. The report must conform with 
27.22 	generally accepted governmental accounting principles, applied on a consistent basis. The 
27.23 	report must be audited. The report must include, as part of its exhibits or its footnotes, 
27.24 	an actuarial disclosure item based on the actuarial valuation calculations prepared by the 
27.25 	actuary retained under section 356.214 or by the actuary retained by the retirement fund or 
27.26 	plan, whichever applies, according to applicable actuarial requirements enumerated in 
27.27 	section 356.215, and specified in the most recent standards for actuarial work adopted 
27.28 	by the Legislative Commission on Pensions and Retirement. The accrued assets, the 
27.29 	accrued liabilities, including accrued reserves, and the unfunded actuarial accrued liability 
27.30 	of the fund or plan must be disclosed. The disclosure item must contain a declaration by 
27.31 	the actuary retained under section 356.214 or the actuary retained by the fund or plan, 
27.32 	whichever applies, specifying that the required reserves for any retirement, disability, or 
27.33 	survivor benefits provided under a benefit formula are computed in accordance with the 
27.34 	entry age actuarial cost method, under section 356.215, and in accordance with the most 
28.1 	recent applicable standards for actuarial work adopted by the Legislative Commission on 
28.2 	Pensions and Retirement.
28.3 	(b) Assets of the fund or plan contained in the disclosure item must include the 
28.4 	following statement of ~~the actuarial value of~~ current assets as defined in section 356.215, 
28.5 	subdivision 1, paragraph (f):

28.6

28.7

Value at 
cost

Value at 
market

28.8 | Cash, cash equivalents, and | | | |
28.9 | | short-term securities | | ........ | | ........
28.10 | Accounts receivable | | ........ | | ........
28.11 | Accrued investment income | | ........ | | ........
28.12 | Fixed income investments | | ........ | | ........
28.13 | Equity investments other | | | |
28.14 | | than real estate | | ........ | | ........
28.15 | Real estate investments | | ........ | | ........
28.16 | Equipment | | ........ | | ........
28.17 | Participation in the Minnesota | | | |
28.18 | | postretirement investment | | | |
28.19 | | fund or the retirement | | | |
28.20 | | benefit fund | | ........ | | ........
28.21 | Other | | ........ | | ........

28.22 | Total assets | | | |
28.23 | | Value at cost | | | | ........
28.24 | | Value at market | | | | ........
28.25

28.26

Actuarial value of current 
assets

........

28.27 	(c) The unfunded actuarial accrued liability of the fund or plan contained in the 
28.28 	disclosure item must include the following measures of unfunded actuarial accrued 
28.29 	liability, using the actuarial value of current assets:
28.30 	(1) the unfunded actuarial accrued liability, determined by subtracting the current 
28.31 	assets and the present value of future normal costs from the total current and expected 
28.32 	future benefit obligations; and
28.33 	(2) the unfunded pension benefit obligation, determined by subtracting the current 
28.34 	assets from the actuarial present value of credited projected benefits.
28.35 	If the current assets of the fund or plan exceed the actuarial accrued liabilities, the 
28.36 	excess must be disclosed and indicated as a surplus.
28.37 	(d) The pension benefit obligations schedule included in the disclosure must contain 
28.38 	the following information on the benefit obligations:
28.39 	(1) the pension benefit obligation, determined as the actuarial present value of 
28.40 	credited projected benefits on account of service rendered to date, separately identified 
28.41 	as follows:

29.1 | | (i) | for annuitants,
29.2 | | | retirement annuities,
29.3 | | | disability benefits,
29.4 | | | surviving spouse and child benefits;
29.5

29.6

(ii)

for former members without vested 
rights;

29.7

29.8

(iii)

for deferred annuitants' benefits, 
including any augmentation;

29.9 | | (iv) | for active employees,
29.10

29.11

accumulated employee contributions, 
including allocated investment income,

29.12 | | | employer-financed benefits vested,
29.13 | | | employer-financed benefits nonvested,
29.14 | | | total pension benefit obligation; and
29.15 	(2) if there are additional benefits not appropriately covered by the ~~foregoing items~~ 
29.16 	~~of~~ benefit ~~obligations~~ obligation items under clause (1), a separate identification of the 
29.17 	obligation.
29.18 	(e) The report must contain an itemized exhibit describing the administrative 
29.19 	expenses of the plan, including, but not limited to, the following items, classified on a 
29.20 	consistent basis from year to year, and with any further meaningful detail:
29.21 	(1) personnel expenses;
29.22 	(2) communication-related expenses;
29.23 	(3) office building and maintenance expenses;
29.24 	(4) professional services fees; and
29.25 	(5) other expenses.
29.26 	(f) The report must contain an itemized exhibit describing the investment expenses 
29.27 	of the plan, including, but not limited to, the following items, classified on a consistent 
29.28 	basis from year to year, and with any further meaningful detail:
29.29 	(1) internal investment-related expenses; and
29.30 	(2) external investment-related expenses.
29.31 	(g) Any additional statements or exhibits or more detailed or subdivided itemization 
29.32 	of a disclosure item that will enable the management of the fund to portray a true 
29.33 	interpretation of the fund's financial condition must be included in the additional 
29.34 	statements or exhibits.

29.35 	Sec. 32. Minnesota Statutes 2006, section 356.215, subdivision 1, is amended to read:
29.36 		Subdivision 1.Definitions. (a) For the purposes of sections 3.85 and 356.20 to 
29.37 	356.23, each of the terms in the following paragraphs has the meaning given. 
30.1 	(b) "Actuarial valuation" means a set of calculations prepared by the actuary 
30.2 	retained under section 356.214 if so required under section 3.85, or otherwise, by an 
30.3 	approved actuary, to determine the normal cost and the accrued actuarial liabilities of 
30.4 	a benefit plan, according to the entry age actuarial cost method and based upon stated 
30.5 	assumptions including, but not limited to rates of interest, mortality, salary increase, 
30.6 	disability, withdrawal, and retirement and to determine the payment necessary to amortize 
30.7 	over a stated period any unfunded accrued actuarial liability disclosed as a result of the 
30.8 	actuarial valuation of the benefit plan. 
30.9 	(c) "Approved actuary" means a person who is regularly engaged in the business 
30.10 	of providing actuarial services and who has at least 15 years of service to major public 
30.11 	employee pension or retirement funds or who is a fellow in the Society of Actuaries.
30.12 	(d) "Entry age actuarial cost method" means an actuarial cost method under which 
30.13 	the actuarial present value of the projected benefits of each individual currently covered 
30.14 	by the benefit plan and included in the actuarial valuation is allocated on a level basis over 
30.15 	the service of the individual, if the benefit plan is governed by section 69.773, or over the 
30.16 	earnings of the individual, if the benefit plan is governed by any other law, between the 
30.17 	entry age and the assumed exit age, with the portion of the actuarial present value which is 
30.18 	allocated to the valuation year to be the normal cost and the portion of the actuarial present 
30.19 	value not provided for at the valuation date by the actuarial present value of future normal 
30.20 	costs to be the actuarial accrued liability, with aggregation in the calculation process to be 
30.21 	the sum of the calculated result for each covered individual and with recognition given to 
30.22 	any different benefit formulas which may apply to various periods of service.
30.23 	(e) "Experience study" means a report providing experience data and an actuarial 
30.24 	analysis of the adequacy of the actuarial assumptions on which actuarial valuations are 
30.25 	based.
30.26 	(f) "Current assets" means~~:~~
30.27 	~~(1) for the July 1, 2001, actuarial valuation, the market value of all assets as of~~ 
30.28 	~~June 30, 2001, reduced by:~~
30.29 	~~(i) 30 percent of the difference between the market value of all assets as of June 30,~~ 
30.30 	~~1999, and the actuarial value of assets used in the July 1, 1999, actuarial valuation;~~
30.31 	~~(ii) 60 percent of the difference between the actual net change in the market value of~~ 
30.32 	~~assets between June 30, 1999, and June 30, 2000, and the computed increase in the market~~ 
30.33 	~~value of assets between June 30, 1999, and June 30, 2000, if the assets had increased at~~ 
30.34 	~~the percentage preretirement interest rate assumption used in the July 1, 1999, actuarial~~ 
30.35 	~~valuation; and~~
31.1 	~~(iii) 80 percent of the difference between the actual net change in the market value~~ 
31.2 	~~of assets between June 30, 2000, and June 30, 2001, and the computed increase in~~ 
31.3 	~~the market value of assets between June 30, 2000, and June 30, 2001, if the assets had~~ 
31.4 	~~increased at the percentage preretirement interest rate assumption used in the July 1,~~ 
31.5 	~~2000, actuarial valuation;~~
31.6 	~~(2) for the July 1, 2002, actuarial valuation, the market value of all assets as of~~ 
31.7 	~~June 30, 2002, reduced by:~~
31.8 	~~(i) ten percent of the difference between the market value of all assets as of June 30,~~ 
31.9 	~~1999, and the actuarial value of assets used in the July 1, 1999, actuarial valuation;~~
31.10 	~~(ii) 40 percent of the difference between the actual net change in the market value of~~ 
31.11 	~~assets between June 30, 1999, and June 30, 2000, and the computed increase in the market~~ 
31.12 	~~value of assets between June 30, 1999, and June 30, 2000, if the assets had increased at~~ 
31.13 	~~the percentage preretirement interest rate assumption used in the July 1, 1999, actuarial~~ 
31.14 	~~valuation;~~
31.15 	~~(iii) 60 percent of the difference between the actual net change in the market value~~ 
31.16 	~~of assets between June 30, 2000, and June 30, 2001, and the computed increase in~~ 
31.17 	~~the market value of assets between June 30, 2000, and June 30, 2001, if the assets had~~ 
31.18 	~~increased at the percentage preretirement interest rate assumption used in the July 1, 2000,~~ 
31.19 	~~actuarial valuation; and~~
31.20 	~~(iv) 80 percent of the difference between the actual net change in the market value of~~ 
31.21 	~~assets between June 30, 2001, and June 30, 2002, and the computed increase in the market~~ 
31.22 	~~value of assets between June 30, 2001, and June 30, 2002, if the assets had increased at~~ 
31.23 	~~the percentage preretirement interest rate assumption used in the July 1, 2001, actuarial~~ 
31.24 	~~valuation; or~~
31.25 	~~(3) for any actuarial valuation after July 1, 2002,~~ the market value of all assets 
31.26 	as of the preceding June 30, reduced by:
31.27 	~~(i)~~(1) 20 percent of the difference between the actual net change in the market value 
31.28 	of assets between the June 30 that occurred three years earlier and the June 30 that occurred 
31.29 	four years earlier and the computed increase in the market value of assets over that 
31.30 	fiscal year period if the assets had increased at the percentage preretirement interest rate 
31.31 	assumption used in the actuarial valuation for the July 1 that occurred four years earlier;
31.32 	~~(ii)~~(2) 40 percent of the difference between the actual net change in the market value 
31.33 	of assets between the June 30 that occurred two years earlier and the June 30 that occurred 
31.34 	three years earlier and the computed increase in the market value of assets over that 
31.35 	fiscal year period if the assets had increased at the percentage preretirement interest rate 
31.36 	assumption used in the actuarial valuation for the July 1 that occurred three years earlier;
32.1 	~~(iii)~~(3) 60 percent of the difference between the actual net change in the market 
32.2 	value of assets between the June 30 that occurred one year earlier and the June 30 that 
32.3 	occurred two years earlier and the computed increase in the market value of assets over 
32.4 	that fiscal year period if the assets had increased at the percentage preretirement interest 
32.5 	rate assumption used in the actuarial valuation for the July 1 that occurred two years 
32.6 	earlier; and
32.7 	~~(iv)~~(4) 80 percent of the difference between the actual net change in the market 
32.8 	value of assets between the immediately prior June 30 and the June 30 that occurred one 
32.9 	year earlier and the computed increase in the market value of assets over that fiscal year 
32.10 	period if the assets had increased at the percentage preretirement interest rate assumption 
32.11 	used in the actuarial valuation for the July 1 that occurred one year earlier.
32.12 	(g) "Unfunded actuarial accrued liability" means the total current and expected 
32.13 	future benefit obligations, reduced by the sum of current assets and the present value of 
32.14 	future normal costs.
32.15 	(h) "Pension benefit obligation" means the actuarial present value of credited 
32.16 	projected benefits, determined as the actuarial present value of benefits estimated to be 
32.17 	payable in the future as a result of employee service attributing an equal benefit amount, 
32.18 	including the effect of projected salary increases and any step rate benefit accrual rate 
32.19 	differences, to each year of credited and expected future employee service.

32.20 	Sec. 33. Minnesota Statutes 2006, section 356.215, subdivision 2, is amended to read:
32.21 		Subd. 2.Requirements. (a) It is the policy of the legislature that it is necessary 
32.22 	and appropriate to determine annually the financial status of tax supported retirement and 
32.23 	pension plans for public employees. To achieve this goal:
32.24 	(1) the actuary retained under section 356.214 shall prepare annual actuarial 
32.25 	valuations of the retirement plans enumerated in section 356.214, subdivision 1, paragraph 
32.26 	(b), and quadrennial experience studies of the retirement plans enumerated in section 
32.27 	356.214, subdivision 1, paragraph (b), clauses (1), (2), and (7); and
32.28 	(2) at Department of Finance expense, the commissioner of finance may have 
32.29 	~~prepared by~~ the actuary retained ~~by the commission~~ under section 356.214, prepare two 
32.30 	years after each set of quadrennial experience studies, quadrennial projection valuations 
32.31 	of ~~at least~~ one or more of the retirement plans enumerated in section 6, subdivision 1, 
32.32 	paragraph (b), for which the commissioner determines that the analysis may be beneficial.
32.33 	(b) The governing or managing board or administrative officials of each public 
32.34 	pension and retirement fund or plan enumerated in section   356.20, subdivision 2, clauses 
33.1 	(9), (10), and (12), ~~shall~~must have prepared by an approved actuary annual actuarial 
33.2 	valuations of their respective funds as provided in this section.
33.3 	~~This~~(c) The actuarial valuation requirement also applies to any fund or plan that 
33.4 	is the successor to any organization enumerated in section 356.20, subdivision 2, or 
33.5 	to the governing or managing board or administrative officials of any newly formed 
33.6 	retirement fund, plan, or association operating under the control or supervision of any 
33.7 	public employee group, governmental unit, or institution receiving a portion of its support 
33.8 	through legislative appropriations, and any local police or fire fund to which section 
33.9 	356.216 applies.

33.10 	Sec. 34. Minnesota Statutes 2006, section 356.215, subdivision 2a, is amended to read:
33.11 		Subd. 2a.Projection valuation requirements. (a) A quadrennial projection 
33.12 	valuation authorized under subdivision 2 is intended to serve as an additional analytical 
33.13 	tool with which policy makers may assess the future funding status of public plans through 
33.14 	forecasting and testing various potential outcomes over time if certain plan assumptions or 
33.15 	valuation methods were to be modified.
33.16 	(b) In consultation with the retirement fund directors, the state economist, the 
33.17 	state demographer, the commissioner of finance, and the commissioner of employee 
33.18 	relations, the actuary retained under section 356.214 shall perform the quadrennial 
33.19 	projection valuations on behalf of the commissioner of finance, if requested to do so by 
33.20 	the commissioner of finance, testing future implications for plan funding by modifying 
33.21 	assumptions and methods currently in place. The actuary retained under section 356.214 
33.22 	shall provide advice to the commissioner as to the periods over which such projections 
33.23 	should be made, the nature and scope of the scenarios to be analyzed, and the measures of 
33.24 	funding status to be employed, and shall report the results of these analyses in the same 
33.25 	manner as for quadrennial experience studies.

33.26 	Sec. 35. Minnesota Statutes 2006, section 356.215, subdivision 17, is amended to read:
33.27 		Subd. 17.Actuarial services by approved actuaries. (a) The benefit increase cost 
33.28 	estimate, the actuarial valuation ~~or~~, and the quadrennial experience study must be made 
33.29 	and any actuarial consulting services for a retirement fund or plan must be provided by an 
33.30 	approved actuary. The benefit increase cost estimate, the actuarial valuation ~~or~~, and the 
33.31 	quadrennial experience study must include a signed written declaration that it has been 
33.32 	prepared according to sections   356.20 to   356.23 and according to the most recent standards 
33.33 	for actuarial work adopted by the Legislative Commission on Pensions and Retirement. 
34.1 	(b) Benefit increase cost estimates, actuarial valuations ~~or~~, and experience studies 
34.2 	prepared by an approved actuary retained by a retirement fund or plan must be submitted 
34.3 	to the Legislative Commission on Pensions and Retirement within ten days of the 
34.4 	submission of the document to the retirement fund or plan.

34.5 	Sec. 36. Minnesota Statutes 2006, section 356.215, subdivision 18, is amended to read:
34.6 		Subd. 18.Establishment of actuarial assumptions. (a) The actuarial assumptions 
34.7 	used for the preparation of actuarial valuations under this section that are other than 
34.8 	those set forth in this section may be changed only with the approval of the Legislative 
34.9 	Commission on Pensions and Retirement.
34.10 	(b) A change in the applicable actuarial assumptions may be proposed by the 
34.11 	governing board of the applicable pension fund or relief association, by the actuary 
34.12 	retained ~~by the joint retirement systems~~ under section 356.214~~,~~; by the actuarial ~~advisor~~
34.13 	adviser to a pension fund governed by chapter 352, 353, 354, or 354A~~,~~; or by the actuary 
34.14 	retained by a local police or firefighters relief association governed by sections 69.77 or 
34.15 	69.771 to 69.776, if one is retained. 

34.16 	Sec. 37. Minnesota Statutes 2006, section 356.551, subdivision 2, is amended to read:
34.17 		Subd. 2.Determination. (a) Unless the minimum purchase amount set forth in 
34.18 	paragraph (c) applies, the prior service credit purchase amount is an amount equal to the 
34.19 	actuarial present value, on the date of payment, as calculated by the chief administrative 
34.20 	officer of the pension plan and reviewed for accuracy by the actuary retained under section 
34.21 	356.214, of the amount of the additional retirement annuity obtained by the acquisition of 
34.22 	the additional service credit in this section.
34.23 	(b) Calculation of this amount must be made using the preretirement interest rate 
34.24 	applicable to the public pension plan specified in section 356.215, subdivision 8, and 
34.25 	the mortality table adopted for the public pension plan. The calculation must assume 
34.26 	continuous future service in the public pension plan until, and retirement at, the age at 
34.27 	which the minimum requirements of the fund for normal retirement or retirement with an 
34.28 	annuity unreduced for retirement at an early age, including section 356.30, are met with 
34.29 	the additional service credit purchased. The calculation must also assume a full-time 
34.30 	equivalent salary, or actual salary, whichever is greater, and a future salary history that 
34.31 	includes annual salary increases at the applicable salary increase rate for the plan specified 
34.32 	in section 356.215, subdivision 4d.
34.33 	(c) The prior service credit purchase amount may not be less than the amount 
34.34 	determined by applying the current employee or member contribution rate, the employer 
35.1 	contribution rate, and the additional employer contribution rate, if any, to the person's 
35.2 	current annual salary and multiplying that result by the number of whole and fraction 
35.3 	years of service to be purchased.
35.4 	(d) Payment must be made in one lump sum within one year of the prior service 
35.5 	credit authorization. Payment of the amount calculated under this section must be made 
35.6 	by the applicable eligible person.
35.7 	(e) However, the current employer or the prior employer may, at its discretion, pay 
35.8 	all or any portion of the payment amount that exceeds an amount equal to the employee 
35.9 	contribution rates in effect during the period or periods of prior service applied to the 
35.10 	actual salary rates in effect during the period or periods of prior service, plus interest at the 
35.11 	rate of 8.5 percent a year compounded annually from the date on which the contributions 
35.12 	would otherwise have been made to the date on which the payment is made. If the 
35.13 	employer agrees to payments under this subdivision, the purchaser must make the 
35.14 	employee payments required under this subdivision within 90 days of the prior service 
35.15 	credit authorization. If that employee payment is made, the employer payment under this 
35.16 	subdivision must be remitted to the chief administrative officer of the public pension plan 
35.17 	within 60 days of receipt by the chief administrative officer of the employee payments 
35.18 	specified under this subdivision.

35.19 	Sec. 38. Minnesota Statutes 2006, section 422A.01, subdivision 7, is amended to read:
35.20 		Subd. 7.Actuarial equivalent. "Actuarial equivalent" means the condition 
35.21 	of one annuity or benefit having an equal present worth or present value as another 
35.22 	annuity or benefit determined as of a given date with each actuarial present value based 
35.23 	on the appropriate mortality table adopted by the board based on the experience of the 
35.24 	retirement plan as certified as accurate by the actuary retained under section 356.214 and 
35.25 	approved under section 356.215, subdivision 18, and using the applicable preretirement or 
35.26 	postretirement interest rate assumption specified in section 356.215, subdivision 8.

35.27 	Sec. 39. Minnesota Statutes 2006, section 422A.04, subdivision 2, is amended to read:
35.28 		Subd. 2.Actuarial data. The board shall keep, in a convenient form, any data 
35.29 	that is necessary for the preparation of the annual actuarial valuation of the fund created 
35.30 	by this chapter. The actuarial valuation of the fund ~~shall be~~must be prepared by the 
35.31 	actuary retained under section 356.214 and is governed by the provisions of chapter 356
35.32 	and the standards for actuarial work adopted by the Legislative Commission on Pensions 
35.33 	and Retirement.

36.1 	Sec. 40. Minnesota Statutes 2006, section 422A.04, subdivision 3, is amended to read:
36.2 		Subd. 3.Experience data and mortality tables. The board shall prepare and 
36.3 	keep any needful tables, records, and accounts required for carrying out the provisions 
36.4 	of sections 422A.01 to 422A.25, including data showing the mortality and disability 
36.5 	experience of the officers and employees of the service and the date of withdrawal from 
36.6 	service, and any other information that may serve as a guide for future actuarial valuations 
36.7 	and adjustments in the actuarial assumptions for the retirement fund. Mortality tables 
36.8 	~~shall~~must be adopted and may be modified from time to time by the board based on the 
36.9 	experience of the fund as recommended by the actuary retained under section 356.214 as a 
36.10 	basis of calculation for retirement allowances, with ~~any recommendation~~a certification as 
36.11 	to accuracy by the actuary retained as a part of the permanent records of the board and any 
36.12 	assumption change approved as required under section 356.215, subdivision 18. 

36.13 	Sec. 41. Minnesota Statutes 2006, section 422A.06, subdivision 2, is amended to read:
36.14 		Subd. 2.Actuarial valuation required. As of July 1 of each year, an actuarial 
36.15 	valuation of the retirement fund ~~shall~~must be prepared by the actuary retained ~~by the joint~~ 
36.16 	~~retirement systems~~ under section 356.214 and filed in conformance with the provisions 
36.17 	and requirements of sections 356.215 to 356.23. Experience studies ~~shall~~must be prepared 
36.18 	at those times required by statute, required by the standards for actuarial work adopted by 
36.19 	the Legislative Commission on Pensions and Retirement or ordered by the board. 
36.20 	The board may contract for the services of an approved actuary and fix the 
36.21 	reasonable compensation for those services. Any approved actuary retained by the board 
36.22 	~~shall function~~functions as the actuarial ~~advisor~~adviser to the board and may perform 
36.23 	benefit increase cost estimates, actuarial valuations, and experience studies to supplement 
36.24 	those performed by the actuary retained ~~by the joint retirement systems~~ under section 
36.25 	356.214. ~~Any~~Benefit increase cost estimates, supplemental actuarial valuations ~~or~~, and
36.26 	experience studies prepared by an approved actuary retained by the board must be filed 
36.27 	with the executive director of the Legislative Commission on Pensions and Retirement
36.28 	at the same time as the document is filed with the board. 

36.29 	Sec. 42. Minnesota Statutes 2007 Supplement, section 422A.06, subdivision 8, is 
36.30 	amended to read:
36.31 		Subd. 8.Retirement benefit fund. (a) The retirement benefit fund consists of 
36.32 	amounts held for payment of retirement allowances for members retired under this chapter, 
36.33 	including any transfer amount payable under subdivision 3, paragraph (c).
37.1 	(b) Unless subdivision 3, paragraph (c), applies, assets equal to the required 
37.2 	reserves for retirement allowances under this chapter determined in accordance with the 
37.3 	appropriate mortality table adopted by the board of trustees based on the experience of the 
37.4 	fund as recommended by the actuary retained under section 356.214 must be transferred 
37.5 	from the deposit accumulation fund to the retirement benefit fund as of the last business 
37.6 	day of the month in which the retirement allowance begins. The income from investments 
37.7 	of these assets must be allocated to this fund and any interest charge under subdivision 
37.8 	3, paragraph (c), must be credited to the fund. There must be paid from this fund the 
37.9 	retirement annuities authorized by law. A required reserve calculation for the retirement 
37.10 	benefit fund must be made by the actuary retained under section 356.214 and must be 
37.11 	certified to the retirement board by ~~the~~that actuary ~~retained under section 356.214~~.
37.12 	(c) The retirement benefit fund must be governed by the applicable laws governing 
37.13 	the accounting and audit procedures, investment, actuarial requirements, calculation and 
37.14 	payment of postretirement benefit adjustments, discharge of any deficiency in the assets 
37.15 	of the fund when compared to the actuarially determined required reserves, and other 
37.16 	applicable operations and procedures regarding the Minnesota postretirement investment 
37.17 	fund in effect on June 30, 1997, established under Minnesota Statutes 1996, section 
37.18 	11A.18, and any legal or administrative interpretations of those laws of the State Board 
37.19 	of Investment, the legal ~~advisor~~adviser to the Board of Investment and the executive 
37.20 	director of the State Board of Investment in effect on June 30, 1997. If a deferred yield 
37.21 	adjustment account ~~is~~was established for the Minnesota postretirement investment fund 
37.22 	before June 30, 1997, under Minnesota Statutes 1996, section 11A.18, subdivision 5, 
37.23 	the retirement board ~~shall~~ also must establish and maintain a deferred yield adjustment 
37.24 	account within this fund. 
37.25 	(d) Annually, following the calculation of any postretirement adjustment payable 
37.26 	from the retirement benefit fund, the board of trustees shall submit a report to the 
37.27 	executive director of the Legislative Commission on Pensions and Retirement and to the 
37.28 	commissioner of finance indicating the amount of any postretirement adjustment and 
37.29 	the underlying calculations on which that postretirement adjustment amount is based, 
37.30 	including the amount of dividends, the amount of interest, and the amount of net realized 
37.31 	and unrealized capital gains or losses utilized in the calculations.
37.32 	(e) With respect to a former contributing member who began receiving a retirement 
37.33 	annuity or disability benefit under section 422A.151, paragraph (a), clause (2), after June 
37.34 	30, 1997, or with respect to a survivor of a former contributing member who began 
37.35 	receiving a survivor benefit under section 422A.151, paragraph (a), clause (2), after June 
37.36 	30, 1997, the reserves attributable to the one percent lower amount of the cost-of-living 
38.1 	adjustment payable to those annuity or benefit recipients annually must be transferred back 
38.2 	to the deposit accumulation fund to the credit of the Metropolitan Airports Commission. 
38.3 	The calculation of this annual reduced cost-of-living adjustment reserve transfer must be 
38.4 	reviewed by the actuary retained under section 356.214. 

38.5 	Sec. 43. Minnesota Statutes 2006, section 422A.101, subdivision 1, is amended to read:
38.6 		Subdivision 1.Financial requirements of fund. ~~Prior to~~(a) Before July 31 
38.7 	annually, the retirement board, in consultation with the actuary retained under section 
38.8 	356.214, shall prepare an itemized statement of the financial requirements of the fund 
38.9 	for the succeeding fiscal year. A copy of the statement ~~shall~~must be submitted to the 
38.10 	city council, the board of estimate and taxation of the city, the managing board or chief 
38.11 	administrative officer of each city owned public utility, improvement project or municipal 
38.12 	activity supported in whole or in part by revenues other than real estate taxes, public 
38.13 	corporation, or unit of metropolitan government employing members of the fund, the 
38.14 	board of Special School District No. 1, and the state commissioner of finance ~~prior to~~on 
38.15 	or before July 31 annually.
38.16 	(b) The statement ~~shall~~must be itemized and ~~shall~~must include the following:
38.17 	(1) an estimate of the administrative expenses of the fund for the following year, 
38.18 	including the amount necessary to amortize through June 30, 2020, the annual costs that 
38.19 	are determined by the retirement board to be related to investment activities of the deposit 
38.20 	accumulation fund other than actual investment transaction amounts;
38.21 	(2) an estimate of the normal cost of the fund expressed as a dollar amount, which 
38.22 	~~shall~~must be determined by applying the normal cost of the fund as reported in the most 
38.23 	recent actuarial valuation prepared by the actuary retained under section 356.214 and 
38.24 	expressed as a percentage of covered payroll to the estimated total covered payroll of all 
38.25 	employees covered by the fund for the following year;
38.26 	(3) an estimate of the contribution required to amortize on a level annual dollar basis 
38.27 	the unfunded actuarial accrued liability of the fund by June 30, 2020, using an interest rate 
38.28 	of six percent compounded annually, as reported in the most recent actuarial valuation~~,~~
38.29 	prepared by the actuary retained under section 356.214, expressed as a dollar amount. In 
38.30 	determining the amount of the unfunded actuarial accrued liability of the fund, all assets 
38.31 	other than the assets of the retirement benefit fund ~~shall~~must be valued as current assets 
38.32 	as defined under section 356.215, subdivision 1, ~~clause (6)~~ paragraph (f), and the assets 
38.33 	of the retirement benefit fund ~~shall~~must be valued as an amount equal to the actuarially 
38.34 	determined required reserves for benefits payable from that fund; and
39.1 	(4) the amount of any deficiency in the actual amount of any employer contribution 
39.2 	provided for in this section when compared to the required contribution amount certified 
39.3 	for the previous year, plus interest on the amount at the rate of six percent per annum.

39.4 	Sec. 44. Minnesota Statutes 2006, section 422A.101, subdivision 1a, is amended to 
39.5 	read:
39.6 		Subd. 1a.City contributions. ~~Prior to~~(a) Before August 31 of each year, the 
39.7 	retirement board shall prepare an itemized statement of the financial requirements of the 
39.8 	fund payable by the city for the succeeding fiscal year~~, and~~. A copy of the statement 
39.9 	~~shall~~must be submitted to the board of estimate and taxation and to the city council by 
39.10 	September 15 annually.
39.11 	(b) The financial requirements of the fund payable by the city ~~shall~~must be 
39.12 	calculated as follows:
39.13 	~~(a)~~(1) a regular employer contribution of an amount equal to the percentage,
39.14 	rounded to the nearest two decimal places of the salaries and wages of all employees 
39.15 	covered by the retirement fund which equals the difference between the level normal cost 
39.16 	plus administrative cost as reported in the annual actuarial valuation prepared by the 
39.17 	actuary retained under section 356.214 and the employee contributions provided for in 
39.18 	section 422A.10 less any amounts contributed toward the payment of the balance of 
39.19 	the normal cost not paid by employee contributions by any city owned public utility, 
39.20 	improvement project, other municipal activities supported in whole or in part by revenues 
39.21 	other than real estate taxes, any public corporation, any employing unit of metropolitan 
39.22 	government, or by Special School District No. 1 ~~pursuant to~~under subdivision 2; 
39.23 	~~(b)~~(2) an additional employer contribution of an amount equal to the percent 
39.24 	specified in section 353.27, subdivision 3a, clause (a), multiplied by the salaries and wages 
39.25 	of all employees covered by the retirement fund less any amounts contributed toward 
39.26 	amortization of the unfunded actuarial accrued liability by June 30, 2020, attributable to 
39.27 	their respective covered employees by any city owned public utility, improvement project, 
39.28 	other municipal activities supported in whole or in part by revenues other than real estate 
39.29 	taxes, any public corporation, any employing unit of metropolitan government, or by 
39.30 	Special School District No. 1 ~~pursuant to~~under subdivision 2; and 
39.31 	~~(c)~~(3) a proportional share of an additional employer amortization contribution of 
39.32 	an amount equal to $3,900,000 annually until June 30, 2020, based upon the share of the 
39.33 	fund's unfunded actuarial accrued liability attributed to the city as disclosed in the annual 
39.34 	actuarial valuation prepared by the actuary retained under section 356.214.
40.1 	(c) The city council shall, in addition to other taxes levied by the city, annually levy 
40.2 	a tax equal to the amount of the financial requirements of the fund which are payable by 
40.3 	the city. The tax, when levied, ~~shall~~must be extended upon the county lists and ~~shall~~must 
40.4 	be collected and enforced in the same manner as other taxes levied by the city. If the city 
40.5 	does not levy a tax sufficient to meet the requirements of this subdivision, the retirement 
40.6 	board shall submit the tax levy statement directly to the county auditor, who shall levy the 
40.7 	tax. The tax, when levied, ~~shall~~must be extended upon the county lists and ~~shall~~must be 
40.8 	collected and paid into the city treasury to the credit of the retirement fund. Any amount 
40.9 	to the credit of the retirement fund ~~shall constitute~~constitutes a special fund and ~~shall~~may 
40.10 	be used only for the payment of obligations authorized ~~pursuant to~~under this chapter.

40.11 	Sec. 45. Minnesota Statutes 2006, section 422A.101, subdivision 2, is amended to read:
40.12 		Subd. 2.Contributions by or for city-owned public utilities, improvements, 
40.13 	or municipal activities. (a) Contributions by or for any city-owned public utility, 
40.14 	improvement project, and other municipal activities supported in whole or in part by 
40.15 	revenues other than real estate taxes, any public corporation, any employing unit of 
40.16 	metropolitan government, Special School District No. 1, or Hennepin County, on ~~account~~
40.17 	behalf of any employee covered by the fund, ~~shall~~must be calculated as follows:
40.18 	~~(a)~~(1) a regular employer contribution of an amount equal to the percentage 
40.19 	rounded to the nearest two decimal places of the salaries and wages of all employees of 
40.20 	the employing unit covered by the retirement fund which equals the difference between 
40.21 	the level normal cost plus administrative cost reported in the annual actuarial valuation 
40.22 	prepared by the actuary retained under section 356.214 and the employee contributions 
40.23 	provided for in section 422A.10; 
40.24 	~~(b)~~(2) an additional employer contribution of an amount equal to the percent 
40.25 	specified in section 353.27, subdivision 3a, clause (a), multiplied by the salaries and wages 
40.26 	of all employees of the employing unit covered by the retirement fund; and
40.27 	~~(c)~~(3) a proportional share of an additional employer amortization contribution of 
40.28 	an amount equal to $3,900,000 annually until June 30, 2020, based upon the share of the 
40.29 	fund's unfunded actuarial accrued liability attributed to the employer as disclosed in the 
40.30 	annual actuarial valuation prepared by the actuary retained under section 356.214.
40.31 	(b) The city council or any board or commission may, by proper action, provide for 
40.32 	the inclusion of the cost of the retirement contributions for employees of any city-owned 
40.33 	public utility or for persons employed in any improvement project or other municipal 
40.34 	activity supported in whole or in part by revenues other than taxes who are covered by 
40.35 	the retirement fund in the cost of operating the utility, improvement project, or municipal 
41.1 	activity. The cost of retirement contributions for these employees ~~shall~~must be determined 
41.2 	by the retirement board and the respective governing bodies having jurisdiction over the 
41.3 	financing of these operating costs.
41.4 	(c) The cost of the employer contributions on behalf of employees of Special School 
41.5 	District No. 1 who are covered by the retirement fund ~~shall be~~is the obligation of the 
41.6 	school district. Contributions by the school district to the retirement fund or any other 
41.7 	public pension or retirement fund of which its employees are members must be remitted 
41.8 	to the fund each month. An amount due and not transmitted begins to accrue interest at 
41.9 	the rate of six percent compounded annually 15 days after the date due. The retirement 
41.10 	board shall prepare an itemized statement of the financial requirements of the fund 
41.11 	payable by the school district, which ~~shall~~must be submitted ~~prior to~~before September 
41.12 	15. Contributions by the school district ~~shall~~must be made at times designated by the 
41.13 	retirement board. The school district may levy for its contribution to the retirement fund 
41.14 	only to the extent permitted ~~pursuant to~~under section 126C.41, subdivision 3. 
41.15 	(d) The cost of the employer contributions on behalf of elective officers or other 
41.16 	employees of Hennepin County who are covered by the retirement fund ~~pursuant to~~under 
41.17 	section 422A.09, subdivision 3, clause (2), 422A.22, subdivision 2, or 488A.115, or Laws 
41.18 	1973, chapter 380, section 3, Laws 1975, chapter 402, section 2, or any other applicable 
41.19 	law ~~shall be~~is the obligation of Hennepin County. The retirement board shall prepare an 
41.20 	itemized statement of the financial requirements of the fund payable by Hennepin County, 
41.21 	which ~~shall~~must be submitted ~~prior to~~before September 15. Contributions by Hennepin 
41.22 	County ~~shall~~must be made at times designated by the retirement board. Hennepin County 
41.23 	may levy for its contribution to the retirement fund. 

41.24 	Sec. 46. Minnesota Statutes 2006, section 422A.101, subdivision 2a, is amended to 
41.25 	read:
41.26 		Subd. 2a.Contributions by Metropolitan Airports Commission and 
41.27 	Metropolitan Council. The Metropolitan Airports Commission and the Metropolitan 
41.28 	Council shall pay to the Minneapolis Employees Retirement Fund annually, in 
41.29 	installments as specified in subdivision 3, the share of the additional support rate required 
41.30 	for full amortization of the unfunded actuarial accrued liabilities by June 30, 2020, 
41.31 	that is attributable to employees of the airports commission or former Metropolitan 
41.32 	Waste Control Commission who are members of the fund. The amount of the payment 
41.33 	~~shall~~must be determined as if the airport commission and Metropolitan Council's 
41.34 	employer contributions determined under subdivision 2 had also included a proportionate 
41.35 	share of a $1,000,000 annual employer amortization contribution. The amount of this 
42.1 	$1,000,000 annual employer amortization contribution that would have been allocated to 
42.2 	the commission or council would have been based on the share of the fund's unfunded 
42.3 	actuarial accrued liability attributed to the commission or council compared to the total 
42.4 	unfunded actuarial accrued liability attributed to all employers under subdivisions 1a and 
42.5 	2. The determinations required under this subdivision must be based on the most recent 
42.6 	actuarial valuation prepared by the actuary retained under section 356.214.

42.7 	Sec. 47. Minnesota Statutes 2007 Supplement, section 422A.101, subdivision 3, 
42.8 	is amended to read:
42.9 		Subd. 3.State contributions. (a) Subject to the limitation set forth in paragraph (c), 
42.10 	the state shall pay to the Minneapolis Employees Retirement Fund annually an amount 
42.11 	equal to the amount calculated under paragraph (b).
42.12 	(b) The payment amount is an amount equal to the financial requirements of the 
42.13 	Minneapolis Employees Retirement Fund reported in the actuarial valuation of the fund 
42.14 	prepared by the actuary retained under section 356.214 consistent with section 356.215
42.15 	for the most recent year, but based on a target date for full amortization of the unfunded 
42.16 	actuarial accrued liabilities by June 30, 2020, less the amount of employee contributions 
42.17 	required under section 422A.10, and the amount of employer contributions required under 
42.18 	subdivisions 1a, 2, and 2a. Payments ~~shall~~must be made September 15 annually. 
42.19 	(c) The annual state contribution under this subdivision may not exceed $9,000,000, 
42.20 	plus the cost of the annual supplemental benefit determined under section 356.43. 
42.21 	(d) If the amount determined under paragraph (b) exceeds $9,000,000, the excess 
42.22 	must be allocated to and must be paid to the fund by the employers identified in 
42.23 	subdivisions 1a and 2, other than units of metropolitan government. Each employer's 
42.24 	share of the excess is proportionate to the employer's share of the fund's unfunded 
42.25 	actuarial accrued liability as disclosed in the annual actuarial valuation prepared by the 
42.26 	actuary retained under section 356.214 compared to the total unfunded actuarial accrued 
42.27 	liability attributed to all employers identified in subdivisions 1a and 2, other than units of 
42.28 	metropolitan government. Payments must be made in equal installments as set forth in 
42.29 	paragraph (b).

42.30 	Sec. 48. Minnesota Statutes 2006, section 422A.15, subdivision 2, is amended to read:
42.31 		Subd. 2.Withdrawal of voluntary contributions. (a) Voluntary additions to the 
42.32 	employee's deposits made by the employee under section 422A.10 may be withdrawn 
42.33 	in a lump sum by the retiring employee ~~or,~~. With the approval of the retirement board, 
42.34 	~~applied~~voluntary additions to the employee's deposits may be used to ~~the~~ purchase ~~of~~ an 
43.1 	additional annuity computed and determined under a procedure specified by the actuary 
43.2 	retained under section 356.214 utilizing the appropriate mortality table established by the 
43.3 	board of trustees based on the experience of the fund as ~~recommended~~certified as accurate 
43.4 	by the actuary retained under section 356.214 and using the applicable postretirement 
43.5 	interest rate assumption specified in section 356.215, subdivision 8. 

43.6 	Sec. 49. Minnesota Statutes 2006, section 422A.15, subdivision 3, is amended to read:
43.7 		Subd. 3.Optional defined contribution annuity. In lieu of the formula pension 
43.8 	and annuity, a person who was a contributing member on April 28, 1973, who is eligible to 
43.9 	retire and who ceases to be employed and who qualifies for retirement ~~shall have the option~~ 
43.10 	~~of electing~~may elect to receive a retirement allowance known as "the $2 bill and annuity."
43.11 	If a member of the contributing class makes the election provided for in this section, 
43.12 	the member ~~shall~~is entitled to receive a minimum pension of $2 per month for each 
43.13 	year of service. The pension ~~shall~~must be the actuarial equivalent of the accumulated 
43.14 	amounts of the annual installments as may be fixed and designated by law throughout 
43.15 	the period of service of the retiring employee, not to exceed 25 years, accumulated 
43.16 	to the date of retirement at six percent compound interest, and such extra credit to be 
43.17 	provided by the city as will produce the minimum pension of $2 per month for each 
43.18 	year of service. The pension ~~shall be~~is in addition to the annuity. The annuity ~~shall~~
43.19 	must be ~~in~~ the actuarial equivalent of the net accumulated contributions to the credit of the 
43.20 	retiring employee, calculated at the date of retirement. For the purposes of this chapter, 
43.21 	the "service allowance" for members of the contributing class ~~shall consist~~consists of an 
43.22 	"annuity" and a "pension."
43.23 	The pension provided for ~~herein shall~~in this subdivision must be the actuarial 
43.24 	equivalent of the accumulated annual installments of $2 per month for each year of 
43.25 	service. The sum of $2 ~~shall~~must be computed as a single life annuity and is subject to 
43.26 	the option selections provided for in section 422A.17. The pension and annuity provided 
43.27 	for in this subdivision ~~shall~~must be first paid from the contributing member's own 
43.28 	contributions and normal earned credits, plus interest, until those credits are exhausted. 
43.29 	The retirement allowance provided under this subdivision or any optional annuity 
43.30 	form of the retirement allowance ~~shall~~must be computed and determined under a 
43.31 	procedure specified by the actuary retained under section 356.214 utilizing the appropriate 
43.32 	mortality table established by the board of trustees based on the experience of the fund 
43.33 	as ~~recommended~~certified by the actuary retained under section 356.214 and using 
43.34 	the applicable postretirement interest rate assumption specified in section 356.215, 
43.35 	subdivision 8. 

44.1 	Sec. 50. Minnesota Statutes 2006, section 422A.16, subdivision 2, is amended to read:
44.2 		Subd. 2.Deferred defined contribution annuity. A person who ~~is~~was a member 
44.3 	of the contributing class on April 28, 1973, and who makes the election provided for 
44.4 	in this subdivision and in subdivision 1, may, upon attaining the age of 55 years, but 
44.5 	before attaining the age of 65 years, or someone acting in the member's behalf, may 
44.6 	make application to receive the retirement allowance provided for in section 422A.15, 
44.7 	subdivision 3, or an optional retirement allowance in the manner provided for by section 
44.8 	422A.17. The retirement allowance ~~shall~~must be the actuarial equivalent of the city's 
44.9 	contribution and the member's deposit, as they were on the date the separation becomes 
44.10 	permanent, plus interest, as provided for in section 422A.12. 
44.11 	The retirement allowance provided under this subdivision or any optional annuity 
44.12 	form of the retirement allowance ~~shall~~must be computed and determined under a 
44.13 	procedure specified by the actuary retained under section 356.214 utilizing the appropriate 
44.14 	mortality table established by the board of trustees based on the experience of the fund 
44.15 	as ~~recommended~~certified by the actuary retained under section 356.214 and using 
44.16 	the applicable postretirement interest rate assumption specified in section 356.215, 
44.17 	subdivision 8. 

44.18 	Sec. 51. Minnesota Statutes 2006, section 422A.17, is amended to read:
44.19 	422A.17 RETIREMENT ALLOWANCE; OPTIONS.
44.20 	At retirement, any employee who is eligible to receive a service allowance may elect 
44.21 	to receive benefits in a retirement allowance payable throughout life or may on retirement 
44.22 	elect to receive the actuarial equivalent at that time of annuity, pension, or retirement 
44.23 	allowance in a lesser annuity, or a lesser pension, or a lesser retirement allowance, payable 
44.24 	throughout life, with the provisions that:
44.25 	Option I. If the benefit recipient dies before receiving in payments an amount equal 
44.26 	to the present value of the benefit recipient's annuity, pension, or retirement allowance, 
44.27 	as of the date of the benefit recipient's retirement, the balance ~~shall be paid~~is payable 
44.28 	to the benefit recipient's legal representatives or to such person as the benefit recipient 
44.29 	~~shall nominate~~nominates by written designation duly acknowledged and filed with the 
44.30 	retirement board as of the date of retirement, or
44.31 	Option II. Upon the death of the benefit recipient, the benefit recipient's annuity, 
44.32 	pension, or retirement allowance ~~shall be continued~~continues throughout the life of and 
44.33 	paid to the person as the benefit recipient ~~shall nominate~~nominates by written designation 
44.34 	duly acknowledged and filed with the retirement board as of the date of retirement, or
45.1 	Option III. Upon death of the benefit recipient, one-half of the benefit recipient's 
45.2 	annuity, pension, or retirement allowance ~~shall be continued~~continues throughout the life 
45.3 	of and paid to the person as the benefit recipient ~~shall nominate~~nominates by written 
45.4 	designation duly acknowledged and filed with the retirement board as of the date of 
45.5 	retirement, or
45.6 	Option IV. Other optional retirement allowance forms, including a bounceback 
45.7 	joint and survivor option under which the benefit recipient receives a normal single-life 
45.8 	annuity if the designated optional annuity beneficiary dies before the benefit recipient, 
45.9 	~~shall be paid~~are payable to the benefit recipient or other person or persons the benefit 
45.10 	recipient nominates~~, provided that~~if the optional annuity is of equivalent actuarial value 
45.11 	to the applicable single life annuity calculated under section 422A.15 and is approved 
45.12 	by the retirement board. 
45.13 	~~Any~~An optional retirement allowance ~~shall~~must be computed and determined 
45.14 	under a procedure specified by the actuary retained under section 356.214 utilizing the 
45.15 	appropriate mortality table established by the board of trustees based on the experience 
45.16 	of the fund as ~~recommended~~certified by the actuary retained under section 356.214 and 
45.17 	using the applicable postretirement interest rate assumption specified in section 356.215, 
45.18 	subdivision 8. 
45.19 	In adopting optional annuity forms, the board of trustees ~~shall~~must obtain the 
45.20 	written ~~recommendation of~~certification of accuracy from the actuary retained under 
45.21 	section 356.214. The ~~recommendations shall~~certifications must be a part of the permanent 
45.22 	records of the board of trustees.

45.23 	Sec. 52. Minnesota Statutes 2006, section 422A.23, subdivision 12, is amended to read:
45.24 		Subd. 12.Determination of annuity. The survivor annuities payable under this 
45.25 	section must be computed and determined under a procedure specified by the actuary 
45.26 	retained under section 356.214 utilizing the appropriate mortality table based on the 
45.27 	experience of the fund as recommended by that actuary and approved by the Legislative 
45.28 	Commission on Pensions and Retirement under section 356.215, subdivision 18, and 
45.29 	using the applicable postretirement interest rate assumption specified in section 356.215, 
45.30 	subdivision 8. 

45.31 	Sec. 53. Minnesota Statutes 2006, section 422A.231, is amended to read:
45.32 	422A.231 COST ALLOCATION.
46.1 	(a) Notwithstanding any law to the contrary, all current and future contribution 
46.2 	requirements due to ~~this article~~Laws 1999, chapter 222, article 17, are payable by the 
46.3 	participating contributing employing units other than the state of Minnesota.
46.4 	(b) In each actuarial valuation of the retirement fund, the actuary retained under 
46.5 	section 356.214 shall include an exhibit on the impact of the benefit increases contained 
46.6 	in this article on the survivor benefit fund. The actuary shall calculate the expected 
46.7 	change in the present value of the future benefits payable from the survivor benefit fund 
46.8 	attributable to ~~this article~~ Laws 1999, chapter 222, article 17, using the actuarial method 
46.9 	and assumptions applicable to the Minneapolis Employees Retirement Fund, from the 
46.10 	prior actuarial valuation and shall compare that result with the actual change in the present 
46.11 	value of future benefits payable from the survivor benefit fund attributable to this article 
46.12 	from the prior actuarial valuation.
46.13 	(c) The executive director shall assess each participating employer, other than the 
46.14 	state of Minnesota, its proportional share of the net increase amount calculated under 
46.15 	paragraph (b). The assessment must be made on the first business day of the following 
46.16 	February, plus compound interest at an annual rate of six percent on the amount from the 
46.17 	actuarial valuation date to the date of payment.

46.18 	Sec. 54. Minnesota Statutes 2006, section 490.121, subdivision 2a, is amended to read:
46.19 		Subd. 2a.Actuarial equivalent. "Actuarial equivalent" means the condition of one 
46.20 	annuity or benefit having an equal actuarial present value as another annuity or benefit, 
46.21 	determined as of a given date with each actuarial present value based on the appropriate 
46.22 	mortality table adopted by the board of directors of the Minnesota State Retirement 
46.23 	System based on the experience of the fund as ~~recommended~~certified as accurate by the 
46.24 	actuary retained under section 356.214 and approved under section 356.215, subdivision 
46.25 	18, and using the applicable preretirement or postretirement interest rate assumption 
46.26 	specified in section 356.215, subdivision 8.

46.27 	Sec. 55. Minnesota Statutes 2006, section 490.124, subdivision 11, is amended to read:
46.28 		Subd. 11.Limitation on survivor benefits; optional annuities. (a) No survivor 
46.29 	or death benefits may be paid in connection with the death of a judge who retires after 
46.30 	December 31, 1973, except as otherwise provided in this chapter.
46.31 	(b) Except as provided in subdivision 10, a judge may elect to receive, instead 
46.32 	of the normal retirement annuity, an optional retirement annuity in the form of either 
46.33 	(1) an annuity payable for a period certain and for life after that period, (2) a joint and 
46.34 	survivor annuity without reinstatement of the single life annuity amount if the designated 
47.1 	beneficiary predeceases the retired judge, or (3) a bounceback joint and survivor annuity 
47.2 	with reinstatement of the single life annuity amount if the designated beneficiary 
47.3 	predeceases the retired judge.
47.4 	(c) An optional retirement annuity must be actuarially equivalent to a single-life 
47.5 	annuity with no term certain and must be established by the board of directors of the 
47.6 	Minnesota State Retirement System. In establishing these optional retirement annuity 
47.7 	forms, the board shall obtain the written ~~recommendation of~~certification of accuracy by 
47.8 	the actuary retained under section 356.214. The ~~recommendations~~certifications must be 
47.9 	retained as a part of the permanent records of the board.

47.10 	Sec. 56. EFFECTIVE DATE.
 47.11 	Sections 1 to 55 are effective July 1, 2008.