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353.665 MERGER OF CERTAIN CONSOLIDATION ACCOUNTS INTO PERA-P&F.
    Subdivision 1. Merger authorized. (a) Notwithstanding any provision of law to the contrary,
unless the applicable municipality elects otherwise under paragraph (b), every local police and
fire consolidation account under chapter 353A in existence on March 1, 1999, becomes a part
of the public employees police and fire plan and fund governed by sections 353.63 to 353.659
on July 1, 1999.
(b) If a municipality desires to retain its consolidation account or consolidation accounts,
whichever applies, the governing body of the municipality must adopt a resolution to that effect
and must file a copy of the resolution with the secretary of state, the state auditor, the legislative
auditor, the finance commissioner, the revenue commissioner, the executive director of the public
employees retirement association, and the executive director of the Legislative Commission on
Pensions and Retirement. The retention election must apply to both consolidation accounts if the
municipality is associated with more than one consolidation account. The retention resolution
must be adopted and filed with all recipients before June 15, 1999.
    Subd. 2. Transfer of liabilities. Unless the municipality has elected to retain the
consolidation account under subdivision 1, paragraph (b), all current and future liabilities of a
former local police or fire consolidation account are the liabilities of the public employees police
and fire fund as of July 1, 1999, and the accrued benefits of the members are the obligation
of the public employees police and fire fund.
    Subd. 3. Transfer of assets. Unless the municipality has elected to retain the consolidation
account under subdivision 1, paragraph (b), the assets of the former local police or fire
consolidation account must be transferred and upon transfer, the actuarial value of the assets of a
former local police or fire consolidation account less an amount equal to the residual assets as
determined under subdivision 7, paragraph (f), are the assets of the public employees police
and fire fund as of July 1, 1999. The participation of a consolidation account in the Minnesota
postretirement investment fund becomes part of the participation of the public employees police
and fire fund in the Minnesota postretirement investment fund. The remaining assets, excluding
the amounts for distribution under subdivision 7, paragraph (f), become an asset of the public
employees police and fire fund. The public employees police and fire fund also must be credited
as an asset with the amount of receivable assets under subdivision 7, paragraph (e).
    Subd. 4. Benefit coverage for active members. (a) A person who is a police officer or a
firefighter who, as such, is an active member of a merging local police or fire consolidation
account on June 30, 1999, and who has not previously elected benefit coverage under the relevant
provisions of the public employees police and fire fund benefit plan under section 353A.08,
subdivision 3
, may elect benefit coverage under the relevant provisions of the public employees
police and fire fund benefit plan. This election must be made in writing on a form prescribed by
the executive director before September 1, 1999, and is irrevocable.
(b) If an eligible person makes no affirmative election of benefit coverage before September
1, 1999, the person retains the benefit coverage provided by the relief association benefit plan as
reflected in the applicable provisions of chapter 353B and may elect benefit coverage under the
relevant provisions of the public employees police and fire fund benefit plan when the person
terminates active employment for purposes of receiving a service pension, disability benefit, or
within 90 days of the date the member terminates active employment and defers receipt of a
service pension, whichever applies.
(c) Notwithstanding any provision of section 353A.083 and any municipal action under
authority of that statute to the contrary, the provisions of the public employees police and fire
fund benefit plan applicable to active members of the merging local police or fire consolidation
accounts who elect the public employees police and fire fund benefit plan under section 353A.08,
subdivision 3
, or paragraph (a), are the applicable provisions of sections 353.63 to 353.659.
    Subd. 5. Benefit coverage for retirees and benefit recipients. (a) A person who received a
service pension, a disability pension or benefit, or a survivor benefit from a merging local police
or fire consolidation account for the month of June 1999, and who has not previously elected
participation in the Minnesota postretirement investment fund for any future postretirement
adjustments rather than the postretirement adjustment mechanism or mechanisms of the relief
association benefit plan under section 353A.08, subdivision 1, may elect participation in the
Minnesota postretirement investment fund for any future postretirement adjustments or retention
of the postretirement adjustment mechanism or mechanisms of the relief association benefit plan
as reflected in the applicable provisions of chapter 353B. This election must be in writing on a
form prescribed by the executive director and must be made before September 1, 1999.
(b) If an eligible person is a minor, the election must be made by the person's parent or legal
guardian. If the eligible person makes no affirmative election under this subdivision, the person
retains the postretirement adjustment mechanism or mechanisms of the relief association benefit
plan as reflected in the applicable provisions of chapter 353B.
(c) The survivor benefit payable on behalf of any service pension or disability benefit
recipient who elects participation in the Minnesota postretirement investment fund must be
calculated under the relief association benefit plan in effect on the effective date of consolidation
under chapter 353A as reflected in the applicable provisions of chapter 353B.
    Subd. 6. Benefit coverage for deferred members. A person who terminated before July
1, 1999, active employment as a police officer or a firefighter that gave rise to membership in a
local relief association that has consolidated with the public employees police and fire plan under
chapter 353A and is merging under this section and who had sufficient service credit to entitle
the person to an eventual service pension retains the benefit plan as reflected in the applicable
provisions of chapter 353B, except that the deferred member may elect before September 1, 1999,
to participate, upon retirement, in the Minnesota postretirement investment fund. Any election to
participate in the Minnesota postretirement investment fund is applicable to any survivor benefit
attributable to a deferred member covered by this subdivision.
    Subd. 7. Calculation of final funded status. (a) As of June 30, 1999, the actuary retained
under section 356.214 shall determine the final funded status of local police and fire consolidation
accounts under chapter 353A that the applicable municipality has not elected to retain under
subdivision 1, paragraph (b), as provided in this subdivision.
(b) The final funded status calculation must be made using the benefit plan provisions
applicable to the consolidation account and the actuarial assumptions used for the June 30, 1998,
actuarial valuation of the account.
(c) The actuary must calculate the total actuarial accrued liability of the consolidation
account, which is the sum of the actuarial accrued liability for all consolidation account members
who are not included in the participation of the account in the Minnesota postretirement
investment fund calculated using the entry age normal actuarial cost method. If local legislation
enacted during the 1999 regular session or any special session occurring before October 1, 1999,
provides a benefit increase for one consolidation account member or more, whether the applicable
municipality has given final approval to the local legislation yet or not, the total actuarial accrued
liability calculation must include that benefit increase. The actuary also must calculate any
account unfunded accrued liability or any account funding surplus. An account unfunded accrued
liability is the actuarial accrued liability reduced by the amount of the current value of assets, if the
resulting number is positive. An account funding surplus is the actuarial accrued liability reduced
by the amount of the current value of assets, if the resulting number is negative. If a municipality
is associated with two consolidation accounts and one has an account funding surplus and one
has an account unfunded accrued liability in the preliminary calculation under this paragraph,
the actuary must make a second calculation for the account with a preliminary account unfunded
accrued liability, after crediting to that account an amount up to 75 percent of the one-half of the
market value of the assets of the account with an account funding surplus that are in excess of 100
percent of the account actuarial accrued liability and that are less than that percentage of the total
actuarial accrued liability that equals the public employees police and fire fund funded ratio as of
June 30, 1999, but not to exceed the account's unfunded actuarial accrued liability.
(d) The actuary also must calculate the amortizable base for every consolidation account.
The amortizable base is the present value of future benefits for all account members who are not
included in the participation of the account in the Minnesota postretirement investment fund
reduced by the present value of 19 percent of future covered salary and further reduced by the
current value of account assets other than its participation in the Minnesota postretirement
investment fund, after adjustment for fiscal year 1999 net mortality gains and losses and for the
net actuarial affect of the election of postretirement adjustment coverage under subdivision 5.
(e) If the amortizable base under paragraph (d) is a positive number, the receivable assets are
an amount equal to the amortizable base number.
(f) If the amortizable base under paragraph (d) is a negative number, the actuary must
calculate the residual asset amount. The residual asset amount is:
(1) one-half of the amount by which the current assets of the account exceed 100 percent of
the total actuarial accrued liability up to that percentage of the total actuarial accrued liability that
equals the public employees police and fire fund funded ratio on June 30, 1999; and
(2) the amount by which the current assets of the account exceed that percentage of the total
actuarial accrued liability that equals the public employees police and fire fund funded ratio
on June 30, 1999. Following the calculation of the residual asset amount for each applicable
municipality and the verification of the amount by the legislative auditor, the executive director of
the public employees retirement association shall pay the applicable residual asset amount with
interest equal to the average yield on the invested treasurer's cash fund from July 1, 1999, to the
first of the month in which the payment is issued to each qualifying municipality. The residual
asset amount must be used by the municipality to defray fire department expenditure items if
the residual asset amount was derived from a fire consolidation account or to defray police
department expenditure items if the residual asset amount was derived from a police consolidation
account. Before the residual asset amount payment is made by the Public Employees Retirement
Association, the governing body of the applicable municipality, following a public hearing on the
issue, must formulate and adopt a plan for the expenditure of the residual amount and must file
that plan in the form of a municipal resolution with the state auditor. The residual asset amount
must be deposited in a special fund or account in the municipal treasury established for that
purpose. The special fund or account must be invested and any investment return attributable to
the residual asset amount must be credited to that special fund or account and its disbursement
similarly restricted. The special fund or account must be audited periodically by the state auditor.
    Subd. 8. Member and employer contributions. (a) Effective on the first day of the first
full pay period following June 30, 1999, the employee contribution rate for merging former
consolidation account active members is the rate specified in section 353.65, subdivision 2, and
the regular municipal contribution rate on behalf of former consolidation account active members
is the rate specified in section 353.65, subdivision 3.
(b) The municipality associated with a merging former local consolidation account that
had a positive value amortizable base calculation under subdivision 7, paragraph (d), after the
preliminary calculation or the second calculation, whichever applies, must make an additional
municipal contribution to the public employees police and fire plan for the period from January 1,
2000, to December 31, 2009. The amount of the additional municipal contribution is the amount
calculated by the actuary retained under section 356.214 and certified by the executive director
of the Public Employees Retirement Association by which the amortizable base amount would
be amortized on a level dollar annual end-of-the-year contribution basis, using an 8.5 percent
interest rate assumption. The additional municipal contribution is payable during the month
of January, is without any interest, or if made after January 31, but before the next following
December 31, is payable with interest for the period since January 1 at a rate which is equal to
the preretirement interest rate assumption specified in section 356.215, subdivision 8, applicable
to the public employees police and fire fund expressed as a monthly rate and compounded on
a monthly basis or if made after December 31 of the year in which the additional municipal
contribution is due is payable with interest at a rate which is four percent greater than the highest
interest rate assumption specified in section 356.215, subdivision 8, expressed as a monthly
rate and compounded monthly from January 1 of the year in which the additional municipal
contribution is due until the date on which payment is made.
    Subd. 9. Benefit plan coverage. Unless modified by an election authorized under subdivision
4, 5, or 6, the benefit plan election by any person or on behalf of any person under section
353A.08 remains binding. Merging former consolidation account members who elected the
entirety of the public employees police and fire benefit plan are entitled to an applicable annuity
or benefit under the provisions of sections 353.63 to 353.68 in effect on the day that the merging
former consolidation account member terminated active service as a police officer or firefighter,
whichever applies.
    Subd. 10. Consolidation account termination. Unless the municipality has elected to retain
the consolidation account under subdivision 1, paragraph (b), upon the payment of all residual
asset amounts under subdivision 7 and the transfer of all liabilities and remaining assets under
subdivisions 2 and 3, the local consolidation accounts under chapter 353A in existence on March
1, 1999, are terminated, and all benefits accrued up to the date of termination are the obligation
of the public employees police and fire fund.
History: 1999 c 222 art 4 s 10; 2002 c 392 art 11 s 52; 2006 c 271 art 3 s 47