SF 55

as introduced - 89th Legislature (2015 - 2016) Posted on 08/12/2015 02:04pm

A bill for an act
relating to retirement; Public Employees Retirement Association; making
administrative and technical modifications; amending Minnesota Statutes 2014,
sections 353.01, subdivisions 6, 10, 11a, 16, 28, 36; 353.0161, by adding a
subdivision; 353.0162; 353.03, subdivision 3; 353.031, subdivisions 5, 10;
353.27, subdivision 10, by adding a subdivision; 353.29, subdivision 7; 353.33,
subdivisions 6, 13; 353.37, subdivision 1; 353.656, subdivisions 1a, 1b, 2, 4,
5a; 353D.03, subdivision 3; 353E.06, subdivisions 5, 6; 353F.01; 353F.02,
subdivisions 3, 5a; 353F.04, subdivision 2; 353F.051, subdivisions 1, 2, 3;
353G.08, subdivision 1; 355.07; 356.32, subdivision 1; repealing Minnesota
Statutes 2014, sections 353.025; 353.83; 353.84; 353.85; 353D.03, subdivision 4.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 353.01, subdivision 6, is amended to read:

Subd. 6.

Governmental subdivision.

(a) "Governmental subdivision" means a
county, city, town, school district within this state, or a department, unit or instrumentality
of state or local government, or any public body established under state or local
authority that has a governmental purpose, is under public control, is responsible for the
employment and payment of the salaries of employees of the entity, and receives a major
portion of its revenues from taxation, fees, assessments or from other public sources.

(b) Governmental subdivision also means the Public Employees Retirement
Association, the League of Minnesota Cities, the Association of Metropolitan
Municipalities, charter schools formed under section 124D.10, service cooperatives
exercising retirement plan participation under section 123A.21, subdivision 5, joint
powers boards organized under section 471.59, subdivision 11, paragraph (a), family
service collaboratives and children's mental health collaboratives organized under
section 471.59, subdivision 11, paragraph (b) or (c), provided that the entities creating
the collaboratives are governmental units that otherwise qualify for retirement plan
membership, public hospitals owned or operated by, or an integral part of, a governmental
subdivision or governmental subdivisions, the Association of Minnesota Counties, the
Minnesota Inter-county Association, the Minnesota Municipal Utilities Association, the
Metropolitan Airports Commission, the University of Minnesota with respect to police
officers covered by the public employees police and fire retirement plan, the Minneapolis
Employees Retirement Fund for employment initially commenced after June 30, 1979, the
Range Association of Municipalities and Schools, soil and water conservation districts,
economic development authorities created or operating under sections 469.090 to 469.108,
the Port Authority of the city of St. Paul, the Seaway Port Authority of Duluth, the Red
Wing Port Authority, the Spring Lake Park Fire Department, incorporated, the Lake
Johanna Volunteer Fire Department, incorporated, the Red Wing Environmental Learning
Center, the Dakota County Agricultural Society, and Hennepin Healthcare System, Inc.

(c) Governmental subdivision does not mean any of the following:

(1) a department of the state under section 15.01 or a state agency under section
15.012;

(2) any municipal housing and redevelopment authority organized under the
provisions of sections 469.001 to 469.047; or

(3) any port authority organized under sections 469.048 to 469.089 other than the
Port Authority of the city of St. Paul or the Seaway Port Authority of Duluth and other
than the Red Wing Port Authority; or

(4) any hospital district organized or reorganized prior to July 1, 1975, under
sections 447.31 to 447.37 or the successor of the district; or

(5) the board of a family service collaborative or children's mental health
collaborative organized under sections 124D.23, 245.491 to 245.495, or 471.59, if that
board is not controlled by representatives of governmental units.

(d) A nonprofit corporation governed by chapter 317A or organized under Internal
Revenue Code, section 501(c)(3), which is not covered by paragraph (a) or (b), is not a
governmental subdivision unless the entity has obtained a written advisory opinion from
the United States Department of Labor or a ruling from the Internal Revenue Service
declaring the entity to be an instrumentality of the state so as to provide that any future
contributions by the entity on behalf of its employees are contributions to a governmental
plan within the meaning of Internal Revenue Code, section 414(d).

(e) A joint powers board established under section 471.59, family service
collaboratives and children's mental health collaboratives organized under section 471.59,
subdivision 11, paragraph (b) or (c), or a public body created by state or local authority
may request membership on behalf of its employees by providing sufficient evidence that
it meets the requirements in paragraph (a).

(f) An entity determined to be a governmental subdivision is subject to the reporting
requirements of this chapter upon receipt of a written notice of eligibility from the
association.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 2.

Minnesota Statutes 2014, section 353.01, subdivision 10, is amended to read:

Subd. 10.

Salary.

(a) Subject to the limitations of section 356.611, "salary" means:

(1) the wages or periodic compensation payable to a public employee by the
employing governmental subdivision before:

(i) employee retirement deductions that are designated as picked-up contributions
under section 356.62;

(ii) any employee-elected deductions for deferred compensation, supplemental
retirement plans, or other voluntary salary reduction programs that would have otherwise
been available as a cash payment to the employee; and

(iii) employee deductions for contributions to a supplemental plan or to a
governmental trust established under section 356.24, subdivision 1, clause (7), to save for
postretirement health care expenses, unless otherwise excluded under paragraph (b);

(2) for a public employee who is covered by a supplemental retirement plan under
section 356.24, subdivision 1, clause (8), (9), (10), or (12), the employer contributions
to the applicable supplemental retirement plan when an agreement between the parties
establishes that the contributions will either result in a mandatory reduction of employees'
wages through payroll withholdings, or be made in lieu of an amount that would otherwise
be paid as wages;

(3) a payment from a public employer through a grievance proceeding, settlement,
or court order that is attached to a specific earnings period in which the employee's regular
salary was not earned or paid to the member due to a suspension or a period of involuntary
termination that is not a wrongful discharge under section 356.50; provided the amount is
not less than the equivalent of the average of the hourly base salary rate in effect during
the last six months of allowable service prior to the suspension or period of involuntary
termination, plus any applicable increases awarded during the period that would have been
paid under a collective bargaining agreement or personnel policy but for the suspension
or involuntary termination, multiplied by the average number of regular hours for which
the employee was compensated during the six months of allowable service prior to the
suspension or period of involuntary termination, but not to exceed the compensation that
the public employee would have earned if regularly employed during the applicable period;

(4) the amount paid to for a member who is absent from employment by reason
of personal, parental, or military due to an authorized leave of absence, other than an
authorized medical leave of absence, the compensation paid during the leave if equivalent
to the hourly base salary rate in effect during the six months of allowable service, or
portions thereof, prior to the leave, multiplied by the average number of regular hours
for which the employee was compensated during the six months of allowable service
prior to the applicable leave of absence;

(5) the amount paid to for a member who is absent from employment by reason of an
authorized medical leave of absence, the compensation paid during the leave if specified
in advance to be at least one-half of, but no more than equal to, the earnings the member
received, on which contributions were reported and allowable service credited during the
six months immediately preceding the medical leave of absence; and

(6) for a public employee who receives performance or merit bonus payment under
a written compensation plan, policy, or collective bargaining agreement in addition
to regular salary or in lieu of regular salary increases, the compensation paid to the
employee for attaining or exceeding performance goals, duties, or measures during a
specified period of employment.

(b) Salary does not mean:

(1) fees paid to district court reporters;

(2) unused annual leave, vacation, or sick leave payments, in the form of lump-sum
or periodic payments;

(3) for the donor, payment to another person of the value of hours donated under a
benevolent vacation, personal, or sick leave donation program;

(4) any form of severance or retirement incentive payments;

(5) an allowance payment or per diem payments for or reimbursement of expenses;

(6) lump-sum settlements not attached to a specific earnings period;

(7) workers' compensation payments or disability insurance payments, including
payments from employer self-insurance arrangements;

(8) employer-paid amounts used by an employee toward the cost of insurance
coverage, flexible spending accounts, cafeteria plans, health care expense accounts, day
care expenses, or any payments in lieu of any employer-paid group insurance coverage,
including the difference between single and family rates that may be paid to a member with
single coverage and certain amounts determined by the executive director to be ineligible;

(9) employer-paid fringe benefits, including, but not limited to:

(i) employer-paid premiums or supplemental contributions for employees for all
types of insurance;

(ii) membership dues or fees for the use of fitness or recreational facilities;

(iii) incentive payments or cash awards relating to a wellness program;

(iv) the value of any nonmonetary benefits;

(v) any form of payment made in lieu of an employer-paid fringe benefit;

(vi) an employer-paid amount made to a deferred compensation or tax-sheltered
annuity program; and

(vii) any amount paid by the employer as a supplement to salary, either as a
lump-sum amount or a fixed or matching amount paid on a recurring basis, that is not
available to the employee as cash;

(10) the amount equal to that which the employing governmental subdivision would
otherwise pay toward single or family insurance coverage for a covered employee when,
through a contract or agreement with some but not all employees, the employer:

(i) discontinues, or for new hires does not provide, payment toward the cost of the
employee's selected insurance coverages under a group plan offered by the employer;

(ii) makes the employee solely responsible for all contributions toward the cost of
the employee's selected insurance coverages under a group plan offered by the employer,
including any amount the employer makes toward other employees' selected insurance
coverages under a group plan offered by the employer; and

(iii) provides increased salary rates for employees who do not have any
employer-paid group insurance coverages;

(11) except as provided in section 353.86 or 353.87, compensation of any kind
paid to volunteer ambulance service personnel or volunteer firefighters, as defined in
subdivision 35 or 36;

(12) the amount of compensation that exceeds the limitation provided in section
356.611;

(13) amounts paid by a federal or state grant for which the grant specifically
prohibits grant proceeds from being used to make pension plan contributions, unless the
contributions to the plan are made from sources other than the federal or state grant; and

(14) bonus pay that is not performance or merit pay under paragraph (a), clause (6).

(c) Amounts, other than those provided under paragraph (a), clause (3), provided to
an employee by the employer through a grievance proceeding, a court order, or a legal
settlement are salary only if the settlement or court order is reviewed by the executive
director and the amounts are determined by the executive director to be consistent with
paragraph (a) and prior determinations.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 3.

Minnesota Statutes 2014, section 353.01, subdivision 11a, is amended to read:

Subd. 11a.

Termination of public service.

(a) "Termination of public service"
occurs (1) when:

(1) a member resigns or is dismissed from public service by the employing
governmental subdivision and the employee does not, within 30 days of the date the
employment relationship ended, return to an employment position in the same with
a governmental subdivision; or

(2) when the employer-employee relationship is severed due to the expiration of a
layoff under subdivision 12 or 12c.

(b) The termination of public service must be recorded in the association records
upon receipt of an appropriate notice from the governmental subdivision.

(c) A termination of public service does not occur if,:

(1) prior to termination of service, the member has an agreement, verbal or written,
to return provide service to a governmental subdivision as an employee, or to the same
governmental subdivision as an independent contractor, or employee of an independent
contractor.; or

(2) within 30 days after the date the employment relationship ended, the member
provides service to the same governmental subdivision as an independent contractor or
employee of an independent contractor.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 4.

Minnesota Statutes 2014, section 353.01, subdivision 16, is amended to read:

Subd. 16.

Allowable service; limits and computation.

(a) "Allowable service"
means:

(1) service during years of actual membership in the course of which employee
deductions were withheld from salary and contributions were made at the applicable rates
under section 353.27, 353.65, or 353E.03;

(2) periods of service covered by payments in lieu of salary deductions under
sections 353.27, subdivision subdivisions 12 and 12a, and 353.35;

(3) service in years during which the public employee was not a member but for
which the member later elected, while a member, to obtain credit by making payments to
the fund as permitted by any law then in effect;

(4) a period of authorized leave of absence with pay during which the employee
receives pay as specified in subdivision 10, paragraph (a), clause (4) or (5), from which
deductions for employee contributions are made, deposited, and credited to the fund;

(5) a period of authorized personal, parental, or medical leave of absence without
pay, including a leave of absence covered under the federal Family Medical Leave Act,
that does not exceed one year or with pay that is not included in the definition of salary
under subdivision 10, paragraph (a), clause (4) or (5), for which salary deductions are
not authorized, and for which a member obtained service credit for each month in up
to 12 months of the authorized leave period by payment under section 353.0161 or
353.0162, to the fund made in place of salary deductions. An employee must return to
public service and render a minimum of three months of allowable service in order to be
eligible to make payment under section 353.0161 for a subsequent authorized leave of
absence without pay. Upon payment, the employee must be granted allowable service
credit for the purchased period;

(6) a periodic, repetitive leave that is offered to all employees of a governmental
subdivision. The leave program may not exceed 208 hours per annual normal work cycle
as certified to the association by the employer. A participating member obtains service
credit by making employee contributions in an amount or amounts based on the member's
average salary, excluding overtime pay, that would have been paid if the leave had not been
taken. The employer shall pay the employer and additional employer contributions on
behalf of the participating member. The employee and the employer are responsible to pay
interest on their respective shares at the rate of 8.5 percent a year, compounded annually,
from the end of the normal cycle until full payment is made. An employer shall also make
the employer and additional employer contributions, plus 8.5 percent interest, compounded
annually, on behalf of an employee who makes employee contributions but terminates
public service. The employee contributions must be made within one year after the end of
the annual normal working cycle or within 30 days after termination of public service,
whichever is sooner. The executive director shall prescribe the manner and forms to be
used by a governmental subdivision in administering a periodic, repetitive leave. Upon
payment, the member must be granted allowable service credit for the purchased period;

(7) an authorized temporary or seasonal layoff under subdivision 12, limited to three
months allowable service per authorized temporary or seasonal layoff in one calendar year.
An employee who has received the maximum service credit allowed for an authorized
temporary or seasonal layoff must return to public service and must obtain a minimum of
three months of allowable service subsequent to the layoff in order to receive allowable
service for a subsequent authorized temporary or seasonal layoff;

(8) a period during which a member is absent from employment by a governmental
subdivision by reason of service in the uniformed services, as defined in United States
Code, title 38, section 4303(13), if the member returns to public service with the same
governmental subdivision upon discharge from service in the uniformed service within the
time frames required under United States Code, title 38, section 4312(e), provided that
the member did not separate from uniformed service with a dishonorable or bad conduct
discharge or under other than honorable conditions. The service must be credited if the
member pays into the fund equivalent employee contributions based upon the contribution
rate or rates in effect at the time that the uniformed service was performed multiplied by
the full and fractional years being purchased and applied to the annual salary rate. The
annual salary rate is the average annual salary during the purchase period that the member
would have received if the member had continued to be employed in covered employment
rather than to provide uniformed service, or, if the determination of that rate is not
reasonably certain, the annual salary rate is the member's average salary rate during the
12-month period of covered employment rendered immediately preceding the period of the
uniformed service. Payment of the member equivalent contributions must be made during
a period that begins with the date on which the individual returns to public employment
and that is three times the length of the military leave period, or within five years of the
date of discharge from the military service, whichever is less. If the determined payment
period is less than one year, the contributions required under this clause to receive service
credit may be made within one year of the discharge date. Payment may not be accepted
following 30 days after termination of public service under subdivision 11a. If the member
equivalent contributions provided for in this clause are not paid in full, the member's
allowable service credit must be prorated by multiplying the full and fractional number
of years of uniformed service eligible for purchase by the ratio obtained by dividing the
total member contributions received by the total member contributions otherwise required
under this clause. The equivalent employer contribution, and, if applicable, the equivalent
additional employer contribution must be paid by the governmental subdivision employing
the member if the member makes the equivalent employee contributions. The employer
payments must be made from funds available to the employing unit, using the employer
and additional employer contribution rate or rates in effect at the time that the uniformed
service was performed, applied to the same annual salary rate or rates used to compute the
equivalent member contribution. The governmental subdivision involved may appropriate
money for those payments. The amount of service credit obtainable under this section may
not exceed five years unless a longer purchase period is required under United States Code,
title 38, section 4312. The employing unit shall pay interest on all equivalent member and
employer contribution amounts payable under this clause. Interest must be computed at a
rate of 8.5 percent compounded annually from the end of each fiscal year of the leave or the
break in service to the end of the month in which the payment is received. Upon payment,
the employee must be granted allowable service credit for the purchased period; or

(9) a period specified under section 353.0162.

(b) For calculating benefits under sections 353.30, 353.31, 353.32, and 353.33 for
state officers and employees displaced by the Community Corrections Act, chapter 401,
and transferred into county service under section 401.04, "allowable service" means the
combined years of allowable service as defined in paragraph (a), clauses (1) to (6), and
section 352.01, subdivision 11.

(c) (b) No member may receive more than 12 months of allowable service credit in a
year either for vesting purposes or for benefit calculation purposes. For an active member
who was an active member of the former Minneapolis Firefighters Relief Association
on December 29, 2011, "allowable service" is the period of service credited by the
Minneapolis Firefighters Relief Association as reflected in the transferred records of the
association up to December 30, 2011, and the period of service credited under paragraph
(a), clause (1), after December 30, 2011. For an active member who was an active member
of the former Minneapolis Police Relief Association on December 29, 2011, "allowable
service" is the period of service credited by the Minneapolis Police Relief Association as
reflected in the transferred records of the association up to December 30, 2011, and the
period of service credited under paragraph (a), clause (1), after December 30, 2011.

(d) MS 2002 [Expired]

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 5.

Minnesota Statutes 2014, section 353.01, subdivision 28, is amended to read:

Subd. 28.

Retirement.

(a) "Retirement" means the commencement of the payment
of an annuity based on a date designated by the board of trustees by the association. This
date determines the rights under this chapter which occur either before or after retirement.
A right to retirement is subject to termination of public service under subdivision 11a.
A right to retirement requires a complete and continuous separation for 30 days from
employment as a public employee and from the provision of paid services to that employer.

(b) An individual who separates from employment as a public employee and who,
within 30 days of separation, returns to provide service to a governmental subdivision
as an independent contractor or as an employee of an independent contractor, has not
satisfied the separation requirements under paragraph (a).

(c) (b) Notwithstanding the 30-day separation requirement under paragraph (a), a
member of a defined benefit plan under this chapter, who also participates in the public
employees defined contribution plan under chapter 353D for other public service, may be
paid, if eligible, a retirement annuity from the defined benefit plan while participating in the
defined contribution plan. A retirement annuity is also payable from a defined benefit plan
under this chapter to an eligible member who terminates public service and who, within
30 days of separation, takes office as an elected official of a governmental subdivision.

(d) (c) Elected officials included in association membership under subdivisions 2a
and 2d meet the 30-day separation requirement under this section by resigning from office
before filing for a subsequent term in the same office and by remaining completely and
continuously separated from that office for 30 days prior to the date of the election.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 6.

Minnesota Statutes 2014, section 353.01, subdivision 36, is amended to read:

Subd. 36.

Volunteer firefighter.

For purposes of this chapter, a person is
considered a "volunteer firefighter" for all service for which the person receives credit
in an association or fund operating under chapter 424A or credit in the retirement plan
established under chapter 353G.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 7.

Minnesota Statutes 2014, section 353.0161, is amended by adding a subdivision
to read:

Subd. 3.

Restriction on subsequent purchases.

To purchase salary credit or
service credit for a subsequent authorized leave of absence period, the member must return
to public service and render a minimum of three months of allowable service credit.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 8.

Minnesota Statutes 2014, section 353.0162, is amended to read:

353.0162 REDUCED SALARY PERIODS SALARY CREDIT PURCHASE.

(a) A member may purchase additional salary credit for a period specified in this
section.

(b) The applicable period is a period during which the member is receiving a reduced
salary from the employer while the member is:

(1) receiving temporary workers' compensation payments related to the member's
service to the public employer;

(2) on an authorized medical leave of absence; or

(3) on an authorized partial paid leave of absence as a result of a budgetary or salary
savings program offered or mandated by a governmental subdivision.

(c) The differential salary amount is the difference between the average monthly
salary received by the member during the period of reduced salary under this section and
the average monthly salary of the member, excluding overtime, on which contributions
to the applicable plan were made during the period of the last six months of covered
employment occurring immediately before the period of reduced salary, applied to the
member's normal employment period, measured in hours or otherwise, as applicable.

(d) To receive eligible salary credit, the member shall pay an amount equal to:

(1) the applicable employee contribution rate under section 353.27, subdivision
2; 353.65, subdivision 2; or 353E.03, subdivision 1, as applicable, multiplied by the
differential salary amount;

(2) plus an employer equivalent payment equal to the applicable employer
contribution rate in section 353.27, subdivision 3; 353.65, subdivision 3; or 353E.03,
subdivision 2, as applicable, multiplied by the differential salary amount;

(3) plus, if applicable, an equivalent employer additional amount equal to the
additional employer contribution rate in section 353.27, subdivision 3a, multiplied by the
differential salary amount.

(e) The employer, by appropriate action of its governing body and documented in its
official records, may pay the employer equivalent contributions and, as applicable, the
equivalent employer additional contributions on behalf of the member.

(f) Payment under this section must include interest on the contribution amount
or amounts, whichever applies, at an 8.5 percent annual rate, prorated for applicable
months from the date on which the period of reduced salary specified under this section
terminates to the date on which the payment or payments are received by the executive
director. Payment under this section must be completed within the earlier of 30 days from
termination of public service by the employee under section 353.01, subdivision 11a, or
one year after the termination of the period specified in paragraph (b), as further restricted
under this section.

(g) The period for which additional allowable salary credit may be purchased is
limited to the period during which the person receives temporary workers' compensation
payments or for those business years in which the governmental subdivision offers or
mandates a budget or salary savings program, as certified to the executive director by a
resolution of the governing body of the governmental subdivision. For an authorized
medical leave of absence, the period for which allowable salary credit may be purchased
may not exceed 12 consecutive months of authorized medical leave.

(h) To purchase salary credit for a subsequent period of temporary workers'
compensation benefits or subsequent authorized medical leave of absence, the member
must return to public service and render a minimum of three months of allowable service.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 9.

Minnesota Statutes 2014, section 353.03, subdivision 3, is amended to read:

Subd. 3.

Duties and powers.

(a) The board shall:

(1) elect a president and vice-president;

(2) approve the staffing complement, as recommended by the executive director,
necessary to administer the fund;

(3) adopt bylaws for its own government and for the management of the fund
consistent with the laws of the state and may modify them at pleasure;

(4) adopt, alter, and enforce reasonable rules consistent with the laws of the state and
the terms of the applicable benefit plans for the administration and management of the
fund, for the payment and collection of payments from members and for the payment of
withdrawals and benefits, and that are necessary in order to comply with the applicable
federal Internal Revenue Service and Department of Labor requirements;

(5) pass upon and allow or disallow all applications for membership in the fund and
allow or disallow claims for withdrawals, pensions, or benefits payable from the fund;

(6) authorize procedures for use of electronic signatures as defined in section
325L.02, paragraph (h), on applications and forms required by the association;

(6) (7) adopt an appropriate mortality table based on experience of the fund as
recommended by the association actuary and approved under section 356.215, subdivision
18, with interest set at the rate specified in section 356.215, subdivision 8;

(7) (8) provide for the payment out of the fund of the cost of administering this
chapter, of all necessary expenses for the administration of the fund and of all claims for
withdrawals, pensions, or benefits allowed;

(8) (9) approve or disapprove all recommendations and actions of the executive
director made subject to its approval or disapproval by subdivision 3a; and

(9) (10) approve early retirement and optional annuity factors, subject to review by
the actuary retained by the Legislative Commission on Pensions and Retirement; establish
the schedule for implementation of the approved factors; and notify the Legislative
Commission on Pensions and Retirement of the implementation schedule.

(b) In passing upon all applications and claims, the board may summon, swear, hear,
and examine witnesses and, in the case of claims for disability benefits, may require the
claimant to submit to a medical examination by a physician of the board's choice, at the
expense of the fund, as a condition precedent to the passing on the claim, and, in the
case of all applications and claims, may conduct investigations necessary to determine
their validity and merit.

(c) The board may continue to authorize the sale of life insurance to members under
the insurance program in effect on January 1, 1985, but must not change that program
without the approval of the commissioner of management and budget. The association
shall not receive any financial benefit from the life insurance program beyond the amount
necessary to reimburse the association for costs incurred in administering the program.
The association shall not engage directly or indirectly in any other activity involving the
sale or promotion of goods or services, or both, whether to members or nonmembers.

(d) The board shall establish procedures governing reimbursement of expenses
to board members. These procedures must define the types of activities and expenses
that qualify for reimbursement, must provide that all out-of-state travel be authorized
by the board, and must provide for the independent verification of claims for expense
reimbursement. The procedures must comply with the applicable rules and policies of the
Department of Management and Budget and the Department of Administration.

(e) The board may purchase fiduciary liability insurance and official bonds for the
officers and members of the board of trustees and employees of the association and may
purchase property insurance or may establish a self-insurance risk reserve including, but
not limited to, data processing insurance and "extra-expense" coverage.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 10.

Minnesota Statutes 2014, section 353.031, subdivision 5, is amended to read:

Subd. 5.

Medical adviser.

The executive director may contract with an accredited
independent organization specializing in disability determinations or a licensed physicians
or physicians on the staff of the state commissioner of health, as designated by the
commissioner, physician to be the medical adviser of the association. The medical adviser
shall review all medical reports submitted to the association, including the findings of
an independent medical examination requested under this section, and shall advise the
executive director.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 11.

Minnesota Statutes 2014, section 353.031, subdivision 10, is amended to read:

Subd. 10.

Restoring forfeited service and salary credit.

(a) To restore forfeited
service and salary credit, a repayment of a refund must be made within six months after
the effective date of disability benefits or within six months after the date of the filing of
the disability application, whichever is later.

(b) Except for the salary credit purchase authorized under section 353.0162,
paragraph (b), clause (1), no purchase of prior service or payment made in lieu of salary
deductions otherwise authorized under section section 353.01 or 353.0162 may be made
after the occurrence of the disability for which an application is filed under this section.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 12.

Minnesota Statutes 2014, section 353.27, is amended by adding a subdivision
to read:

Subd. 4a.

Authorization to release summary data to employers.

The executive
director is authorized to release summary data about the members of the association
employed by a governmental subdivision upon request by the employer. Summary data
may include, but is not limited to, the number of employees eligible to retire under the rule
of 90, at normal retirement age, or at early retirement. Summary data does not include
not-public data about individual members or groups of members.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 13.

Minnesota Statutes 2014, section 353.27, subdivision 10, is amended to read:

Subd. 10.

Employer exclusion reports.

(a) The head of a department or a
designated representative shall annually furnish the executive director with an exclusion
report listing and certifying only those employees in potentially PERA general employees
retirement plan-eligible positions who were not reported as members of the general
employees retirement plan and who worked during the school year for school employees
and calendar year for nonschool employees. The department head must certify the
accuracy and completeness of the exclusion report to the association. The executive
director shall prescribe the manner and forms, including standardized exclusion codes, to
be used by a governmental subdivision in preparing and filing exclusion reports. Also, the
executive director shall check the exclusion report to ascertain whether any omissions
have been made by a department head in the reporting of new public employees for
membership. The executive director may delegate an association employee under section
353.03, subdivision 3a, paragraph (b), clause (5), to conduct a field audit to review the
payroll records of a governmental subdivision.

(b) If an employer fails to comply with the reporting requirements under this
subdivision, the executive director may assess a fine of $25 for each failure if the
association staff has notified the employer of the noncompliance and attempted to obtain
the missing data or form from the employer for a period of more than three months.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 14.

Minnesota Statutes 2014, section 353.29, subdivision 7, is amended to read:

Subd. 7.

Annuities; accrual.

(a) Except as to elected public officials, a retirement
annuity granted under this chapter begins with the first day of the first calendar month
after the date of termination of public service. The annuity must be paid in equal monthly
installments and does not accrue beyond the end of the month in which entitlement to the
annuity has terminated. If the annuitant dies prior to negotiating the check for the month
in which death occurs, payment must be made to the surviving spouse, or if none, to the
designated beneficiary, or if none, to the estate.

(b) An annuity granted to an elective public official accrues on the day following
expiration of public office or expiration of the right to hold that office. The annuity for the
month during which the expiration occurred is prorated accordingly.

(c) An annuity, once granted, must not be increased, decreased, or revoked except
under this chapter.

(d) An annuity payment may be made retroactive for up to one year prior to that month
in which a complete application is received by the executive director under subdivision 4.

(e) If an annuitant dies before negotiating the check for the month in which death
occurs, payment must first be made to the surviving spouse, or if none, then to the
designated beneficiary, or if none, lastly to the estate.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 15.

Minnesota Statutes 2014, section 353.33, subdivision 6, is amended to read:

Subd. 6.

Continuing eligibility for benefits.

Disability benefits are contingent upon
a disabled person's participation in a vocational rehabilitation evaluation assessment if the
executive director determines that the disabled person may be able to return to a gainful
occupation. If, after a review by the executive director under section 353.031, subdivision
8, a member is found to be no longer totally and permanently disabled, payments must
cease the first of the month following the expiration of a 30-day period after the member
receives a certified letter notifying the member that payments will cease.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 16.

Minnesota Statutes 2014, section 353.33, subdivision 13, is amended to read:

Subd. 13.

Postretirement adjustment eligibility.

(a) A disability benefit under this
section is eligible for postretirement adjustments under section 356.415.

(b) When a disability benefit terminates under subdivision 11, the retirement annuity
elected by the individual must include all prior adjustments provided under section
11A.18, through January 1, 2009, and thereafter as provided in section 356.415.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 17.

Minnesota Statutes 2014, section 353.37, subdivision 1, is amended to read:

Subdivision 1.

Salary maximums.

(a) The annuity of a person otherwise eligible
for an annuity from the general employees retirement plan of the Public Employees
Retirement Association, the public employees police and fire retirement plan, or the local
government correctional employees retirement plan must be suspended under subdivision
2 or reduced under subdivision 3, whichever results in the higher annual annuity amount, if
the person reenters public service as a nonelective employee of a governmental subdivision
in a position covered by this chapter or returns to work as an employee of a labor
organization that represents public employees who are association members under this
chapter and salary for the reemployment service exceeds the annual maximum earnings
allowable for that age for the continued receipt of full benefit amounts monthly under the
federal Old Age, Survivors and Disability Insurance Program as set by the secretary of
health and human services under United States Code, title 42, section 403, in any calendar
year. If the person has not yet reached the minimum age for the receipt of Social Security
benefits, the maximum salary for the person is equal to the annual maximum earnings
allowable for the minimum age for the receipt of Social Security benefits.

(b) The provisions of paragraph (a) do not apply to the members of the MERF
division.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 18.

Minnesota Statutes 2014, section 353.656, subdivision 1a, is amended to read:

Subd. 1a.

Total and permanent duty disability; computation of benefits.

(a) A
member of the police and fire plan, other than a firefighter covered by section 353.6511, or
a police officer covered by section 353.6512, whose disabling condition is determined
to be a duty disability that is also a permanent and total disability as defined in section
353.01, subdivision 19, is entitled to receive, for life, disability benefits in an amount equal
to 60 percent of the average salary as defined in section 353.01, subdivision 17a, plus an
additional 3.0 percent of that average salary for each year of service in excess of 20 years.

(b) A disability benefit payable under paragraph (a) is subject to eligibility review
under section 353.33, subdivision 6, but the review may be waived if the executive director
receives a written statement from the association's medical advisor that no improvement
can be expected in the member's disabling condition that was the basis for payment of the
benefit under paragraph (a). A member receiving a disability benefit under this subdivision
who is found to no longer be permanently and totally disabled as defined under section
353.01, subdivision 19, but continues to meet the definition for receipt of a duty disability
under section 353.01, subdivision 41, is subject to subdivision 1 upon written notice from
the association's medical advisor that the person is no longer considered permanently and
totally disabled, and may upon application, elect an optional annuity under subdivision 1b.

(c) If a member approved for disability benefits under this subdivision dies before
attaining normal retirement age as defined in section 353.01, subdivision 37, paragraph
(b), or within 60 months of the effective date of the disability, whichever is later,
the surviving spouse is entitled to receive a survivor benefit under section 353.657,
subdivision 2, paragraph (a), clause (1), if the death is the direct result of the disabling
condition for which disability benefits were approved, or section 353.657, subdivision
2, paragraph (a), clause (2), if the death is not directly related to the disabling condition
for which benefits were approved under this subdivision.

(d) If the election of an actuarial equivalent optional annuity is not made at the time
the permanent and total disability benefit accrues, an election must be made within 90
days before the member attains normal retirement age as defined under section 353.01,
subdivision 37, paragraph (b), or having collected total and permanent disability benefits
for 60 months, whichever is later. If a member receiving disability benefits who has
dependent children dies, subdivision 6a, paragraph (c), applies.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 19.

Minnesota Statutes 2014, section 353.656, subdivision 1b, is amended to read:

Subd. 1b.

Optional annuity election.

(a) A disabled member of the police and fire
fund may elect to receive the normal disability benefit or an actuarial equivalent optional
annuity. If the election of an actuarial equivalent optional annuity is made before the
commencement of payment of the disability benefit, the optional annuity must begin to
accrue on the same date as the disability benefit covering only the disabilitant disability
benefit recipient would have accrued.

(b) If an election of an optional annuity is not made before the commencement of the
disability benefit, the disabilitant disability benefit recipient may elect an optional annuity:

(1) within 90 days before normal retirement age;

(2) upon the filing of an application to convert to an early retirement annuity, if
electing to convert to an early retirement annuity before the normal retirement age; or

(3) within 90 days before the expiration of the 60-month period for which a disability
benefit is paid, if the disability benefit is payable because the disabled member did not
have at least 20 years of allowable service at normal retirement age.; or

(4) upon being determined that the disability benefit recipient continues to be disabled
under subdivision 1, but is no longer totally and permanently disabled under subdivision 1a.

(c) If a disabled member who has named a joint and survivor optional annuity
beneficiary dies before the disability benefit ceases and is recalculated under subdivision
5a, the beneficiary eligible to receive the joint and survivor annuity may elect to have
the annuity converted at the times designated in paragraph (b), clause (1), (2), or (3),
whichever allows for the earliest payment of a higher joint and survivor annuity option
resulting from recalculation under subdivision 5a, paragraph (e).

(d) A disabled member may name a person other than the spouse as beneficiary
of a joint and survivor annuity only if the spouse of the disabled member permanently
waives surviving spouse coverage on the disability application form prescribed by the
executive director.

(e) If the spouse of the member permanently waives survivor coverage, the
dependent child or children, if any, continue to be eligible for dependent child benefits
under section 353.657, subdivision 3, and the designated optional annuity beneficiary
may draw the monthly benefit.

(f) Any optional annuity under this subdivision, plus dependent child benefits, if
applicable, are subject to the maximum and minimum family benefit amounts specified in
section 353.657, subdivision 3a.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 20.

Minnesota Statutes 2014, section 353.656, subdivision 2, is amended to read:

Subd. 2.

Benefits paid under workers' compensation law.

(a) If When the amount
determined under paragraph (b) exceeds the equivalent salary determined under paragraph
(c), the disability benefit amount must be reduced to that amount which, when added to
the workers' compensation benefits, equals the equivalent salary.

(b) When a member becomes disabled and receives receiving a disability benefit as
specified in this section and is also entitled to receive lump sum or periodic benefits under
workers' compensation laws, the single life annuity actuarial equivalent disability benefit
amount and the workers' compensation amount must be added. The computation must
exclude any attorney fees paid by the disabilitant disability benefit recipient as authorized
under applicable workers' compensation laws. The computation must also exclude
permanent partial disability payments provided under section 176.101, subdivision 2a,
and retraining payments under section 176.102, subdivision 11, if the permanent partial
disability or retraining payments are reported to the executive director in a manner
specified by the executive director.

(b) (c) The equivalent salary is the amount determined under clause (1) or (2),
whichever is greater:

(1) the salary the disabled member received as of the date of the disability; or

(2) the salary currently payable for the same employment position or substantially
similar positions in the applicable government subdivision.

(c) If the amount determined under paragraph (a) exceeds the equivalent salary
determined under paragraph (b), the disability benefit amount must be reduced to that
amount which, when added to the workers' compensation benefits, equals the equivalent
salary.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 21.

Minnesota Statutes 2014, section 353.656, subdivision 4, is amended to read:

Subd. 4.

Limitation on disability benefit payments.

(a) No member is entitled to
receive a disability benefit payment when there remains to the member's credit unused
annual leave, sick leave, or any other employer-provided salary continuation plan, or
under any other circumstances when, during the period of disability, there has been no
impairment of the person's salary as a police officer, a firefighter, or a paramedic as defined
in section 353.64, subdivision 10, whichever applies.

(b) If a disabled member resumes a gainful occupation with earnings that, when added
to the normal single life disability benefit, and workers' compensation benefit if applicable,
exceed the disabilitant disability benefit recipient's reemployment earnings limit, the
amount of the disability benefit must be reduced during the months of employment and
receipt of workers' compensation benefits, if applicable, as provided in this paragraph.
The disabilitant disability benefit recipient's reemployment earnings limit is the greater of:

(1) the monthly salary earned at the date of disability; or

(2) 125 percent of the base monthly salary currently paid by the employing
governmental subdivision for similar positions.

(c) The disability benefit must be reduced by one dollar for each three dollars by
which the total amount of the current monthly disability benefit, any monthly workers'
compensation benefits if applicable, and actual monthly earnings exceed the greater
disabilitant disability benefit recipient's reemployment earnings limit. In no event may
the monthly disability benefit as adjusted under this subdivision exceed the disability
benefit originally allowed.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 22.

Minnesota Statutes 2014, section 353.656, subdivision 5a, is amended to read:

Subd. 5a.

Cessation of disability benefit.

(a) The association shall cease the
payment of any disability benefit the first of the month following the reinstatement of a
member to full time or less than full-time service in a position covered by the police
and fire fund.

(b) A disability benefit paid to a disabled member of the police and fire plan, that
was granted under laws in effect after June 30, 2007, terminates at the end of the month in
which the member:

(1) reaches normal retirement age;

(2) if the disability benefit is payable for a 60-month period as determined under
subdivisions 1 and 3, as applicable, the first of the month following the expiration of
the 60-month period; or

(3) if the disabled member so chooses, the end of the month in which the member
has elected to convert to an early retirement annuity under section 353.651, subdivision 4.

(c) If the police and fire plan member continues to be disabled when the disability
benefit terminates under this subdivision, the member is deemed to be retired. The
individual is entitled to receive a normal retirement annuity or an early retirement annuity
under section 353.651, whichever is applicable, as further specified in paragraph (d) or
(e). If the individual did not previously elect an optional annuity under subdivision 1a
1b, paragraph (a), the individual may elect an optional annuity under subdivision 1a
1b, paragraph (b).

(d) A member of the police and fire plan who is receiving a disability benefit under
this section may, upon application, elect to receive an early retirement annuity under
section 353.651, subdivision 4, at any time after attaining age 50, but must convert to a
retirement annuity no later than the end of the month in which the disabled member attains
normal retirement age. An early retirement annuity elected under this subdivision must be
calculated on the disabled member's accrued years of service and average salary as defined
in section 353.01, subdivision 17a, and when elected, the member is deemed to be retired.

(e) When an individual's disability benefit terminates under paragraph (b), clause (1)
or (2), and is recalculated as a retirement annuity under this section, the annuity must be
based on clause (1) or clause (2), whichever provides the greater amount:

(1) the benefit amount at the time of reclassification, including all prior adjustments
provided under Minnesota Statutes 2008, section 11A.18, through January 1, 2009, and
thereafter as provided in section 356.415; or

(2) a benefit amount computed on the member's actual years of accrued allowable
service credit and the law in effect at the time the disability benefit first accrued, plus any
increases that would have applied since that date under Minnesota Statutes 2008, section
11A.18, through January 1, 2009, and thereafter as provided in section 356.415.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 23.

Minnesota Statutes 2014, section 353D.03, subdivision 3, is amended to read:

Subd. 3.

Ambulance service, rescue squad personnel contribution.

(a) A public
ambulance service or privately operated ambulance service that receives an operating
subsidy from a governmental entity that elects to participate in the plan shall fund benefits
for its qualified personnel who individually elect to participate.

(b) Personnel who are paid for their services may elect to make member contributions
in an amount not to exceed the service's contribution on their behalf.

(c) Ambulance service contributions on behalf of salaried employees must be a
fixed percentage of salary.

(d) An ambulance service making contributions for volunteer or largely
uncompensated personnel, or a municipality or county making contributions on behalf
of rescue squad members who are volunteers or largely uncompensated personnel, may
assign a unit value for each call or each period of alert duty for the purpose of calculating
ambulance service or rescue squad service contributions, as applicable.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 24.

Minnesota Statutes 2014, section 353E.06, subdivision 5, is amended to read:

Subd. 5.

Disability benefit termination.

(a) The disability benefit paid to a disabled
local government correctional employee terminates at the end of the month in which the
employee reaches age 65 55, or the first of the month after the expiration of the 60-month
period from the effective date of the disability benefit, whichever is later.

(b) If the disabled local government correctional employee is still disabled when the
employee reaches has been collecting the disability benefit for 60 months or has reached
age 65 55, whichever is later, the employee is deemed to be a retired employee and, if the
employee had elected an optional annuity under subdivision 3, must receive an annuity in
accordance with the terms of the optional annuity previously elected.

(c) If the employee had not elected an optional annuity under subdivision 3, the
employee may elect either to receive a normal single life retirement annuity computed
in the manner provided in section 353E.04, subdivision 3, or to receive an optional
annuity as provided in section 353.30, subdivision 3, based on the same length of service
as used in the calculation of the disability benefit. Election of an optional annuity must
be made within 90 days before attaining the age of 65 years, or reaching the five-year
anniversary of the effective date of the disability benefit, whichever is later termination of
the disability benefit under paragraph (a).

(d) When an individual's disability benefit terminates under this subdivision and
is recalculated as a retirement annuity, the annuity must include all prior adjustments
provided under section 11A.18, through January 1, 2009, and thereafter as provided in
section 356.415.

EFFECTIVE DATE.

Paragraphs (a) to (c) are effective for disability benefits that
accrue after June 30, 2015. Paragraph (d) is effective the day following final enactment.

Sec. 25.

Minnesota Statutes 2014, section 353E.06, subdivision 6, is amended to read:

Subd. 6.

Resumption of employment.

If a disabled employee resumes a gainful
occupation from which earnings are less than the monthly salary received at the date
of disability or the monthly salary currently paid for similar positions, or should the
employee be entitled to receive workers' compensation benefits, the disability benefit
must be continued in an amount that, when added to such earnings during the months of
employment, and workers' compensation benefits, if applicable, does not exceed the
monthly salary received at the date of disability or the monthly salary currently payable
for the same employment position or an employment position substantially similar to the
one the person held as of the date of the disability, whichever is greater.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 26.

Minnesota Statutes 2014, section 353F.01, is amended to read:

353F.01 PURPOSE AND INTENT.

The purpose of this chapter is to ensure, to the extent possible, that persons
employed at public medical facilities and other public employing units who are privatized
and consequently are excluded from retirement coverage by the Public Employees
Retirement Association will be entitled to receive future retirement benefits under the
general employees retirement plan of the Public Employees Retirement Association
commensurate with the prior contributions made by them or made on their behalf upon the
privatization of the medical facility or other public employing unit.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 27.

Minnesota Statutes 2014, section 353F.02, subdivision 3, is amended to read:

Subd. 3.

Effective date of privatization.

"Effective date of privatization" means
the date that the operation of a medical facility or other public employing unit is assumed
by another employer or the date that a medical facility or other public employing unit
is purchased by another employer and active membership in the Public Employees
Retirement Association consequently terminates.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 28.

Minnesota Statutes 2014, section 353F.02, subdivision 5a, is amended to read:

Subd. 5a.

Privatized former public employer.

"Privatized former public
employer" means a medical facility or other employing unit that was formerly included in
the definition of governmental subdivision under section 353.01, subdivision 6, that is
privatized and whose employees are certified for participation under this chapter.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 29.

Minnesota Statutes 2014, section 353F.04, subdivision 2, is amended to read:

Subd. 2.

Exceptions.

The increased augmentation rates specified in subdivision 1
do not apply to a privatized former public employee:

(1) beginning the first of the month in which the privatized former public employee
becomes covered again by a retirement plan enumerated in section 356.30, subdivision 3,
if the employee continues to be covered and accrues at least six months of credited service
in any single plan enumerated in section 356.30, subdivision 3, except clause (6);

(2) beginning the first of the month in which the privatized former public employee
becomes covered again by the general employees retirement plan of the Public Employees
Retirement Association;

(2) (3) beginning the first of the month after a privatized former public employee
terminates service with the successor entity; or

(3) (4) if the person begins receipt of a retirement annuity while employed by the
employer which assumed operations of or purchased the privatized former public employer.

Sec. 30.

Minnesota Statutes 2014, section 353F.051, subdivision 1, is amended to read:

Subdivision 1.

Eligibility.

A privatized former public employee who is totally and
permanently disabled under Minnesota Statutes 1998, section 353.01, subdivision 19,
and who had a medically documented preexisting condition of the disability before the
termination of coverage, may apply for a disability benefit.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 31.

Minnesota Statutes 2014, section 353F.051, subdivision 2, is amended to read:

Subd. 2.

Calculation of benefits.

A person qualifying under subdivision 1 is
entitled to receive a disability benefit calculated under Minnesota Statutes 1998, section
353.33, subdivision 3. The disability benefit must be augmented under Minnesota Statutes
1998, section 353.71, subdivision 2, from the date of termination to the date the disability
benefit begins to accrue.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 32.

Minnesota Statutes 2014, section 353F.051, subdivision 3, is amended to read:

Subd. 3.

Applicability of general law.

Except as otherwise provided, Minnesota
Statutes 1998, section 353.33, applies to a person who qualifies for disability under
subdivision 1.

Sec. 33.

Minnesota Statutes 2014, section 353G.08, subdivision 1, is amended to read:

Subdivision 1.

Annual funding requirements.

(a) Annually, the executive director
shall determine the funding requirements of each account in the voluntary statewide
lump-sum volunteer firefighter retirement plan on or before August 1. The funding
requirements as directed under this section, must be determined using a mathematical
procedure developed and certified as accurate by an approved actuary retained by the
Public Employees Retirement Association and based on present value factors using a six
percent interest rate, without any decrement assumptions. The funding requirements
must be certified to the entity or entities associated with the fire department whose active
firefighters are covered by the retirement plan.

(b) The overall funding balance of each account for the current calendar year must
be determined in the following manner:

(1) The total accrued liability for all active and deferred members of the account as
of December 31 of the current year must be calculated based on the good time service
credit of active and deferred members as of that date.

(2) The total present assets of the account projected to December 31 of the current
year, including receipts by and disbursements from the account anticipated to occur on or
before December 31, must be calculated. To the extent possible, the market value of assets
must be utilized in making this calculation.

(3) The amount of the total present assets calculated under clause (2) must be
subtracted from the amount of the total accrued liability calculated under clause (1). If the
amount of total present assets exceeds the amount of the total accrued liability, then the
account is considered to have a surplus over full funding. If the amount of the total present
assets is less than the amount of the total accrued liability, then the account is considered
to have a deficit from full funding. If the amount of total present assets is equal to the
amount of the total accrued liability, then the special fund is considered to be fully funded.

(c) The financial requirements of each account for the following calendar year must
be determined in the following manner:

(1) The total accrued liability for all active and deferred members of the account
as of December 31 of the calendar year next following the current calendar year must be
calculated based on the good time service used in the calculation under paragraph (b),
clause (1), increased by one year.

(2) The increase in the total accrued liability of the account for the following calendar
year over the total accrued liability of the account for the current year must be calculated.

(3) The amount of anticipated future administrative expenses of the account must be
calculated by multiplying the per person dollar amount of the administrative expenses for
the most recent prior calendar year by the factor of 1.035 number of active and deferred
firefighters reported to PERA on the most recent good time service credit certification
form for each account.

(4) If the account is fully funded, the financial requirement of the account for the
following calendar year is the total of the amounts calculated under clauses (2) and (3).

(5) If the account has a deficit from full funding, the financial requirement of the
account for the following calendar year is the total of the amounts calculated under clauses
(2) and (3) plus an amount equal to one-tenth of the amount of the deficit from full
funding of the account.

(6) If the account has a surplus over full funding, the financial requirement of
the account for the following calendar year is the financial requirement of the account
calculated as though the account was fully funded under clause (4) and, if the account has
also had a surplus over full funding during the prior two years, additionally reduced by an
amount equal to one-tenth of the amount of the surplus over full funding of the account.

(d) The required contribution of the entity or entities associated with the fire
department whose active firefighters are covered by the retirement plan is the annual
financial requirements of the account of the retirement plan under paragraph (c) reduced by
the amount of any fire state aid payable under sections 69.011 to 69.051 and supplemental
state aid under section 423A.022 reasonably anticipated to be received by the retirement
plan attributable to the entity or entities during the following calendar year, and an
amount of interest on the assets projected to be received during the following calendar
year calculated at the rate of six percent per annum. The required contribution must be
allocated between the entities if more than one entity is involved. A reasonable amount
of anticipated fire state aid is an amount that does not exceed the fire state aid actually
received in the prior year multiplied by the factor 1.035.

(e) The required contribution calculated in paragraph (d) must be paid to the
retirement plan on or before December 31 of the year for which it was calculated. If
the contribution is not received by the retirement plan by December 31, it is payable
with interest at an annual compound rate of six percent from the date due until the date
payment is received by the retirement plan. If the entity does not pay the full amount of
the required contribution, the executive director shall collect the unpaid amount under
section 353.28, subdivision 6.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 34.

Minnesota Statutes 2014, section 355.07, is amended to read:

355.07 DECLARATION OF POLICY.

(a) In order to extend to employees of the state, its political subdivisions, and its
other governmental employers, and to the dependents and survivors of the employees of
those employing units, the basic protection accorded to others by the old age, survivors,
and disability insurance system embodied in the Social Security Act, it is hereby declared
to be the policy of the legislature, subject to the limitations of this chapter, that these steps
are taken to provide protection to employees of the state and its political subdivisions on
as broad a basis as may be authorized by the legislature and is permitted under the Social
Security Act.

(b) It is also the policy of the legislature that the protection afforded employees in
positions covered by a retirement system on the date an agreement under this chapter is
made applicable to service performed in those positions, or receiving periodic benefits
under the retirement system at that time, will not be impaired as a result of making the
agreement so applicable or as a result of legislative enactment in anticipation thereof when
combined with the benefits accorded the employee by the Social Security Act.

(c) To this end, the agreement referred to in section 355.02 must not be made
applicable to any service performed in any position covered by a retirement system unless
a referendum is first held by secret ballot in which a majority of "eligible employees," as
defined in section 218(d) (3) of the Social Security Act, vote in favor thereof, or unless
a retirement system is divided in two divisions or parts, one of which is composed of
positions of members of the system who desire coverage and one of which is composed of
positions of members of the system who do not desire coverage under section 218(d) (3)
of the Social Security Act, in accordance with subsections (6) and (7) thereof. The cost of
the referendum must be borne by the affected governmental subdivision or subdivisions,
which are required to elect a voting method.

(d) If a retirement system is divided as described in paragraph (c), any member of
the division of members that did not desire coverage may be transferred to the division of
members who did desire coverage as provided in section 218(d)(6)(f) of the Social Security
Act so long as the individual files a written request for such a transfer with the director.

(d) (e) Nothing in any provision of this chapter authorizes the extension of the
insurance system established by this chapter, to service in any police officer's or firefighter's
position or in any position covered by a retirement system applicable exclusively to
positions in one or more law enforcement or firefighting units, agencies or departments as
covered by a retirement system in section 356.30, subdivision 3, clauses (4) and (7).

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 35.

Minnesota Statutes 2014, section 356.32, subdivision 1, is amended to read:

Subdivision 1.

Proportionate retirement annuity.

(a) Notwithstanding any
provision to the contrary of the laws governing any of the retirement funds enumerated
in subdivision 2, any person who is an active member of any applicable fund, who has
credit for at least one year but less than ten years of allowable service in one or more of
the covered plans, and who terminates active service under a mandatory retirement law or
policy or at age 65 or older, or at the normal retirement age if this age is but not less than
age 65, for any reason is entitled upon making written application on the form prescribed
by the chief administrative officer of the plan to a proportionate retirement annuity from
each covered plan in which the person has at least six months of allowable service credit.

(b) The proportionate annuity must be calculated under the applicable laws
governing annuities based upon allowable service credit at the time of retirement and the
person's average salary for the highest five successive years of allowable service or the
average salary for the entire period of allowable service if less than five years.

(c) Nothing in this section prevents the imposition of the appropriate early retirement
reduction of an annuity which commences before the normal retirement age.

EFFECTIVE DATE.

This section is effective the day following final enactment.

Sec. 36. REPEALER.

Minnesota Statutes 2014, sections 353.025; 353.83; 353.84; 353.85; and 353D.03,
subdivision 4, are repealed.

EFFECTIVE DATE.

This section is effective July 1, 2015.