2007 Minnesota Statutes

353.27 PUBLIC EMPLOYEES RETIREMENT FUND.
    Subdivision 1. Income; disbursements. There is a special fund known as the "public
employees retirement fund," the "retirement fund," or the "fund," which shall include all the assets
of the association. This fund shall be credited with all contributions, all interest and all other
income authorized by law. From this fund there is appropriated the payments authorized by this
chapter in the amounts and at such time provided herein, including the expenses of administering
the fund, and including the proper share of the Minnesota postretirement investment fund.
    Subd. 2. Employee contribution. (a) The employee contribution is the following applicable
percentage of the total salary amount for a "basic member" and for a "coordinated member":

		Basic Program		Coordinated Program
Effective before January 1, 2006		9.10		5.10
Effective January 1, 2006		9.10		5.50
Effective January 1, 2007		9.10		5.75
Effective January 1, 2008		9.10		6.00 plus any contribution rate adjustment under subdivision 3b

(b) These contributions must be made by deduction from salary as defined in section 353.01,
subdivision 10 , in the manner provided in subdivision 4. If any portion of a member's salary is
paid from other than public funds, the member's employee contribution must be based on the total
salary received by the member from all sources.
    Subd. 3. Employer contribution. (a) The employer contribution is the following applicable
percentage of the total salary amount for "basic members" and for "coordinated members":

		Basic Program		Coordinated Program
Effective before January 1, 2006		9.10		5.10
Effective January 1, 2006		9.10		5.50
Effective January 1, 2007		9.10		5.75
Effective January 1, 2008		9.10		6.00 plus any contribution rate adjustment under subdivision 3b

(b) This contribution must be made from funds available to the employing subdivision by the
means and in the manner provided in section 353.28.
    Subd. 3a. Additional employer contribution. (a) An additional employer contribution
must be made equal to the following applicable percentage of the total salary amount for "basic
members" and for "coordinated members":

		Basic Program		Coordinated Program
Effective before January 1, 2006		2.68		.43
Effective January 1, 2006		2.68		.50
Effective January 1, 2009		2.68		.75
Effective January 1, 2010		2.68		1.00

These contributions must be made from funds available to the employing subdivision by the
means and in the manner provided in section 353.28.
(b) The coordinated program contribution rates set forth in paragraph (a) effective for
January 1, 2009, or January 1, 2010, must not be implemented if, following receipt of the July
1, 2008, or July 1, 2009, annual actuarial valuation reports under section 356.215, respectively,
the actuarially required contributions are equal to or less than the total rates under this section in
effect as of January 1, 2008.
(c) This subdivision is repealed once the actuarial value of the assets of the plan equal or
exceed the actuarial accrued liability of the plan as determined by the actuary retained under
sections 356.214 and 356.215. The repeal is effective on the first day of the first full pay period
occurring after March 31 of the calendar year following the issuance of the actuarial valuation
upon which the repeal is based.
    Subd. 3b. Change in employee and employer contributions in certain instances. (a)
For purposes of this section, a contribution sufficiency exists if the total of the employee
contribution under subdivision 2, the employer contribution under subdivision 3, the additional
employer contribution under subdivision 3a, and any additional contribution previously imposed
under this subdivision exceeds the total of the normal cost, the administrative expenses, and the
amortization contribution of the retirement plan as reported in the most recent actuarial valuation
of the retirement plan prepared by the actuary retained under section 356.214 and prepared
under section 356.215 and the standards for actuarial work of the Legislative Commission on
Pensions and Retirement. For purposes of this section, a contribution deficiency exists if the
total of the employee contributions under subdivision 2, the employer contributions under
subdivision 3, the additional employer contribution under subdivision 3a, and any additional
contribution previously imposed under this subdivision is less than the total of the normal cost,
the administrative expenses, and the amortization contribution of the retirement plan as reported
in the most recent actuarial valuation of the retirement plan prepared by the actuary retained under
section 356.214 and prepared under section 356.215 and the standards for actuarial work of the
Legislative Commission on Pensions and Retirement.
(b) Employee and employer contributions under subdivisions 2 and 3 must be adjusted:
(1) if, after July 1, 2010, the regular actuarial valuations of the general employees retirement
plan of the Public Employees Retirement Association under section 356.215 indicate that there is a
contribution sufficiency under paragraph (a) equal to or greater than 0.5 percent of covered payroll
for two consecutive years, the coordinated program employee and employer contribution rates
must be decreased as determined under paragraph (c) to a level such that the sufficiency equals no
more than 0.25 percent of covered payroll based on the most recent actuarial valuation; or
(2) if, after July 1, 2010, the regular actuarial valuations of the general employees retirement
plan of the Public Employees Retirement Association under section 356.215 indicate that there is
a deficiency equal to or greater than 0.5 percent of covered payroll for two consecutive years, the
coordinated program employee and employer contribution rates must be increased as determined
under paragraph (c) to a level such that no deficiency exists based on the most recent actuarial
valuation.
(c) The contribution rate increase or decrease must be determined by the executive director
of the Public Employees Retirement Association, must be reported to the chair and the executive
director of the Legislative Commission on Pensions and Retirement on or before the next
February 1, and, if the Legislative Commission on Pensions and Retirement does not recommend
against the rate change or does not recommend a modification in the rate change, is effective
on the next July 1 following the determination by the executive director that a contribution
deficiency or sufficiency has existed for two consecutive fiscal years based on the most recent
actuarial valuations under section 356.215. If the actuarially required contribution exceeds or is
less than the total support provided by the combined employee and employer contribution rates
by more than 0.5 percent of covered payroll, the coordinated program employee and employer
contribution rates must be adjusted incrementally over one or more years to a level such that there
remains a contribution sufficiency of no more than 0.25 percent of covered payroll.
(d) No incremental adjustment may exceed 0.25 percent for either the coordinated program
employee and employer contribution rates per year in which any adjustment is implemented. A
contribution rate adjustment under this subdivision must not be made until at least two years have
passed since fully implementing a previous adjustment under this subdivision.
    Subd. 4. Employer reporting requirements; contributions; member status. (a) A
representative authorized by the head of each department shall deduct employee contributions
from the salary of each employee who qualifies for membership under this chapter and remit
payment in a manner prescribed by the executive director for the aggregate amount of the
employee contributions, the employer contributions and the additional employer contributions to
be received within 14 calendar days. The head of each department or the person's designee shall
for each pay period submit to the association a salary deduction report in the format prescribed
by the executive director. Data required to be submitted as part of salary deduction reporting
must include, but are not limited to:
(1) the legal names and Social Security numbers of employees who are members;
(2) the amount of each employee's salary deduction;
(3) the amount of salary from which each deduction was made;
(4) the beginning and ending dates of the payroll period covered and the date of actual
payment; and
(5) adjustments or corrections covering past pay periods.
(b) Employers must furnish the data required for enrollment for each new employee who
qualifies for membership in the format prescribed by the executive director. The required
enrollment data on new employees must be submitted to the association prior to or concurrent
with the submission of the initial employee salary deduction. The employer shall also report to the
association all member employment status changes, such as leaves of absence, terminations, and
death, and shall report the effective dates of those changes, on an ongoing basis for the payroll
cycle in which they occur. The employer shall furnish data, forms, and reports as may be required
by the executive director for proper administration of the retirement system. Before implementing
new or different computerized reporting requirements, the executive director shall give
appropriate advance notice to governmental subdivisions to allow time for system modifications.
(c) Notwithstanding paragraph (a), the association may provide for less frequent reporting
and payments for small employers.
    Subd. 5.[Repealed, 1973 c 753 s 85]
    Subd. 5a.[Repealed, 1992 c 443 s 2]
    Subd. 6.[Repealed, 1971 c 106 s 40]
    Subd. 7. Adjustment for erroneous receipts or disbursements. (a) Except as provided
in paragraph (b), erroneous employee deductions and erroneous employer contributions and
additional employer contributions for a person, who otherwise does not qualify for membership
under this chapter, are considered:
(1) valid if the initial erroneous deduction began before January 1, 1990. Upon determination
of the error by the association, the person may continue membership in the association while
employed in the same position for which erroneous deductions were taken, or file a written
election to terminate membership and apply for a refund upon termination of public service
or defer an annuity under section 353.34; or
(2) invalid, if the initial erroneous employee deduction began on or after January 1, 1990.
Upon determination of the error, the association shall refund all erroneous employee deductions
and all erroneous employer contributions as specified in paragraph (d). No person may claim a
right to continued or past membership in the association based on erroneous deductions which
began on or after January 1, 1990.
(b) Erroneous deductions taken from the salary of a person who did not qualify for
membership in the association by virtue of concurrent employment before July 1, 1978, which
required contributions to another retirement fund or relief association established for the benefit
of officers and employees of a governmental subdivision, are invalid. Upon discovery of the
error, the association shall remove all invalid service and, upon termination of public service,
the association shall refund all erroneous employee deductions to the person, with interest under
section 353.34, subdivision 2, and all erroneous employer contributions to the employer. This
paragraph has both retroactive and prospective application.
(c) Employer contributions and employee deductions taken in error from amounts which are
not salary under section 353.01, subdivision 10, are invalid upon discovery by the association and
must be refunded as specified in paragraph (d).
(d) Upon discovery of the receipt of erroneous deductions and contributions under paragraph
(a), clause (2), or paragraph (c), the association must require the employer to discontinue the
erroneous employee deductions and erroneous employer contributions. Upon discontinuation, the
association either must refund the invalid employee deductions to the person without interest and
the invalid employer contributions to the employer or provide a credit against future contributions
payable by the employer for the amount of all erroneous deductions and contributions. If the
employing unit receives a credit under this paragraph, the employing unit is responsible for
refunding to the applicable employee any amount that had been erroneously deducted from the
person's salary. In the event that a retirement annuity or disability benefit has been computed
using invalid service or salary, the association must adjust the annuity or benefit and recover any
overpayment under subdivision 7b.
(e) In the event that a salary warrant or check from which a deduction for the retirement fund
was taken has been canceled or the amount of the warrant or check returned to the funds of the
department making the payment, a refund of the sum deducted, or any portion of it that is required
to adjust the deductions, must be made to the department or institution.
(f) Any refund to a member under this subdivision that is reasonably determined to cause the
plan to fail to be a qualified plan under section 401(a) of the federal Internal Revenue Code, as
amended, may not be refunded and instead must be credited against future contributions payable
by the employer. The employer receiving the credit is responsible for refunding to the applicable
employee any amount that had been erroneously deducted from the person's salary.
    Subd. 7a. Deductions or contributions transmitted by error. (a) If employee deductions
and employer contributions were erroneously transmitted to the association, but should have been
transmitted to another Minnesota public pension plan, the executive director shall transfer the
erroneous employee deductions and employer contributions to the appropriate retirement fund or
individual account, as applicable, without interest. The time limitations specified in subdivisions 7
and 12 do not apply.
(b) For purposes of this subdivision, a Minnesota public pension plan means a plan specified
in section 356.30, subdivision 3, or the plans governed by chapters 353D and 354B.
(c) A potential transfer under paragraph (a) that is reasonably determined to cause the plan
to fail to be a qualified plan under section 401(a) of the federal Internal Revenue Code, as
amended, must not be made by the executive director of the association. Within 30 days after
being notified by the Public Employees Retirement Association of an unmade potential transfer
under this paragraph, the employer of the affected person must transmit an amount representing
the applicable salary deductions and employer contributions, without interest, to the retirement
fund of the appropriate Minnesota public pension plan, or to the applicable individual account if
the proper coverage is by a defined contribution plan. The association must provide the employing
unit a credit for the amount of the erroneous salary deductions and employer contributions
against future contributions from the employer. If the employing unit receives a credit under this
paragraph, the employing unit is responsible for refunding to the applicable employee any amount
that had been erroneously deducted from the person's salary.
    Subd. 7b. Overpayments to members. In the event of an overpayment to a member, retiree,
beneficiary, or other person, the executive director shall recover the overpayment by suspending
or reducing the payment of a retirement annuity, refund, disability benefit, survivor benefit, or
optional annuity payable to the applicable person or the person's estate, whichever applies, under
this chapter until all outstanding money has been recovered.
    Subd. 8. District court reporters; salary deductions. Deductions from the salary of a
district court reporter in a judicial district consisting of two or more counties shall be made by the
auditor of the county in which the bond and official oath of such district court reporter are filed,
from the portion of salary paid by such county.
    Subd. 9. Fee officers; contributions; obligations of employers. Any appointed or elected
officer of a governmental subdivision who was or is a "public employee" within the meaning of
section 353.01 and was or is a member of the fund and whose salary was or is paid in whole or
in part from revenue derived by fees and assessments, shall pay employee contribution in the
amount, at the time, and in the manner provided in subdivisions 2 and 4. This subdivision shall
not apply to district court reporters. The employer contribution as provided in subdivision 3, and
the additional employer contribution as provided in subdivision 3a, with respect to such service
shall be paid by the governmental subdivision. This subdivision shall have both retroactive and
prospective application as to all such members; and every employing governmental subdivision
is deemed liable, retroactively and prospectively, for all employer and additional employer
contributions for every such member in its employ. Delinquencies under this section shall be
governed in all respects by section 353.28.
    Subd. 10. Employer exclusion reports. The head of a department shall annually furnish
the executive director with an exclusion report listing only those employees in potentially
PERA-eligible positions who were not reported as members of the association 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. The executive director shall also 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.
    Subd. 11. Employers; required to furnish requested information. (a) All governmental
subdivisions shall furnish promptly such other information relative to the employment status of
all employees or former employees, including, but not limited to, payroll abstracts pertaining to
all past and present employees, as may be requested by the executive director, including schedules
of salaries applicable to various categories of employment.
(b) In the event payroll abstract records have been lost or destroyed, for whatever reason
or in whatever manner, so that such schedules of salaries cannot be furnished therefrom, the
employing governmental subdivision, in lieu thereof, shall furnish to the association an estimate
of the earnings of any employee or former employee for any period as may be requested by the
executive director. If the association is provided a schedule of estimated earnings, the executive
director is authorized to use the same as a basis for making whatever computations might be
necessary for determining obligations of the employee and employer to the retirement fund. If
estimates are not furnished by the employer at the request of the executive director, the executive
director may estimate the obligations of the employee and employer to the retirement fund based
upon those records that are in its possession.
    Subd. 12. Omitted salary deductions; obligations. (a) In the case of omission of required
deductions from the salary of an employee, the department head or designee shall immediately,
upon discovery, report the employee for membership and deduct the employee deductions under
subdivision 4 during the current pay period or during the pay period immediately following the
discovery of the omission. Payment for the omitted obligations may only be made in accordance
with reporting procedures and methods established by the executive director.
(b) When the entire omission period of an employee does not exceed 60 days, the
governmental subdivision may report and submit payment of the omitted employee deductions
and the omitted employer contributions through the reporting processes under subdivision 4.
(c) When the omission period of an employee exceeds 60 days, the governmental subdivision
shall furnish to the association sufficient data and documentation upon which the obligation
for omitted employee and employer contributions can be calculated. The omitted employee
deductions must be deducted from the employee's subsequent salary payment or payments and
remitted to the association. The employee shall pay omitted employee deductions due for the 60
days prior to the end of the last pay period in the omission period during which salary was earned.
The employer shall pay any remaining omitted employee deductions and any omitted employer
contributions, plus cumulative interest at an annual rate of 8.5 percent compounded annually,
from the date or dates each omitted employee contribution was first payable.
(d) An employer shall not hold an employee liable for omitted employee deductions beyond
the pay period dates under paragraph (c), nor attempt to recover from the employee those
employee deductions paid by the employer on behalf of the employee. Omitted deductions due
under paragraph (c) which are not paid by the employee constitute a liability of the employer
that failed to deduct the omitted deductions from the employee's salary. The employer shall make
payment with interest at an annual rate of 8.5 percent compounded annually. Omitted employee
deductions are no longer due if an employee terminates public service before making payment of
omitted employee deductions to the association, but the employer remains liable to pay omitted
employer contributions plus interest at an annual rate of 8.5 percent compounded annually from
the date the contributions were first payable.
(e) The association may not commence action for the recovery of omitted employee
deductions and employer contributions after the expiration of three calendar years after the
calendar year in which the contributions and deductions were omitted. Except as provided
under paragraph (b), no payment may be made or accepted unless the association has already
commenced action for recovery of omitted deductions. An action for recovery commences on the
date of the mailing of any written correspondence from the association requesting information
from the governmental subdivision upon which to determine whether or not omitted deductions
occurred.
    Subd. 12a. Terminated employees: omitted deductions. A terminated employee who has
a period of employment in which previously omitted employer contributions were made under
subdivision 12 but for whom no, or only partial, omitted employee contributions have been made,
or a member who had prior coverage in the association for which previously omitted employer
contributions were made under subdivision 12 but who terminated service before required
omitted employee deductions could be withheld from salary, may pay the omitted employee
deductions for the period on which omitted employer contributions were previously paid plus
interest at an annual rate of 8.5 percent compounded annually. A terminated employee may
pay the omitted employee deductions plus interest within six months of an initial notification
from the association of eligibility to pay those omitted deductions. If a terminated employee is
reemployed in a position covered under a public pension fund under section 356.30, subdivision
3 , and elects to pay omitted employee deductions, payment must be made no later than six months
after a subsequent termination of public service.
    Subd. 12b. Terminated employees: immediate eligibility. If deductions were omitted
from salary adjustments or final salary of a terminated employee who is immediately eligible to
draw a monthly benefit, the employer shall pay the omitted employer and employer additional
contributions plus interest on both the employer and employee amounts due at an annual rate of
8.5 percent compounded annually. The employee shall pay the employee deductions within six
months of an initial notification from the association of eligibility to pay omitted deductions or the
employee forfeits the right to make the payment.
    Subd. 13. Certain warrants canceled. A warrant payable from the retirement fund
remaining unpaid for a period of six months must be canceled into the retirement fund and not
into the general fund.
    Subd. 14. Treatment of periods before initial coverage date. (a) If an entity is determined to
be a governmental subdivision due to receipt of a written notice of eligibility from the association,
that employer and its employees are subject to the requirements of subdivision 12, effective
retroactively to the date that the executive director of the association determines that the entity
first met the definition of a governmental subdivision, if that date predates the notice of eligibility.
    (b) If the retroactive time period under paragraph (a) exceeds three years, an employee is
authorized to purchase service credit in the applicable Public Employees Retirement Association
plan for the portion of the period in excess of three years, by making payment under section
356.551.
    (c) This subdivision does not apply if the applicable employment under paragraph (a)
included coverage by any public or private defined benefit or defined contribution retirement plan,
other than a volunteer firefighters relief association. If this paragraph applies, an individual is
prohibited from purchasing service credit for any period or periods specified in paragraph (a).
History: 1957 c 935 s 7; 1959 c 650 s 12,37,58; 1961 c 744 s 1; Ex1961 c 50 s 1; 1963 c 641
s 18; 1965 c 714 s 1-3; 1965 c 880 s 3; Ex1967 c 53 s 1-3; 1969 c 267 s 2; 1969 c 940 s 5; 1971 c
106 s 16,17; 1973 c 35 s 55; 1973 c 753 s 27-33; 1974 c 229 s 12,13; 1975 c 102 s 6; 1976 c 329
s 20; 1977 c 429 s 24; 1980 c 607 art 14 s 45 subd 2; 1981 c 180 s 6; 1982 c 404 s 5; 1983 c 73 s
1,2; 1983 c 286 s 7; 1984 c 564 s 21; 1Sp1985 c 7 s 13; 1986 c 444; 1987 c 284 art 5 s 4-6; 1988
c 709 art 5 s 10-15; 1989 c 319 art 3 s 7; art 13 s 30; 1990 c 570 art 11 s 5,6; 1991 c 341 s 8-14;
1992 c 432 art 2 s 6-8; 1992 c 513 art 4 s 40; 1992 c 598 art 2 s 2-4; 1993 c 307 art 4 s 17; 1994 c
508 art 1 s 2; 1994 c 528 art 2 s 8; 1997 c 233 art 1 s 38,39; 1998 c 390 art 9 s 1,2; 1999 c 222 art
2 s 5,6; 2000 c 461 art 3 s 14,15; 1Sp2001 c 10 art 11 s 13-16; 2002 c 392 art 3 s 6,7; 1Sp2005 c 8
art 5 s 1-4; art 10 s 47; 2006 c 212 art 3 s 33; 2006 c 271 art 3 s 16-18,47; 2007 c 134 art 2 s 22