1.1                          A bill for an act
  1.2             relating to retirement; various public pension plans; 
  1.3             providing for the suspension or forfeiture of certain 
  1.4             survivor benefits in the event of certain felonious 
  1.5             deaths; making various individual and small group 
  1.6             pension accommodations; making various pension plan 
  1.7             administrative changes; recodifying the individual 
  1.8             retirement account plan and making various other 
  1.9             modifications; amending Minnesota Statutes 1994, 
  1.10            sections 11A.23, subdivision 4; 352.12, subdivisions 
  1.11            1, 2, 2a, and 6; 352B.105; 352D.02, subdivision 1; 
  1.12            354.05, subdivisions 2a, 5, 35, and 40; 354.06, 
  1.13            subdivision 4; 354.44, by adding a subdivision; 
  1.14            354.52, subdivision 4a; 354A.011, subdivision 27; 
  1.15            354A.12, subdivision 3d; 354A.31, by adding a 
  1.16            subdivision; 355.61; 356.215, subdivisions 4d and 4g; 
  1.17            356.24, subdivision 1; 383B.48; and 383B.49; proposing 
  1.18            coding for new law in Minnesota Statutes, chapters 
  1.19            354B; 354C; and 356; repealing Minnesota Statutes 
  1.20            1994, sections 352D.02, subdivision 1a; 354B.01; 
  1.21            354B.015; 354B.02; 354B.035; 354B.04; 354B.045; 
  1.22            354B.05; 354B.06; 354B.07; 354B.08; 354B.085; 354B.09; 
  1.23            and 354B.15; Laws 1990, chapter 570, article 3, 
  1.24            sections 10 and 11, as amended; Laws 1993, chapters 
  1.25            192, section 89; and 239, article 5, section 2; and 
  1.26            Laws 1994, chapters 508, article 1, section 14; and 
  1.27            572, sections 11 and 12. 
  1.28  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.29                             ARTICLE 1 
  1.30                SUSPENSION OR FORFEITURE OF CERTAIN 
  1.31                 SURVIVOR BENEFITS IN THE EVENT OF 
  1.32                      CERTAIN FELONIOUS DEATHS 
  1.33     Section 1.  [356.305] [LOSS OF ENTITLEMENT TO BENEFITS FOR 
  1.34  SURVIVOR CAUSING DEATH OF PENSION PLAN MEMBER.] 
  1.35     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
  1.36  section, the following words or terms have the meanings given 
  2.1   them in this subdivision. 
  2.2      (b) "Public pension plan" means a retirement plan or fund 
  2.3   listed in section 356.20, subdivision 2, or 356.30, subdivision 
  2.4   3, a relief association governed by section 69.77 or sections 
  2.5   69.771 to 69.775, a retirement plan governed by chapter 354B or 
  2.6   354C, the Hennepin County supplemental retirement plan governed 
  2.7   by sections 383B.46 to 383B.52, or a housing and redevelopment 
  2.8   authority retirement plan. 
  2.9      (c) "Public pension plan member" means a participant 
  2.10  covered by a public pension plan; a former participant of a 
  2.11  public pension plan who has sufficient service to be entitled to 
  2.12  receive a future retirement annuity or service pension; a 
  2.13  recipient of a retirement annuity, service pension, or 
  2.14  disability benefit from a public pension plan; or a former 
  2.15  participant of a public pension plan who has member or employee 
  2.16  contributions to the former participant's credit in the public 
  2.17  pension plan. 
  2.18     (d) "Survivor" means the surviving spouse, a surviving 
  2.19  former spouse, a surviving child, a joint annuitant, a 
  2.20  designated recipient of a second or remainder portion of an 
  2.21  optional annuity form, a beneficiary, or the estate of a 
  2.22  deceased public pension plan member, as those terms are commonly 
  2.23  understood or defined in the benefit plan document of the public 
  2.24  pension plan. 
  2.25     (e) "Survivor benefit" means a surviving spouse benefit, 
  2.26  surviving child benefit, second or remainder portion of an 
  2.27  optional annuity form, a death benefit, a funeral benefit, or a 
  2.28  refund of member or employee contributions payable on account of 
  2.29  the death of a public pension plan member as provided for in the 
  2.30  benefit plan document of the public pension plan. 
  2.31     Subd. 2.  [SURVIVOR CAUSING DEATH OF MEMBER.] A survivor of 
  2.32  a public pension plan member is not entitled to a survivor 
  2.33  benefit otherwise payable from the plan if the survivor has been 
  2.34  convicted of a felony that caused the death of the member, of 
  2.35  criminal liability for the felony, or of conspiracy to commit 
  2.36  the felony.  The conviction of one survivor, however, does not 
  3.1   affect the entitlement of another survivor to a survivor benefit.
  3.2   A survivor benefit may not be paid to a survivor charged with 
  3.3   the commission of a felony that caused the death of a member, 
  3.4   criminal liability for the felony, or conspiracy to commit the 
  3.5   felony, but an amount equal to the survivor benefit due the 
  3.6   survivor must be set aside and paid to the survivor in the event 
  3.7   that the survivor is not convicted of the charge. 
  3.8      Subd. 3.  [RECOVERY OF CERTAIN BENEFITS.] If a survivor 
  3.9   benefit has already been paid to a survivor who is later charged 
  3.10  or convicted of a felony listed in subdivision 2, the executive 
  3.11  director or chief administrative officer of the public pension 
  3.12  plan shall attempt to recover the amounts paid.  Payment may be 
  3.13  made to the next beneficiary or survivor only in an amount equal 
  3.14  to the amount recovered and in the amount of any future payments 
  3.15  that would legally accrue to another survivor under the laws 
  3.16  governing the retirement plan. 
  3.17     Sec. 2.  [EFFECTIVE DATE.] 
  3.18     Section 1 is effective the day following final enactment 
  3.19  and applies to felony charges pending on that date. 
  3.20                             ARTICLE 2 
  3.21         INDIVIDUAL AND SMALL GROUP PENSION ACCOMMODATIONS 
  3.22     Section 1.  [PURCHASE OF FULL-SERVICE CREDIT FOR SABBATICAL 
  3.23  LEAVE.] 
  3.24     Subdivision 1.  [ELIGIBILITY.] Notwithstanding Minnesota 
  3.25  Statutes, section 354.092, subdivision 3, a member of the 
  3.26  teachers retirement association described in subdivision 2 may 
  3.27  make a direct payment under subdivision 3 to the association to 
  3.28  receive service credit for a period of uncovered service due to 
  3.29  a sabbatical leave during the 1975-1976 school year for which 
  3.30  the member failed to make employee payments on the difference 
  3.31  between salary during the leave and the salary for a comparable 
  3.32  period during the year immediately preceding the leave. 
  3.33     Subd. 2.  [APPLICATION.] Subdivision 1 applies to a member 
  3.34  who was on a sabbatical leave of absence during the 1975-1976 
  3.35  school year, whose additional payment permitted for that fiscal 
  3.36  year was $313.46, who was attending an institute of higher 
  4.1   education outside Minnesota during the period of the leave, and 
  4.2   whose original payment deadline was June 30, 1977. 
  4.3      Subd. 3.  [PURCHASE PAYMENT AMOUNT.] (a) To purchase credit 
  4.4   for prior service under this section, there must be paid to the 
  4.5   teachers retirement association an amount equal to the present 
  4.6   value, on the date of payment, of the amount of the additional 
  4.7   retirement annuity obtained by the purchase of the additional 
  4.8   service credit.  Calculation of this amount must be made by the 
  4.9   executive director of the teachers retirement association using 
  4.10  the applicable preretirement interest rate of the association 
  4.11  specified in Minnesota Statutes, section 356.215, subdivision 
  4.12  4d, and the mortality table adopted for the association.  The 
  4.13  calculation must assume continuous future service in the 
  4.14  association until, and retirement at, the age at which the 
  4.15  minimum requirements of the fund for normal retirement or 
  4.16  retirement with an annuity unreduced for retirement at an early 
  4.17  age, including Minnesota Statutes, section 356.30, are met with 
  4.18  the additional service credit purchased.  The calculation must 
  4.19  also assume the person's actual salary and a future salary 
  4.20  history that includes annual salary increases at the applicable 
  4.21  rate for the fund or association specified in Minnesota 
  4.22  Statutes, section 356.215, subdivision 4d.  In order to purchase 
  4.23  the service credit, the individual must establish in the records 
  4.24  of the association proof of the sabbatical leave for which the 
  4.25  purchase of prior service applies.  The manner of proof must be 
  4.26  in accordance with procedures prescribed by the executive 
  4.27  director of the association. 
  4.28     (b) Payment must be made in one lump sum before July 1, 
  4.29  1995. 
  4.30     (c) Payment of the amount calculated under this subdivision 
  4.31  must be made by the member.  However, the current or former 
  4.32  employer of the member may, at its discretion, pay all or any 
  4.33  portion of the payment amount that exceeds $313.46 plus interest 
  4.34  at the rate of eight and one-half percent a year compounded 
  4.35  annually from June 30, 1977, to the date on which the payment is 
  4.36  made.  If the employer agrees to payments under this paragraph, 
  5.1   the employee must make the employee payments required under this 
  5.2   paragraph before July 1, 1995.  If that employee payment is 
  5.3   made, the employing unit payment under this paragraph must be 
  5.4   remitted to the executive director of the teachers retirement 
  5.5   association within 30 days of receipt by the executive director 
  5.6   of the employee payments specified under this paragraph. 
  5.7      Subd. 4.  [SERVICE CREDIT GRANT.] Service credit for the 
  5.8   purchase period or periods must be granted to the account of the 
  5.9   eligible person upon receipt of the purchase payment amount 
  5.10  specified in subdivision 3.  
  5.11     Sec. 2.  [CERTAIN CITY ATTORNEY; ANNUITY COMPUTATION.] 
  5.12     A retired member of the public employees retirement 
  5.13  association who terminated a contract for employment as city 
  5.14  attorney for the city of West St. Paul on January 30, 1994, but 
  5.15  who continued to perform legal services for the city as an 
  5.16  independent contractor until the city retained a successor legal 
  5.17  counsel on May 9, 1994, may be deemed to have terminated public 
  5.18  service on January 30, 1994, and is eligible for the increased 
  5.19  accrual rate retirement incentive provided by Laws 1993, chapter 
  5.20  192, section 108, subdivision 3, notwithstanding the fact that 
  5.21  there was no interruption of legal service for 30 days after 
  5.22  January 30, 1994. 
  5.23     Sec. 3.  [TEACHERS RETIREMENT ASSOCIATION; PURCHASE OF 
  5.24  PRIOR SERVICE CREDIT.] 
  5.25     Subdivision 1.  [ELIGIBILITY; MANKATO STATE UNIVERSITY 
  5.26  PROFESSOR.] (a) Notwithstanding any provision of Minnesota 
  5.27  Statutes, section 354.094, to the contrary, an eligible person 
  5.28  described in paragraph (b) is entitled to purchase allowable 
  5.29  service credit in the teachers retirement association for the 
  5.30  period described in paragraph (c) by paying the amount specified 
  5.31  in subdivision 3. 
  5.32     (b) An eligible person is a person who was granted an 
  5.33  extended leave of absence from employment by Mankato state 
  5.34  university on June 19, 1991, for the period September 11, 1991, 
  5.35  through June of 1994, which was erroneously characterized as an 
  5.36  educational leave. 
  6.1      (c) The period for service credit purchase is the period 
  6.2   from September 11, 1991, through June 1994. 
  6.3      Subd. 2.  [PURCHASE PAYMENT AMOUNT.] (a) To purchase credit 
  6.4   under subdivision 1, there must be paid to the teachers 
  6.5   retirement association an amount equal to the present value on 
  6.6   the date of payment, of the amount of the additional retirement 
  6.7   annuity obtained by purchase of the additional service credit. 
  6.8      (b) Calculation of this amount must be made by the 
  6.9   executive director of the teachers retirement association using 
  6.10  the applicable preretirement interest rate specified in 
  6.11  Minnesota Statutes, section 356.215, subdivision 4d, and the 
  6.12  mortality table adopted for the coordinated program of the 
  6.13  retirement association.  The calculation must assume continuous 
  6.14  future service in the association until, and retirement at, the 
  6.15  age at which the minimum requirements of the retirement 
  6.16  association for normal retirement or retirement with an annuity 
  6.17  unreduced for retirement at an early age, including Minnesota 
  6.18  Statutes, section 356.30, are met with the additional service 
  6.19  credit purchased.  The calculation must also assume a future 
  6.20  salary history that includes annual salary increases at the rate 
  6.21  specified in Minnesota Statutes, section 356.215, subdivision 4d.
  6.22     (c) The eligible person must establish in the records of 
  6.23  the association proof of the leave of absence for which the 
  6.24  purchase of service credit is requested.  The manner of the 
  6.25  proof must be in accordance with procedures prescribed by the 
  6.26  executive director of the retirement association. 
  6.27     (d) The portion of the total cost of the purchase payable 
  6.28  by the eligible person is specified in subdivision 3.  The 
  6.29  remaining portion of total cost is to be paid by the employing 
  6.30  unit as specified in subdivision 4. 
  6.31     Subd. 3.  [ELIGIBLE PERSON PAYMENT.] (a) To receive credit 
  6.32  for the period of service credit purchase specified in 
  6.33  subdivision 1, paragraph (c), the eligible person specified in 
  6.34  subdivision 1, paragraph (b), must pay a member contribution 
  6.35  equivalent amount. 
  6.36     (b) The member contribution equivalent amount is an amount 
  7.1   equal to the applicable employee contribution rate specified in 
  7.2   Minnesota Statutes, section 354.42, applied to the person's 
  7.3   actual salary rate in the year immediately preceding the 
  7.4   extended leave, plus 8.5 percent annually compounded interest 
  7.5   from June 30 of each year of the leave until payment is made.  
  7.6   Payment must be made in a lump sum.  Authority to make the 
  7.7   member contribution equivalent amount expires 90 days after the 
  7.8   effective date of this section or at the time of retirement, 
  7.9   whichever is earlier. 
  7.10     Subd. 4.  [MANDATORY EMPLOYING UNIT PAYMENT.] (a) Within 30 
  7.11  days of the receipt by the executive director of the teachers 
  7.12  retirement association of the payment from the eligible person 
  7.13  under subdivision 3, the employer employing the eligible person 
  7.14  described in subdivision 1, paragraph (b), immediately before 
  7.15  the leave described in subdivision 1, shall pay the difference 
  7.16  between the amounts specified in subdivisions 2 and 3. 
  7.17     (b) The mandatory employing unit payment amount is payable 
  7.18  by the governmental employing unit in a lump sum. 
  7.19     Subd. 5.  [SERVICE CREDIT GRANT.] Service credit for the 
  7.20  purchase period must be granted to the account of the eligible 
  7.21  person upon receipt of the purchase payment amount specified in 
  7.22  subdivision 2. 
  7.23     Sec. 4.  [PURCHASE OF PRIOR SERVICE CREDIT.] 
  7.24     Subdivision 1.  [ELIGIBILITY.] (a) Notwithstanding 
  7.25  Minnesota law to the contrary, an employee of Swift county who 
  7.26  is a current coordinated member of the public employees 
  7.27  retirement association, who was born in 1948, who first had 
  7.28  sufficient salary to meet minimum statutory salary thresholds 
  7.29  for association membership on March 1, 1990, but who was not 
  7.30  reported for membership until January 1991, may purchase 
  7.31  allowable service credit in the public employees retirement 
  7.32  association for the periods of uncovered service during which 
  7.33  the employee had sufficient salary to meet minimum statutory 
  7.34  salary thresholds for public employees retirement association 
  7.35  membership. 
  7.36     (b) In order to purchase the service credit, the individual 
  8.1   must establish in the records of the association proof of the 
  8.2   service for which the purchase of prior service applies, and 
  8.3   proof that the individual had sufficient salary during all or 
  8.4   part of that period to meet minimum statutory salary thresholds 
  8.5   for public employees retirement association membership.  
  8.6   Payments may not be made if the executive director determines 
  8.7   that the member was eligible for coverage during this period by 
  8.8   another Minnesota public pension plan other than a volunteer 
  8.9   fire plan covered by Minnesota Statutes, section 69.771, 
  8.10  subdivision 1.  The manner of proof must be in accordance with 
  8.11  procedures prescribed by the executive director of the 
  8.12  association. 
  8.13     Subd. 2.  [PURCHASE PAYMENT AMOUNT.] (a) To purchase credit 
  8.14  for prior service under this section, there must be paid to the 
  8.15  public employees retirement association an amount equal to the 
  8.16  present value, on the date of payment, of the amount of the 
  8.17  additional retirement annuity obtained by the purchase of the 
  8.18  additional service credit.  Calculation of this amount must be 
  8.19  made by the executive director of the public employees 
  8.20  retirement association using the applicable preretirement 
  8.21  interest rate of the association specified in Minnesota 
  8.22  Statutes, section 356.215, subdivision 4d, and the mortality 
  8.23  table adopted for the association.  The calculation must assume 
  8.24  continuous future service in the association until, and 
  8.25  retirement at, the age at which the minimum requirements of the 
  8.26  fund for normal retirement or retirement with an annuity 
  8.27  unreduced for retirement at an early age, including Minnesota 
  8.28  Statutes, section 356.30, are met with the additional service 
  8.29  credit purchased.  The calculation must also assume the person's 
  8.30  actual salary and a future salary history that includes annual 
  8.31  salary increases at the applicable rate for the fund or 
  8.32  association specified in Minnesota Statutes, section 356.215, 
  8.33  subdivision 4d. 
  8.34     (b) Payment must be made in one lump sum before July 1, 
  8.35  1996. 
  8.36     (c) Payment of the amount calculated under this subdivision 
  9.1   must be made by the member.  However, the current or former 
  9.2   employer of the member may, at its discretion, pay all or any 
  9.3   portion of the payment amount that exceeds an amount equal to 
  9.4   the employee contribution rates in effect during the period or 
  9.5   periods of prior service applied to the actual salary rates in 
  9.6   effect during the period or periods of prior service, plus 
  9.7   interest at the rate of eight and one-half percent a year 
  9.8   compounded annually from the date on which the contributions 
  9.9   would otherwise have been made to the date on which the payment 
  9.10  is made.  If the employer agrees to payments under this 
  9.11  paragraph, the employee must make the employee payments required 
  9.12  under this paragraph before July 1, 1996.  If that employee 
  9.13  payment is made, the employing unit payment under this paragraph 
  9.14  must be remitted to the executive director of the public 
  9.15  employees retirement association within 60 days of receipt by 
  9.16  the executive director of the employee payments specified under 
  9.17  this paragraph. 
  9.18     Subd. 3.  [SERVICE CREDIT GRANT.] Service credit for the 
  9.19  purchase period or periods must be granted to the account of the 
  9.20  eligible person upon receipt of the purchase payment amount 
  9.21  specified in subdivision 2. 
  9.22     Sec. 5.  [EFFECTIVE DATE.] 
  9.23     (a) Section 1 is effective the day following final 
  9.24  enactment. 
  9.25     (b) Section 2 is effective the day following final 
  9.26  enactment and the annuity payable under section 2 must be 
  9.27  recalculated and paid retroactively to the date that the annuity 
  9.28  was first paid to the retiree. 
  9.29     (c) Section 3 is effective July 1, 1995. 
  9.30     (d) Section 4 is effective the day following final 
  9.31  enactment. 
  9.32                             ARTICLE 3 
  9.33               PENSION PLAN ADMINISTRATIVE PROVISIONS 
  9.34     Section 1.  Minnesota Statutes 1994, section 352.12, 
  9.35  subdivision 1, is amended to read: 
  9.36     Subdivision 1.  [DEATH BEFORE TERMINATION OF SERVICE.] If 
 10.1   an employee dies before state service has terminated and neither 
 10.2   a survivor annuity nor a reversionary annuity is payable, or if 
 10.3   a former employee who has sufficient service credit to be 
 10.4   entitled to an annuity dies before the benefit has become 
 10.5   payable, the director shall make a refund to the last designated 
 10.6   beneficiary or, if there is none, to the surviving spouse or, if 
 10.7   none, to the employee's surviving children in equal shares or, 
 10.8   if none, to the employee's surviving parents in equal shares or, 
 10.9   if none, to the representative of the estate in an amount equal 
 10.10  to the accumulated employee contributions plus interest at the 
 10.11  rate of six percent per annum compounded annually.  Interest 
 10.12  must be computed as provided in section 352.22, subdivision 2, 
 10.13  to the first day of the month in which the refund is 
 10.14  processed ~~and based on fiscal year balances~~.  Upon the death of 
 10.15  an employee who has received a refund that was later repaid in 
 10.16  full, interest must be paid on the repaid refund only from the 
 10.17  date of repayment.  If the repayment was made in installments, 
 10.18  interest must be paid only from the date installment payments 
 10.19  began.  The designated beneficiary, surviving spouse, or 
 10.20  representative of the estate of an employee who had received a 
 10.21  disability benefit is not entitled to interest upon any balance 
 10.22  remaining to the decedent's credit in the fund at the time of 
 10.23  death, unless death occurred before any payment could be 
 10.24  negotiated.  
 10.25     Sec. 2.  Minnesota Statutes 1994, section 352.12, 
 10.26  subdivision 2, is amended to read: 
 10.27     Subd. 2.  [SURVIVING SPOUSE BENEFIT.] (a) If an employee or 
 10.28  former employee has credit for at least three years allowable 
 10.29  service and dies before an annuity or disability benefit has 
 10.30  become payable, notwithstanding any designation of beneficiary 
 10.31  to the contrary, the surviving spouse of the employee may elect 
 10.32  to receive, in lieu of the refund with interest under 
 10.33  subdivision 1, an annuity equal to the joint and 100 percent 
 10.34  survivor annuity which the employee or former employee could 
 10.35  have qualified for ~~had the employee terminated service~~ on the 
 10.36  date of death. 
 11.1      (b) If the employee was under age 55 and has credit for at 
 11.2   least 30 years of allowable service on the date of death, the 
 11.3   surviving spouse may elect to receive a 100 percent joint and 
 11.4   survivor annuity based on the age of the employee and surviving 
 11.5   spouse on the date of death.  The annuity is payable using the 
 11.6   full early retirement reduction under section 352.116, 
 11.7   subdivision 1, paragraph (a), to age 55 and one-half of the 
 11.8   early retirement reduction from age 55 to the age payment begins.
 11.9      (c) If the employee was under age 55 and has credit for at 
 11.10  least three years of allowable service credit on the date of 
 11.11  death but did not yet qualify for retirement, the surviving 
 11.12  spouse may elect to receive a 100 percent joint and survivor 
 11.13  annuity based on the age of the employee and surviving spouse at 
 11.14  the time of death.  The annuity is payable using the full early 
 11.15  retirement reduction under section 352.116, subdivision 1 or 1a, 
 11.16  to age 55 and one-half of the early retirement reduction from 
 11.17  age 55 to the age payment begins.  
 11.18     The surviving spouse eligible for ~~surviving spouse~~ benefits 
 11.19  under paragraph (a) may apply for the annuity at any time after 
 11.20  the date on which the ~~deceased~~ employee or former employee would 
 11.21  have attained the required age for retirement based on 
 11.22  the ~~employee's~~ allowable service earned.  The surviving spouse 
 11.23  eligible for surviving spouse benefits under paragraph (b) or 
 11.24  (c) may apply for the annuity at any time after the employee's 
 11.25  death.  The annuity must be computed under sections 352.115, 
 11.26  subdivisions 1, 2, and 3, and 352.116, subdivisions 1, 1a, and 
 11.27  3.  Sections 352.22, subdivision 3, and 352.72, subdivision 2, 
 11.28  apply to a deferred annuity or surviving spouse benefit payable 
 11.29  under this subdivision.  The annuity must cease with the last 
 11.30  payment received by the surviving spouse in the lifetime of the 
 11.31  surviving spouse, or upon expiration of a term certain benefit 
 11.32  payment to a surviving spouse under subdivision 2a.  An amount 
 11.33  equal to the excess, if any, of the accumulated contributions 
 11.34  credited to the account of the deceased employee in excess of 
 11.35  the total of the benefits paid and payable to the surviving 
 11.36  spouse must be paid to the deceased employee's or former 
 12.1   employee's last designated beneficiary or, if none, as specified 
 12.2   under subdivision 1.  
 12.3      Any employee or former employee may request in writing that 
 12.4   this subdivision not apply and that payment be made only to a 
 12.5   designated beneficiary as otherwise provided by this chapter. 
 12.6      Sec. 3.  Minnesota Statutes 1994, section 352.12, 
 12.7   subdivision 2a, is amended to read: 
 12.8      Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 
 12.9   lieu of the 100 percent optional annuity under subdivision 2, or 
 12.10  refund under subdivision 1, the surviving spouse of a deceased 
 12.11  employee or former employee may elect to receive survivor 
 12.12  coverage in a term certain of five, ten, 15, or 20 years, but 
 12.13  monthly payments must not exceed 75 percent of the average 
 12.14  high-five monthly salary of the deceased employee or former 
 12.15  employee.  The monthly term certain annuity must be actuarially 
 12.16  equivalent to the 100 percent optional annuity under subdivision 
 12.17  2. 
 12.18     If a survivor elects a term certain annuity and dies before 
 12.19  the expiration of the specified term certain period, the 
 12.20  commuted value of the remaining annuity payments must be paid in 
 12.21  a lump sum to the survivor's estate. 
 12.22     Sec. 4.  Minnesota Statutes 1994, section 352.12, 
 12.23  subdivision 6, is amended to read: 
 12.24     Subd. 6.  [DEATH AFTER SERVICE TERMINATION.] Except as 
 12.25  provided in subdivision 1, if a former employee covered by the 
 12.26  system dies and has not received an annuity, a retirement 
 12.27  allowance, or a disability benefit, a refund must be made to the 
 12.28  last designated beneficiary or, if there is none, to the 
 12.29  surviving spouse or, if none, to the employee's surviving 
 12.30  children in equal shares or, if none, to the employee's 
 12.31  surviving parents in equal shares or, if none, to the 
 12.32  representative of the estate in an amount equal to accumulated 
 12.33  employee contributions.  The refund must include interest at the 
 12.34  rate of six percent per year compounded annually.  The interest 
 12.35  must be computed ~~to the first day of the month in which the~~ 
 12.36  ~~refund is processed and be based on fiscal year balances~~ as 
 13.1   provided in section 352.22, subdivision 2. 
 13.2      Sec. 5.  Minnesota Statutes 1994, section 352B.105, is 
 13.3   amended to read: 
 13.4      352B.105 [TERMINATION OF DISABILITY BENEFITS.] 
 13.5      Disability benefits payable under section 352B.10 shall 
 13.6   terminate at the end of the month the beneficiary becomes ~~55~~ 65 
 13.7   years old.  If the beneficiary is still disabled when the 
 13.8   beneficiary becomes ~~55~~ 65 years old, the beneficiary shall be 
 13.9   deemed to be a retired member and, if the beneficiary had chosen 
 13.10  an optional annuity under section 352B.10, subdivision 5, shall 
 13.11  receive an annuity in accordance with the terms of the optional 
 13.12  annuity previously chosen.  If the beneficiary had not chosen an 
 13.13  optional annuity under section 352B.10, subdivision 5, the 
 13.14  beneficiary may choose to receive either a normal retirement 
 13.15  annuity computed under section 352B.08, subdivision 2, or an 
 13.16  optional annuity as provided in section 352B.08, subdivision 3. 
 13.17  An optional annuity must be chosen within 90 days of attaining 
 13.18  age 65 or reaching the five-year anniversary of the effective 
 13.19  date of the disability benefit, whichever is later.  If an 
 13.20  optional annuity is chosen, the optional annuity shall begin to 
 13.21  accrue the first of the month following attainment of age 65 or 
 13.22  the five-year anniversary of the effective date of the 
 13.23  disability benefit, whichever is later. 
 13.24     Sec. 6.  Minnesota Statutes 1994, section 354.05, 
 13.25  subdivision 5, is amended to read: 
 13.26     Subd. 5.  [MEMBER OF ~~FUND~~ ASSOCIATION.] "Member of ~~fund~~ 
 13.27  association" means every teacher who ~~joins and~~ contributes to 
 13.28  the teachers retirement fund as provided in this chapter who has 
 13.29  not retired, except a teacher covered by section 354B.02, 
 13.30  subdivision 2 or 3, who elects to participate in the individual 
 13.31  retirement account plan under chapter 354B, or a teacher who 
 13.32  exercises an option to elect coverage under another public 
 13.33  pension plan enumerated in section 356.30, subdivision 3.  Any 
 13.34  former member of the ~~fund~~ association who is retired and 
 13.35  subsequently resumes teaching service is a member of the 
 13.36  ~~fund~~ association only for purposes of social security coverage. 
 14.1      Sec. 7.  Minnesota Statutes 1994, section 354.05, 
 14.2   subdivision 35, is amended to read: 
 14.3      Subd. 35.  [SALARY.] (a) "Salary" means the compensation, 
 14.4   upon which member contributions are required and made, that is 
 14.5   paid to a teacher before employee-paid fringe benefits, tax 
 14.6   sheltered annuities, deferred compensation, or any combination 
 14.7   of these employee-paid items are deducted. 
 14.8      (b) "Salary" does not mean: 
 14.9      (1) lump sum annual leave payments; 
 14.10     (2) lump sum wellness and sick leave payments; 
 14.11     (3) payments in lieu of any employer-paid group insurance 
 14.12  coverage; 
 14.13     (4) payments for the difference between single and family 
 14.14  premium rates that may be paid to a member with single coverage; 
 14.15     (5) employer-paid fringe benefits including, but not 
 14.16  limited to, flexible spending accounts, cafeteria plans, health 
 14.17  care expense accounts, day care expenses, or automobile 
 14.18  allowances and expenses; 
 14.19     (6) any form of payment made in lieu of any other 
 14.20  employer-paid fringe benefit or expense; 
 14.21     (7) any form of severance payments; 
 14.22     (8) workers' compensation payments; 
 14.23     (9) disability insurance payments including self-insured 
 14.24  disability payments; 
 14.25     (10) payments to school principals and all other 
 14.26  administrators for services in addition to the normal work year 
 14.27  contract if these additional services are performed on an 
 14.28  extended duty day, Saturday, Sunday, holiday, annual leave day, 
 14.29  sick leave day, or any other nonduty day; 
 14.30     (11) payments under section 356.24, subdivision 1, clause 
 14.31  (4)~~(ii)~~; and 
 14.32     (12) payments made under section 125.12, subdivision 7, 
 14.33  except for payments for sick leave accumulated under the 
 14.34  provisions of a uniform school district policy that applies 
 14.35  equally to all similarly situated persons in the district. 
 14.36     Sec. 8.  Minnesota Statutes 1994, section 354.05, 
 15.1   subdivision 40, is amended to read: 
 15.2      Subd. 40.  [TIMELY RECEIPT.] An application, payment, 
 15.3   return, claim, or other document that is not personally 
 15.4   delivered to the association on or before the applicable due 
 15.5   date is considered to be a timely receipt if officially 
 15.6   postmarked on or before the due date or delivered or filed under 
 15.7   section 645.151. 
 15.8      Sec. 9.  Minnesota Statutes 1994, section 354.06, 
 15.9   subdivision 4, is amended to read: 
 15.10     Subd. 4.  [~~TREASURER; DUTIES~~ BOARD; EXPENSES.] All members 
 15.11  of the board shall serve without compensation.  A member ~~shall~~ 
 15.12  must receive necessary expenses to attend meetings of the board 
 15.13  and its committees~~,~~ and association functions and presentations 
 15.14  authorized by the board.  The necessary expenses must be paid 
 15.15  out of the fund.  Members of the board shall suffer no loss of 
 15.16  compensation from their employing units by reason of service on 
 15.17  or for the association, the board, or any committee authorized 
 15.18  by the board.  Necessary expenses may include the salary of any 
 15.19  substitute teacher which the employing unit is required to hire 
 15.20  in the absence of the board member.  The board may reimburse the 
 15.21  employing unit for the cost of the substitute teacher. 
 15.22     Sec. 10.  Minnesota Statutes 1994, section 354.44, is 
 15.23  amended by adding a subdivision to read: 
 15.24     Subd. 9.  [DETERMINING APPLICABLE LAW.] An employee who 
 15.25  returns to covered service following a termination and who is 
 15.26  not receiving a retirement annuity under this section must have 
 15.27  earned at least 85 days of credited service following the return 
 15.28  to covered service to be eligible for improved benefits 
 15.29  resulting from any law change enacted subsequent to that 
 15.30  termination. 
 15.31     Sec. 11.  Minnesota Statutes 1994, section 354.52, 
 15.32  subdivision 4a, is amended to read: 
 15.33     Subd. 4a.  [MEMBER DATA REPORTING REQUIREMENTS.] (a) An 
 15.34  employing unit shall initially provide the following member data 
 15.35  or any of that data not previously provided to the association 
 15.36  for payroll warrants dated after June 30, 1995, in a format 
 16.1   prescribed by the executive director.  Data changes and the 
 16.2   dates of those changes must be reported to the association on an 
 16.3   ongoing basis for the payroll cycle in which they occur with the 
 16.4   data under subdivision 4b.  Data on the member includes:  
 16.5      (1) legal name, address, date of birth, association member 
 16.6   number, employer-assigned employee number, and social security 
 16.7   number; 
 16.8      (2) association status, including, but not limited to, 
 16.9   basic, coordinated, exempt annuitant, exempt technical college 
 16.10  teacher, and exempt independent contractor or consultant; 
 16.11     (3) employment status, including, but not limited to, full 
 16.12  time, part time, intermittent, substitute, or part-time 
 16.13  mobility; 
 16.14     (4) employment position, including, but not limited to, 
 16.15  teacher, superintendent, principal, administrator, or other; 
 16.16     (5) employment activity, including, but not limited to, 
 16.17  hire, termination, resumption of employment, disability, or 
 16.18  death; 
 16.19     (6) leaves of absence; 
 16.20     (7) county district number assigned by the association for 
 16.21  the employing unit; 
 16.22     (8) data center identification number, if applicable; and 
 16.23     (9) other information as may be required by the executive 
 16.24  director. 
 16.25     Sec. 12.  Minnesota Statutes 1994, section 354A.12, 
 16.26  subdivision 3d, is amended to read: 
 16.27     Subd. 3d.  [SUPPLEMENTAL ADMINISTRATIVE EXPENSE 
 16.28  ASSESSMENT.] (a) The active and retired membership of the 
 16.29  Minneapolis teachers retirement fund association and of the St. 
 16.30  Paul teachers retirement fund association is responsible for 
 16.31  defraying supplemental administrative expenses other than 
 16.32  investment expenses of the respective teacher retirement fund 
 16.33  association. 
 16.34     (b) Investment expenses of the teachers retirement fund 
 16.35  association are those expenses incurred by or on behalf of the 
 16.36  retirement fund in connection with the investment of the assets 
 17.1   of the retirement fund other than investment security 
 17.2   transaction costs.  Other administrative expenses are all 
 17.3   expenses incurred by or on behalf of the retirement fund for all 
 17.4   other retirement fund functions other than the investment of 
 17.5   retirement fund assets.  Investment and other administrative 
 17.6   expenses must be accounted for using generally accepted 
 17.7   accounting principles and in a manner consistent with the 
 17.8   comprehensive annual financial report of the teachers retirement 
 17.9   fund association for the immediately previous fiscal year under 
 17.10  section 356.20. 
 17.11     (c) Supplemental administrative expenses other than 
 17.12  investment expenses of a first class city teacher retirement 
 17.13  fund association are those expenses for the fiscal year that 
 17.14  exceed the amount computed by applying the most recent 
 17.15  percentage of pay administrative expense amount, other than 
 17.16  investment expenses, for the teachers retirement association 
 17.17  governed by chapter 354 to the covered payroll of the respective 
 17.18  teachers retirement fund association for the fiscal year. 
 17.19     (d) The board of trustees of each first class city teachers 
 17.20  retirement fund association shall allocate the total dollar 
 17.21  amount of supplemental administrative expenses other than 
 17.22  investment expenses among the various active and retired 
 17.23  membership groups of the teachers retirement fund association 
 17.24  and shall assess the various membership groups their respective 
 17.25  share of the supplemental administrative expenses other than 
 17.26  investment expenses, in amounts determined by the board of 
 17.27  trustees.  The supplemental administrative expense assessments 
 17.28  must be paid by the membership group in a manner determined by 
 17.29  the board of trustees of the respective teachers retirement 
 17.30  association.  Supplemental administrative expenses payable by 
 17.31  the active members of the pension plan must be picked up by the 
 17.32  employer in accordance with section 356.62. 
 17.33     (e) With respect to the St. Paul teachers retirement fund 
 17.34  association, the supplemental administrative expense assessment 
 17.35  must be fully disclosed to the various active and retired 
 17.36  membership groups of the teachers retirement fund association.  
 18.1   The chief administrative officer of the association shall 
 18.2   prepare a supplemental administrative expense assessment 
 18.3   disclosure notice, which must include the following: 
 18.4      (1) the total amount of administrative expenses of the 
 18.5   association, the amount of the investment expenses of the 
 18.6   association, and the net remaining amount of administrative 
 18.7   expenses of the association; 
 18.8      (2) the amount of administrative expenses for the 
 18.9   association that would be equivalent to the teachers retirement 
 18.10  association noninvestment administrative expense level described 
 18.11  in paragraph (c); 
 18.12     (3) the total amount of supplemental administrative 
 18.13  expenses required for assessment calculated under paragraph (c); 
 18.14     (4) the portion of the total amount of the supplemental 
 18.15  administrative expense assessment allocated to each membership 
 18.16  group and the rationale for that allocation; 
 18.17     (5) the manner of collecting the supplemental 
 18.18  administrative expense assessment from each membership group, 
 18.19  the number of assessment payments required during the year, and 
 18.20  the amount of each payment or the procedure used to determine 
 18.21  each payment; and 
 18.22     (6) any other information that the chief administrative 
 18.23  officer determines is necessary to fairly portray the manner in 
 18.24  which the supplemental administrative expense assessment was 
 18.25  determined and allocated. 
 18.26     (f) The disclosure notice must be provided annually in the 
 18.27  annual report of the association. 
 18.28     (g) The supplemental administrative expense assessments 
 18.29  must be deposited in the applicable teachers retirement fund 
 18.30  upon receipt. 
 18.31     ~~(f)~~ (h) Any omitted active membership group assessments 
 18.32  that remain undeducted and unpaid to the teachers retirement 
 18.33  fund association for 90 days must be paid by the respective 
 18.34  school district.  The school district may recover any omitted 
 18.35  active membership group assessment amounts that it has 
 18.36  previously paid.  The teachers retirement fund association shall 
 19.1   deduct any omitted retired membership group assessment amounts 
 19.2   from the benefits next payable after the discovery of the 
 19.3   omitted amounts. 
 19.4      Sec. 13.  Minnesota Statutes 1994, section 354A.31, is 
 19.5   amended by adding a subdivision to read: 
 19.6      Subd. 8.  [DETERMINING APPLICABLE LAW.] An employee who 
 19.7   returns to covered service following a termination and who is 
 19.8   not receiving a retirement annuity under this section must have 
 19.9   earned at least 85 days of credited service following the return 
 19.10  to covered service to be eligible for improved benefits 
 19.11  resulting from any law change enacted subsequent to that 
 19.12  termination. 
 19.13     Sec. 14.  Minnesota Statutes 1994, section 356.215, 
 19.14  subdivision 4d, is amended to read: 
 19.15     Subd. 4d.  [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 
 19.16  governed by chapters ~~352,~~ 352B~~, 353,~~ and 353C, and ~~354~~ by 
 19.17  sections 352.90 to 352.951 and 353.63 to 353.68, the actuarial 
 19.18  valuation must use a preretirement interest assumption of 8.5 
 19.19  percent, a postretirement interest assumption of five percent, 
 19.20  and a future salary increase assumption of 6.5 percent. 
 19.21     (b) For funds governed by chapter 354A, the actuarial 
 19.22  valuation must use preretirement and postretirement assumptions 
 19.23  of 8.5 percent and a future salary increase assumption of 6.5 
 19.24  percent, but the actuarial valuation must reflect the payment of 
 19.25  postretirement adjustments to retirees, based on the methods 
 19.26  specified in the bylaws of the fund as approved by the 
 19.27  legislature.  For a fund governed by chapter 422A, the actuarial 
 19.28  valuation shall use a preretirement interest assumption of six 
 19.29  percent, a postretirement interest assumption of five percent, 
 19.30  and an assumption that in each future year the salary on which a 
 19.31  retirement or other benefit is based is 1.04 multiplied by the 
 19.32  salary for the preceding year.  
 19.33     (c) For all other funds not specified in paragraph (a), 
 19.34  (b), ~~or~~ (d), or (e), the actuarial valuation must use a 
 19.35  preretirement interest assumption of five percent, a 
 19.36  postretirement interest assumption of five percent, and a future 
 20.1   salary increase assumption of 3.5 percent. 
 20.2      (d) For funds governed by chapters 3A, 352C, and 490, the 
 20.3   actuarial valuation must use a preretirement interest assumption 
 20.4   of 8.5 percent, a postretirement interest assumption of five 
 20.5   percent, and a future salary increase assumption of 6.5 percent 
 20.6   in each future year in which the salary amount payable is not 
 20.7   determinable from section 3.099, 15A.081, subdivision 6, or 
 20.8   15A.083, subdivision 1, whichever applies, or from applicable 
 20.9   compensation council recommendations under section 15A.082. 
 20.10     (e) For funds governed by sections 352.01 to 352.86, 353.01 
 20.11  to 353.46, and chapter 354, the actuarial valuation must use a 
 20.12  preretirement interest assumption of 8.5, a postretirement 
 20.13  interest assumption of five percent, and a graded rate future 
 20.14  salary increase assumption as follows: 
 20.15          General State   General Public   
 20.16            Employees       Employees         Teachers  
 20.17           Retirement      Retirement        Retirement 
 20.18   Age        Plan            Plan              Plan 
 20.19   16        7.2500%         8.71%              7.25%
 20.20   17        7.2500          8.71               7.25 
 20.21   18        7.2500          8.70               7.25 
 20.22   19        7.2500          8.70               7.25 
 20.23   20        7.2500          7.70               7.25 
 20.24   21        7.1454          7.70               7.25 
 20.25   22        7.1094          7.70               7.25 
 20.26   23        7.0725          7.70               7.20 
 20.27   24        7.0363          7.70               7.15 
 20.28   25        7.0000          7.60               7.10 
 20.29   26        7.0000          7.51               7.05 
 20.30   27        7.0000          7.39               7.00 
 20.31   28        7.0000          7.30               7.00 
 20.32   29        7.0000          7.20               7.00 
 20.33   30        7.0000          7.20               7.00 
 20.34   31        7.0000          7.10               7.00 
 20.35   32        7.0000          7.10               7.00 
 20.36   33        7.0000          7.00               7.00 
 21.1    34        7.0000          7.00               7.00 
 21.2    35        7.0000          6.90               7.00 
 21.3    36        6.9019          6.80               7.00 
 21.4    37        6.8074          6.70               7.00 
 21.5    38        6.7125          6.60               6.90 
 21.6    39        6.6054          6.50               6.80 
 21.7    40        6.5000          6.40               6.70 
 21.8    41        6.3540          6.30               6.60 
 21.9    42        6.2087          6.30               6.50 
 21.10   43        6.0622          6.30               6.35 
 21.11   44        5.9048          6.20               6.20 
 21.12   45        5.7500          6.20               6.05 
 21.13   46        5.6940          6.09               5.90 
 21.14   47        5.6375          6.00               5.75 
 21.15   48        5.5822          5.90               5.70 
 21.16   49        5.5405          5.80               5.65 
 21.17   50        5.5000          5.70               5.60 
 21.18   51        5.4384          5.70               5.55 
 21.19   52        5.3776          5.70               5.50 
 21.20   53        5.3167          5.70               5.45 
 21.21   54        5.2826          5.70               5.40 
 21.22   55        5.2500          5.70               5.35 
 21.23   56        5.2500          5.70               5.30 
 21.24   57        5.2500          5.70               5.25 
 21.25   58        5.2500          5.70               5.25 
 21.26   59        5.2500          5.70               5.25 
 21.27   60        5.2500          5.00               5.25 
 21.28   61        5.2500          5.00               5.25 
 21.29   62        5.2500          5.00               5.25 
 21.30   63        5.2500          5.00               5.25 
 21.31   64        5.2500          5.00               5.25 
 21.32   65        5.2500          5.00               5.25 
 21.33   66        5.2500          5.00               5.25 
 21.34   67        5.2500          5.00               5.25 
 21.35   68        5.2500          5.00               5.25 
 21.36   69        5.2500          5.00               5.25 
 22.1    70        5.2500          5.00               5.25 
 22.2      Sec. 15.  Minnesota Statutes 1994, section 356.215, 
 22.3   subdivision 4g, is amended to read: 
 22.4      Subd. 4g.  [AMORTIZATION CONTRIBUTIONS.] (a) In addition to 
 22.5   the exhibit indicating the level normal cost, the actuarial 
 22.6   valuation must contain an exhibit indicating the additional 
 22.7   annual contribution sufficient to amortize the unfunded 
 22.8   actuarial accrued liability.  For funds governed by chapters 3A, 
 22.9   352, 352B, 352C, 353, 353C, 354, 354A, and 490, the additional 
 22.10  contribution must be calculated on a level percentage of covered 
 22.11  payroll basis by the established date for full funding in effect 
 22.12  when the valuation is prepared.  For funds governed by chapter 
 22.13  3a, sections 352.90 to 352.951, chapter 352B, chapter 352C, 
 22.14  sections 353.63 to 353.68, chapter 353C, chapter 354A, and 
 22.15  chapter 490, the level percent additional contribution must be 
 22.16  calculated assuming annual payroll growth of 6.5 percent.  For 
 22.17  funds governed by sections 352.01 to 352.86 and chapter 354, the 
 22.18  level percent additional contribution must be calculated 
 22.19  assuming an annual payroll growth of five percent.  For the fund 
 22.20  governed by sections 353.01 to 353.46, the level percent 
 22.21  additional contribution must be calculated assuming an annual 
 22.22  payroll growth of six percent.  For all other funds, the 
 22.23  additional annual contribution must be calculated on a level 
 22.24  annual dollar amount basis. 
 22.25     (b) For any fund other than the Minneapolis employees 
 22.26  retirement fund, after the first actuarial valuation date 
 22.27  occurring after June 1, 1989, if there has not been a change in 
 22.28  the actuarial assumptions used for calculating the actuarial 
 22.29  accrued liability of the fund, a change in the benefit plan 
 22.30  governing annuities and benefits payable from the fund, a change 
 22.31  in the actuarial cost method used in calculating the actuarial 
 22.32  accrued liability of all or a portion of the fund, or a 
 22.33  combination of the three, which change or changes by themselves 
 22.34  without inclusion of any other items of increase or decrease 
 22.35  produce a net increase in the unfunded actuarial accrued 
 22.36  liability of the fund, the established date for full funding for 
 23.1   the first actuarial valuation made after June 1, 1989, and each 
 23.2   successive actuarial valuation is the first actuarial valuation 
 23.3   date occurring after June 1, 2020.  
 23.4      (c) For any fund or plan other than the Minneapolis 
 23.5   employees retirement fund, after the first actuarial valuation 
 23.6   date occurring after June 1, 1989, if there has been a change in 
 23.7   any or all of the actuarial assumptions used for calculating the 
 23.8   actuarial accrued liability of the fund, a change in the benefit 
 23.9   plan governing annuities and benefits payable from the fund, a 
 23.10  change in the actuarial cost method used in calculating the 
 23.11  actuarial accrued liability of all or a portion of the fund, or 
 23.12  a combination of the three, and the change or changes, by 
 23.13  themselves and without inclusion of any other items of increase 
 23.14  or decrease, produce a net increase in the unfunded actuarial 
 23.15  accrued liability in the fund, the established date for full 
 23.16  funding must be determined using the following procedure:  
 23.17     (i) the unfunded actuarial accrued liability of the fund 
 23.18  must be determined in accordance with the plan provisions 
 23.19  governing annuities and retirement benefits and the actuarial 
 23.20  assumptions in effect before an applicable change; 
 23.21     (ii) the level annual dollar contribution or level 
 23.22  percentage, whichever is applicable, needed to amortize the 
 23.23  unfunded actuarial accrued liability amount determined under 
 23.24  item (i) by the established date for full funding in effect 
 23.25  before the change must be calculated using the interest 
 23.26  assumption specified in subdivision 4d in effect before the 
 23.27  change; 
 23.28     (iii) the unfunded actuarial accrued liability of the fund 
 23.29  must be determined in accordance with any new plan provisions 
 23.30  governing annuities and benefits payable from the fund and any 
 23.31  new actuarial assumptions and the remaining plan provisions 
 23.32  governing annuities and benefits payable from the fund and 
 23.33  actuarial assumptions in effect before the change; 
 23.34     (iv) the level annual dollar contribution or level 
 23.35  percentage, whichever is applicable, needed to amortize the 
 23.36  difference between the unfunded actuarial accrued liability 
 24.1   amount calculated under item (i) and the unfunded actuarial 
 24.2   accrued liability amount calculated under item (iii) over a 
 24.3   period of 30 years from the end of the plan year in which the 
 24.4   applicable change is effective must be calculated using the 
 24.5   applicable interest assumption specified in subdivision 4d in 
 24.6   effect after any applicable change; 
 24.7      (v) the level annual dollar or level percentage 
 24.8   amortization contribution under item (iv) must be added to the 
 24.9   level annual dollar amortization contribution or level 
 24.10  percentage calculated under item (ii); 
 24.11     (vi) the period in which the unfunded actuarial accrued 
 24.12  liability amount determined in item (iii) is amortized by the 
 24.13  total level annual dollar or level percentage amortization 
 24.14  contribution computed under item (v) must be calculated using 
 24.15  the interest assumption specified in subdivision 4d in effect 
 24.16  after any applicable change, rounded to the nearest integral 
 24.17  number of years, but not to exceed 30 years from the end of the 
 24.18  plan year in which the determination of the established date for 
 24.19  full funding using the procedure set forth in this clause is 
 24.20  made and not to be less than the period of years beginning in 
 24.21  the plan year in which the determination of the established date 
 24.22  for full funding using the procedure set forth in this clause is 
 24.23  made and ending by the date for full funding in effect before 
 24.24  the change; and 
 24.25     (vii) the period determined under item (vi) must be added 
 24.26  to the date as of which the actuarial valuation was prepared and 
 24.27  the date obtained is the new established date for full funding.  
 24.28     (d) For the Minneapolis employees retirement fund, the 
 24.29  established date for full funding is June 30, 2020. 
 24.30     (e) For the public employees retirement association police 
 24.31  and fire fund, an excess of valuation assets over actuarial 
 24.32  accrued liability will be amortized in the same manner over the 
 24.33  same period as an unfunded actuarial accrued liability but will 
 24.34  serve to reduce the required contribution instead of increasing 
 24.35  it. 
 24.36     Sec. 16.  Minnesota Statutes 1994, section 356.24, 
 25.1   subdivision 1, is amended to read: 
 25.2      Subdivision 1.  [RESTRICTION; EXCEPTIONS.] (a) It is 
 25.3   unlawful for a school district or other governmental subdivision 
 25.4   or state agency to levy taxes for, or contribute public funds to 
 25.5   a supplemental pension or deferred compensation plan that is 
 25.6   established, maintained, and operated in addition to a primary 
 25.7   pension program for the benefit of the governmental subdivision 
 25.8   employees other than: 
 25.9      (1) to a supplemental pension plan that was established, 
 25.10  maintained, and operated before May 6, 1971; 
 25.11     (2) to a plan that provides solely for group health, 
 25.12  hospital, disability, or death benefits~~,~~; 
 25.13     (3) to the individual retirement account plan established 
 25.14  by sections 354B.01 to 354B.05; 
 25.15     ~~(3)~~ (4) to a plan that provides solely for severance pay 
 25.16  under section 465.72 to a retiring or terminating employee; 
 25.17     ~~(4)~~ (5) for employees other than personnel employed by the 
 25.18  state university board or the community college board and 
 25.19  covered by section 354B.07, subdivision 1, ~~to:~~ 
 25.20     ~~(i) the state of Minnesota deferred compensation plan under~~ 
 25.21  ~~section 352.96; or~~ 
 25.22     ~~(ii) payment of the applicable portion of the premium on a~~ 
 25.23  ~~tax sheltered annuity contract qualified under section 403(b) of~~ 
 25.24  ~~the federal Internal Revenue Code, purchased from a qualified~~ 
 25.25  ~~insurance company;~~ if provided for in a personnel policy of the 
 25.26  public employer or in the collective bargaining agreement ~~of~~ 
 25.27  between the public employer ~~with~~ and the exclusive 
 25.28  representative of public employees in an appropriate unit, in an 
 25.29  amount matching employee contributions on a dollar for dollar 
 25.30  basis, but not to exceed an employer contribution of $2,000 a 
 25.31  year per employee: 
 25.32     (i) to the state of Minnesota deferred compensation plan 
 25.33  under section 352.96; or 
 25.34     (ii) in payment of the applicable portion of the premium on 
 25.35  a tax-sheltered annuity contract qualified under section 403(b) 
 25.36  of the Internal Revenue Code, if purchased from a qualified 
 26.1   insurance company, and if the employing unit has complied with 
 26.2   any applicable pension plan provisions of the Internal Revenue 
 26.3   Code with respect to the tax-sheltered annuity program during 
 26.4   the preceding calendar year; or 
 26.5      ~~(5)~~ (6) for personnel employed by the state university 
 26.6   board or the community college board and covered by sections 
 26.7   352D.02, subdivision 1a, and 354B.07, subdivision 1, to the 
 26.8   supplemental retirement plan under sections 354B.07 to 354B.09, 
 26.9   if provided for in a personnel policy or in the collective 
 26.10  bargaining agreement of the public employer with the exclusive 
 26.11  representative of the covered employees in an appropriate unit, 
 26.12  in an amount matching employee contributions on a dollar for 
 26.13  dollar basis, but not to exceed an employer contribution of 
 26.14  $2,000 a year for each employee.  
 26.15     (b) A qualified insurance company is a company that: 
 26.16     (1) meets the definition in section 60A.02, subdivision 4; 
 26.17     (2) is licensed to engage in life insurance or annuity 
 26.18  business in the state; 
 26.19     (3) is determined by the commissioner of commerce to have a 
 26.20  rating within the top two rating categories by a recognized 
 26.21  national rating agency or organization that regularly rates 
 26.22  insurance companies; and 
 26.23     (4) is determined by the state board of investment to be 
 26.24  among the ten applicant insurance companies with competitive 
 26.25  options and investment returns on annuity products.  The state 
 26.26  board of investment determination must be made on or before 
 26.27  January 1, 1993, and must be reviewed periodically.  The state 
 26.28  board of investment may retain actuarial services to assist it 
 26.29  in this determination and in its periodic review.  The state 
 26.30  board of investment may annually establish a budget for its 
 26.31  costs in any determination and periodic review processes.  The 
 26.32  state board of investment may charge a proportional share of all 
 26.33  costs related to the periodic review to those companies 
 26.34  currently under contract and may charge a proportional share of 
 26.35  all costs related to soliciting and evaluating bids in a 
 26.36  determination process to each company selected by the state 
 27.1   board of investment.  All contracts must be approved before 
 27.2   execution by the state board of investment.  The state board of 
 27.3   investment shall establish policies and procedures under section 
 27.4   11A.04, clause (2), to carry out this paragraph. 
 27.5      (c) A personnel policy for unrepresented employees or a 
 27.6   collective bargaining agreement may establish limits on the 
 27.7   number of vendors under paragraph (b), clause ~~(4)~~ (5), that it 
 27.8   will utilize and conditions under which the vendors may contact 
 27.9   employees both during working hours and after working hours. 
 27.10     Sec. 17.  Minnesota Statutes 1994, section 383B.48, is 
 27.11  amended to read: 
 27.12     383B.48 [PURCHASE OF SHARES IN MINNESOTA SUPPLEMENTAL 
 27.13  INVESTMENT FUND.] 
 27.14     At the time a person becomes eligible for coverage and 
 27.15  elects to obtain coverage by the Hennepin county supplemental 
 27.16  retirement program and ~~prior to July~~ before November 1 of each 
 27.17  subsequent year, a participant in the Hennepin county 
 27.18  supplemental retirement program shall indicate in writing on a 
 27.19  form provided by the county of Hennepin the account of the 
 27.20  Minnesota supplemental investment fund in which the participant 
 27.21  wishes salary deductions and county matching contributions 
 27.22  attributable to salary deductions to be invested for ~~that fiscal~~ 
 27.23  ~~year~~ the subsequent 12-month period.  For that ~~fiscal~~ 
 27.24  ~~year~~ 12-month period the county of Hennepin shall purchase with 
 27.25  the salary deductions and county matching funds attributable to 
 27.26  the salary deductions shares in the appropriate account of the 
 27.27  Minnesota supplemental investment fund in accordance with the 
 27.28  indicated preferences of the participant.  However, the county 
 27.29  of Hennepin has the authority to determine which accounts of the 
 27.30  Minnesota supplemental investment fund will be available for 
 27.31  participant investment.  The shares purchased ~~shall~~ must stand 
 27.32  in the name of the county of Hennepin.  A record ~~shall~~ must be 
 27.33  kept by the county of Hennepin indicating the number of shares 
 27.34  in each account of the Minnesota supplemental investment fund 
 27.35  purchased with the salary deductions and county matching funds 
 27.36  attributable to the salary deductions of each participant.  The 
 28.1   record ~~shall~~ must be known as the "participant's share account 
 28.2   record."  The participant's share account record ~~shall~~ must 
 28.3   show, in addition to the number of shares ~~therein~~ in the 
 28.4   account, any cash balance of salary deductions or county 
 28.5   matching funds attributable to those deductions which stand 
 28.6   uninvested in shares.  At the option of the county of Hennepin, 
 28.7   and subject to any terms and conditions established and 
 28.8   communicated in writing by the county to a participant, the 
 28.9   participant may designate no more often than once each ~~fiscal~~ 
 28.10  ~~year~~ calendar quarter that prior salary deductions and county 
 28.11  matching contributions attributable to the salary 
 28.12  deductions ~~from prior fiscal years~~, together with any interest 
 28.13  earned, be reinvested in another account of the Minnesota 
 28.14  supplemental investment fund made available by the county of 
 28.15  Hennepin. 
 28.16     Sec. 18.  Minnesota Statutes 1994, section 383B.49, is 
 28.17  amended to read: 
 28.18     383B.49 [SUPPLEMENTAL RETIREMENT BENEFITS; REDEMPTION OF 
 28.19  SHARES.] 
 28.20     When requested to do so, in writing, on forms provided by 
 28.21  the county, by a participant, surviving spouse, a guardian of a 
 28.22  surviving child or ~~an estate~~ a personal representative, 
 28.23  whichever is applicable, the county of Hennepin shall redeem 
 28.24  shares in the accounts of the Minnesota supplemental investment 
 28.25  fund standing in a participant's share account record under the 
 28.26  following circumstances and in accordance with the laws and 
 28.27  regulations governing the Minnesota supplemental investment fund:
 28.28     (1) A participant who is no longer employed by the county 
 28.29  of Hennepin ~~shall be~~ is entitled to receive the cash realized on 
 28.30  the redemption of the shares to the credit of the participant's 
 28.31  share account record of the person.  The participant may request 
 28.32  the redemption of all or a portion of the shares in the 
 28.33  participant's share account record of the person, but may not 
 28.34  request more than one redemption in any one calendar year.  If 
 28.35  only a portion of the shares in the participant's share account 
 28.36  record is requested to be redeemed the person may request to 
 29.1   redeem not less than 20 percent of the shares in any one 
 29.2   calendar year and the redemption must be completed in no more 
 29.3   than five years.  An election is irrevocable except that a 
 29.4   participant may request an amendment of the election to redeem 
 29.5   all of the person's remaining shares.  All requests under this 
 29.6   paragraph are subject to application to and approval of the 
 29.7   Hennepin county board, in its sole discretion.  
 29.8      (2) In the event of the death of a participant leaving a 
 29.9   surviving spouse, the surviving spouse ~~shall be~~ is entitled to 
 29.10  receive the cash realized on the redemption of all or a portion 
 29.11  of the shares in the participant's share account record of the 
 29.12  deceased spouse, but in no event may the spouse request more 
 29.13  than one redemption in each calendar year.  If only a portion of 
 29.14  the shares in the participant's share account record is 
 29.15  requested to be redeemed, the surviving spouse may request the 
 29.16  redemption of not less than 20 percent of the shares in any one 
 29.17  calendar year.  Redemption must be completed in no more than 
 29.18  five years.  An election is irrevocable except that the 
 29.19  surviving spouse may request an amendment of the election to 
 29.20  redeem all of the participant's remaining shares.  All requests 
 29.21  under this paragraph are subject to application to and approval 
 29.22  of the Hennepin county board, in ~~their~~ its sole discretion.  
 29.23  Upon the death of the surviving spouse, any shares remaining in 
 29.24  the participant's share account record ~~shall~~ must be redeemed by 
 29.25  the county of Hennepin and the cash realized ~~therefrom~~ from the 
 29.26  redemption distributed to the estate of the surviving spouse. 
 29.27     (3) In the event of the death of a participant leaving no 
 29.28  surviving spouse, but leaving a minor surviving child or minor 
 29.29  surviving children, the guardianship estate of the minor 
 29.30  child is, or the guardianship estates of the minor 
 29.31  children ~~shall be~~ are, entitled to receive the cash realized on 
 29.32  the redemption of all shares to the credit of the participant's 
 29.33  share account record of the deceased participant.  In the event 
 29.34  of minor surviving children, the cash realized ~~shall~~ must be 
 29.35  paid in equal shares to the guardianship estates of the minor 
 29.36  surviving children. 
 30.1      (4) In the event of the death of a participant leaving no 
 30.2   surviving spouse and no minor surviving children, the estate of 
 30.3   the deceased participant ~~shall be~~ is entitled to receive the 
 30.4   cash realized on the redemption of all shares to the credit of 
 30.5   the participant's share account record of the deceased 
 30.6   participant. 
 30.7      Sec. 19.  [FIRST CLASS CITY TEACHER PLANS; DETERMINING 
 30.8   APPLICABLE LAW.] 
 30.9      In accordance with Minnesota Statutes, section 354A.12, 
 30.10  subdivision 4, the Minneapolis teachers retirement fund 
 30.11  association, the St. Paul teachers retirement fund association, 
 30.12  and the Duluth teachers retirement fund association shall amend 
 30.13  the articles of incorporation or bylaws of the respective 
 30.14  association.  This authorization is to provide that an employee 
 30.15  who has service credit in the basic plan of the Minneapolis 
 30.16  teachers retirement fund association or the St. Paul teachers 
 30.17  retirement fund association, or an employee with service credit 
 30.18  in the Duluth teachers retirement fund association old law plan, 
 30.19  who returns to covered service following a termination and who 
 30.20  is not receiving a retirement annuity from the respective plan, 
 30.21  must have earned at least 85 days of credited service following 
 30.22  the return to covered service to be eligible for improved 
 30.23  benefits resulting from any law change enacted subsequent to the 
 30.24  termination. 
 30.25     Sec. 20.  [INSTRUCTION TO REVISOR.] 
 30.26     In the next and subsequent issues of Minnesota Statutes, 
 30.27  the revisor of statutes shall substitute "association" for 
 30.28  "fund" in every instance where reference is to the teachers 
 30.29  retirement organization in chapters 354 and 356.  For purposes 
 30.30  of this section, "organization" means the entity that 
 30.31  administers the plans under chapter 354.  The revisor shall 
 30.32  substitute "fund" for "association" in every instance where 
 30.33  reference is to the fund which receives contributions and is 
 30.34  used to accumulate and invest assets to meet liabilities created 
 30.35  by benefits offered under terms of the plan. 
 30.36     Sec. 21.  [EFFECTIVE DATE.] 
 31.1      (a) Sections 1 to 9, 11, 12, 14, 15, and 20 are effective 
 31.2   the day following final enactment. 
 31.3      (b) Sections 10, 13, and 19 are effective July 1, 1995. 
 31.4      (c) Section 16 is effective the day following final 
 31.5   enactment and applies to tax-sheltered annuity programs 
 31.6   receiving employer matching contributions in operation at any 
 31.7   time during the 1995 calendar year. 
 31.8                              ARTICLE 4 
 31.9                IRAP RECODIFICATION AND MODIFICATIONS 
 31.10     Section 1.  Minnesota Statutes 1994, section 11A.23, 
 31.11  subdivision 4, is amended to read: 
 31.12     Subd. 4.  [COVERED RETIREMENT FUNDS AND PLANS.] The 
 31.13  provisions of this section shall apply to the following 
 31.14  retirement funds and plans:  
 31.15     (1) ~~State university and state community college~~ higher 
 31.16  education board supplemental retirement plan established 
 31.17  ~~pursuant to sections 354B.07 to 354B.09~~ under chapter 354C; 
 31.18     (2) state employees retirement fund established pursuant to 
 31.19  chapter 352; 
 31.20     (3) correctional employees retirement plan established 
 31.21  pursuant to chapter 352; 
 31.22     (4) state patrol retirement fund established pursuant to 
 31.23  chapter 352B; 
 31.24     (5) unclassified employees retirement plan established 
 31.25  pursuant to chapter 352D; 
 31.26     (6) public employees retirement fund established pursuant 
 31.27  to chapter 353; 
 31.28     (7) public employees police and fire fund established 
 31.29  pursuant to chapter 353; 
 31.30     (8) teachers' retirement fund established pursuant to 
 31.31  chapter 354; 
 31.32     (9) judges' retirement fund established pursuant to chapter 
 31.33  490; and 
 31.34     (10) any other funds required by law to be invested by the 
 31.35  board.  
 31.36     Sec. 2.  Minnesota Statutes 1994, section 352D.02, 
 31.37  subdivision 1, is amended to read: 
 32.1      Subdivision 1.  [COVERAGE.] (a) Employees enumerated in 
 32.2   paragraph (b), if they are in the unclassified service of the 
 32.3   state or metropolitan council and are eligible for coverage 
 32.4   under the general state employees retirement plan under chapter 
 32.5   352, are participants in the unclassified program under this 
 32.6   chapter unless the employee gives notice to the executive 
 32.7   director of the Minnesota state retirement system within one 
 32.8   year following the commencement of employment in the 
 32.9   unclassified service that the employee desires coverage under 
 32.10  the general state employees retirement plan.  For the purposes 
 32.11  of this chapter, an employee who does not file notice with the 
 32.12  executive director is deemed to have exercised the option to 
 32.13  participate in the unclassified plan. 
 32.14     (b) Enumerated employees are: 
 32.15     (1) an employee in the office of the governor, lieutenant 
 32.16  governor, secretary of state, state auditor, state treasurer, 
 32.17  attorney general, or an employee of the state board of 
 32.18  investment; 
 32.19     (2) the head of a department, division, or agency created 
 32.20  by statute in the unclassified service, an acting department 
 32.21  head subsequently appointed to the position, or an employee 
 32.22  enumerated in section 15A.081, subdivision 1 or 15A.083, 
 32.23  subdivision 4; 
 32.24     (3) a permanent, full-time unclassified employee of the 
 32.25  legislature or a commission or agency of the legislature or a 
 32.26  temporary legislative employee having shares in the supplemental 
 32.27  retirement fund as a result of former employment covered by this 
 32.28  chapter, whether or not eligible for coverage under the 
 32.29  Minnesota state retirement system; 
 32.30     (4) a person ~~other than an employee of the state board of~~ 
 32.31  ~~technical colleges~~ who is employed in a position established 
 32.32  under section 43A.08, subdivision 1, clause (3), ~~or subdivision~~ 
 32.33  ~~1a,~~ or in a position authorized under a statute creating or 
 32.34  establishing a department or agency of the state, which is at 
 32.35  the deputy or assistant head of department or agency or director 
 32.36  level; 
 33.1      (5) the regional administrator, or executive director of 
 33.2   the metropolitan council, general counsel, division directors, 
 33.3   operations managers, and other positions as designated by the 
 33.4   council, all of which may not exceed 27 positions at the 
 33.5   council~~;~~ and the chair, provided that upon initial designation 
 33.6   of all positions provided for in this clause, no further 
 33.7   designations or redesignations may be made without approval of 
 33.8   the board of directors of the Minnesota state retirement system; 
 33.9      (6) the executive director, associate executive director, 
 33.10  and not to exceed nine positions of the higher education 
 33.11  coordinating board in the unclassified service, as designated by 
 33.12  the higher education coordinating board before January 1, 1992, 
 33.13  or subsequently redesignated with the approval of the board of 
 33.14  directors of the Minnesota state retirement system, unless the 
 33.15  person has elected coverage by the individual retirement account 
 33.16  plan under chapter 354B; 
 33.17     (7) the clerk of the appellate courts appointed under 
 33.18  article VI, section 2, of the Constitution of the state of 
 33.19  Minnesota; 
 33.20     (8) the chief executive officers of correctional facilities 
 33.21  operated by the department of corrections and of hospitals and 
 33.22  nursing homes operated by the department of human services; 
 33.23     (9) an employee whose principal employment is at the state 
 33.24  ceremonial house; 
 33.25     (10) an employee of the Minnesota educational computing 
 33.26  corporation; 
 33.27     (11) an employee of the world trade center board; and 
 33.28     (12) an employee of the state lottery board who is covered 
 33.29  by the managerial plan established under section 43A.18, 
 33.30  subdivision 3~~;~~ 
 33.31     ~~(13) an employee of the state board of technical colleges~~ 
 33.32  ~~employed in a position established under section 43A.08,~~ 
 33.33  ~~subdivision 1, clause (3), or 1a, unless the person has elected~~ 
 33.34  ~~coverage by the individual retirement account plan under chapter~~ 
 33.35  ~~354B; and~~ 
 33.36     ~~(14) an employee of the higher education board in a~~ 
 34.1   ~~position established under section 136E.04, subdivision 2,~~ 
 34.2   ~~unless the person has elected coverage by the individual~~ 
 34.3   ~~retirement account plan under chapter 354B~~. 
 34.4      Sec. 3.  Minnesota Statutes 1994, section 354.05, 
 34.5   subdivision 2a, is amended to read: 
 34.6      Subd. 2a.  [EXCEPTIONS.] (a) Notwithstanding subdivision 2, 
 34.7   a person specified in paragraph (b) is not a member of the fund 
 34.8   except for purposes of social security coverage unless ~~(1) the~~ 
 34.9   ~~person is covered by section 354B.02, subdivision 2, and remains~~ 
 34.10  ~~a member of the fund for all purposes or, (2)~~ the person is 
 34.11  covered by section ~~354B.02, subdivision 1 or 5, or~~ 
 34.12  ~~354B.035~~ 354B.21, and elects coverage by the teachers retirement 
 34.13  association. 
 34.14     (b) A teacher is excluded from fund membership other than 
 34.15  social security coverage under paragraph (a) if ~~first employed~~ 
 34.16  ~~as:~~ 
 34.17     ~~(1) a teacher in the state university system after June 30,~~ 
 34.18  ~~1989;~~ 
 34.19     ~~(2) a teacher in the state community college system after~~ 
 34.20  ~~June 30, 1989; or~~ 
 34.21     ~~(3) a teacher in a technical college authorized under~~ 
 34.22  ~~chapter 136C or 136D after June 30, 1995~~ the person is covered 
 34.23  by the individual retirement account plan established under 
 34.24  chapter 354B. 
 34.25     Sec. 4.  Minnesota Statutes 1994, section 354A.011, 
 34.26  subdivision 27, is amended to read: 
 34.27     Subd. 27.  [TEACHER.] "Teacher" means any person who 
 34.28  renders service in a public school district located in the 
 34.29  corporate limits of one of the cities of the first class which 
 34.30  was so classified on January 1, 1979, as any of the following: 
 34.31     (a) a full-time employee in a position for which a valid 
 34.32  license from the state department of education is required; 
 34.33     (b) an employee of the teachers retirement fund association 
 34.34  located in the city of the first class unless the employee has 
 34.35  exercised the option pursuant to Laws 1955, chapter 10, section 
 34.36  1, to retain membership in the Minneapolis employees retirement 
 35.1   fund established pursuant to chapter 422A; 
 35.2      (c) a part-time employee in a position for which a valid 
 35.3   license from the state department of education is required; or 
 35.4      (d) a part-time employee in a position for which a valid 
 35.5   license from the state department of education is required who 
 35.6   also renders other nonteaching services for the school district 
 35.7   unless the board of trustees of the teachers retirement fund 
 35.8   association determines that the combined employment is on the 
 35.9   whole so substantially dissimilar to teaching service that the 
 35.10  service shall not be covered by the association. 
 35.11     The term shall not mean any person who renders service in 
 35.12  the school district as any of the following: 
 35.13     (1) an independent contractor or the employee of an 
 35.14  independent contractor; 
 35.15     (2) an employee who is a full-time teacher covered by 
 35.16  another teachers retirement fund association established 
 35.17  pursuant to this chapter or chapter 354; 
 35.18     (3) an employee exempt from licensure pursuant to section 
 35.19  125.031; ~~or~~ 
 35.20     (4) an employee who is a teacher in a technical college 
 35.21  located in a city of the first class unless the person elects 
 35.22  coverage by the applicable first class city teacher retirement 
 35.23  fund association under section ~~354B.02~~ 354B.21, subdivision ~~1,~~ 
 35.24  ~~or 354B.035~~ 2; or 
 35.25     (5) an employee who is a part-time teacher in a technical 
 35.26  college in a city of the first class and who has elected 
 35.27  coverage by the applicable first class city teacher retirement 
 35.28  fund association under section 354B.21, subdivision 2, but (1) 
 35.29  the teaching service is incidental to the regular nonteaching 
 35.30  occupation of the person; (2) the applicable technical college 
 35.31  stipulates annually in advance that the part-time teaching 
 35.32  service will not exceed 300 hours in a fiscal year; and (3) the 
 35.33  part-time teaching actually does not exceed 300 hours in the 
 35.34  fiscal year to which the certification applies.  
 35.35     Sec. 5.  [354B.20] [DEFINITIONS.] 
 35.36     Subdivision 1.  [IN GENERAL.] Unless the content or subject 
 36.1   matter indicates otherwise, as used in this chapter, the terms 
 36.2   in this section have the meanings given them. 
 36.3      Subd. 2.  [BOARD.] "Board" means the higher education board.
 36.4      Subd. 3.  [CHANCELLOR.] "Chancellor" means the chancellor 
 36.5   of the board. 
 36.6      Subd. 4.  [COVERED EMPLOYMENT.] (a) "Covered employment" 
 36.7   means employment by a person eligible for coverage by this 
 36.8   retirement program under section 354B.21 in a faculty position 
 36.9   or in an eligible unclassified administrative position. 
 36.10     (b) "Covered employment" does not mean employment specified 
 36.11  in paragraph (a) by a faculty member employed in a state 
 36.12  university or a community college if the person's initial 
 36.13  appointment is specified as constituting less than 25 percent of 
 36.14  a full academic year, exclusive of summer session, for the 
 36.15  applicable institution. 
 36.16     Subd. 5.  [COVERED SALARY.] (a) "Covered salary" means the 
 36.17  periodic compensation paid to the participant before deductions 
 36.18  for deferred compensation, supplemental retirement coverage, or 
 36.19  other voluntary salary reduction program. 
 36.20     (b) "Covered salary" does not mean lump sum sick leave 
 36.21  payments, severance payments, payments in lieu of employer-paid 
 36.22  group insurance coverage, payments based on differences between 
 36.23  single employer-paid group insurance coverage and insurance 
 36.24  coverage including dependents, or workers' compensation payment. 
 36.25     Subd. 6.  [ELIGIBLE UNCLASSIFIED ADMINISTRATIVE POSITION.] 
 36.26  "Eligible unclassified administrative position" means the 
 36.27  following: 
 36.28     (1) the chancellor of the board; 
 36.29     (2) a president of a state college or university; or 
 36.30     (3) an excluded administrator employed in a state 
 36.31  university or college by the board or by the higher education 
 36.32  coordinating board. 
 36.33     Subd. 7.  [EMPLOYING UNIT.] "Employing unit," if the agency 
 36.34  employs any persons covered by the individual retirement account 
 36.35  plan under section 354B.21, means: 
 36.36     (1) the board; 
 37.1      (2) the higher education coordinating board; and 
 37.2      (3) the higher education facilities authority. 
 37.3      Subd. 8.  [FACULTY.] "Faculty" means an employment position 
 37.4   that meets the definition of either section 354.05, subdivision 
 37.5   2, or 354A.011, subdivision 27. 
 37.6      Subd. 9.  [FIRST CLASS CITY TEACHER RETIREMENT FUND 
 37.7   ASSOCIATION.] "First class city teacher retirement fund 
 37.8   association" means a retirement plan, fund, and plan 
 37.9   administration established under chapter 354A. 
 37.10     Subd. 10.  [GENERAL STATE EMPLOYEES RETIREMENT 
 37.11  PLAN.] "General state employees retirement plan" means the 
 37.12  retirement plan administered by the Minnesota state retirement 
 37.13  system and governed by sections 352.01 to 352.73. 
 37.14     Subd. 11.  [HIGHER EDUCATION BOARD.] "Higher education 
 37.15  board" means the governing board for the state universities, the 
 37.16  community colleges, and the technical colleges established by 
 37.17  section 136E.01. 
 37.18     Subd. 12.  [PARTICIPANT.] "Participant" means a person who 
 37.19  is employed in covered employment by the board and who elects 
 37.20  coverage by the plan under section 354B.21. 
 37.21     Subd. 13.  [PLAN.] "Plan" means the individual retirement 
 37.22  account plan established by this chapter. 
 37.23     Subd. 14.  [PLAN ADMINISTRATOR.] "Plan administrator" means 
 37.24  the board employee or an independent contract agent designated 
 37.25  by the board to perform the primary administrative functions 
 37.26  relating to the plan. 
 37.27     Subd. 15.  [SABBATICAL LEAVE.] "Sabbatical leave" means a 
 37.28  sabbatical leave as specified in the applicable collective 
 37.29  bargaining agreement or personnel policy of the board for its 
 37.30  employees. 
 37.31     Subd. 16.  [STATE UNCLASSIFIED EMPLOYEES RETIREMENT 
 37.32  PROGRAM.] "State unclassified employees retirement program" 
 37.33  means the retirement program established by chapter 352D. 
 37.34     Subd. 17.  [SUPPLEMENTAL PLAN.] "Supplemental plan" means 
 37.35  the retirement program established by chapter 354C. 
 37.36     Subd. 18.  [TEACHERS RETIREMENT PLAN.] "Teachers retirement 
 38.1   plan" means the retirement plan established by chapter 354. 
 38.2      Sec. 6.  [354B.21] [COVERAGE.] 
 38.3      Subdivision 1.  [ELIGIBILITY.] The following persons are 
 38.4   eligible to have coverage by the individual retirement account 
 38.5   plan and to be participants in the plan: 
 38.6      (1) employees of the board who are employed as faculty in 
 38.7   an employment classification included in the state university 
 38.8   instructional unit, the community college instructional unit, or 
 38.9   the technical college instructional unit under section 179A.10, 
 38.10  subdivision 2; 
 38.11     (2) the chancellor and employees of the board in eligible 
 38.12  unclassified administrative positions; 
 38.13     (3) the employees in eligible unclassified administrative 
 38.14  positions in the state universities; 
 38.15     (4) the employees in eligible unclassified administrative 
 38.16  positions in the technical colleges; and 
 38.17     (5) the employees in eligible unclassified administrative 
 38.18  positions of the higher education coordinating board or of the 
 38.19  community colleges. 
 38.20     Subd. 2.  [COVERAGE; ELECTION.] (a) An eligible person is 
 38.21  entitled to elect coverage by the plan.  If the eligible person 
 38.22  does not make a timely election of coverage by the plan, the 
 38.23  person has the coverage specified in subdivision 3. 
 38.24     (b) For eligible persons who were employed by the former 
 38.25  state university system or the former community college system 
 38.26  before May 1, 1995, the person has the retirement coverage that 
 38.27  the person had for employment immediately before May 1, 1995. 
 38.28     (c) For all other eligible persons, the election of 
 38.29  coverage must be made within 90 days of the date of enactment of 
 38.30  this act or 90 days of the start of covered employment, 
 38.31  whichever occurs later. 
 38.32     Subd 3.  [DEFAULT COVERAGE.] If an eligible person fails to 
 38.33  elect coverage by the plan under subdivision 2 or if the person 
 38.34  fails to make a timely election, the following retirement 
 38.35  coverage applies: 
 38.36     (1) for employees of the board who are employed in faculty 
 39.1   positions in the state universities or in the community 
 39.2   colleges, the retirement coverage is by the plan established by 
 39.3   this chapter; 
 39.4      (2) for employees of the board who are employed in faculty 
 39.5   positions in the technical colleges, the retirement coverage is 
 39.6   by the teachers retirement association established under chapter 
 39.7   354, unless the employee was a member of a first class city 
 39.8   teacher retirement fund established under chapter 354A on June 
 39.9   30, 1995, and then the retirement coverage is by the Duluth 
 39.10  teachers retirement fund association if the person was a member 
 39.11  of that plan on June 30, 1995, or the Minneapolis teachers 
 39.12  retirement fund association if the person was a member of that 
 39.13  plan on June 30, 1995, or the St. Paul teachers retirement fund 
 39.14  association if the person was a member of that plan on June 30, 
 39.15  1995; and 
 39.16     (3) for employees of the board who are employed in eligible 
 39.17  unclassified administrative positions, the retirement coverage 
 39.18  is by the plan established by this chapter. 
 39.19     Subd. 3a.  [CONTINUATION OF PLAN COVERAGE IN CERTAIN 
 39.20  INSTANCES.] For a person with retirement coverage by a first 
 39.21  class city teacher retirement fund association instead of the 
 39.22  individual retirement account plan under subdivision 3, clause 
 39.23  (2), coverage by the retirement fund association continues for 
 39.24  the duration of the person's employment by the higher education 
 39.25  board unless, within 90 days of a change in employment within 
 39.26  the Minnesota state colleges and universities system, the person 
 39.27  elects the individual retirement account plan for all future 
 39.28  employment by the higher education board. 
 39.29     Subd. 3b.  [COVERAGE OF CERTAIN FORMER TECHNICAL COLLEGE 
 39.30  FACULTY MEMBERS.] A person who was employed as a teacher by a 
 39.31  technical college before July 1, 1995, and who subsequently is 
 39.32  reclassified into a different employment position while 
 39.33  continuing to perform the same or essentially the same 
 39.34  employment duties and consequently shifts from the technical 
 39.35  college instructional collective bargaining unit to another 
 39.36  state collective bargaining unit retains coverage by the 
 40.1   teachers retirement association or the applicable first class 
 40.2   city teachers retirement fund association, whichever applies. 
 40.3      Subd. 3c.  [ELECTION OF TRA COVERAGE IN CERTAIN 
 40.4   INSTANCES.] (a) A person who was employed as a teacher by a 
 40.5   technical college before July 1, 1995, and who has retirement 
 40.6   coverage for that technical college teacher employment by a 
 40.7   first class city teacher retirement fund association under 
 40.8   chapter 354A may elect to have future higher education system 
 40.9   teacher employment retirement coverage by the teacher retirement 
 40.10  association governed by chapter 354. 
 40.11     (b) The election to transfer prospective retirement 
 40.12  coverage under paragraph (a) must be made by the technical 
 40.13  college teacher by October 1, 1995, or within 90 days of 
 40.14  initially being employed by the higher education system, 
 40.15  whichever is later.  The election must be made in writing on a 
 40.16  form prescribed by the executive director of the teachers 
 40.17  retirement association.  The election, once filed with the 
 40.18  executive director of the teachers retirement association, is 
 40.19  irrevocable. 
 40.20     (c) An election to transfer prospective retirement coverage 
 40.21  under paragraph (a) does not affect prior allowable service 
 40.22  credit under section 354A.011, subdivision 4.  The transfer of 
 40.23  prospective retirement coverage does not make the person 
 40.24  eligible for a refund of member contributions during the course 
 40.25  of the person's employment by the higher education system. 
 40.26     Subd. 4.  [COVERAGE IN THE EVENT OF ACTING, INTERIM, OR 
 40.27  TEMPORARY APPOINTMENTS.] (a) A person previously employed by the 
 40.28  board and subsequently appointed by the board to an acting, 
 40.29  interim, or temporary faculty or eligible unclassified 
 40.30  administrative position by the board retains the retirement 
 40.31  coverage that the person had in the prior board position.  If 
 40.32  the participant's status becomes permanent, the participant has 
 40.33  the option to make an election of retirement coverage 
 40.34  appropriate to the retirement plan in which the employment 
 40.35  position should have retirement coverage consistent with 
 40.36  subdivision 2. 
 41.1      (b) A person who is appointed to an acting, interim, or 
 41.2   temporary faculty position by the board and who was not employed 
 41.3   in a faculty position by the board immediately before that 
 41.4   appointment must elect coverage as provided in subdivision 2. 
 41.5      Subd. 5.  [PAYMENT FOR CERTAIN PRIOR UNCOVERED SERVICE.] (a)
 41.6   A person employed in a faculty position by the board who was 
 41.7   initially excluded from participation in the individual 
 41.8   retirement account plan coverage, who was not covered by any 
 41.9   other Minnesota public pension plan for that service, and who is 
 41.10  subsequently eligible to participate in the individual 
 41.11  retirement account plan may make member contributions for that 
 41.12  period of prior uncovered teaching employment or eligible 
 41.13  unclassified administrative employment with the board. 
 41.14     (b) The member contributions for prior uncovered board 
 41.15  service are the amount that the person would have paid if the 
 41.16  prior service had been covered employment.  The payment must be 
 41.17  made to the individual retirement account plan administrator and 
 41.18  may be made only by payroll deduction.  The payment must be made 
 41.19  by the later of: 
 41.20     (1) 45 days of the start of covered employment; or 
 41.21     (2) the end of the fiscal year in which covered employment 
 41.22  began. 
 41.23     (c) The board must contribute an amount to match any 
 41.24  contribution made by a plan participant under this subdivision. 
 41.25     (d) Payments of contributions for prior uncovered board 
 41.26  service under this subdivision must be invested in the same 
 41.27  manner as the regular contributions made by or on behalf of the 
 41.28  plan participant. 
 41.29     Subd. 6.  [CONTINUATION OF COVERAGE.] Once a person is 
 41.30  employed in a position that qualifies for participation in the 
 41.31  individual retirement account plan and elects to participate in 
 41.32  the plan, all subsequent service by the person as a faculty 
 41.33  member employed by the board or other employing unit is covered 
 41.34  by the individual retirement account plan. 
 41.35     Sec. 7.  [354B.22] [IRAP COVERAGE IN ADDITION TO SOCIAL 
 41.36  SECURITY COVERAGE.] 
 42.1      Subdivision 1.  [SOCIAL SECURITY COVERAGE.] (a) An employee 
 42.2   of the board or other employing unit who elects coverage by this 
 42.3   chapter is a member of the teachers retirement association 
 42.4   solely for purposes of coverage by the federal old age, 
 42.5   survivors, disability and health insurance program, and is 
 42.6   covered by the agreement made under section 355.02. 
 42.7      (b) A person with federal social security coverage through 
 42.8   teachers retirement association membership under paragraph (a) 
 42.9   is not a member of the teachers retirement association for any 
 42.10  other purpose while employed as a teacher by the board, and 
 42.11  membership in the teachers retirement association for this 
 42.12  limited purpose conveys no rights or benefit entitlement under 
 42.13  chapter 354. 
 42.14     Subd. 2.  [PUBLIC PENSION COVERAGE AS CONDITION OF 
 42.15  EMPLOYMENT.] Coverage by a public pension plan under section 
 42.16  354B.21 is a condition of initial employment or continued 
 42.17  employment as a faculty member or eligible unclassified 
 42.18  administrative position by the board or other employing unit. 
 42.19     Sec. 8.  [354B.23] [CONTRIBUTIONS.] 
 42.20     Subdivision 1.  [MEMBER CONTRIBUTION RATE.] (a) Except as 
 42.21  provided in paragraph (b), the member contribution rate for 
 42.22  participants in the individual retirement account plan is 4.5 
 42.23  percent of salary. 
 42.24     (b) For participants in the individual retirement account 
 42.25  plan who were otherwise eligible to elect retirement coverage in 
 42.26  the state unclassified employees retirement program, the member 
 42.27  contribution rate is the rate specified in section 352D.04, 
 42.28  subdivision 2, paragraph (a). 
 42.29     Subd. 2.  [MEMBER CONTRIBUTION METHOD.] Member 
 42.30  contributions must be made by payroll deduction each pay period. 
 42.31     Subd. 3.  [EMPLOYER CONTRIBUTION RATE.] The employer 
 42.32  contribution rate on behalf of participants in the individual 
 42.33  retirement account plan is six percent of salary. 
 42.34     Subd. 4.  [EMPLOYER CONTRIBUTION METHOD.] The employer 
 42.35  contribution must be made by the employing unit of a plan 
 42.36  participant during each pay period.  The employer contribution 
 43.1   must be made from the available revenue sources of the employing 
 43.2   unit. 
 43.3      Subd. 5.  [OMITTED MEMBER DEDUCTIONS.] (a) If the employing 
 43.4   unit that employs a plan participant fails to deduct the member 
 43.5   contribution from the participant's salary and a period of less 
 43.6   than 60 days from the date on which the deduction should have 
 43.7   been made has elapsed, the employing unit must obtain the 
 43.8   omitted member deduction by an additional payroll deduction 
 43.9   during the pay period next following the discovery of the 
 43.10  omission. 
 43.11     (b) If the employing unit of a plan participant fails to 
 43.12  deduct the member contribution from the participant's salary and 
 43.13  that omission continues for at least 60 days from the date on 
 43.14  which the deduction should have been made, the employing unit 
 43.15  must pay the amount representing the omitted member contribution 
 43.16  and the full required employer contribution, plus compound 
 43.17  interest at an annual rate of 8.5 percent.  The contributions 
 43.18  and any interest must be made within one year of the date on 
 43.19  which the omission was discovered. 
 43.20     Subd. 6.  [TRANSFER OF CERTAIN TRA MEMBER CONTRIBUTION 
 43.21  AMOUNTS TO IRAP.] (a) Notwithstanding any provisions of chapter 
 43.22  354 to the contrary, a former member of the teachers retirement 
 43.23  association who has less than three years of allowable service 
 43.24  credit under section 354.05, subdivision 13, and who is a member 
 43.25  of the individual retirement account plan may elect to transfer 
 43.26  to the plan an amount equal to the refund that the person could 
 43.27  have received under section 354.49, subdivision 2, if the person 
 43.28  had been eligible to receive a refund. 
 43.29     (b) The transfer must be made from the teachers retirement 
 43.30  association directly to the individual retirement account plan 
 43.31  and credited to the appropriate account. 
 43.32     (c) No amount under this subdivision may be paid directly 
 43.33  to the former teachers retirement association member. 
 43.34     (d) The election of this transfer must be made on a form 
 43.35  prescribed by the executive director of the teachers retirement 
 43.36  association, after consultation with the plan administrator. 
 44.1      Sec. 9.  [354B.24] [SABBATICAL LEAVE.] 
 44.2      Subdivision 1.  [CONTINUATION OF COVERAGE.] A person who is 
 44.3   a participant in the individual retirement plan and who goes on 
 44.4   an approved sabbatical leave remains a participant in the plan 
 44.5   for any period during which the person receives a salary from 
 44.6   the board or during which the person makes an optional 
 44.7   contribution provided for in subdivision 3. 
 44.8      Subd. 2.  [MANDATORY CONTRIBUTIONS.] (a) From the salary 
 44.9   paid to the person during the course of an approved sabbatical 
 44.10  leave, the employing unit must deduct a member contribution as 
 44.11  required under section 354B.23, subdivision 1. 
 44.12     (b) The employing unit must make the employer contribution 
 44.13  on behalf of the plan participant as provided in section 
 44.14  354B.23, subdivision 3. 
 44.15     Subd. 3.  [OPTIONAL ADDITIONAL CONTRIBUTIONS.] (a) A plan 
 44.16  participant on an approved sabbatical leave may make an optional 
 44.17  additional member contribution.  The optional additional member 
 44.18  may not exceed the applicable member contribution rate specified 
 44.19  in section 354B.23, subdivision 1, applied to the difference 
 44.20  between the amount of salary actually received during the 
 44.21  sabbatical leave and the amount of salary actually received for 
 44.22  a comparable period of an identical length to the sabbatical 
 44.23  leave that occurred during the fiscal year immediately preceding 
 44.24  the sabbatical leave. 
 44.25     (b) Any optional additional member contribution must be 
 44.26  made before the last day of the fiscal year following the fiscal 
 44.27  year in which the sabbatical leave terminates.  The optional 
 44.28  additional member contribution may not include interest. 
 44.29     (c) When an optional additional member contribution is 
 44.30  made, the employing unit must make the employer contribution at 
 44.31  the rate specified in section 354B.23, subdivision 3, on the 
 44.32  salary that was the basis for the optional additional member 
 44.33  contribution under paragraph (a). 
 44.34     (d) An employer contribution required under this section 
 44.35  must be made no later than 60 days after the date on which the 
 44.36  optional additional member contribution was made. 
 45.1      Subd. 4.  [REINSTATEMENT RIGHTS.] Notwithstanding the 
 45.2   provisions of any sabbatical leave agreements, regular and 
 45.3   optional additional member contributions and employer 
 45.4   contributions under this section are permissible only if the 
 45.5   plan participant retains the right to full reinstatement to an 
 45.6   employment position with the applicable employing unit both 
 45.7   during and at the conclusion of the sabbatical leave. 
 45.8      Sec. 10.  [354B.25] [INDIVIDUAL RETIREMENT ACCOUNT PLAN 
 45.9   ADMINISTRATION.] 
 45.10     Subdivision 1.  [GENERAL GOVERNANCE.] The individual 
 45.11  retirement account plan is the administrative responsibility of 
 45.12  the higher education board.  The higher education board may 
 45.13  administer the plan directly or may contract out for 
 45.14  administrative services with a qualified third-party plan 
 45.15  administrative entity. 
 45.16     Subd. 2.  [ANNUITY CONTRACTS AND CUSTODIAL ACCOUNTS.] (a) 
 45.17  The plan administrator shall arrange for the purchase of fixed 
 45.18  annuity contracts, variable annuity contracts, a combination of 
 45.19  fixed and variable annuity contracts, or custodial accounts from 
 45.20  financial institutions that have been selected by the state 
 45.21  board of investment under subdivision 3 as the investment 
 45.22  vehicle for the retirement coverage of plan participants and to 
 45.23  provide retirement benefits to plan participants.  Custodial 
 45.24  accounts from financial institutions must include open-end 
 45.25  investment companies registered under the federal Investment 
 45.26  Company Act of 1940, as amended. 
 45.27     (b) The annuity contracts or accounts must be purchased 
 45.28  with contributions under section 354B.23 or with money or assets 
 45.29  otherwise provided by law by authority of the board and deemed 
 45.30  acceptable by the applicable financial institution. 
 45.31     (c) In addition to contracts and accounts from financial 
 45.32  institutions, the Minnesota supplemental investment fund 
 45.33  established under section 11A.17 and administered by the state 
 45.34  board of investment is one of the investment options for the 
 45.35  individual retirement account plan. 
 45.36     Subd. 3.  [SELECTION OF FINANCIAL INSTITUTIONS.] (a) The 
 46.1   state board of investment shall select the financial 
 46.2   institutions provided for under subdivision 2.  Financial 
 46.3   institutions include open-end investment companies registered 
 46.4   under the federal Investment Company Act of 1940, as amended. 
 46.5      (b) The state board of investment may select up to five 
 46.6   financial institutions to provide annuity contracts, custodial 
 46.7   accounts, or a combination as investment options for the 
 46.8   individual retirement account plan in addition to the Minnesota 
 46.9   supplemental investment fund.  In making its selection, at a 
 46.10  minimum, the state board of investment shall consider at least 
 46.11  the following: 
 46.12     (1) the experience and ability of the financial institution 
 46.13  to provide retirement and death benefits that are suited to meet 
 46.14  the needs of plan participants; 
 46.15     (2) the relationship of those retirement and death benefits 
 46.16  provided by the financial institution to their cost; and 
 46.17     (3) the financial strength and stability of the financial 
 46.18  institution. 
 46.19     (c) After selecting a financial institution, the state 
 46.20  board of investment shall periodically review each financial 
 46.21  institution selected under paragraph (b).  The periodic review 
 46.22  must occur at least every three years.  The state board of 
 46.23  investment may retain appropriate consulting services to assist 
 46.24  it in its periodic review, may establish a budget for the cost 
 46.25  of the periodic review process, and may charge a proportional 
 46.26  share of these costs to the reviewed financial institution. 
 46.27     (d) Contracts with financial institutions under this 
 46.28  section must be executed by the board and must be approved by 
 46.29  the state board of investment before execution. 
 46.30     (e) The state board of investment shall also establish 
 46.31  policies and procedures under section 11A.04, clause (2), to 
 46.32  carry out the provisions of this subdivision. 
 46.33     Subd. 4.  [BENEFIT OWNERSHIP.] The retirement benefits 
 46.34  provided by the annuity contracts and custodial accounts of the 
 46.35  individual retirement account plan are held for the benefit of 
 46.36  plan participants and must be paid according to this chapter and 
 47.1   of the plan document. 
 47.2      Subd. 5.  [INDIVIDUAL RETIREMENT ACCOUNT PLAN 
 47.3   ADMINISTRATIVE EXPENSES.] (a) The reasonable and necessary 
 47.4   administrative expenses of the individual retirement account 
 47.5   plan must be paid by plan participants in the following manner: 
 47.6      (1) from plan participants with amounts invested in the 
 47.7   Minnesota supplemental investment fund, the plan administrator 
 47.8   may charge an administrative expense assessment as provided in 
 47.9   section 11A.17, subdivisions 10a and 14; and 
 47.10     (2) from plan participants with amounts through annuity 
 47.11  contracts and custodial accounts purchased under subdivision 2, 
 47.12  paragraph (a), the plan administrator may charge an 
 47.13  administrative expense assessment of a designated amount, not to 
 47.14  exceed two percent of member and employer contributions, as 
 47.15  those contributions are made. 
 47.16     (b) Any administrative expense charge that is not actually 
 47.17  needed for the administrative expenses of the individual 
 47.18  retirement account plan must be refunded to member accounts. 
 47.19     Sec. 11.  [354B.26] [DEFERRED ANNUITY ENTITLEMENT FOR 
 47.20  CERTAIN FORMER TRA MEMBERS.] 
 47.21     Notwithstanding any provision of chapter 354 to the 
 47.22  contrary, a person covered by this chapter who had less than 
 47.23  three years of prior allowable service credit in the teachers 
 47.24  retirement association is entitled to a deferred annuity and 
 47.25  augmentation under section 354.55, subdivision 11. 
 47.26     Sec. 12.  [354B.30] [PROHIBITION ON LOANS OR PRETERMINATION 
 47.27  DISTRIBUTIONS.] 
 47.28     (a) No participant may obtain a loan from the plan or 
 47.29  obtain any distribution from the plan before the participant 
 47.30  terminates the employment that gave rise to plan coverage. 
 47.31     (b) No amounts to the credit of the plan are assignable 
 47.32  either in law or in equity, are subject to state estate tax, or 
 47.33  are subject to execution, levy, attachment, garnishment, or 
 47.34  other legal process, except as provided in section 518.58, 
 47.35  518.581, or 518.611. 
 47.36     Sec. 13.  [354C.10] [SUPPLEMENTAL PLAN.] 
 48.1      The supplemental retirement plan for certain employees of 
 48.2   the higher education board is the continuation of the plan 
 48.3   established by Laws 1967, chapter 808, sections 1 to 6, as 
 48.4   amended. 
 48.5      Sec. 14.  [354C.11] [COVERAGE.] 
 48.6      Personnel employed by the higher education board who are in 
 48.7   the unclassified service of the state and who have completed at 
 48.8   least two years of employment by the board or a predecessor 
 48.9   board with a full-time contract are participants in the 
 48.10  supplemental retirement plan, effective on the following July 1, 
 48.11  if the person is employed in an eligible unclassified 
 48.12  administrative position as defined in section 354B.20, 
 48.13  subdivision 6, or is employed in an employment classification 
 48.14  included in one of the following collective bargaining units 
 48.15  under section 179A.10, subdivision 2: 
 48.16     (1) the state university instructional unit; 
 48.17     (2) the community college instructional unit; 
 48.18     (3) the technical college instructional unit; or 
 48.19     (4) the state university administrative unit. 
 48.20     Sec. 15.  [354C.12] [SALARY DEDUCTIONS AND MATCHING 
 48.21  EMPLOYER CONTRIBUTIONS.] 
 48.22     Subdivision 1.  [BASIC CONTRIBUTIONS AND DEDUCTIONS.] (a) 
 48.23  The employer of personnel covered by the supplemental retirement 
 48.24  plan as provided in section 354C.11 shall deduct a sum equal to 
 48.25  five percent of the annual salary of the person between $6,000 
 48.26  and $15,000. 
 48.27     (b) The basic contribution deduction must be made in the 
 48.28  same manner as other retirement deductions are made from the 
 48.29  salary of the person under section 352.04, subdivision 4; 
 48.30  352D.04, subdivision 2; 354.42, subdivision 2; or 354A.12, 
 48.31  whichever applies. 
 48.32     (c) The employer shall also make a contribution to the 
 48.33  supplemental retirement plan on behalf of covered personnel 
 48.34  equal to the salary deduction made under paragraph (a). 
 48.35     Subd. 2.  [OMITTED DEDUCTIONS.] If the employer of 
 48.36  personnel covered by the supplemental retirement plan as 
 49.1   provided in section 354C.11 fails to deduct the member basic 
 49.2   contribution from the covered employee's salary and a period of 
 49.3   less than 60 days from the date on which the deduction should 
 49.4   have been made has elapsed, the employer shall obtain the 
 49.5   omitted member deduction by an additional payroll deduction 
 49.6   during the pay period following the discovery of the omission.  
 49.7   If the employer fails to deduct the member basic contribution 
 49.8   from the covered employee's salary and that omission continues 
 49.9   for at least 60 days from the date on which the member basic 
 49.10  contribution deduction should have been made, the employer shall 
 49.11  pay the amount representing the omitted member basic 
 49.12  contribution and the full required omitted employer basic 
 49.13  contribution, plus compound interest at an annual rate of 8.5 
 49.14  percent.  The contributions must be made within one year of the 
 49.15  date on which the omission was discovered. 
 49.16     Subd. 3.  [ADDITIONAL DEDUCTIONS AND CONTRIBUTIONS.] If an 
 49.17  agreement is made under section 356.24 for an additional 
 49.18  employee deduction and an additional matching employer 
 49.19  contribution, an amount equal to the additional employee 
 49.20  contribution must be deducted from the employee's salary above 
 49.21  $15,000.  The employer must match the additional employee 
 49.22  contribution deduction. 
 49.23     Subd. 4.  [ADMINISTRATIVE EXPENSES.] The higher education 
 49.24  board is authorized to pay the necessary and reasonable 
 49.25  administrative expenses of the supplemental retirement plan.  
 49.26  The administrative fees or charges must be paid by participants 
 49.27  in the following manner: 
 49.28     (1) from participants whose contributions are invested with 
 49.29  the state board of investment, the plan administrator may 
 49.30  recover administrative expenses in the manner provided by 
 49.31  section 11A.17, subdivisions 10a and 14; or 
 49.32     (2) from participants where contributions are invested 
 49.33  through contracts purchased from any other authorized source, 
 49.34  the plan administrator may assess an amount of up to two percent 
 49.35  of the employee and employer contributions. 
 49.36     Any recovered or assessed amounts that are not needed for 
 50.1   the necessary and reasonable administrative expenses of the plan 
 50.2   must be refunded to member accounts. 
 50.3      Sec. 16.  [354C.13] [ADMINISTRATION.] 
 50.4      The higher education board shall administer the 
 50.5   supplemental retirement plan. 
 50.6      Sec. 17.  [354C.14] [INVESTMENT OF DEDUCTIONS AND 
 50.7   CONTRIBUTIONS.] 
 50.8      (a) The higher education board shall invest the deductions 
 50.9   and contributions under section 354C.12, after deduction of 
 50.10  administrative expenses under section 354C.12, subdivision 4, in 
 50.11  annuity contracts or custodial accounts from financial 
 50.12  institutions selected by the state board of investment under 
 50.13  section 354B.25, subdivision 3. 
 50.14     (b) The retirement contributions and death benefits 
 50.15  provided by annuity contracts or custodial accounts purchased by 
 50.16  the higher education board are owned by the supplemental 
 50.17  retirement plan and must be paid in accordance with those 
 50.18  annuity contracts or custodial account agreements. 
 50.19     Sec. 18.  [354C.15] [REDEMPTION OF SUPPLEMENTAL INVESTMENT 
 50.20  FUND SHARES.] 
 50.21     (a) The higher education board shall redeem all shares in 
 50.22  the accounts of the Minnesota supplemental investment fund held 
 50.23  on behalf of personnel covered by the supplemental retirement 
 50.24  plan upon the election by the person of an investment option 
 50.25  other than the supplemental investment fund, except as provided 
 50.26  in paragraph (b). 
 50.27     (b) The redemption of shares in the fixed interest account 
 50.28  attributable to a guaranteed investment contract as of July 1, 
 50.29  1994, may not occur until the expiration date of the applicable 
 50.30  guaranteed investment contract. 
 50.31     (c) The higher education board shall transfer the cash 
 50.32  realized from a redemption of Minnesota supplemental investment 
 50.33  fund shares to the financial institution or institutions 
 50.34  selected by the state board of investment under section 354B.25, 
 50.35  subdivision 3. 
 50.36     Sec. 19.  [354C.16] [PAYMENT OF BENEFITS.] 
 51.1      (a) The withdrawal of member contributions, employer 
 51.2   contributions and accrued investment income, or a retirement 
 51.3   benefit based on those amounts, is payable immediately upon the 
 51.4   death or termination of employment of the employee. 
 51.5      (b) An application by the employee or made on behalf of the 
 51.6   employee by an appropriate third party must be filed before any 
 51.7   payment of benefits may occur. 
 51.8      Sec. 20.  [354C.165] [PROHIBITION ON LOANS OR 
 51.9   PRETERMINATION DISTRIBUTIONS.] 
 51.10     (a) No participant may obtain a loan from the plan or 
 51.11  obtain any distribution from the plan before the participant 
 51.12  terminates the employment that gave rise to plan coverage. 
 51.13     (b) No amounts to the credit of the plan are assignable 
 51.14  either in law or in equity, are subject to state estate tax, or 
 51.15  are subject to execution, levy, attachment, garnishment, or 
 51.16  other legal process, except as provided in section 518.58, 
 51.17  518.581, or 518.611. 
 51.18     Sec. 21.  [354C.17] [TAX SHELTER PROVISIONS.] 
 51.19     Subdivision 1.  [AGREEMENTS; SALARY ADJUSTMENTS.] For the 
 51.20  purpose of permitting participation in a tax shelter for 
 51.21  employment income under the applicable pension provisions of the 
 51.22  Internal Revenue Code, the higher education board may enter into 
 51.23  agreements with its employees to reduce or to adjust downward 
 51.24  the salaries for persons covered by the supplemental retirement 
 51.25  plan under section 354C.11, and to pay as the employer an amount 
 51.26  equivalent to the salary reduction or the salary downward 
 51.27  adjustment in the same manner as deductions would have been paid 
 51.28  by the employee under section 354C.12, subdivision 1. 
 51.29     Subd. 2.  [RULES.] The higher education board may adopt 
 51.30  rules and procedures consistent with this chapter to permit, if 
 51.31  possible, participation in a tax shelter under the applicable 
 51.32  provisions of the Internal Revenue Code. 
 51.33     Sec. 22.  [354C.18] [RULES.] 
 51.34     (a) The higher education board may adopt rules to 
 51.35  administer this chapter. 
 51.36     (b) The higher education board may deposit member 
 52.1   contributions in a nontreasury account established under chapter 
 52.2   136, an account or accounts established under section 11A.17, or 
 52.3   other appropriate accounts operated by the state board of 
 52.4   investment for investment under procedures established by the 
 52.5   state board of investment. 
 52.6      Sec. 23.  Minnesota Statutes 1994, section 355.61, is 
 52.7   amended to read: 
 52.8      355.61 [SOCIAL SECURITY COVERAGE FOR CERTAIN ~~STATE~~ 
 52.9   ~~UNIVERSITY OR COMMUNITY COLLEGE~~ FACULTY MEMBERS EMPLOYED BY THE 
 52.10  HIGHER EDUCATION BOARD.] 
 52.11     Plan participants ~~under section 354B.02, subdivision 1,~~ and 
 52.12  persons electing participation under section ~~354B.02,~~ 
 52.13  ~~subdivision 2 or 3,~~ 354B.21 remain members of the teachers 
 52.14  retirement association for purposes of social security coverage 
 52.15  only, and remain covered by the applicable agreement entered 
 52.16  into under section 355.02, but are not members of the teachers 
 52.17  retirement association for any other purpose while employed in 
 52.18  covered employment. 
 52.19     Sec. 24.  Minnesota Statutes 1994, section 356.24, 
 52.20  subdivision 1, is amended to read: 
 52.21     Subdivision 1.  [RESTRICTION; EXCEPTIONS.] (a) It is 
 52.22  unlawful for a school district or other governmental subdivision 
 52.23  or state agency to levy taxes for, or contribute public funds to 
 52.24  a supplemental pension or deferred compensation plan that is 
 52.25  established, maintained, and operated in addition to a primary 
 52.26  pension program for the benefit of the governmental subdivision 
 52.27  employees other than: 
 52.28     (1) to a supplemental pension plan that was established, 
 52.29  maintained, and operated before May 6, 1971; 
 52.30     (2) to a plan that provides solely for group health, 
 52.31  hospital, disability, or death benefits, to the individual 
 52.32  retirement account plan established by ~~sections 354B.01 to~~ 
 52.33  ~~354B.05~~ chapter 354B; 
 52.34     (3) to a plan that provides solely for severance pay under 
 52.35  section 465.72 to a retiring or terminating employee; 
 52.36     (4) for employees other than personnel employed by the 
 53.1   state university board or the community college board and 
 53.2   covered by ~~section 354B.07, subdivision 1~~ the higher education 
 53.3   board supplemental retirement plan under chapter 354C, to: 
 53.4      (i) the state of Minnesota deferred compensation plan under 
 53.5   section 352.96; or 
 53.6      (ii) payment of the applicable portion of the premium on a 
 53.7   tax sheltered annuity contract qualified under section 403(b) of 
 53.8   the federal Internal Revenue Code, purchased from a qualified 
 53.9   insurance company; if provided for in a personnel policy or in 
 53.10  the collective bargaining agreement of the public employer with 
 53.11  the exclusive representative of public employees in an 
 53.12  appropriate unit, in an amount matching employee contributions 
 53.13  on a dollar for dollar basis, but not to exceed an employer 
 53.14  contribution of $2,000 a year per employee; or 
 53.15     (5) for personnel employed by the state university board or 
 53.16  the community college board and not covered by ~~sections 352D.02,~~ 
 53.17  ~~subdivision 1a, and 354B.07, subdivision 1~~ clause (4), to the 
 53.18  supplemental retirement plan under ~~sections 354B.07 to 354B.09~~ 
 53.19  chapter 354C, if provided for in a personnel policy or in the 
 53.20  collective bargaining agreement of the public employer with the 
 53.21  exclusive representative of the covered employees in an 
 53.22  appropriate unit, in an amount matching employee contributions 
 53.23  on a dollar for dollar basis, but not to exceed an employer 
 53.24  contribution of $2,000 a year for each employee.  
 53.25     (b) A qualified insurance company is a company that: 
 53.26     (1) meets the definition in section 60A.02, subdivision 4; 
 53.27     (2) is licensed to engage in life insurance or annuity 
 53.28  business in the state; 
 53.29     (3) is determined by the commissioner of commerce to have a 
 53.30  rating within the top two rating categories by a recognized 
 53.31  national rating agency or organization that regularly rates 
 53.32  insurance companies; and 
 53.33     (4) is determined by the state board of investment to be 
 53.34  among the ten applicant insurance companies with competitive 
 53.35  options and investment returns on annuity products.  The state 
 53.36  board of investment determination must be made on or before 
 54.1   January 1, 1993, and must be reviewed periodically.  The state 
 54.2   board of investment may retain actuarial services to assist it 
 54.3   in this determination and in its periodic review.  The state 
 54.4   board of investment may annually establish a budget for its 
 54.5   costs in any determination and periodic review processes.  The 
 54.6   state board of investment may charge a proportional share of all 
 54.7   costs related to the periodic review to those companies 
 54.8   currently under contract and may charge a proportional share of 
 54.9   all costs related to soliciting and evaluating bids in a 
 54.10  determination process to each company selected by the state 
 54.11  board of investment.  All contracts must be approved before 
 54.12  execution by the state board of investment.  The state board of 
 54.13  investment shall establish policies and procedures under section 
 54.14  11A.04, clause (2), to carry out this paragraph. 
 54.15     (c) A personnel policy for unrepresented employees or a 
 54.16  collective bargaining agreement may establish limits on the 
 54.17  number of vendors under paragraph (b), clause (4), that it will 
 54.18  utilize and conditions under which the vendors may contact 
 54.19  employees both during working hours and after working hours. 
 54.20     Sec. 25.  [NO EFFECT ON CURRENT COVERAGE AND PRIOR SERVICE 
 54.21  CREDIT AND CONTRIBUTIONS.] 
 54.22     (a) Nothing in sections 5 to 14 is intended to remove any 
 54.23  current participant in the individual retirement account plan 
 54.24  from future coverage by that plan for continued employment in 
 54.25  the same employment position or to add any person to individual 
 54.26  retirement account plan coverage or eligibility who was not 
 54.27  eligible for that coverage under the laws in effect before July 
 54.28  1, 1995. 
 54.29     (b) Nothing in sections 5 to 14 may be construed to 
 54.30  disqualify any period of employment covered by the individual 
 54.31  retirement account plan or to disqualify any contributions to 
 54.32  the credit of participants in the individual retirement account 
 54.33  plan as reflected in plan records as of June 30, 1995. 
 54.34     Sec. 26.  [NO EFFECT ON CURRENT COVERAGE AND PRIOR SERVICE 
 54.35  CREDIT AND CONTRIBUTIONS.] 
 54.36     (a) Nothing in this recodification article is intended to 
 55.1   affect the eligibility for coverage or the coverage by the 
 55.2   supplemental retirement plan of any person covered by that plan 
 55.3   on June 30, 1995. 
 55.4      (b) Nothing in this recodification article may be construed 
 55.5   to disqualify any contributions to the credit of any person 
 55.6   covered by the supplemental retirement plan as reflected in plan 
 55.7   records as of June 30, 1995. 
 55.8      Sec. 27.  [EFFECT OF UNCLASSIFIED PROGRAM COVERAGE CHANGE.] 
 55.9      The change in eligibility for retirement coverage by the 
 55.10  unclassified employees retirement program of the Minnesota state 
 55.11  retirement system provided for in sections 2; 6, subdivision 3; 
 55.12  and 30, paragraph (d), may not be interpreted to disqualify from 
 55.13  future retirement coverage by the unclassified employees 
 55.14  retirement program any person who is a member of the 
 55.15  unclassified employees retirement program on the date of 
 55.16  enactment and may not be interpreted to disqualify from 
 55.17  eligibility to elect future retirement coverage by the 
 55.18  unclassified employees retirement program any person who was 
 55.19  employed in state service any time before the date of enactment 
 55.20  and who subsequently is employed in an eligible unclassified 
 55.21  administrative position under section 5, subdivision 6. 
 55.22     Sec. 28.  [INSTRUCTION TO REVISOR.] 
 55.23     In Minnesota Statutes 1995 Supplement and subsequent 
 55.24  editions, the revisor of statutes shall correct any references 
 55.25  to any provision of Minnesota Statutes, chapter 136E, in this 
 55.26  article, replacing the incorrect reference with the appropriate 
 55.27  reference. 
 55.28     Sec. 29.  [INSTRUCTION TO REVISOR.] 
 55.29     In Minnesota Statutes 1995 Supplement and subsequent 
 55.30  editions, the revisor of statutes shall renumber as chapter 354D 
 55.31  the professional and supervisory employee individual retirement 
 55.32  account law that is currently coded as chapter 354C and shall 
 55.33  appropriately revise any statutory cross-references to conform 
 55.34  with that recoding. 
 55.35     Sec. 30.  [REPEALER.] 
 55.36     (a) Minnesota Statutes 1994, sections 354B.01; 354B.015; 
 56.1   354B.02; 354B.035; 354B.04; 354B.045; 354B.05; and 354B.15, are 
 56.2   repealed. 
 56.3      (b) Laws 1990, chapter 570, article 3, sections 10 and 11, 
 56.4   as amended by Laws 1992, chapter 420, section 1, and Laws 1993, 
 56.5   chapter 239, article 2, section 7; Laws 1993, chapters 192, 
 56.6   section 89; and 239, article 5, section 2; and Laws 1994, 
 56.7   chapters 508, article 1, section 14; and 572, sections 11 and 
 56.8   12, are repealed. 
 56.9      (c) Minnesota Statutes 1994, sections 354B.06; 354B.07; 
 56.10  354B.08; 354B.085; and 354B.09, are repealed. 
 56.11     (d) Minnesota Statutes 1994, section 352D.02, subdivision 
 56.12  1a, is repealed. 
 56.13     Sec. 31.  [EFFECTIVE DATE.] 
 56.14     Sections 1 to 30 are effective July 1, 1995.