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Minnesota Legislature

Office of the Revisor of Statutes

354.51 PAYMENTS TO RECEIVE CREDIT FOR PRIOR SERVICE; SHORTAGES IN
MEMBER DEDUCTIONS.
    Subdivision 1. Eligibility to make payments. No member shall be entitled to make
payments in lieu of salary deductions to the retirement board to receive credit for any period of
service prior to that date for which employee contributions were not deducted from the member's
salary, except as provided in subdivision 4, or section 354.50 or 354.53.
    Subd. 2.[Repealed, 1974 c 289 s 59]
    Subd. 3.[Repealed, 1974 c 289 s 59]
    Subd. 4. Other state or school teaching service; purchase of credit. Any teacher who has
rendered teaching service prior to June 30, 1953, in another state, or in a state public school which
is not an employing unit with employees for whom retirement coverage is provided pursuant to
this chapter, or for the University of Minnesota, who was a member of the fund prior to or after
the uncredited teaching service, who is not entitled to any benefits from any other retirement
system based on the uncredited teaching service, who has credit for at least 15 years of service as
a member of the retirement fund with at least five years of service occurring subsequent to the
period of uncredited teaching service, who became a member of the retirement fund prior to June
30, 1957, and who has not accepted a refund of accumulated member contributions or deductions
and resumed teaching service covered by the retirement fund after July 1, 1957, shall be entitled
to obtain service credit for the period of uncredited teaching service. To obtain service credit,
a teacher shall make a payment equal to six percent of the average annual salary of the teacher
for the five year period occurring immediately prior to the completion of the minimum service
requirement or July 1, 1951, whichever is later, multiplied for the number of years of the period
of uncredited teaching service, but not to exceed $175 annually for any period of uncredited
teaching service occurring prior to July 1, 1953, or $216 annually for any period of uncredited
teaching service occurring subsequent to June 30, 1953. The payment made by the teacher shall
be accompanied by a matching payment representing the employer contribution. This matching
employer contribution payment is to be made by the agency which formerly employed the teacher,
except that, at its discretion, the payment may be made by the current employer of the teacher.
The payments shall include interest at an annual rate of 8.5 percent compounded annually from
the end of the year of uncredited service to the date on which payment is first made. Payment
shall be made in a single payment unless the executive director authorizes installment payments.
If the payment made is less than the full required payment, including interest, the formula service
credit granted shall be adjusted in accordance with section 354.05, subdivision 25, clause (3).
Any school district or institution which employs a teacher who makes a payment pursuant to this
subdivision is authorized to make any required payments representing employer contributions
and interest and the required amounts are hereby appropriated from any funds available to the
school district or institution. Any payments made pursuant to this subdivision shall be considered
accumulations made after July 1, 1957 for purposes of computing an annuity pursuant to section
354.44, subdivision 2. All payments shall be made to the executive director prior to July 1, 1973
or within one year after the completion of the minimum state teaching service requirements
whichever is later.
    Subd. 5. Payment of shortages. (a) Except as provided in paragraph (b), in the event that
full required member contributions are not deducted from the salary of a teacher, payment must
be made as follows:
(1) Payment of shortages in member deductions on salary earned after June 30, 1957, and
before July 1, 1981, may be made any time before retirement. Payment must include interest at
an annual rate of 8.5 percent compounded annually from the end of the fiscal year in which the
shortage occurred to the end of the month in which payment is made and the interest must be
credited to the fund. If payment of a shortage in deductions is not made, the formula service credit
of the member must be prorated under section 354.05, subdivision 25, clause (3).
(2) Payment of shortages in member deductions on salary earned after June 30, 1981, are the
sole obligation of the employing unit and are payable by the employing unit upon notification by
the executive director of the shortage with interest at an annual rate of 8.5 percent compounded
annually from the end of the fiscal year in which the shortage occurred to the end of the month
in which payment is made and the interest must be credited to the fund. Effective July 1, 1986,
the employing unit shall also pay the employer contributions as specified in section 354.42,
subdivisions 3 and 5
for the shortages. If the shortage payment is not paid by the employing unit
within 60 days of notification, the executive director shall certify the amount of the shortage
payment to the applicable county auditor, who shall spread a levy in the amount of the shortage
payment over the taxable property of the taxing district of the employing unit if the employing
unit is supported by property taxes, or to the commissioner of finance, who shall deduct the
amount from any state aid or appropriation amount applicable to the employing unit if the
employing unit is not supported by property taxes.
(3) Payment may not be made for shortages in member deductions on salary earned before
July 1, 1957, for shortages in member deductions on salary paid or payable under paragraph (b),
or for shortages in member deductions for persons employed by the Minnesota State Colleges and
Universities system in a faculty position or in an eligible unclassified administrative position and
whose employment was less than 25 percent of a full academic year, exclusive of the summer
session, for the applicable institution that exceeds the most recent 36 months.
(b) For a person who is employed by the Minnesota State Colleges and Universities
system in a faculty position or in an eligible unclassified administrative position and whose
employment was less than 25 percent of a full academic year, exclusive of the summer session,
for the applicable institution, upon the person's election under section 354B.21 of retirement
coverage under this chapter, the shortage in member deductions on the salary for employment
by the Minnesota State Colleges and Universities system institution of less than 25 percent of a
full academic year, exclusive of the summer session, for the applicable institution for the most
recent 36 months and the associated employer contributions must be paid by the Minnesota State
Colleges and Universities system institution, plus annual compound interest at the rate of 8.5
percent from the end of the fiscal year in which the shortage occurred to the end of the month in
which the Teachers Retirement Association coverage election is made. If the shortage payment is
not made by the institution within 60 days of notification, the executive director shall certify the
amount of the shortage payment to the commissioner of finance, who shall deduct the amount
from any state appropriation to the system. An individual electing coverage under this paragraph
shall repay the amount of the shortage in member deductions, plus interest, through deduction
from salary or compensation payments within the first year of employment after the election under
section 354B.21, subject to the limitations in section 16D.16. The Minnesota State Colleges and
Universities system may use any means available to recover amounts which were not recovered
through deductions from salary or compensation payments. No payment of the shortage in member
deductions under this paragraph may be made for a period longer than the most recent 36 months.
History: Ex1957 c 16 s 13; Ex1959 c 50 s 18,19; 1969 c 485 s 26; 1971 c 40 s 25,26; 1974 c
289 s 42; 1981 c 160 s 11; 1981 c 224 s 116-118; 1982 c 578 art 3 s 19; 1Sp1985 c 12 art 11 s 7;
1986 c 444; 1987 c 284 art 6 s 9; 1992 c 598 art 3 s 4,5; 2004 c 267 art 5 s 2