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Chapter 423A

Section 423A.02

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423A.02 LOCAL POLICE AND FIREFIGHTERS RELIEF ASSOCIATION
AMORTIZATION STATE AID.
    Subdivision 1. Amortization state aid. (a) A municipality in which is located a local police
or salaried firefighters' relief association to which the provisions of section 69.77, apply, that had
an unfunded actuarial accrued liability in the most recent relief association actuarial valuation, is
entitled, upon application as required by the commissioner of revenue, to receive local police and
salaried firefighters' relief association amortization state aid if the municipality and the appropriate
relief association both comply with the applicable provisions of sections 69.031, subdivision 5,
69.051, subdivisions 1 and 3, and 69.77. If a municipality loses entitlement for amortization state
aid in any year because its local relief association no longer has an unfunded actuarial accrued
liability, the municipality is not entitled to amortization state aid in any subsequent year.
(b) The total amount of amortization state aid to all entitled municipalities must not exceed
$5,055,000.
(c) Subject to the adjustment for the city of Minneapolis provided in this paragraph, the
amount of amortization state aid to which a municipality is entitled annually is an amount equal
to the level annual dollar amount required to amortize, by December 31, 2010, the unfunded
actuarial accrued liability of the special fund of the appropriate relief association as reported in the
December 31, 1978, actuarial valuation of the relief association prepared under sections 356.215
and 356.216, reduced by the dollar amount required to pay the interest on the unfunded actuarial
accrued liability of the special fund of the relief association for calendar year 1981 set at the rate
specified in Minnesota Statutes 1978, section 356.215, subdivision 8. For the city of Minneapolis,
the amortization state aid amount thus determined must be reduced by $747,232 on account of
the Minneapolis Police Relief Association and by $772,768 on account of the Minneapolis Fire
Department Relief Association. If the amortization state aid amounts determined under this
paragraph exceed the amount appropriated for this purpose, the amortization state aid for actual
allocation must be reduced pro rata.
(d) Payment of amortization state aid to municipalities must be made directly to the
municipalities involved in three equal installments on July 15, September 15, and November 15
annually. Upon receipt of amortization state aid, the municipal treasurer shall transmit the aid
amount to the treasurer of the local relief association for immediate deposit in the special fund of
the relief association.
(e) The commissioner of revenue shall prescribe and periodically revise the form for and
content of the application for the amortization state aid.
    Subd. 1a. Supplementary amortization state aid. In addition to the amortization state
aid under subdivision 1, there is a distribution of supplementary amortization state aid among
those municipalities that receive amortization state aid under subdivision 1. The amount of the
distribution is that proportion of the appropriation that the unfunded actuarial accrued liability
of each relief association bears to the total unfunded actuarial accrued liabilities of all relief
associations as reported in the December 31, 1983, actuarial valuations of the relief associations
receiving amortization state aid under subdivision 1. Money under this subdivision must be
distributed at the same time that fire and police state aid is distributed under section 69.021.
    Subd. 1b. Additional amortization state aid. (a) Annually, on October 1, the commissioner
of revenue shall allocate the additional amortization state aid transferred under section 69.021,
subdivision 11
, to:
(1) all police or salaried firefighters relief associations governed by and in full compliance
with the requirements of section 69.77, that had an unfunded actuarial accrued liability in the
actuarial valuation prepared under sections 356.215 and 356.216 as of the preceding December 31;
(2) all local police or salaried firefighter consolidation accounts governed by chapter 353A
that are certified by the executive director of the public employees retirement association as having
for the current fiscal year an additional municipal contribution amount under section 353A.09,
subdivision 5
, paragraph (b), and that have implemented section 353A.083, subdivision 1, if the
effective date of the consolidation preceded May 24, 1993, and that have implemented section
353A.083, subdivision 2, if the effective date of the consolidation preceded June 1, 1995; and
(3) the municipalities that are required to make an additional municipal contribution under
section 353.665, subdivision 8, for the duration of the required additional contribution.
(b) The commissioner shall allocate the state aid on the basis of the proportional share of
the relief association or consolidation account of the total unfunded actuarial accrued liability of
all recipient relief associations and consolidation accounts as of December 31, 1993, for relief
associations, and as of June 30, 1994, for consolidation accounts.
(c) Beginning October 1, 2000, and annually thereafter, the commissioner shall allocate the
state aid, including any state aid in excess of the limitation in subdivision 4, on the following basis:
(1) 64.5 percent to the municipalities to which section 353.665, subdivision 8, paragraph (b),
or 353A.09, subdivision 5, paragraph (b), apply for distribution in accordance with paragraph (b)
and subject to the limitation in subdivision 4;
(2) 34.2 percent to the city of Minneapolis to fund any unfunded actuarial accrued liability
in the actuarial valuation prepared under sections 356.215 and 356.216 as of the preceding
December 31 for the Minneapolis Police Relief Association or the Minneapolis Fire Department
Relief Association; and
(3) 1.3 percent to the city of Virginia to fund any unfunded actuarial accrued liability in the
actuarial valuation prepared under sections 356.215 and 356.216 as of the preceding December 31
for the Virginia Fire Department Relief Association.
If there is no unfunded actuarial accrued liability in both the Minneapolis Police Relief
Association and the Minneapolis Fire Department Relief Association as disclosed in the most
recent actuarial valuations for the relief associations prepared under sections 356.215 and 356.216,
the commissioner shall allocate that 34.2 percent of the aid as follows: 49 percent to the Teachers
Retirement Association, 21 percent to the St. Paul Teachers Retirement Fund Association, and 30
percent as additional funding to support minimum fire state aid for volunteer firefighters relief
associations. If there is no unfunded actuarial accrued liability in the Virginia Fire Department
Relief Association as disclosed in the most recent actuarial valuation for the relief association
prepared under sections 356.215 and 356.216, the commissioner shall allocate that 1.3 percent
of the aid as follows: 49 percent to the Teachers Retirement Association, 21 percent to the St.
Paul Teachers Retirement Fund Association, and 30 percent as additional funding to support
minimum fire state aid for volunteer firefighters relief associations. The allocation must be made
by the commissioner at the same time and under the same procedures as specified in subdivision
3. With respect to the St. Paul Teachers Retirement Fund Association, annually, beginning on July
1, 2005, if the applicable teacher's association five-year average time-weighted rate of investment
return does not equal or exceed the performance of a composite portfolio assumed passively
managed (indexed) invested ten percent in cash equivalents, 60 percent in bonds and similar debt
securities, and 30 percent in domestic stock calculated using the formula under section 11A.04,
clause (11), the aid allocation to that retirement fund under this section ceases until the five-year
annual rate of investment return equals or exceeds the performance of that composite portfolio.
(d) The amounts required under this subdivision are annually appropriated to the
commissioner of revenue.
    Subd. 2. Continued eligibility. A municipality that has qualified for amortization state
aid under subdivision 1 on December 31, 1984, and has an additional municipal contribution
payable under section 353A.09, subdivision 5, paragraph (b), as of the most recent December 31,
continues upon application to be entitled to receive amortization state aid under subdivision 1
and supplementary amortization state aid under subdivision 1a, after the local police or salaried
firefighters' relief association has been consolidated into the public employees police and fire fund.
If a municipality loses entitlement for amortization state aid and supplementary amortization
state aid in any year because of not having an additional municipal contribution under section
353A.09, subdivision 5, paragraph (b), the municipality is not entitled to the aid amounts in any
subsequent year. A municipality that received amortization aid in 1999 and is required to make an
additional municipal contribution under section 353.665, subdivision 8, continues to qualify for
the amortization state aid and the supplemental amortization aid until December 31, 2009.
    Subd. 3. Reallocation of amortization or supplementary amortization state aid. (a)
Seventy percent of the difference between $5,720,000 and the current year amortization aid or
supplemental amortization aid distributed under subdivisions 1 and 1a that is not distributed for
any reason to a municipality for use by a local police or salaried fire relief association must be
distributed by the commissioner of revenue according to this paragraph. The commissioner
shall distribute 70 percent of the amounts derived under this paragraph to the Minneapolis
Teachers Retirement Fund Association and 30 percent to the St. Paul Teachers Retirement Fund
Association to fund the unfunded actuarial accrued liabilities of the respective funds. These
payments shall be made on or before June 30 each fiscal year. The amount required under this
paragraph is appropriated annually from the general fund to the commissioner of revenue. If
either the Minneapolis Teachers Retirement Fund Association or the St. Paul Teachers Retirement
Fund Association becomes funded at the funding ratio applicable to the teachers retirement
association based on the actuarial reports prepared by the actuary for the Legislative Commission
on Pensions and Retirement, then the commissioner shall distribute that fund's share under this
paragraph to the other fund. The appropriation under this paragraph terminates when both funds
become fully funded. Amounts remaining in the undistributed balance account at the end of the
biennium cancel to the general fund.
(b) In order to receive amortization and supplementary amortization aid under paragraph (a),
Independent School District No. 625, St. Paul, must make contributions to the St. Paul Teachers
Retirement Fund Association in accordance with the following schedule:

Fiscal Year
Amount

1996
$0

1997
$0

1998
$200,000

1999
$400,000

2000
$600,000

2001 and thereafter
$800,000
(c) In order to receive amortization and supplementary amortization aid under paragraph
(a), Special School District No. 1, Minneapolis, and the city of Minneapolis must each make
contributions to the Minneapolis Teachers Retirement Fund Association in accordance with the
following schedule:



Fiscal Year
City
amount
School
district
amount

1996
$0
$0

1997
$0
$0

1998
$250,000
$250,000

1999
$400,000
$400,000

2000
$550,000
$550,000

2001
$700,000
$700,000

2002
$850,000
$850,000

2003 and thereafter
$1,000,000
$1,000,000
(d) Money contributed under paragraph (a) and either paragraph (b) or (c), as applicable,
must be credited to a separate account in the applicable teachers retirement fund and may not be
used in determining any benefit increases. The separate account terminates for a fund when the
aid payments to the fund under paragraph (a) cease.
(e) Thirty percent of the difference between $5,720,000 and the current year amortization
aid or supplemental amortization aid under subdivisions 1 and 1a that is not distributed for any
reason to a municipality for use by a local police or salaried firefighter relief association must be
distributed under section 69.021, subdivision 7, paragraph (d), as additional funding to support a
minimum fire state aid amount for volunteer firefighter relief associations. The amount required
under this paragraph is appropriated annually to the commissioner of revenue.
    Subd. 4. Limit on certain total aid amounts. (a) The total of amortization aid, supplemental
amortization aid, and additional amortization aid under this section payable to a municipality to
which section 353.665, subdivision 8, paragraph (b), applies, may not exceed the amount of the
additional municipal contribution payable by an individual municipality under section 353.665,
subdivision 8
, paragraph (b).
(b) Any aid amount in excess of the limit under this subdivision for an individual municipality
must be redistributed to the other municipalities to which section 353.665, subdivision 8,
paragraph (b), applies. The excess aid must be distributed in proportion to each municipality's
additional municipal contribution under section 353.665, subdivision 8, paragraph (b).
(c) When the total aid for each municipality under this section equals the limit under
paragraph (a), any aid in excess of the limit must be redistributed under subdivision 1b.
    Subd. 5. Termination of state aid programs. The amortization state aid, supplemental
amortization state aid, and additional amortization state aid programs terminate as of the
December 31, next following the date of the actuarial valuation when the assets of the Minneapolis
Teachers Retirement Fund Association equal the actuarial accrued liability of that plan and when
the assets of the St. Paul Teachers Retirement Fund Association equal the actuarial accrued
liability of that plan or December 31, 2009, whichever is later.
History: 1980 c 607 art 15 s 5; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1985 c 261 s
5; 1986 c 359 s 17; 1991 c 345 art 1 s 92; 1992 c 437 s 1; 1992 c 511 art 4 s 23; 1994 c 465 art 3
s 58; 1996 c 390 s 35; 1996 c 438 art 4 s 8,9; 1997 c 241 art 9 s 1; 1999 c 222 art 4 s 15-18; 2000
c 461 art 9 s 1-3; 2002 c 392 art 11 s 52; 2006 c 277 art 3 s 42