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353A.09 EFFECT ON CONTRIBUTIONS AND FUNDING.
    Subdivision 1. Establishment of consolidation accounts. The board of trustees of the Public
Employees Retirement Association shall establish a separate consolidation account for each local
relief association of a municipality that consolidates with the Public Employees Retirement
Association. The association shall credit to the consolidation account the assets of the individual
consolidating local relief association upon transfer, member contributions received after
consolidation under subdivision 4, municipal contributions received after consolidation under
subdivision 5, and a proportionate share of any investment income earned after consolidation.
From the consolidation account, the association shall pay for the transfer of any required reserves
to the Minnesota postretirement investment fund on account of persons electing the type of benefit
coverage provided by the public employees police and fire fund under subdivisions 2 and 3 and
section 353.271, subdivision 2, the pension and benefit amounts on account of persons electing
coverage by the relief association benefit plan under section 353A.08, the benefit amounts not
payable from the Minnesota postretirement investment fund on account of persons electing the
type of benefit coverage provided by the public employees police and fire fund under section
353A.08, and any direct administrative expenses related to the consolidation account, and the
proportional share of the general administrative expenses of the association.
Except as otherwise provided for in this section, the liabilities and the assets of a
consolidation account must be considered for all purposes to be separate from the balance of the
public employees police and fire fund. The consolidation account must be subject to separate
accounting, a separate actuarial valuation, and must be reported as a separate exhibit in any annual
financial report or actuarial valuation report of the public employees police and fire consolidation
fund, whichever applies. The executive director of the public employees retirement association
shall maintain separate accounting records and balances for each consolidation account.
    Subd. 2. Initial allocation of assets upon consolidation. As soon as is practicable following
the effective date of consolidation, the executive director of the Public Employees Retirement
Association shall transfer from the individual local relief association consolidation accounts
to the Minnesota postretirement investment fund assets of that account equal to the required
reserves for service pensions payable to persons electing coverage by the public employees police
and fire fund benefit plan under section 353A.08 and any potential survivor benefit payable on
account of those persons as determined in accordance with the appropriate mortality table adopted
by the board of the Public Employees Retirement Association based on the experience of the
consolidating relief association or consolidating relief associations as recommended by the actuary
retained under section 356.214 and using the applicable interest assumption specified in section
356.215, subdivision 8. A transfer may be made only from the individual account for an electing
person's municipality. The executive director may not transfer assets between individual local
consolidation accounts, nor may the executive director transfer assets from the Public Employees
Retirement Association to the Minnesota postretirement fund or to a local consolidation account
to cover liabilities of an individual local consolidation account. If there are insufficient assets in a
local consolidation account to provide for the transfer of assets to the Minnesota postretirement
investment fund or to provide for benefit payments, the municipality shall immediately provide
the local consolidation account with the assets necessary to make the transfer or benefit payments.
    Subd. 3. Subsequent postretirement fund transfers. Upon the retirement of any person
who was entitled to a deferred service pension as of the effective date of consolidation or who
was a current active member of the relief association as of the effective date of consolidation and
who elects coverage by the public employees police and fire fund benefit plan under section
353A.08, the executive director of the public employees retirement association shall transfer from
that local relief association consolidation account to the Minnesota postretirement investment
fund assets equal to the required reserves for that retirement annuity and any potential survivor
benefit payable under section 353.271. The transfer for any person who was a current active
member of the relief association as of the effective date of consolidation and elected coverage
by the public employees police and fire fund benefit plan and who also has service credit as an
employee of another governmental subdivision in the public employees police and fire fund shall
be that amount of the total required reserves which bears the same relationship that the service
as an active member of the consolidating relief association bears to the total public employees
police and fire fund membership. A transfer may be made only from the individual account for an
electing person's municipality. The executive director may not transfer assets between individual
municipal accounts, nor may the executive director transfer assets from the public employees
retirement association to the Minnesota postretirement fund or to a local consolidation account to
cover liabilities of an individual local consolidation account. If there are insufficient assets in a
local consolidation account to provide for the transfer of assets to the Minnesota postretirement
investment fund or to provide for benefit payments, the municipality shall immediately provide
the local consolidation account with the assets necessary to make the transfer or benefit payments.
    Subd. 4. Member contributions. Following the effective date of consolidation, the
applicable member contribution rate and applicable salary rate to which the member contribution
rate applies for persons who were formerly members of the relief association shall be determined
as follows:
(1) if the person has elected coverage by the public employees police and fire fund benefit
plan under section 353A.08, the applicable member contribution rate shall be that rate specified in
Minnesota Statutes 1998, section 353.65, subdivision 2, and the applicable salary rate to which
the member contribution rate applies shall be the actual salary of the person, as defined in section
353.01, subdivision 10; and
(2) if the person has not elected coverage by the public employees police and fire fund benefit
plan under section 353A.08, the applicable member contribution rate shall be the rate specified in
section 69.77, subdivision 3, or the rate specified in the applicable general law, special law, or
bylaw provision governing the relief association as of the date of the initiation of consolidation,
whichever is greater, and the applicable salary rate to which the member contribution rate applies
shall be the salary rate specified in the applicable general law, special law, or bylaw provision
governing the relief association as of the date of the initiation of consolidation or the actual
salary of the person, including overtime pay and any regularly occurring special payments but
excluding lump sum annual leave payments, worker's compensation payments, and severance
payments, whichever salary rate is greater.
The member contribution rate and applicable salary rate to which the member contribution
rate applies shall be effective as of the first day of the first pay period occurring after the effective
date of consolidation.
The chief administrative officer of the municipal police department or municipal fire
department, whichever applies, shall cause the member contributions required under this
subdivision to be deducted in the manner and subject to the terms provided in section 353.27,
subdivision 4
.
    Subd. 5. Regular and additional municipal contributions. (a) Following the effective date
of consolidation, the applicable regular municipal contribution rate and applicable salary rate to
which the regular municipal contribution rate applies on behalf of persons who were formerly
members of the relief association shall be as follows:
(1) on behalf of persons who have elected coverage by the public employees police and fire
fund benefit plan under section 353A.08, the applicable regular municipal contribution rate shall
be that specified in Minnesota Statutes 1998, section 353.65, subdivision 3, and the applicable
salary rate to which the regular municipal contribution rate applies shall be that specified in
subdivision 4, clause (1); and
(2) on behalf of persons who have not elected coverage by the public employees police and
fire fund benefit plan under section 353A.08, the applicable regular municipal contribution rate
shall be 12 percent and the applicable salary rate to which the regular municipal contribution rate
applies shall be that specified in subdivision 4, clause (2).
(b) Following the effective date of consolidation, the applicable additional municipal
contribution amount shall be the sum of the following:
(1) the annual level dollar contribution as calculated by the actuary retained under section
356.214 as of the effective date of consolidation which is required to amortize by December 31,
2010, that portion of the present value of future benefits computed on the basis of the benefit plan
producing the largest present value of future benefits for each individual which remains after
subtracting the present value of future member contributions as provided in subdivision 4, the
present value of future regular municipal contributions as provided in clause (a), and the market
value of the assets of the relief association transferred to the fund; and
(2) the amount of the annual contribution as calculated by the actuary retained under section
356.214 as of the most recent actuarial valuation date which is required to amortize on a level
annual dollar basis the amount of any net actuarial experience loss incurred during the year which
ended as of the day immediately before the most recent actuarial valuation date by December 31
of the year occurring 15 years later.
(c) Regular municipal contributions shall be made in the manner provided in section
353.28. Additional municipal contributions shall be paid during the calendar year following
the annual certification of the amount of the annual additional municipal contribution by the
executive director of the Public Employees Retirement Association and, if made during the
month of January, shall be payable without any interest, or if made after January 31, but before
the next following December 31, shall be 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 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 shall be 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. 5a. Authority to modify contribution rates. (a) Notwithstanding subdivisions 4
and 5, a municipality associated with a consolidation account, with municipal governing body
approval, may implement the contribution rates specified in section 353.65, subdivisions 2 and 3,
rather than the rates specified in subdivisions 4 and 5.
(b) If the contribution rates specified in section 353.65, subdivisions 2 and 3, are subsequently
modified, the applicable municipal governing body must approve that subsequent modification.
(c) The municipal governing body approval must be in the form of a municipal resolution.
The municipal resolution must specify the effective date for the contribution rate modification.
The municipal resolution must be filed with the executive director of the Public Employees
Retirement Association, the state auditor, the secretary of state, and the executive director of the
Legislative Commission on Pensions and Retirement.
    Subd. 6. Certification of municipal contributions. The governing body of the municipality
shall include the amount of any regular municipal contribution and additional municipal
contribution in the budget approved for the municipality and to the extent not paid from other
revenue sources of the municipality, in the tax levy certified by the municipality to the county
auditor.
    Subd. 7.[Repealed, 1991 c 269 art 3 s 21]
History: 1987 c 296 s 16; 1992 c 432 art 2 s 33; 1999 c 222 art 4 s 11-13; 2002 c 392
art 1 s 8; art 11 s 52; 2006 c 271 art 3 s 47