Minnesota Legislature
SF 637
1st Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
1.1 A bill for an act 1.2 relating to retirement; increasing pension benefit 1.3 accrual rates; adjusting financing for pension plans; 1.4 adding supplemental financial conditions information 1.5 for pension funds; reducing appropriations; modifying 1.6 or establishing various pension aids; appropriating 1.7 money; amending Minnesota Statutes 1996, sections 1.8 3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 1.9 and 4; 3A.07; 11A.18, subdivision 9; 69.011, 1.10 subdivisions 1, 2, and by adding a subdivision; 1.11 69.021, subdivisions 7a and 10; 69.031, subdivision 5; 1.12 352.01, subdivision 25; 352.04, subdivisions 2 and 3; 1.13 352.115, subdivision 3; 352.72, subdivision 2; 352.92, 1.14 subdivisions 1 and 2; 352.93, subdivisions 2, 3, and 1.15 by adding a subdivision; 352.95, subdivisions 1 and 5; 1.16 352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 1.17 2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a 1.18 subdivision; 352C.031, subdivision 4; 352C.033; 1.19 353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 1.20 353.29, subdivision 3; 353.651, subdivision 3; 1.21 353.656, subdivision 1; 353.71, subdivision 2; 1.22 353A.08, subdivisions 1 and 2; 353A.083, by adding a 1.23 subdivision; 354.05, subdivision 38; 354.42, 1.24 subdivisions 2, 3, and 5; 354.44, subdivision 6, and 1.25 by adding a subdivision; 354.53, subdivision 1; 1.26 354.55, subdivision 11; 354A.011, subdivision 15a; 1.27 354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, 1.28 subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, 1.29 subdivisions 2, 4d, and 4g; 356.217; 356.30, 1.30 subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, 1.31 subdivision 8; 422A.151; 423B.01, subdivision 9, and 1.32 by adding a subdivision; 423B.06, by adding a 1.33 subdivision; 423B.07; 423B.09, subdivision 1, and by 1.34 adding a subdivision; 423B.10, subdivision 1; 423B.15, 1.35 subdivisions 2, 3, 6, and by adding a subdivision; and 1.36 490.124, subdivisions 1 and 5; Laws 1965, chapter 519, 1.37 section 1, as amended; Laws 1979, chapter 109, section 1.38 1, as amended; Laws 1989, chapter 319, article 19, 1.39 section 7, subdivisions 1, as amended, 3, 4, as 1.40 amended, and 7; and Laws 1993, chapter 125, article 1, 1.41 section 1; proposing coding for new law in Minnesota 1.42 Statutes, chapters 124; 273; 352; 352C; 352E; 354A; 1.43 and 356; repealing Minnesota Statutes 1996, sections 1.44 124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 1.45 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 1.46 353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 2.1 356.88, subdivision 2; and Laws 1985, chapter 259, 2.2 section 3; and Laws 1993, chapter 336, article 3, 2.3 section 1. 2.4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.5 ARTICLE 1 2.6 PENSION UNIFORMITY PROVISIONS 2.7 Section 1. Minnesota Statutes 1996, section 3.85, 2.8 subdivision 11, is amended to read: 2.9 Subd. 11. [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The 2.10 commission shall contract with an established actuarial 2.11 consulting firm to conduct annual actuarial valuations for the 2.12 retirement plans named in paragraph (b). The contract must 2.13 include provisions for performing cost analyses of proposals for 2.14 changes in benefit and funding policies. 2.15 (b) The contract for actuarial valuation must include the 2.16 following retirement plans: 2.17 (1) the teachers retirement plan, teachers retirement 2.18 association; 2.19 (2) the general state employees retirement plan, Minnesota 2.20 state retirement system; 2.21 (3) the correctional employees retirement plan, Minnesota 2.22 state retirement system; 2.23 (4) the state patrol retirement plan, Minnesota state 2.24 retirement system; 2.25 (5) the judges retirement plan, Minnesota state retirement 2.26 system; 2.27 (6) the Minneapolis employees retirement plan, Minneapolis 2.28 employees retirement fund; 2.29 (7) the public employees retirement plan, public employees 2.30 retirement association; 2.31 (8) the public employees police and fire plan, public 2.32 employees retirement association; 2.33 (9) the Duluth teachers retirement plan, Duluth teachers 2.34 retirement fund association; 2.35 (10) the Minneapolis teachers retirement plan, Minneapolis 2.36 teachers retirement fund association; 2.37 (11) the St. Paul teachers retirement plan, St. Paul 3.1 teachers retirement fund association; 3.2 (12) the legislators retirement plan, Minnesota state 3.3 retirement system; and 3.4 (13) the elective state officers retirement plan, Minnesota 3.5 state retirement system; and3.6(14) the public employees local government correctional3.7service retirement plan, public employees retirement3.8association, if there are any participants in that plan. 3.9 (c) The contract must specify completion of annual 3.10 actuarial valuation calculations on a fiscal year basis with 3.11 their contents as specified in section 356.215, and the 3.12 standards for actuarial work adopted by the commission. 3.13 The contract must specify completion of annual experience 3.14 data collection and processing and a quadrennial published 3.15 experience study for the plans listed in paragraph (b), clauses 3.16 (1), (2), and (7), as provided for in the standards for 3.17 actuarial work adopted by the commission. The experience data 3.18 collection, processing, and analysis must evaluate the following: 3.19 (1) individual salary progression; 3.20 (2) rate of return on investments based on current asset 3.21 value; 3.22 (3) payroll growth; 3.23 (4) mortality; 3.24 (5) retirement age; 3.25 (6) withdrawal; and 3.26 (7) disablement. 3.27 (d) The actuary retained by the commission shall annually 3.28 prepare a report to the legislature, including the commentary on 3.29 the actuarial valuation calculations for the plans named in 3.30 paragraph (b) and summarizing the results of the actuarial 3.31 valuation calculations. The commission-retained actuary shall 3.32 include with the report the actuary's recommendations concerning 3.33 the appropriateness of the support rates to achieve proper 3.34 funding of the retirement funds by the required funding dates. 3.35 The commission-retained actuary shall, as part of the 3.36 quadrennial published experience study, include recommendations 4.1 to the legislature on the appropriateness of the actuarial 4.2 valuation assumptions required for evaluation in the study. 4.3 (e) If the actuarial gain and loss analysis in the 4.4 actuarial valuation calculations indicates a persistent pattern 4.5 of sizable gains or losses, as directed by the commission, the 4.6 actuary retained by the commission shall prepare a special 4.7 experience study for a plan listed in paragraph (b), clause (3), 4.8 (4), (5), (6), (8), (9), (10), (11), (12), or (13),or (14),in 4.9 the manner provided for in the standards for actuarial work 4.10 adopted by the commission. 4.11 (f) The term of the contract between the commission and the 4.12 actuary retained by the commission is two years, plus not to 4.13 exceed two one-year extensions before competitive bidding. The 4.14 contract is subject to competitive bidding procedures as 4.15 specified by the commission. 4.16 Sec. 2. Minnesota Statutes 1996, section 3.85, subdivision 4.17 12, is amended to read: 4.18 Subd. 12. [ALLOCATION OF ACTUARIAL COST.] (a) The 4.19 commission shall assess each retirement plan specified in 4.20 subdivision 11, paragraph (b), the compensation paid to the 4.21 actuary retained by the commission for the actuarial valuation 4.22 calculations, quadrennial projection valuations, and quadrennial 4.23 experience studies. The assessment is 100 percent of the amount 4.24 of contract compensation for the actuarial consulting firm 4.25 retained by the commission for actuarial valuation calculations, 4.26 including the public employees police and fire plan 4.27 consolidation accounts of the public employees retirement 4.28 association, annual experience data collection and processing, 4.29 and quadrennial experience studies. 4.30 The portion of the total assessment payable by each 4.31 retirement system or pension plan must be determined as follows: 4.32 (1) Each pension plan specified in subdivision 11, 4.33 paragraph (b), clauses (1) to(14)(13), must pay the following 4.34 indexed amount based on its total active, deferred, inactive, 4.35 and benefit recipient membership: 4.36 up to 2,000 members, inclusive $2.55 per member 5.1 2,001 through 10,000 members $1.13 per member 5.2 over 10,000 members $0.11 per member 5.3 The amount specified is applicable for the assessment of 5.4 the July 1, 1991, to June 30, 1992, fiscal year actuarial 5.5 compensation amounts. For the July 1, 1992, to June 30, 1993, 5.6 fiscal year and subsequent fiscal year actuarial compensation 5.7 amounts, the amount specified must be increased at the same 5.8 percentage increase rate as the implicit price deflator for 5.9 state and local government purchases of goods and services for 5.10 the 12-month period ending with the first quarter of the 5.11 calendar year following the completion date for the actuarial 5.12 valuation calculations, as published by the federal Department 5.13 of Commerce, and rounded upward to the nearest full cent. 5.14 (2) The total per-member portion of the allocation must be 5.15 determined, and that total per-member amount must be subtracted 5.16 from the total amount for allocation. Of the remainder dollar 5.17 amount, the following per-retirement system and per-pension plan 5.18 charges must be determined and the charges must be paid by the 5.19 system or plan: 5.20 (i) 37.87 percent is the total additional per-retirement 5.21 system charge, of which one-seventh must be paid by each 5.22 retirement system specified in subdivision 11, paragraph (b), 5.23 clauses (1), (2), (6), (7), (9), (10), and (11). 5.24 (ii) 62.13 percent is the total additional per-pension plan 5.25 charge, of which one-thirteenth must be paid by each pension 5.26 plan specified in subdivision 11, paragraph (b), clauses (1) to 5.27 (13), if there are not any participants in the plan specified in5.28subdivision 11, paragraph (b), clause (14), or of which5.29one-fourteenth must be paid by each pension plan specified in5.30subdivision 11, paragraph (b), clauses (1) to (14), if there are5.31participants in the plan specified in subdivision 11, paragraph5.32(b), clause (14). 5.33 (b) The assessment must be made following the completion of 5.34 the actuarial valuation calculations and the experience 5.35 analysis. The amount of the assessment is appropriated from the 5.36 retirement fund applicable to the retirement plan. Receipts 6.1 from assessments must be deposited in the state treasury and 6.2 credited to the general fund. 6.3 Sec. 3. Minnesota Statutes 1996, section 3A.02, 6.4 subdivision 1, is amended to read: 6.5 Subdivision 1. [QUALIFICATIONS.] (a) A former legislator 6.6 is entitled, upon written application to the director, to 6.7 receive a retirement allowance monthly, if the person: 6.8 (1) has served at least six full years, without regard to 6.9 the application of section 3A.10, subdivision 2, or has served 6.10 during all or part of four regular sessions as a member of the 6.11 legislature, which service need not be continuous; 6.12 (2) has attained the normal retirement age; 6.13 (3) has retired as a member of the legislature; and 6.14 (4) has made all contributions provided for in section 6.15 3A.03, has made payments for past service under subdivision 2, 6.16 or has made payments in lieu of contributions under Minnesota 6.17 Statutes 1992, section 3A.031, prior to July 1, 1994. 6.18 (b) This paragraph applies to members of the legislature 6.19 who terminate service as a legislator before July 1, 1997. For 6.20 service rendered before the beginning of the 1979 legislative 6.21 session, but not to exceed eight years of service, the 6.22 retirement allowance is an amount equal to five percent per year 6.23 of service of that member's average monthly salary. For service 6.24 in excess of eight years rendered before the beginning of the 6.25 1979 legislative session, and for service rendered after the 6.26 beginning of the 1979 legislative session, the retirement 6.27 allowance is an amount equal to 2-1/2 percent per year of 6.28 service of that member's average monthly salary. 6.29 (c) This paragraph applies to members of the legislature 6.30 who terminate service as a legislator after June 30, 1997. The 6.31 retirement allowance is an amount equal to the applicable rate 6.32 or rates under paragraph (b) per year of service of the member's 6.33 average monthly salary adjusted for that person on an actuarial 6.34 equivalent basis to reflect the change in the post retirement 6.35 interest rate actuarial assumption under section 56 from five 6.36 percent to six percent. The adjustment must be calculated by 7.1 or, alternatively, the adjustment procedure must be specified 7.2 by, the actuary retained by the legislative commission on 7.3 pensions and retirement. 7.4 (d) The retirement allowance accrues beginning with the 7.5 first day of the month of receipt of the application, but not 7.6 before age 60, and for the remainder of the former legislator's 7.7 life, if the former legislator is not serving as a member of the 7.8 legislature or as a constitutional officer or commissioner as 7.9 defined in section 352C.021, subdivisions 2 and 3. The annuity 7.10shalldoes not begin to accrue prior to retirement as a 7.11 legislator. No annuity paymentshallmay be made retroactive 7.12 for more than 180 days before the date the annuity application 7.13 is filed with the director. 7.14(d)(e) Any member who has served during all or part of 7.15 four regular sessions is considered to have served eight years 7.16 as a member of the legislature. 7.17(e)(f) The retirement allowance ceases with the last 7.18 payment that accrued to the retired legislator during the 7.19 retired legislator's lifetime, except that the surviving spouse, 7.20 if any, is entitled to the retirement allowance for the calendar 7.21 month in which the retired legislator died. 7.22 Sec. 4. Minnesota Statutes 1996, section 3A.02, 7.23 subdivision 4, is amended to read: 7.24 Subd. 4. [DEFERRED ANNUITIES AUGMENTATION.] (a) The 7.25 deferred annuity of any former legislatorshallmust be 7.26 augmented as provided herein. The required reserves applicable 7.27 to the deferred annuity, determined as of the date the benefit 7.28 begins to accrue using an appropriate mortality table and an 7.29 interest assumption offivesix percent,shallmust be augmented 7.30 from the first of the month following termination of service, or 7.31 July 1, 1973, whichever is later, to the first day of the month 7.32 in which the annuity begins to accrue, at the rate of five 7.33 percent per annum compounded annually until January 1, 1981, and 7.34 thereafter at the rate of three percent per annum compounded 7.35 annually until January 1 of the year in which the former 7.36 legislator attains age 55. From that date to the effective date 8.1 of retirement, the rate is five percent compounded annually. 8.2 (b) The retirement allowance of, or the survivor benefit 8.3 payable on behalf of, a former member of the legislature who 8.4 terminated service before July 1, 1997, which is not first 8.5 payable until after June 30, 1997, must be increased on an 8.6 actuarial equivalent basis to reflect the change in the post 8.7 retirement interest rate actuarial assumption under section 56 8.8 from five percent to six percent under a calculation procedure 8.9 and tables adopted by the board of directors of the Minnesota 8.10 state retirement system and approved by the actuary retained by 8.11 the legislative commission on pensions and retirement. 8.12 Sec. 5. Minnesota Statutes 1996, section 11A.18, 8.13 subdivision 9, is amended to read: 8.14 Subd. 9. [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 8.15 Annually, following June 30, the state board shall use the 8.16 procedures in paragraphs (b), (c), and (d) to determine whether 8.17 a postretirement adjustment is payable and to determine the 8.18 amount of any postretirement adjustment. 8.19 (b) If the Consumer Price Index for urban wage earners and 8.20 clerical workers all items index published by the Bureau of 8.21 Labor Statistics of the United States Department of Labor 8.22 increases from June 30 of the preceding year to June 30 of the 8.23 current year, the state board shall certify the percentage 8.24 increase. The amount certifiedmaymust not exceed the lesser 8.25 of the difference between the preretirement interest assumption 8.26 and postretirement interest assumption in section 356.215, 8.27 subdivision 4d, paragraph (a), or3.52.5 percent. For the 8.28 Minneapolis employees retirement fund, the amount certified must 8.29 not exceed 3.5 percent. 8.30 (c) In addition to any percentage increase certified under 8.31 paragraph (b), the board shall use the following procedures to 8.32 determine if a postretirement adjustment is payable under this 8.33 paragraph: 8.34 (1) The state board shall determine the market value of the 8.35 fund on June 30 of that year; 8.36 (2) The amount of reserves required for the annuity or 9.1 benefit payable to an annuitant and benefit recipient of the 9.2 participating public pension plans or fundsshallmust be 9.3 determined by the commission-retained actuary as of the current 9.4 June 30. An annuitant or benefit recipient who has been 9.5 receiving an annuity or benefit for at least 12 full months as 9.6 of the current June 30 is eligible to receive a full 9.7 postretirement adjustment. An annuitant or benefit recipient 9.8 who has been receiving an annuity or benefit for at least one 9.9 full month, but less than 12 full months as of the current June 9.10 30, is eligible to receive a partial postretirement adjustment. 9.11 Each fund shall report separately the amount of the reserves for 9.12 those annuitants and benefit recipients who are eligible to 9.13 receive a full postretirement benefit adjustment. This amount 9.14 is known as "eligible reserves." Each fund shall also report 9.15 separately the amount of the reserves for those annuitants and 9.16 benefit recipients who are not eligible to receive a 9.17 postretirement adjustment. This amount is known as "noneligible 9.18 reserves." For an annuitant or benefit recipient who is 9.19 eligible to receive a partial postretirement adjustment, each 9.20 fund shall report separately as additional "eligible reserves" 9.21 an amount that bears the same ratio to the total reserves 9.22 required for the annuitant or benefit recipient as the number of 9.23 full months of annuity or benefit receipt as of the current June 9.24 30 bears to 12 full months. The remainder of the annuitant's or 9.25 benefit recipient's reservesshallmust be separately reported 9.26 as additional "noneligible reserves." The amount of "eligible" 9.27 and "noneligible" required reservesshallmust be certified to 9.28 the board by the commission-retained actuary as soon as is 9.29 practical following the current June 30; 9.30 (3) The state board shall determine the percentage increase 9.31 certified under paragraph (b) multiplied by the eligible 9.32 required reserves, as adjusted for mortality gains and losses 9.33 under subdivision 11, determined under clause (2); 9.34 (4) The state board shall add the amount of reserves 9.35 required for the annuities or benefits payable to annuitants and 9.36 benefit recipients of the participating public pension plans or 10.1 funds as of the current June 30 to the amount determined under 10.2 clause (3); 10.3 (5) The state board shall subtract the amount determined 10.4 under clause (4) from the market value of the fund determined 10.5 under clause (1); 10.6 (6) The state board shall adjust the amount determined 10.7 under clause (5) by the cumulative current balance determined 10.8 pursuant to clause (8) and any negative balance carried forward 10.9 under clause (9); 10.10 (7) A positive amount resulting from the calculations in 10.11 clauses (1) to (6) is the excess market value. A negative 10.12 amount is the negative balance; 10.13 (8) The state board shall allocate one-fifth of the excess 10.14 market value or one-fifth of the negative balance to each of 10.15 five consecutive years, beginning with the fiscal year ending 10.16 the current June 30; and 10.17 (9) To calculate the postretirement adjustment under this 10.18 paragraph based on investment performance for a fiscal year, the 10.19 state board shall add together all excess market value allocated 10.20 to that year and subtract from the sum all negative balances 10.21 allocated to that year. If this calculation results in a 10.22 negative number, the entire negative balance must be carried 10.23 forward and allocated to the next year. If the resulting amount 10.24 is positive, a postretirement adjustment is payable under this 10.25 paragraph. The board shall express a positive amount as a 10.26 percentage of the total eligible required reserves certified to 10.27 the board under clause (2). 10.28 (d) The state board shall determine the amount of any 10.29 postretirement adjustment which is payable using the following 10.30 procedure: 10.31 (1) The total "eligible" required reserves as of the first 10.32 of January next following the end of the fiscal year for the 10.33 annuitants and benefit recipients eligible to receive a full or 10.34 partial postretirement adjustment as determined by clause (2) 10.35shallmust be certified to the state board by the 10.36 commission-retained actuary. The total "eligible" required 11.1 reservesshallmust be determined by the commission-retained 11.2 actuary on the assumption that all annuitants and benefit 11.3 recipients eligible to receive a full or partial postretirement 11.4 adjustment will be alive on the January 1 in question; and 11.5 (2) The state board shall add the percentage certified 11.6 under paragraph (b) to any positive percentage calculated under 11.7 paragraph (c). The board shall not subtract from the percentage 11.8 certified under paragraph (b) any negative amount calculated 11.9 under paragraph (c). The sum of these percentagesshallmust be 11.10 carried to five decimal places andshallmust be certified to 11.11 each participating public pension fund or plan as the full 11.12 postretirement adjustment percentage. 11.13 (e) A retirement annuity payable in the event of retirement 11.14 before becoming eligible for social security benefits as 11.15 provided in section 352.116, subdivision 3; 353.29, subdivision 11.16 6; or 354.35 must be treated as the sum of a period certain 11.17 retirement annuity and a life retirement annuity for the 11.18 purposes of any postretirement adjustment. The period certain 11.19 retirement annuity plus the life retirement annuityshallmust 11.20 be the annuity amount payable until age 62 or 65, whichever 11.21 applies. A postretirement adjustment granted on the period 11.22 certain retirement annuity must terminate when the period 11.23 certain retirement annuity terminates. 11.24 Sec. 6. Minnesota Statutes 1996, section 69.011, 11.25 subdivision 1, is amended to read: 11.26 Subdivision 1. [DEFINITIONS.] Unless the language or 11.27 context clearly indicates that a different meaning is intended, 11.28 the following words and terms shall for the purposes of this 11.29 chapter and chapters 423, 423A, 424 and 424A have the meanings 11.30 ascribed to them: 11.31 (a) "Commissioner" means the commissioner of revenue. 11.32 (b) "Municipality" means any home rule charter or statutory 11.33 city, organized town or park district subject to chapter 398, 11.34 the University of Minnesota, and, for purposes of the fire state 11.35 aid program only, an American Indian tribal government entity 11.36 located within a federally recognized American Indian 12.1 reservation, and, for purposes of the police state aid program 12.2 only, the metropolitan airports commission, with respect to 12.3employeespeace officers covered under chapter 422A, or the 12.4 department of natural resources and the department of public 12.5 safety with respect to peace officers covered under chapter 352B. 12.6 (c) "Minnesota Firetown Premium Report" means a form 12.7 prescribed by the commissioner containing space for reporting by 12.8 insurers of fire, lightning, sprinkler leakage and extended 12.9 coverage premiums received upon risks located or to be performed 12.10 in this state less return premiums and dividends. 12.11 (d) "Firetown" means the area serviced by any municipality 12.12 having a qualified fire department or a qualified incorporated 12.13 fire department having a subsidiary volunteer firefighters' 12.14 relief association. 12.15 (e) "Market value" means latest available market value of 12.16 all property in a taxing jurisdiction, whether the property is 12.17 subject to taxation, or exempt from ad valorem taxation obtained 12.18 from information which appears on abstracts filed with the 12.19 commissioner of revenue or equalized by the state board of 12.20 equalization. 12.21 (f) "Minnesota Aid to Police Premium Report" means a form 12.22 prescribed by the commissioner for reporting by each fire and 12.23 casualty insurer of all premiums received upon direct business 12.24 received by it in this state, or by its agents for it, in cash 12.25 or otherwise, during the preceding calendar year, with reference 12.26 to insurance written for insuring against the perils contained 12.27 in auto insurance coverages as reported in the Minnesota 12.28 business schedule of the annual financial statement which each 12.29 insurer is required to file with the commissioner in accordance 12.30 with the governing laws or rules less return premiums and 12.31 dividends. 12.32 (g) "Peace officer" means any person: 12.33 (1) whose primary source of income derived from wages is 12.34 from direct employment by a municipality or county as a law 12.35 enforcement officer on a full-time basis of not less than 30 12.36 hours per week; 13.1 (2) who has been employed for a minimum of six months prior 13.2 to December 31 preceding the date of the current year's 13.3 certification under subdivision 2, clause (b); 13.4 (3) who is sworn to enforce the general criminal laws of 13.5 the state and local ordinances; 13.6 (4) who is licensed by the peace officers standards and 13.7 training board and is authorized to arrest with a warrant; and 13.8 (5) who is a member of a local police relief association to 13.9 which section 69.77 applies, the state patrol retirement plan, 13.10 the public employees police and fire fund, or the Minneapolis 13.11 employees retirement fund. 13.12 (h) "Full-time equivalent number of peace officers 13.13 providing contract service" means the integral or fractional 13.14 number of peace officers which would be necessary to provide the 13.15 contract service if all peace officers providing service were 13.16 employed on a full-time basis as defined by the employing unit 13.17 and the municipality receiving the contract service. 13.18 (i) "Retirement benefits other than a service pension" 13.19 means any disbursement authorized under section 424A.05, 13.20 subdivision 3, clauses (2), (3) and (4). 13.21 (j) "Municipal clerk, municipal clerk-treasurer or county 13.22 auditor" means the person who was elected or appointed to the 13.23 specified position or, in the absence of the person, another 13.24 person who is designated by the applicable governing body. In a 13.25 park district the clerk is the secretary of the board of park 13.26 district commissioners. In the case of the University of 13.27 Minnesota, the clerk is that official designated by the board of 13.28 regents. For the metropolitan airports commission, the clerk is 13.29 the person designated by the commission. For the department of 13.30 natural resources or the department of public safety, the clerk 13.31 is the respective commissioner. 13.32 Sec. 7. Minnesota Statutes 1996, section 69.011, 13.33 subdivision 2, is amended to read: 13.34 Subd. 2. [QUALIFICATION FOR FIRE OR POLICE STATE AID.] (a) 13.35 In order to qualify to receive fire state aid, on or before 13.36 March 15 annually, in conjunction with the financial report 14.1 required pursuant to section 69.051, the clerk of each 14.2 municipality having a duly organized fire department as provided 14.3 in subdivision 4, or the secretary of each independent nonprofit 14.4 firefighting corporation having a subsidiary incorporated 14.5 firefighters' relief association whichever is applicable, and 14.6 the fire chief, shall jointly certify the existence of the 14.7 municipal fire department or of the independent nonprofit 14.8 firefighting corporation, whichever is applicable, which meets 14.9 the minimum qualification requirements set forth in this 14.10 subdivision, and the fire personnel and equipment of the 14.11 municipal fire department or the independent nonprofit 14.12 firefighting corporation as of the preceding December 31. 14.13 Certification shall be made to the commissioner on a form 14.14 prescribed by the commissioner and shall include any other facts 14.15 the commissioner may require. The certification shall be made 14.16 to the commissioner in duplicate. Each copy of the certificate 14.17 shall be duly executed and deemed an original. The commissioner 14.18 shall forward one copy to the auditor of the county wherein the 14.19 fire department is located and retain one copy. 14.20 (b) On or before March 15 annually the clerk of each 14.21 municipality having a duly organized police department and 14.22 having a duly incorporated relief association shall certify that 14.23 fact to the county auditor of the county where the police 14.24 department is located and to the commissioner on a form 14.25 prescribed by the commissioner together with the other facts the 14.26 commissioner or auditor may require. 14.27 Except as provided in subdivision 2b, on or before March 15 14.28 annually, the clerk of each municipality and the auditor of each 14.29 county employing one or more peace officers as defined in 14.30 subdivision 1, clause(h)(g), shall certify the number of such 14.31 peace officers to the commissioner on forms prescribed by the 14.32 commissioner. Credit for officers employed less than a full 14.33 year shall be apportioned. Each full month of employment of a 14.34 qualifying officer during the calendar year shall entitle the 14.35 employing municipality or county to credit for 1/12 of the 14.36 payment for employment of a peace officer for the entire year. 15.1 For purposes of sections 69.011 to 69.051, employment of a peace 15.2 officer shall commence when the peace officer is entered on the 15.3 payroll of the respective municipal police department or county 15.4 sheriff's department. No peace officer shall be included in the 15.5 certification of the number of peace officers by more than one 15.6 municipality or county for the same month. 15.7 Sec. 8. Minnesota Statutes 1996, section 69.011, is 15.8 amended by adding a subdivision to read: 15.9 Subd. 2b. [DEPARTMENTS OF NATURAL RESOURCES AND PUBLIC 15.10 SAFETY.] (a) On or before July 1, 1997, the commissioner of 15.11 natural resources shall certify one-half of the number of peace 15.12 officers as defined in subdivision 1, clause (g), employed by 15.13 the enforcement division during calendar year 1996 and the 15.14 commissioner of public safety shall certify one-half of the 15.15 number of peace officers as defined in subdivision 1, clause 15.16 (g), employed by the bureau of criminal apprehension, the 15.17 gambling enforcement division, and the state patrol division 15.18 during calendar year 1996. 15.19 (b) On or before March 15, 1998, and annually on or before 15.20 March 15, thereafter, the commissioner of natural resources 15.21 shall certify the number of peace officers as defined in 15.22 subdivision 1, clause (g), employed by the enforcement division 15.23 and the commissioner of public safety shall certify the number 15.24 of peace officers as defined in subdivision 1, clause (g), 15.25 employed by the bureau of criminal apprehension, the gambling 15.26 enforcement division, and the state patrol division. 15.27 (c) The certification must be on a form prescribed by the 15.28 commissioner. Peace officers certified under this paragraph 15.29 must be included in the total certifications under subdivision 2. 15.30 Sec. 9. Minnesota Statutes 1996, section 69.021, 15.31 subdivision 7a, is amended to read: 15.32 Subd. 7a. [APPORTIONMENT OF POLICE STATE AID.] (a) The 15.33 commissioner shall apportion the state peace officer aid to each 15.34 municipality and to the county in the following manner: 15.35 (1) for all municipalities maintaining police departments 15.36and the county, counties, the department of natural resources, 16.1 and the department of public safety, the police state aid must 16.2 be distributed in proportion to the total number of peace 16.3 officers, as determined under section 69.011, subdivision 1, 16.4 clause (g), and subdivision 2, clause (b), employed by 16.5 eachmunicipality and by the countyemploying unit for 12 16.6 calendar months and the proportional or fractional number who 16.7 were employed less than 12 months; 16.8 (2) for each municipality which contracts with the county 16.9 for police service, a proportionate amount of the state aid 16.10 distributed to the county based on the full-time equivalent 16.11 number of peace officers providing contract service must be 16.12 credited against the municipality's contract obligation; and 16.13 (3) for each municipality which contracts with another 16.14 municipality for police service, a proportionate amount of the 16.15 state aid distributed to the municipality providing contract 16.16 service based on the full-time equivalent number of peace 16.17 officers providing contract service on a full-time equivalent 16.18 basis must be credited against the contract obligation of the 16.19 municipality receiving contract service. 16.20 (b) No municipality entitled to receive state peace officer 16.21 aid may be apportioned less state peace officer aid for any year 16.22 under Laws 1976, chapter 315, than the amount which was 16.23 apportioned to it for calendar year 1975 based on premiums 16.24 reported to the commissioner for calendar year 1974; provided, 16.25 the amount of state peace officer aid to other municipalities 16.26 within the county and to the county must be adjusted in 16.27 proportion to the total number of peace officers in the 16.28 municipalities and the county, so that the amount of state peace 16.29 officer aid apportioned does not exceed the amount of state 16.30 peace officer aid available for apportionment. 16.31 Sec. 10. Minnesota Statutes 1996, section 69.021, 16.32 subdivision 10, is amended to read: 16.33 Subd. 10. [REDUCTION.] (a) The commissioner of revenue 16.34 shall reduce the apportionment of police state aid under 16.35 subdivisions 5, paragraph (b), 6, and77a, for eligible 16.36 employer units by any excess police state aid. 17.1 (b) "Excess police state aid" is: 17.2 (1) for counties and municipalities, the amount in excess 17.3 of the employer's total prior calendar year obligation under 17.4 section 353.65, as certified by the executive director of the 17.5 public employees retirement association; and 17.6 (2) for the department of natural resources and for the 17.7 department of public safety, the amount in excess of the 17.8 employer's total prior calendar year obligation under section 17.9 352B.02, subdivision 1c, for plan members who are peace officers 17.10 under section 69.011, subdivision 1, clause (g), as certified by 17.11 the executive director of the Minnesota state retirement system. 17.12 (c) The total shall be deposited in a separate excess 17.13 police state-aid account in the general fund, administered and 17.14 distributed as provided in subdivision 11. 17.15 Sec. 11. Minnesota Statutes 1996, section 69.031, 17.16 subdivision 5, is amended to read: 17.17 Subd. 5. [DEPOSIT OF STATE AID.](1)(a) The municipal 17.18 treasurer, on receiving the fire state aid, shall within 30 days 17.19 after receipt transmit it to the treasurer of the duly 17.20 incorporated firefighters' relief association if there is one 17.21 organized and the association has filed a financial report with 17.22 the municipality; but if there is no relief association 17.23 organized, or if any association dissolve, be removed, or has 17.24 heretofore dissolved, or has been removed as trustees of state 17.25 aid, then the treasurer of the municipality shall keep the money 17.26 in the municipal treasury as provided for in section 424A.08 and 17.27 shall be disbursed only for the purposes and in the manner set 17.28 forth in that section. 17.29(2)(b) The municipal treasurer, upon receipt of the police 17.30 state aid, shall disburse the police state aid in the following 17.31 manner: 17.32(a)(1) For a municipality in which a local police relief 17.33 association exists and all peace officers are members of the 17.34 association, the total state aid shall be transmitted to the 17.35 treasurer of the relief association within 30 days of the date 17.36 of receipt, and the treasurer of the relief association shall 18.1 immediately deposit the total state aid in the special fund of 18.2 the relief association; 18.3(b)(2) For a municipality in which police retirement 18.4 coverage is provided by the public employees police and fire 18.5 fund and all peace officers are members of the fund, the total 18.6 state aid shall be applied toward the municipality's employer 18.7 contribution to the public employees police and fire fund 18.8 pursuant to section 353.65, subdivision 3; or 18.9(c)(3) For a municipality other than a city of the first 18.10 class with a population of more than 300,000 in which both a 18.11 police relief association exists and police retirement coverage 18.12 is provided in part by the public employees police and fire 18.13 fund, the municipality may elect at its option to transmit the 18.14 total state aid to the treasurer of the relief association as 18.15 provided in clause (a), to use the total state aid to apply 18.16 toward the municipality's employer contribution to the public 18.17 employees police and fire fund subject to all the provisions set 18.18 forth in clause (b), or to allot the total state aid 18.19 proportionately to be transmitted to the police relief 18.20 association as provided in this subdivision and to apply toward 18.21 the municipality's employer contribution to the public employees 18.22 police and fire fund subject to the provisions of clause (b) on 18.23 the basis of the respective number of active full-time peace 18.24 officers, as defined in section 69.011, subdivision 1, clause 18.25 (g). 18.26 For a city of the first class with a population of more 18.27 than 300,000, in addition, the city may elect to allot the 18.28 appropriate portion of the total police state aid to apply 18.29 toward the employer contribution of the city to the public 18.30 employees police and fire fund based on the covered salary of 18.31 police officers covered by the fund each payroll period and to 18.32 transmit the balance to the police relief association. 18.33(3)(c) The county treasurer, upon receipt of the police 18.34 state aid for the county, shall apply the total state aid toward 18.35 the county's employer contribution to the public employees 18.36 police and fire fund pursuant to section 353.65, subdivision 3. 19.1(4)(d) The designated metropolitan airports commission 19.2 official, upon receipt of the police state aid for the 19.3 metropolitan airports commission, shall apply the total police 19.4 state aid toward the commission's employer contribution to the 19.5 Minneapolis employees retirement fund under section 422A.101, 19.6 subdivision 2a. 19.7 (e) For the department of natural resources and for the 19.8 department of public safety, the department must apply the total 19.9 police state aid toward the employer contribution of the 19.10 department to the state patrol retirement plan under section 19.11 352B.02, subdivision 1c. 19.12 Sec. 12. [124.2141] [AID ADJUSTMENTS DUE TO CHANGES IN 19.13 EMPLOYER RETIREMENT CONTRIBUTION RATES.] 19.14 Subdivision 1. [AID ADJUSTMENT.] Beginning in fiscal year 19.15 1998 and each year thereafter, the commissioner of children, 19.16 families, and learning shall adjust state aid payments to school 19.17 operating funds for independent school district No. 625, 19.18 independent school district No. 709 and special school district 19.19 No. 1, by the net amount of clauses (1) and (2) and for all 19.20 other districts, including charter schools, but excluding any 19.21 education organizations that are prohibited from receiving 19.22 direct state aids under section 124.193 or 124.32, subdivision 19.23 12, by the net amount of clauses (1), (2) and (3): 19.24 (1) a decrease equal to each district's share of the fiscal 19.25 year 1997 adjustment effected under Minnesota statutes 1996, 19.26 section 124.2139; 19.27 (2) an increase equal to one percent of the salaries paid 19.28 to members of the general plan of the public employees 19.29 retirement association in fiscal year 1997, multiplied by 0.35 19.30 for fiscal year 1998 and 0.70 each year thereafter; 19.31 (3) a decrease equal to 2.34 percent of the salaries paid 19.32 to members of the teachers retirement association in fiscal year 19.33 1997. 19.34 Subd. 2. [APPROPRIATION AND ESTIMATED NET SAVINGS.] The 19.35 amounts necessary to pay any positive net adjustments under this 19.36 section to any school district are appropriated annually from 20.1 the general fund to the commissioner of children, families and 20.2 learning. The estimated net general fund savings under this 20.3 section is $29,819,000 in fiscal year 1998, and $26,997,000 in 20.4 each fiscal year thereafter. 20.5 Subd. 3. [LIMITS ON ADJUSTMENTS AND POTENTIAL REDUCTIONS.] 20.6 Increases to any school districts under subdivision 1, clause 20.7 (2), and decreases under subdivision 1, clauses (1) and (3), are 20.8 limited to the fiscal year 1999 amounts. The commissioner of 20.9 children, families and learning may permanently reduce the 20.10 adjustments to school districts under subdivision 1, clauses (1) 20.11 and (2), in the same manner as prescribed for non-school 20.12 jurisdictions under section 273.13985, subdivision 2. The 20.13 commissioner may, from time to time, require that the most 20.14 recent fiscal year payroll information be certified by the 20.15 executive director of the teachers retirement association. For 20.16 any school district where the newly certified teachers 20.17 retirement association payroll is significantly lower than the 20.18 fiscal 1997 amount as determined by the commissioner, the 20.19 commissioner shall recalculate the lower reduction under 20.20 subdivision 1, clause (3), and shall permanently reduce the 20.21 adjustment amount in subsequent years. 20.22 Subd. 4. [EFFECT OF REORGANIZATIONS.] The commissioner of 20.23 children, families, and learning shall reapportion the aid 20.24 adjustments to school districts under this section to account 20.25 for significant changes in boundaries or consolidations, as 20.26 determined by the commissioner. If a school district is 20.27 dissolved, or a school district function thereof is assumed by 20.28 either the state or a non-public organization, adjustments for 20.29 all or the appropriate fraction of the total payroll under this 20.30 section must terminate. 20.31 Subd. 5. [ADJUSTMENT TERMINATION.] All adjustments under 20.32 this section terminate on June 30, 2020. 20.33 Sec. 13. [273.13985] [AID FOR PUBLIC EMPLOYEES RETIREMENT 20.34 ASSOCIATION EMPLOYER CONTRIBUTION RATE INCREASE.] 20.35 Subdivision 1. [AID TO OFFSET RATE INCREASE.] Beginning 20.36 with the December 26, 1997, payment, and according to the 21.1 schedule for payment of local aid under section 477A.015 21.2 thereafter, the commissioner of revenue shall pay to each city, 21.3 county, town and other non-school jurisdiction an amount equal 21.4 to 0.35 percent of the fiscal year 1997 payroll for employees 21.5 who were members of the general plan of the public employees 21.6 retirement association. Except for the December 1997 21.7 distribution under this section, the amount of aid must be 21.8 certified before September 1 of the year preceding the 21.9 distribution year to the affected local government. The 21.10 executive director of the public employees retirement 21.11 association shall certify the general plan fiscal year covered 21.12 payroll and other information requested by the commissioner of 21.13 revenue, on or before August 1, 1997, and in subsequent years 21.14 where necessary, in order to facilitate administration of this 21.15 section. The amount necessary to make these aid payments is 21.16 appropriated annually from the general fund to the commissioner 21.17 of revenue. Expenditures under this section are estimated to be 21.18 $7,942,500 in fiscal year 1998, and $15,885,000 in each 21.19 subsequent fiscal year, less any future reductions under 21.20 subdivision 2. 21.21 Subd. 2. [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID 21.22 REDUCTIONS.] The aid amount received by any jurisdiction in 21.23 fiscal year 2000 or any year thereafter may not exceed the 21.24 amount it received in fiscal year 1999. The commissioner may, 21.25 from time to time, request the most recent fiscal year payroll 21.26 information by jurisdiction to be certified by the executive 21.27 director of the public employees retirement association. For 21.28 any jurisdiction where newly certified public employees 21.29 retirement association general plan payroll is significantly 21.30 lower than the fiscal 1997 amount, as determined by the 21.31 commissioner, the commissioner shall recalculate the aid amount 21.32 based on the most recent fiscal year payroll information, 21.33 certify the recalculated aid amount for the next distribution 21.34 year, and permanently reduce the aid amount to that jurisdiction. 21.35 Subd. 3. [EFFECT OF REORGANIZATIONS.] The commissioner of 21.36 revenue may adjust the aid amounts for separate jurisdictions to 22.1 account for significant changes in boundaries or in the form of 22.2 government, as determined by the commissioner. If a local 22.3 government function and the associated public employees 22.4 retirement association general plan payroll is assumed by either 22.5 the state, or a non-public organization, the aid amounts 22.6 attributable to the function under this section must terminate. 22.7 Subd. 4. [AID TERMINATION.] The aid provided under this 22.8 section terminates on June 30, 2020. 22.9 Sec. 14. Minnesota Statutes 1996, section 352.01, 22.10 subdivision 25, is amended to read: 22.11 Subd. 25. [NORMAL RETIREMENT AGE.] "Normal retirement age" 22.12 means age 65 for a person who first became a covered employee or 22.13 a member of a pension fund listed in section 356.30, subdivision 22.14 3, before July 1, 1989. For a person who first becomes a 22.15 covered employee after June 30, 1989, normal retirement age 22.16 means the higher of age 65 or "retirement age," as defined in 22.17 United States Code, title 42, section 416(l), as amended, but 22.18 not to exceed age 66. 22.19 Sec. 15. Minnesota Statutes 1996, section 352.04, 22.20 subdivision 2, is amended to read: 22.21 Subd. 2. [EMPLOYEE CONTRIBUTIONS.] The employee 22.22 contribution to the fund must be equal to4.074.0 percent of 22.23 salary. These contributions must be made by deduction from 22.24 salary as provided in subdivision 4. 22.25 Sec. 16. Minnesota Statutes 1996, section 352.04, 22.26 subdivision 3, is amended to read: 22.27 Subd. 3. [EMPLOYER CONTRIBUTIONS.](a)The employer 22.28 contribution to the fund must be equal to4.24.0 percent of 22.29 salary. 22.30(b) By January 1 of each year, the board of directors shall22.31report to the legislative commission on pensions and retirement,22.32the chair of the committee on appropriations of the house of22.33representatives, and the chair of the committee on finance of22.34the senate on the amount raised by the employer and employee22.35contribution rates in effect and whether the total amount is22.36less than, the same as, or more than the actuarial requirement23.1determined under section 356.215.23.2(c) If the legislative commission on pensions and23.3retirement, based on the most recent valuation performed by its23.4actuary, determines that the total amount raised by the employer23.5and employee contributions under subdivision 2 and paragraph (b)23.6is less than the actuarial requirements determined under section23.7356.215, the employer and employee rates must be increased by23.8equal amounts as necessary to meet the actuarial requirements.23.9The employee rate may not exceed 4.15 percent of salary and the23.10employer rate may not exceed 4.29 percent of salary. The23.11increases are effective on the next January 1 following the23.12determination by the commission. The executive director of the23.13Minnesota state retirement system shall notify employing units23.14of any increases under this paragraph.23.15 Sec. 17. Minnesota Statutes 1996, section 352.115, 23.16 subdivision 3, is amended to read: 23.17 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 23.18 in conjunction with section 352.116, subdivision 1, applies to a 23.19 person who became a covered employee or a member of a pension 23.20 fund listed in section 356.30, subdivision 3, before July 1, 23.21 1989, unless paragraph (b), in conjunction with section 352.116, 23.22 subdivision 1a, produces a higher annuity amount, in which case 23.23 paragraph (b) will apply. The employee's average salary, as 23.24 defined in subdivision 2, multiplied byonethe percent 23.25 specified in section 356.19, subdivision 1, per year of 23.26 allowable service for the first ten years and1.5the percent 23.27 specified in section 356.19, subdivision 2, for each later year 23.28 of allowable service and pro rata for completed months less than 23.29 a full year shall determine the amount of the retirement annuity 23.30 to which the employee is entitled. 23.31 (b) This paragraph applies to a person who has become at 23.32 least 55 years old and first became a covered employee after 23.33 June 30, 1989, and to any other covered employee who has become 23.34 at least 55 years old and whose annuity amount, when calculated 23.35 under this paragraph and in conjunction with section 352.116, 23.36 subdivision 1a, is higher than it is when calculated under 24.1 paragraph (a), in conjunction with section 352.116, subdivision 24.2 1. The employee's average salary, as defined in subdivision 2, 24.3 multiplied by1.5the percent specified in section 356.19, 24.4 subdivision 2, for each year of allowable service and pro rata 24.5 for months less than a full year shall determine the amount of 24.6 the retirement annuity to which the employee is entitled. 24.7 Sec. 18. Minnesota Statutes 1996, section 352.72, 24.8 subdivision 2, is amended to read: 24.9 Subd. 2. [COMPUTATION OF DEFERRED ANNUITY.] (a) The 24.10 deferred annuity, if any, accruing under subdivision 1, or 24.11 section 352.22, subdivision 3, must be computed as provided in 24.12 section 352.22, subdivision 3, on the basis of allowable service 24.13 before termination of state service and augmented as provided 24.14 herein. The required reserves applicable to a deferred annuity 24.15 or to an annuity for which a former employee was eligible but 24.16 had not applied or to any deferred segment of an annuity must be 24.17 determined as of the date the benefit begins to accrue and 24.18 augmented by interest compounded annually from the first day of 24.19 the month following the month in which the employee ceased to be 24.20 a state employee, or July 1, 1971, whichever is later, to the 24.21 first day of the month in which the annuity begins to accrue. 24.22 The rates of interest used for this purpose must be five percent 24.23 compounded annually until January 1, 1981, and three percent 24.24 compounded annually thereafter until January 1 of the year 24.25 following the year in which the former employee attains age 55. 24.26 From that date to the effective date of retirement, the rate is 24.27 five percent compounded annually. If a person has more than one 24.28 period of uninterrupted service, the required reserves related 24.29 to each period must be augmented by interest under this 24.30 subdivision. The sum of the augmented required reserves so 24.31 determined is the present value of the annuity. "Uninterrupted 24.32 service" for the purpose of this subdivision means periods of 24.33 covered employment during which the employee has not been 24.34 separated from state service for more than two years. If a 24.35 person repays a refund, the service restored by the repayment 24.36 must be considered continuous with the next period of service 25.1 for which the employee has credit with this system. The formula 25.2 percentages used for each period of uninterrupted service must 25.3 be those applicable to a new employee. The mortality table and 25.4 interest assumption used to compute the annuity must be those in 25.5 effect when the employee files application for annuity. This 25.6 sectionshalldoes not reduce the annuity otherwise payable 25.7 under this chapter. 25.8 (b) The retirement annuity or disability benefit of, or the 25.9 survivor benefit payable on behalf of, a former state employee 25.10 who terminated service before July 1, 1997, which is not first 25.11 payable until after June 30, 1997, must be increased on an 25.12 actuarial equivalent basis to reflect the change in the post 25.13 retirement interest rate actuarial assumption under section 56 25.14 from five percent to six percent under a calculation procedure 25.15 and the tables adopted by the board and approved by the actuary 25.16 retained by the legislative commission on pensions and 25.17 retirement. 25.18 Sec. 19. Minnesota Statutes 1996, section 352.92, 25.19 subdivision 1, is amended to read: 25.20 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.]Beginning with25.21the first full pay period after July 1, 1984, in lieu of25.22employee contributions payable under section 352.04, subdivision25.232,Employee contributionsbyof covered correctional employees 25.24 must be in an amount equal to4.905.50 percent of salary. 25.25 Sec. 20. Minnesota Statutes 1996, section 352.92, 25.26 subdivision 2, is amended to read: 25.27 Subd. 2. [EMPLOYER CONTRIBUTIONS.]In lieu of employer25.28contributions payable under section 352.04, subdivision 3,The 25.29 employer shall contribute for covered correctional employees an 25.30 amount equal to6.757.70 percent of salary. 25.31 Sec. 21. Minnesota Statutes 1996, section 352.93, 25.32 subdivision 2, is amended to read: 25.33 Subd. 2. [CALCULATING MONTHLY ANNUITY.] The monthly 25.34 annuity under this section must be determined by multiplying the 25.35 average monthly salary by the number of years, or completed 25.36 months, of covered correctional service by2.5the percent 26.1 specified in section 356.19, subdivision 5.However, the26.2monthly annuity must not exceed 75 percent of the average26.3monthly salary.26.4 Sec. 22. Minnesota Statutes 1996, section 352.93, 26.5 subdivision 3, is amended to read: 26.6 Subd. 3. [PAYMENTS; DURATION AND AMOUNTANNUITY ACCRUAL.] 26.7 The annuity under this sectionshallmust begin to accrue as 26.8 provided in section 352.115, subdivision 8., and must be paid26.9for an additional 84 full calendar months or to the first of the26.10month following the month in which the employee attains normal26.11retirement age, whichever occurs first, except that payment must26.12not cease before the first of the month following the month in26.13which the employee becomes 62. It must then be reduced to the26.14amount as calculated at normal retirement age under section26.15352.115, except that if this amount, when added to that portion26.16of the social security benefit based on state service the26.17employee would be eligible to receive at the time, is less than26.18the benefit payable under subdivision 2, the retired employee26.19shall receive an amount that when added to the social security26.20benefit will equal the amount payable under subdivision 2. If26.21the employee retired prior to age 55, the reduced benefit as26.22calculated under section 352.115 must be actuarially reduced as26.23provided in subdivision 2a.26.24When an annuity is reduced under this subdivision, the26.25percentage adjustments, if any, that have been applied to the26.26original annuity under section 11A.18, before the reduction,26.27must be compounded and applied to the reduced annuity. A former26.28correctional employee employed by the state in a position26.29covered by the regular plan or the unclassified employees26.30retirement program between the age of 58 and normal retirement26.31age shall receive a partial return of correctional contributions26.32at retirement with six percent interest based on the following26.33formula:26.34 26.35Employee contributionsYears and complete26.36contributed as amonths of regular27.1correctional employeeservice between27.2in excess of theage 58 and the27.3contributions thenormal retirement age27.4employee would haveX.....................27.5contributed as anumber of years between27.6regular employeeage 58 and normal27.7retirement age27.8 Sec. 23. Minnesota Statutes 1996, section 352.93, is 27.9 amended by adding a subdivision to read: 27.10 Subd. 3a. [OPTIONAL ANNUITIES.] The board may establish 27.11 optional annuity forms to pay a higher amount from the date of 27.12 retirement until an employee is first eligible to draw social 27.13 security benefits or up to the age the employee is eligible to 27.14 receive unreduced social security benefits, at which time the 27.15 monthly benefits must be reduced. The optional annuity forms 27.16 must be actuarially equivalent to the normal single life annuity 27.17 form provided in subdivision 2. The optional annuity forms must 27.18 be approved by the actuary retained by the legislative 27.19 commission on pensions and retirement. 27.20 Sec. 24. [352.931] [SURVIVOR BENEFITS.] 27.21 Subdivision 1. [SURVIVING SPOUSE BENEFIT.] (a) If the 27.22 correctional employee was at least age 50, has credit for at 27.23 least three years allowable service, and dies before an annuity 27.24 or disability benefit has become payable, notwithstanding any 27.25 designation of beneficiary to the contrary, the surviving spouse 27.26 of the employee may elect to receive, in lieu of the refund 27.27 under section 352.12, subdivision 1, an annuity for life equal 27.28 to the joint and 100 percent survivor annuity which the employee 27.29 could have qualified for had the employee terminated service on 27.30 the date of death. The election may be made at any time after 27.31 the date of death of the employee. The surviving spouse benefit 27.32 begins to accrue as of the first of the month next following the 27.33 date on which the application for the benefit was filed. 27.34 (b) If the employee was under age 50, dies, and had credit 27.35 for at least three years of allowable service credit on the date 27.36 of death but did not yet qualify for retirement, the surviving 28.1 spouse may elect to receive a 100 percent joint and survivor 28.2 annuity based on the age of the employee and surviving spouse at 28.3 the time of death. The annuity is payable using the early 28.4 retirement reduction under section 352.93, subdivision 2a, to 28.5 age 50, and one-half of the early retirement reduction from age 28.6 50 to the age payment begins. The surviving spouse eligible for 28.7 surviving spouse benefits under this paragraph may apply for the 28.8 annuity at any time after the employee's death. Sections 28.9 352.22, subdivision 3, and 352.72, subdivision 2, apply to a 28.10 deferred annuity or surviving spouse benefit payable under this 28.11 subdivision. 28.12 (c) The annuity must cease with the last payment received 28.13 by the surviving spouse in the lifetime of the surviving 28.14 spouse. Any employee may request in writing that this 28.15 subdivision not apply and that payment be made only to a 28.16 designated beneficiary as otherwise provided by this chapter. 28.17 Subd. 2. [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 28.18 lieu of the 100 percent optional annuity under subdivision 1, 28.19 the surviving spouse of a deceased employee may elect to receive 28.20 survivor coverage in a term certain of ten, 15, or 20 years. 28.21 The monthly term certain annuity must be actuarially equivalent 28.22 to the 100 percent optional annuity under subdivision 1 and must 28.23 be approved by the actuary retained by the legislative 28.24 commission on pensions and retirement. The optional annuity 28.25 ceases upon the expiration of the term certain period. If a 28.26 survivor elects a term certain annuity and dies before the 28.27 expiration of the specified term certain period, the commuted 28.28 value of the remaining annuity payments must be paid in a lump 28.29 sum to the survivor's estate. 28.30 Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 28.31 no surviving spouse eligible for benefits under subdivision 1, a 28.32 dependent child as defined in section 352.01, subdivision 26, is 28.33 eligible for a dependent child survivor benefit. Benefits to a 28.34 dependent child must be paid from the date of the employee's 28.35 death to the date the dependent child attains age 20 if the 28.36 child is under age 15 on the date of death. If the child is 15 29.1 years or older on the date of death, the benefit is payable for 29.2 five years. The payment to a dependent child is an amount 29.3 actuarially equivalent to the value of a 100 percent joint and 29.4 survivor optional annuity using the age of the employee and age 29.5 of the dependent child at the date of death in lieu of the age 29.6 of the surviving spouse. If there is more than one dependent 29.7 child, each dependent child shall receive a proportionate share 29.8 of the actuarial value of the employee's account, with the 29.9 amount of the benefit payable to each child to be determined 29.10 based on the portion of the total eligibility period that each 29.11 child is eligible. The process for calculating the dependent 29.12 child survivor benefit must be approved by the actuary retained 29.13 by the legislative commission on pensions and retirement. 29.14 Subd. 4. [DEATH REFUND.] An amount equal to the excess, if 29.15 any, of the accumulated contributions credited to the account of 29.16 the deceased employee in excess of the total of the benefits 29.17 paid to the surviving spouse and surviving child or children 29.18 must be paid to the deceased employee's last designated 29.19 beneficiary or, if none, as specified under section 352.12, 29.20 subdivision 1. 29.21 Subd. 5. [APPLICATION.] The benefit elections under this 29.22 section must be made on an application form prescribed by the 29.23 executive director and must be filed with the executive director. 29.24 Sec. 25. Minnesota Statutes 1996, section 352.95, 29.25 subdivision 1, is amended to read: 29.26 Subdivision 1. [JOB-RELATED DISABILITY.] A covered 29.27 correctional employee who becomes disabled and physically unfit 29.28 to perform the duties of the position as a direct result of an 29.29 injury, sickness, or other disability incurred in or arising out 29.30 of any act of duty that makes the employee physically or 29.31 mentally unable to perform the duties, is entitled to a 29.32 disability benefit based on covered correctional service only. 29.33 The benefit amount must equal 50 percent of the average salary 29.34 defined in section 352.93, plus an additional2-1/2percent 29.35 equal to that specified in section 356.19, subdivision 5, for 29.36 each year of covered correctional service in excess of 20 years, 30.1 ten months, prorated for completed months. 30.2 Sec. 26. Minnesota Statutes 1996, section 352.95, 30.3 subdivision 5, is amended to read: 30.4 Subd. 5. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 30.5 disability benefit paid to a disabled correctional employee 30.6 under this section shall terminate at the end of the month in 30.7 which the employee reaches age 62. If the disabled correctional 30.8 employee is still disabled when the employee reaches age 62, the 30.9 employee shall be deemed to be a retired employee. If the 30.10 employee had elected an optional annuity under subdivision 1a, 30.11 the employee shall receive an annuity in accordance with the 30.12 terms of the optional annuity previously elected. If the 30.13 employee had not elected an optional annuity under subdivision 30.14 1a, the employee may within 90 days of attaining age 65 or 30.15 reaching the five-year anniversary of the effective date of the 30.16 disability benefit, whichever is later, either elect to receive 30.17 a normal retirement annuity computed in the manner provided in 30.18 section352.115352.93 or elect to receive an optional annuity 30.19 as provided in section 352.116, subdivision 3, based on the same 30.20 length of service as used in the calculation of the disability 30.21 benefit. Election of an optional annuity must be made within 90 30.22 days before attaining age 65 or reaching the five-year 30.23 anniversary of the effective date of the disability benefit, 30.24 whichever is later.The reduction for retirement before normal30.25retirement age as provided in section 352.116, subdivision 1 or30.261a, does not apply. The savings clause provision of section30.27352.93, subdivision 3, applies.If an optional annuity is 30.28 elected, the optional annuity shall begin to accrue on the first 30.29 of the month following the month in which the employee reaches 30.30 age 65 or the five-year anniversary of the effective date of the 30.31 disability benefit, whichever is later. 30.32 Sec. 27. Minnesota Statutes 1996, section 352B.02, 30.33 subdivision 1a, is amended to read: 30.34 Subd. 1a. [MEMBER CONTRIBUTIONS.] Each member shall pay a 30.35 sum equal to8.928.40 percent of the member's salary, which 30.36 shall constitute the member contribution to the fund. 31.1 Sec. 28. Minnesota Statutes 1996, section 352B.02, 31.2 subdivision 1c, is amended to read: 31.3 Subd. 1c. [EMPLOYER CONTRIBUTIONS.](a)In addition to 31.4 member contributions, department heads shall pay a sum equal to 31.514.8812.60 percent of the salary upon which deductions were 31.6 made, which shall constitute the employer contribution to the 31.7 fund. Department contributions must be paid out of money 31.8 appropriated to departments for this purpose, including police 31.9 state aid under sections 69.011 through 69.031. 31.10(b) By January 1 of each year, the board of directors shall31.11report to the legislative commission on pensions and retirement,31.12the chair of the committee on appropriations of the house of31.13representatives, and the chair of the committee on finance of31.14the senate on the amount raised by the employer and employee31.15contribution rates in effect and whether the total amount is31.16less than, the same as, or more than the actuarial requirement31.17determined under section 356.215.31.18 Sec. 29. Minnesota Statutes 1996, section 352B.08, 31.19 subdivision 2, is amended to read: 31.20 Subd. 2. [NORMAL RETIREMENT ANNUITY.] The annuity must be 31.21 paid in monthly installments. The annuity shall be equal to the 31.22 amount determined by multiplying the average monthly salary of 31.23 the member by2.65the percent specified in section 356.19, 31.24 subdivision 6, for each year and pro rata for completed months 31.25 of service. 31.26 Sec. 30. Minnesota Statutes 1996, section 352B.08, 31.27 subdivision 2a, is amended to read: 31.28 Subd. 2a. [EARLY RETIREMENT.] Any member who has become at 31.29 least 50 years old, or former member if service ended after June31.3030, 1989,and who has at least three years of allowable service 31.31 is entitled upon application to a reduced retirement annuity 31.32 equal to the annuity calculated under subdivision 2, reducedso31.33that the reduced annuity is the actuarial equivalent of the31.34annuity that would be payable if the member deferred receipt of31.35the annuity from the day the annuity begins to accrue to age31.3655by two-tenths of one percent for each month that the member 32.1 is under age 55 at the time of retirement. 32.2 Sec. 31. Minnesota Statutes 1996, section 352B.10, 32.3 subdivision 1, is amended to read: 32.4 Subdivision 1. [INJURIES, PAYMENT AMOUNTS.] Any member who 32.5 becomes disabled and physically or mentally unfit to perform 32.6 duties as a direct result of an injury, sickness, or other 32.7 disability incurred in or arising out of any act of duty, shall 32.8 receive disability benefits while disabled. The benefits must 32.9 be paid in monthly installments equal to the member's average 32.10 monthly salary multiplied by5360 percent, plus an additional 32.112.65percent equal to that specified in section 356.19, 32.12 subdivision 6, for each year and pro rata for completed months 32.13 of service in excess of 20 years, if any. 32.14 Sec. 32. Minnesota Statutes 1996, section 352B.30, is 32.15 amended by adding a subdivision to read: 32.16 Subd. 4. [1997 POSTRETIREMENT FUND INTEREST CHANGES.] The 32.17 retirement annuity or disability benefit of, or the survivor 32.18 benefit payable on behalf of, a former member who terminated 32.19 service before July 1, 1997, which is not first payable until 32.20 after June 30, 1997, must be increased on an actuarial 32.21 equivalent basis to reflect the change in the post retirement 32.22 interest rate actuarial assumption under section 56 from five 32.23 percent to six percent under a calculation procedure and tables 32.24 adopted by the board and approved by the actuary retained by the 32.25 legislative commission on pensions and retirement. 32.26 Sec. 33. Minnesota Statutes 1996, section 352C.031, 32.27 subdivision 4, is amended to read: 32.28 Subd. 4. [RETIREMENT ALLOWANCE FORMULA.] (a) This 32.29 paragraph applies to constitutional officers who terminate that 32.30 service before July 1, 1997. The average salary multiplied by 32.31 2-1/2 percent for each year of allowable service and pro rata 32.32 for completed months less than a full year shall determine the 32.33 amount of the normal retirement allowance. 32.34 (b) This paragraph applies to constitutional officers who 32.35 terminate that service after June 30, 1997. The retirement 32.36 allowance is an amount equal to the rate under paragraph (a) per 33.1 year of service of the constitutional officer's average monthly 33.2 salary adjusted for that person on an actuarial equivalent basis 33.3 to reflect the change in the post retirement interest rate 33.4 actuarial assumption under section 56 from five percent to six 33.5 percent. The adjustment must be calculated by or, 33.6 alternatively, the adjustment procedure must be specified by the 33.7 actuary retained by the legislative commission on pensions and 33.8 retirement. 33.9 Sec. 34. Minnesota Statutes 1996, section 352C.033, is 33.10 amended to read: 33.11 352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 33.12 (a) The deferred retirement allowance for any former 33.13 constitutional officershallmust be augmented as provided in 33.14 this section. The required reserves applicable to the deferred 33.15 retirement allowance, determined as of the date the retirement 33.16 allowance begins to accrue using the appropriate mortality table 33.17 and an interest assumption offivesix percent, shall be 33.18 augmented from the first of the month following termination of 33.19 service as a constitutional officer, or January 1, 1979, 33.20 whichever is later, to the first day of the month in which the 33.21 annuity begins to accrue, at the rate of five percent per annum 33.22 compounded annually until January 1, 1981, and thereafter at the 33.23 rate of three percent per annum compounded annually until 33.24 January 1 of the year in which the former constitutional officer 33.25 attains age 55. From that date to the effective date of 33.26 retirement, the rate is five percent compounded annually. 33.27 (b) The retirement allowance of, or the survivor benefit 33.28 payable on behalf of, a former constitutional officer who 33.29 terminated service before July 1, 1997, which is not first 33.30 payable until after June 30, 1997, must be increased on an 33.31 actuarial equivalent basis to reflect the change in the post 33.32 retirement interest rate actuarial assumption under section 56 33.33 from five percent to six percent under a calculation procedure 33.34 and tables adopted by the board as recommended by an approved 33.35 actuary and approved by the actuary retained by the legislative 33.36 commission on pensions and retirement. 34.1 Sec. 35. Minnesota Statutes 1996, section 353.01, 34.2 subdivision 37, is amended to read: 34.3 Subd. 37. [NORMAL RETIREMENT AGE.] "Normal retirement age" 34.4 means age 65 for a person who first became a public employee or 34.5 a member of a pension fund listed in section 356.30, subdivision 34.6 3, before July 1, 1989. For a person who first becomes a public 34.7 employee after June 30, 1989, "normal retirement age" means the 34.8 higher of age 65 or "retirement age," as defined in United 34.9 States Code, title 42, section 416(l), as amended, but not to 34.10 exceed age 66. 34.11 Sec. 36. Minnesota Statutes 1996, section 353.27, 34.12 subdivision 2, is amended to read: 34.13 Subd. 2. [EMPLOYEE CONTRIBUTION.] The employee 34.14 contribution shall be an amount (a) for a "basic member" equal 34.15 to8.238.75 percent of total salary; and (b) for a "coordinated 34.16 member" equal to4.234.75 percent of total salary. These 34.17 contributionsshallmust be made by deduction from salary in the 34.18 manner provided in subdivision 4. Where any portion of a 34.19 member's salary is paid from other than public funds, such 34.20 member's employee contributionshallmust be based on the total 34.21 salary received from all sources. 34.22 Sec. 37. Minnesota Statutes 1996, section 353.27, 34.23 subdivision 3a, is amended to read: 34.24 Subd. 3a. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An 34.25 additional employer contributionshallmust be made equal to (a) 34.262-1/22.68 percent of the total salary of each "basic member"; 34.27 and (b)one-quarter of one.43 percent of the total salary of 34.28 each "coordinated member." These contributionsshallmust be 34.29 made from funds available to the employing subdivision by the 34.30 means and in the manner provided in section 353.28. 34.31 (b) This subdivision is repealed once the actuarial value 34.32 of the assets of the plan equal or exceed the actuarial accrued 34.33 liability of the plan as determined by the actuary retained by 34.34 the legislative commission on pensions and retirement under 34.35 section 356.215. The repeal is effective on the first day of 34.36 the first full pay period occurring after March 31 of the 35.1 calendar year following the issuance of the actuarial valuation 35.2 upon which the repeal is based. 35.3 Sec. 38. Minnesota Statutes 1996, section 353.29, 35.4 subdivision 3, is amended to read: 35.5 Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 35.6 in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 35.7 1c, applies to any member who first became a public employee or 35.8 a member of a pension fund listed in section 356.30, subdivision 35.9 3, before July 1, 1989, unless paragraph (b), in conjunction 35.10 with section 353.30, subdivision 5, produces a higher annuity 35.11 amount, in which case paragraph (b) will apply. The average 35.12 salary as defined in subdivision 2, multiplied bytwothe 35.13 percent specified in section 356.19, subdivision 3, for each 35.14 year of allowable service for the first ten years and thereafter 35.15 by2.5the percent specified in section 356.19, subdivision 4, 35.16 per year of allowable service and completed months less than a 35.17 full year for the "basic member," andonethe percent specified 35.18 in section 356.19, subdivision 1, for each year of allowable 35.19 service for the first ten years and thereafter by1.5the 35.20 percent specified in section 356.19, subdivision 2, per year of 35.21 allowable service and completed months less than a full year for 35.22 the "coordinated member," shall determine the amount of the 35.23 "normal" retirement annuity. 35.24 (b) This paragraph applies to a member who has become at 35.25 least 55 years old and first became a public employee after June 35.26 30, 1989, and to any other member whose annuity amount, when 35.27 calculated under this paragraph and in conjunction with section 35.28 353.30, subdivision 5, is higher than it is when calculated 35.29 under paragraph (a), in conjunction with section 353.30, 35.30 subdivisions 1, 1a, 1b, and 1c. The average salary, as defined 35.31 in subdivision 2, multiplied by2.5the percent specified in 35.32 section 356.19, subdivision 4, for each year of allowable 35.33 service and completed months less than a full year for a basic 35.34 member and1.5the percent specified in section 356.19, 35.35 subdivision 2, per year of allowable service and completed 35.36 months less than a full year for a coordinated member, shall 36.1 determine the amount of the normal retirement annuity. 36.2 Sec. 39. Minnesota Statutes 1996, section 353.651, 36.3 subdivision 3, is amended to read: 36.4 Subd. 3. [RETIREMENT ANNUITY FORMULA.] The average salary 36.5 as defined in subdivision 2, multiplied by2.65the percent 36.6 specified in section 356.19, subdivision 6, per year of 36.7 allowable service determines the amount of the normal retirement 36.8 annuity. If the member has earned allowable service for 36.9 performing services other than those of a police officer or 36.10 firefighter, the annuity representing such service is computed 36.11 under sections 353.29 and 353.30. 36.12 Sec. 40. Minnesota Statutes 1996, section 353.656, 36.13 subdivision 1, is amended to read: 36.14 Subdivision 1. [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 36.15 A member of the police and fire fund who becomes disabled and 36.16 physically unfit to perform duties as a police officer or 36.17 firefighter subsequent to June 30, 1973, as a direct result of 36.18 an injury, sickness, or other disability incurred in or arising 36.19 out of any act of duty, which has or is expected to render the 36.20 member physically or mentally unable to perform duties as a 36.21 police officer or firefighter for a period of at least one year, 36.22 shall receive disability benefits during the period of such 36.23 disability. The benefits must be in an amount equal to5360 36.24 percent of the "average salary" under subdivision 3, plus an 36.25 additional2.65percent specified in section 356.19, subdivision 36.26 6, of said average salary for each year of service in excess of 36.27 20 years. Should disability under this subdivision occur before 36.28 the member has at least five years of allowable service credit 36.29 in the police and fire fund, the disability benefit must be 36.30 computed on the "average salary" from which deductions were made 36.31 for contribution to the police and fire fund. 36.32 Sec. 41. Minnesota Statutes 1996, section 353.71, 36.33 subdivision 2, is amended to read: 36.34 Subd. 2. [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] (a) 36.35 The deferred annuity, if any, accruing under subdivision 1, or 36.36 sections 353.34, subdivision 3, and 353.68, subdivision 4,shall37.1 must be computed in the manner provided in said sections, on the 37.2 basis of allowable service prior to termination of public 37.3 service and augmented as provided herein. The required reserves 37.4 applicable to a deferred annuity, or to an annuity for which a 37.5 former member was eligible but had not applied, or to any 37.6 deferred segment of an annuity shall be determined as of the 37.7 date the annuity begins to accrue and shall be augmented from 37.8 the first day of the month following the month in which the 37.9 former member ceased to be a public employee, or July 1, 1971, 37.10 whichever is later, to the first day of the month in which the 37.11 annuity begins to accrue, at the rate of five percent per annum 37.12 compounded annually until January 1, 1981, and at the rate of 37.13 three percent thereafter until January 1 of the year following 37.14 the year in which the former member attains age 55. From that 37.15 date to the effective date of retirement, the rate is five 37.16 percent per annum compounded annually. If a person has more 37.17 than one period of uninterrupted service, the required reserves 37.18 related to each period shall be augmented by interest pursuant 37.19 to this subdivision. The sum of the augmented required reserves 37.20 so determined shall be the present value of the annuity. 37.21 Uninterrupted service for the purpose of this subdivision shall 37.22 mean periods of covered employment during which the employee has 37.23 not been separated from public service for more than two years. 37.24 If a person repays a refund, the service restored thereby shall 37.25 be considered as continuous with the next period of service for 37.26 which the employee has credit with this association. The formula 37.27 percentages used for each period of uninterrupted service shall 37.28 be those as would be applicable to a new employee. This section 37.29 shall not reduce the annuity otherwise payable under this 37.30 chapter. This subdivision shall apply to deferred annuitants of 37.31 record on July 1, 1971, and to employees who thereafter become 37.32 deferred annuitants; it shall also apply from July 1, 1971, to 37.33 former members who make application for an annuity after July 1, 37.34 1973. 37.35 (b) The retirement annuity or disability benefit of, or the 37.36 survivor benefit payable on behalf of, a former member who 38.1 terminated service before July 1, 1997, which is not first 38.2 payable until after June 30, 1997, must be increased on an 38.3 actuarial equivalent basis to reflect the change in the post 38.4 retirement interest rate actuarial assumption under section 56 38.5 from five percent to six percent under a calculation procedure 38.6 and tables adopted by the board and approved by the actuary 38.7 retained by the legislative commission on pensions and 38.8 retirement. 38.9 Sec. 42. Minnesota Statutes 1996, section 353A.08, 38.10 subdivision 1, is amended to read: 38.11 Subdivision 1. [ELECTION OF COVERAGE BY CURRENT RETIREES.] 38.12 A person who is receiving a service pension, disability benefit, 38.13 orsurvivorshipsurvivor benefit is eligible to elect benefit 38.14 coverage provided under the relevant provisions of the public 38.15 employees police and fire fund benefit plan or to retain benefit 38.16 coverage provided under the relief association benefit plan in 38.17 effect on the effective date of the consolidation. The relevant 38.18 provisions of the public employees police and fire fund benefit 38.19 plan for the person electing that benefit coverage are limited 38.20 to participation in the Minnesota postretirement investment fund 38.21 for any future postretirement adjustments based on the amount of 38.22 the benefit or pension payable on December 31, if December 31 is 38.23 the effective date of consolidation, or on the December 1 38.24 following the effective date of the consolidation, if other than 38.25 December 31. Thesurvivorshipsurvivor benefit payable on 38.26 behalf of any service pension or disability benefit recipient 38.27 who elects benefit coverage under the public employees police 38.28 and fire fund benefit plan must be calculated under the relief 38.29 association benefit plan and is subject to participation in the 38.30 Minnesota postretirement investment fund for any future 38.31 postretirement adjustments based on the amount of the 38.32survivorshipsurvivor benefit payable. 38.33 A survivor benefit calculated under the relief association 38.34 benefit plan which is first payable after June 30, 1997, to the 38.35 surviving spouse of a retired member of a consolidation account 38.36 who, before July 1, 1997, chose to participate in the Minnesota 39.1 postretirement investment fund as provided under this 39.2 subdivision must be increased on the effective date of the 39.3 survivor benefit on an actuarial equivalent basis to reflect the 39.4 change in the postretirement interest rate actuarial assumption 39.5 under section 56 from five percent to six percent under a 39.6 calculation procedure and tables adopted by the board and 39.7 approved by the actuary retained by the legislative commission 39.8 on pensions and retirement. 39.9 By electing the public employees police and fire fund 39.10 benefit plan, a current service pension or disability benefit 39.11 recipient who, as of the first January 1 occurring after the 39.12 effective date of consolidation, has been receiving the pension 39.13 or benefit for at least seven months, or any survivor benefit 39.14 recipient who, as of the first January 1 occurring after the 39.15 effective date of consolidation, has been receiving the benefit 39.16 on the person's own behalf or in combination with a prior 39.17 applicable service pension or disability benefit for at least 39.18 seven months is eligible to receive a partial adjustment payable 39.19 from the Minnesota postretirement investment fund under section 39.20 11A.18, subdivision 9. 39.21 The election by any pension or benefit recipient must be 39.22 made on or before the deadline established by the board of the 39.23 public employees retirement association in a manner that 39.24 recognizes the number of persons eligible to make the election 39.25 and the anticipated time required to conduct any required 39.26 benefit counseling. 39.27 Sec. 43. Minnesota Statutes 1996, section 353A.08, 39.28 subdivision 2, is amended to read: 39.29 Subd. 2. [ELECTION OF COVERAGE BY CURRENT DEFERRED 39.30 RETIREES.] (a) Any person who has terminated active employment 39.31 as a police officer or firefighter, whichever applies, with the 39.32 municipality, has sufficient credit for service to entitle the 39.33 person to an eventual service pension and has not taken a refund 39.34 of accumulated member contributions, if applicable, shall have 39.35 the option to elect to have benefit coverage provided under the 39.36 relevant provisions of the public employees police and fire fund 40.1 benefit plan or to retain benefit coverage provided by the 40.2 relief association benefit plan in effect on the effective date 40.3 of consolidation. The relevant provisions of the public 40.4 employees police and fire fund benefit plan for the person 40.5 electing that benefit coverage shall be the provisions specified 40.6 in subdivision 1. 40.7 The election shall be made when the person files an 40.8 application for receipt of the deferred service pension and 40.9 shall accompany that application. 40.10 (b) The retirement annuity for a deferred member of a 40.11 consolidated local relief association which consolidated before 40.12 July 1, 1997, who elected the relevant provisions of the public 40.13 employees police and fire fund benefit plan under subdivision 1 40.14 must be increased on an actuarial equivalent basis to reflect 40.15 the change in the post retirement interest rate actuarial 40.16 assumption under section 56 from five percent to six percent 40.17 under a calculation procedure and tables adopted by the board of 40.18 trustees of the public employees retirement association and 40.19 approved by the actuary retained by the legislative commission 40.20 on pensions and retirement. 40.21 Sec. 44. Minnesota Statutes 1996, section 353A.083, is 40.22 amended by adding a subdivision to read: 40.23 Subd. 3. [PRE-1997 CONSOLIDATION.] (a) For any 40.24 consolidation plan account in effect on July 1, 1997, the 40.25 applicable benefit plan coverage defined in paragraph (b) or (c) 40.26 applies unless the consolidation account's city approves the 40.27 extension of the post-June 30, 1997, public employees police and 40.28 fire fund benefit plan to the consolidation account members. 40.29 (b) If the applicable municipality has approved the July 1, 40.30 1993, public employees police and fire fund benefit provisions, 40.31 but has not approved the extension of the post-June 30, 1997, 40.32 public employees police and fire fund benefit provisions: 40.33 (1) the benefit accrual rate for calculating retirement 40.34 annuities that apply to consolidation account members who have 40.35 elected or elect coverage under the provisions of the public 40.36 employees police and fire fund benefit plan is 2.9 percent of 41.1 average salary under section 353.651, subdivision 2, per year of 41.2 allowable service; 41.3 (2) the optional survivor annuities payable to the 41.4 survivors of these consolidated members who elected coverage 41.5 under the provisions of the public employees police and fire 41.6 fund benefit plan must be determined using a benefit accrual 41.7 rate of 2.9 percent of average salary under section 353.651, 41.8 subdivision 2, per year of the member's allowable service; 41.9 (3) the disability benefit payable for these consolidated 41.10 members who elected or elect coverage under the provisions of 41.11 the public employees police and fire fund benefit plan and: 41.12 (i) who become disabled in the line of duty, as defined 41.13 under section 353.656, subdivision 1, is an amount equal to 58 41.14 percent of average salary under section 353.651, subdivision 2, 41.15 plus an additional 2.9 percent of that average salary for each 41.16 year of service in excess of 20 years; or 41.17 (ii) who become disabled because of sickness or injury 41.18 occurring while not on duty, as defined under section 353.656, 41.19 subdivision 3, is an amount equal to 43.50 percent of average 41.20 salary under section 353.651, subdivision 2, plus an additional 41.21 2.9 percent of that average salary for each year of service in 41.22 excess of 15 years. 41.23 (c) If the applicable municipality has not approved the 41.24 July 1, 1993, public employees police and fire fund benefit 41.25 provisions, and has not approved the extension of the post-June 41.26 30, 1997, public employees police and fire fund benefit 41.27 provisions: 41.28 (1) the benefit accrual rate for calculating retirement 41.29 annuities that apply to consolidation account members who have 41.30 elected or elect coverage under the provisions of the public 41.31 employees police and fire fund benefit plan is 2.74 percent of 41.32 average salary under section 353.651, subdivision 2, per year of 41.33 allowable service; 41.34 (2) the optional survivor annuities payable to the 41.35 survivors of these consolidated members who elected coverage 41.36 under the provisions of the public employees police and fire 42.1 fund benefit plan must be determined using a benefit accrual 42.2 rate of 2.74 percent of average salary under section 353.651, 42.3 subdivision 2, per year of the member's allowable service; 42.4 (3) the disability benefit payable for consolidated members 42.5 who elected or elect the coverage under the provisions of the 42.6 public employees police and fire fund benefit plan and: 42.7 (i) who become disabled in the line of duty, as defined 42.8 under section 353.656, subdivision 1, is an amount equal to 42.9 54.80 percent of the average salary under section 353.651, 42.10 subdivision 2, plus an additional 2.74 percent of that average 42.11 salary for each year of service in excess of 20 years; or 42.12 (ii) who become disabled because of sickness or injury 42.13 occurring while not on duty, as defined under section 353.656, 42.14 subdivision 3, is an amount equal to 41.10 percent of the 42.15 average salary under section 353.651, subdivision 2, plus an 42.16 additional 2.74 percent of that average salary for each year of 42.17 service in excess of 15 years. 42.18 Sec. 45. Minnesota Statutes 1996, section 354.05, 42.19 subdivision 38, is amended to read: 42.20 Subd. 38. [NORMAL RETIREMENT AGE.] "Normal retirement age" 42.21 means age 65 for a person who first became a member of the 42.22 association or a member of a pension fund listed in section 42.23 356.30, subdivision 3, before July 1, 1989. For a person who 42.24 first becomes a member of the association after June 30, 1989, 42.25 normal retirement age means the higher of age 65 or "retirement 42.26 age," as defined in United States Code, title 42, section 42.27 416(l), as amended, but not to exceed age 66. 42.28 Sec. 46. Minnesota Statutes 1996, section 354.42, 42.29 subdivision 2, is amended to read: 42.30 Subd. 2. [EMPLOYEE.] The employee contribution to the fund 42.31shall beis an amount equal to6.55.0 percent of the salary of 42.32 every coordinated member and10.59.0 percent of the salary of 42.33 every basic member. This contributionshallmust be made by 42.34 deduction from salary. Where any portion of a member's salary 42.35 is paid from other than public funds,suchthe member's employee 42.36 contributionshallmust be based on the entire salary received. 43.1 Sec. 47. Minnesota Statutes 1996, section 354.42, 43.2 subdivision 3, is amended to read: 43.3 Subd. 3. [EMPLOYER.] The employer contribution to the fund 43.4shall beis an amount equal to4-1/25.0 percent of the salary 43.5 of each coordinated member and8-1/29.0 percent of the salary 43.6 of each basic member. 43.7 Sec. 48. Minnesota Statutes 1996, section 354.42, 43.8 subdivision 5, is amended to read: 43.9 Subd. 5. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) To 43.10 amortize the unfunded actuarial accrued liability computed under 43.11 the entry age actuarial cost method and disclosed under the 43.12 annual actuarial valuations prepared by the commission-retained 43.13 actuary under section 356.215, an additional employer 43.14 contributionshallmust be made in the amount of3.641.64 43.15 percent of the salary of each member. 43.16 (b) This contribution must be made in the manner provided 43.17 in section 354.52, subdivision 4. 43.18 (c) This subdivision is repealed once the actuarial value 43.19 of the assets of the plan equal or exceed the actuarial accrued 43.20 liability of the plan as determined by the actuary retained by 43.21 the legislative commission on pensions and retirement under 43.22 section 356.215. The repeal is effective on the first day of 43.23 the first full pay period occurring after March 31 of the 43.24 calendar year following the issuance of the actuarial valuation 43.25 upon which the repeal is based. 43.26By January 1 of each year, the board of directors shall43.27report to the legislative commission on pensions and retirement,43.28the chair of the committee on appropriations of the house of43.29representatives, and the chair of the committee on finance of43.30the senate on the amount raised by the additional employer43.31contribution rate in effect and whether that amount is less43.32than, the same as, or more than the required amortization43.33contribution determined under section 356.215.43.34 Sec. 49. Minnesota Statutes 1996, section 354.44, 43.35 subdivision 6, is amended to read: 43.36 Subd. 6. [COMPUTATION OF FORMULA PROGRAM RETIREMENT 44.1 ANNUITY.] (1) The formula retirement annuityhereunder shall44.2 must be computed in accordance with the applicable provisions of 44.3 the formulas stated in clause (2) or (4) on the basis of each 44.4 member's average salary for the period of the member's formula 44.5 service credit. 44.6 For all years of formula service credit, "average salary," 44.7 for the purpose of determining the member's retirement annuity, 44.8 means the average salary upon which contributions were made and 44.9 upon which payments were made to increase the salary limitation 44.10 provided in Minnesota Statutes 1971, section 354.511, for the 44.11 highest five successive years of formula service credit 44.12 provided, however, that such "average salary" shall not include 44.13 any more than the equivalent of 60 monthly salary payments. 44.14 Average salary must be based upon all years of formula service 44.15 credit if this service credit is less than five years. 44.16 (2) This clause, in conjunction with clause (3), applies to 44.17 a person who first became a member of the association or a 44.18 member of a pension fund listed in section 356.30, subdivision 44.19 3, before July 1, 1989, unless clause (4), in conjunction with 44.20 clause (5), produces a higher annuity amount, in which case 44.21 clause (4) applies. The average salary as defined in clause 44.22 (1), multiplied by the following percentages per year of formula 44.23 service credit shall determine the amount of the annuity to 44.24 which the member qualifying therefor is entitled: 44.25 Coordinated Member Basic Member 44.26 Each year of service1.13the2.13the 44.27 during first ten percent percent 44.28 specified in specified in 44.29 section 356.19, section 356.19, 44.30 subdivision 1, subdivision 3, 44.31 per year per year 44.32 Each year of service1.63the2.63the 44.33 thereafter percent percent 44.34 specified in specified in 44.35 section 356.19, section 356.19, 44.36 subdivision 2, subdivision 4, 45.1 per year per year 45.2 (3)(i) This clause applies only to a person who first 45.3 became a member of the association or a member of a pension fund 45.4 listed in section 356.30, subdivision 3, before July 1, 1989, 45.5 and whose annuity is higher when calculated under clause (2), in 45.6 conjunction with this clause than when calculated under clause 45.7 (4), in conjunction with clause (5). 45.8 (ii) Where any member retires prior to normal retirement 45.9 age under a formula annuity, the member shall be paid a 45.10 retirement annuity in an amount equal to the normal annuity 45.11 provided in clause (2) reduced by one-quarter of one percent for 45.12 each month that the member is under normal retirement age at the 45.13 time of retirement except that for any member who has 30 or more 45.14 years of allowable service credit, the reduction shall be 45.15 applied only for each month that the member is under age 62. 45.16 (iii) Any member whose attained age plus credited allowable 45.17 service totals 90 years is entitled, upon application, to a 45.18 retirement annuity in an amount equal to the normal annuity 45.19 provided in clause (2), without any reduction by reason of early 45.20 retirement. 45.21 (4) This clause applies to a member who has become at least 45.22 55 years old and first became a member of the association after 45.23 June 30, 1989, and to any other member who has become at least 45.24 55 years old and whose annuity amount when calculated under this 45.25 clause and in conjunction with clause (5), is higher than it is 45.26 when calculated under clause (2), in conjunction with clause (3). 45.27 The average salary, as defined in clause (1) multiplied by2.6345.28 the percent specified by section 356.19, subdivision 4, for each 45.29 year of service for a basic member and by1.63the 45.30 percent specified in section 356.19, subdivision 2, for each 45.31 year of service for a coordinated member shall determine the 45.32 amount of the retirement annuity to which the member is entitled. 45.33 (5) This clause applies to a person who has become at least 45.34 55 years old and first becomes a member of the association after 45.35 June 30, 1989, and to any other member who has become at least 45.36 55 years old and whose annuity is higher when calculated under 46.1 clause (4) in conjunction with this clause than when calculated 46.2 under clause (2), in conjunction with clause (3). An employee 46.3 who retires under the formula annuity before the normal 46.4 retirement age shall be paid the normal annuity provided in 46.5 clause (4) reduced so that the reduced annuity is the actuarial 46.6 equivalent of the annuity that would be payable to the employee 46.7 if the employee deferred receipt of the annuity and the annuity 46.8 amount were augmented at an annual rate of three percent 46.9 compounded annually from the day the annuity begins to accrue 46.10 until the normal retirement age. 46.11 Sec. 50. Minnesota Statutes 1996, section 354.44, is 46.12 amended by adding a subdivision to read: 46.13 Subd. 6a. [EXTENSION OF 1997 PERMANENT INCREASE.] (a) A 46.14 percentage of the permanent increase for benefit recipients 46.15 effective July 1, 1997, under section 68, as specified in 46.16 paragraph (b), is payable to: 46.17 (1) a member who terminates service after June 30, 1997, 46.18 and whose benefit begins to accrue during the period of July 2, 46.19 1997, to July 1, 2002, based on the member's age at retirement. 46.20 (2) a member who is determined to be totally and 46.21 permanently disabled under section 354.05, subdivision 14, after 46.22 June 30, 1997, and whose benefit begins to accrue during the 46.23 period of July 2, 1997, to July 1, 2002, based on the member's 46.24 age at disability. 46.25 (3) the survivor of a member who dies after June 30, 1997, 46.26 and whose benefit begins to accrue during the period of July 2, 46.27 1997, to July 1, 2002. 46.28 (b) The percentage of the permanent increase is the amount 46.29 designated for the applicable beginning benefit accrual date, as 46.30 follows: 46.31 Beginning Benefit Percentage of 46.32 Accrual Date Permanent Increase 46.33 July 2, 1997, to July 1, 1998 50 percent 46.34 July 2, 1998, to July 1, 1999 40 percent 46.35 July 2, 1999, to July 1, 2000 30 percent 46.36 July 2, 2000, to July 1, 2001 20 percent 47.1 July 2, 2001, to July 1, 2002 10 percent 47.2 Sec. 51. Minnesota Statutes 1996, section 354.53, 47.3 subdivision 1, is amended to read: 47.4 Subdivision 1. [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 47.5 employee given a leave of absence to enter military service and 47.6 who returns to teaching service upon discharge from military 47.7 service as provided in section 192.262,shallmay obtain credit 47.8 for the period of military service but shall not receive credit 47.9 for any voluntary extension of military service at the instance 47.10 of the member beyond the initial period of enlistment, induction 47.11 or call to active duty. The member shall obtain credit by 47.12 paying into the fund an employee contribution based upon 47.13 thesalary of the member at the date of return from military47.14service. The amount of this contribution shall be as follows:47.15 47.16PeriodBasic MemberCoordinated Member47.17July 1, 19738 percent4 percent47.18thru47.19June 30, 197947.20July 1, 197947.21and 8.5 percent 4.5 percent47.22thereafter47.23The contributions specified in this subdivision shall be47.24 contribution rates in effect at the time that the military 47.25 service was performed multiplied by the annual salary rate of 47.26 the member for the year beginning with the date of return from 47.27 military service and the number of years of military service 47.28 together with interest thereon at an annual rate of 8.5 percent 47.29 compounded annually from the time the military service was 47.30 rendered to the first date of payment. The employer 47.31 contribution and additional contribution provided in section 47.32 354.42shallmust be paid by the employing unit at the rates in 47.33 effect at the time that the military service was performed, 47.34 applied to the annual salary rate of the member for the year 47.35 beginning with the date of return from military service, in the 47.36 manner provided in section 354.52, subdivision 4. 48.1 Sec. 52. Minnesota Statutes 1996, section 354.55, 48.2 subdivision 11, is amended to read: 48.3 Subd. 11. [DEFERRED ANNUITY; AUGMENTATION.] (a) Any person 48.4 covered under section 354.44, subdivision 6, who ceases to 48.5 render teaching service, may leave the person's accumulated 48.6 deductions in the fund for the purpose of receiving a deferred 48.7 annuity at retirement. Eligibility for an annuity under this 48.8 subdivisionshall beis governed pursuant to section 354.44, 48.9 subdivision 1, or 354.60. 48.10 (b) The amount of the deferred retirement annuityshall be48.11 is determined by section 354.44, subdivision 6, and augmented as 48.12 provided in this subdivision. The required reserves related to 48.13 that portion of the annuity which had accrued when the member 48.14 ceased to render teaching serviceshallmust be augmented by 48.15 interest compounded annually from the first day of the month 48.16 following the month during which the member ceased to render 48.17 teaching service to the effective date of retirement. There 48.18 shall be no augmentation if this period is less than three 48.19 months or if this period commences prior to July 1, 1971. The 48.20 rates of interest used for this purposeshallmust be five 48.21 percent compounded annually commencing July 1, 1971, until 48.22 January 1, 1981, and three percent compounded annually 48.23 thereafter until January 1 of the year following the year in 48.24 which the former member attains age 55. From that date to the 48.25 effective date of retirement, the rate is five percent 48.26 compounded annually. If a person has more than one period of 48.27 uninterrupted service, a separate average salary determined 48.28 under section 354.44, subdivision 6, must be used for each 48.29 period and the required reserves related to each periodshall48.30 must be augmented by interest pursuant to this subdivision. The 48.31 sum of the augmented required reserves so determined shall be 48.32 the basis for purchasing the deferred annuity. If a person 48.33 repays a refund, the service restored by the repayment must be 48.34 considered as continuous with the next period of service for 48.35 which the person has credit with this fund. If a person does 48.36 not render teaching service in any one fiscal year or more 49.1 consecutive fiscal years and then resumes teaching service, the 49.2 formula percentages used from the date of the resumption of 49.3 teaching serviceshallmust be those applicable to new members. 49.4 The mortality table and interest assumption used to compute the 49.5 annuityshallmust be the applicable mortality table established 49.6 by the board under section 354.07, subdivision 1, and the 49.7 interest rate assumption under section 356.215 in effect when 49.8 the member retires. A period of uninterrupted service for the 49.9 purposes of this subdivision means a period of covered teaching 49.10 service during which the member has not been separated from 49.11 active service for more than one fiscal year. 49.12 (c) In no case shall the annuity payable under this 49.13 subdivision be less than the amount of annuity payable pursuant 49.14 to section 354.44, subdivision 6. 49.15 (d) The requirements and provisions for retirement before 49.16 normal retirement age contained in section 354.44, subdivision 49.17 6, clause (3) or (5), shall also apply to an employee fulfilling 49.18 the requirements with a combination of service as provided in 49.19 section 354.60. 49.20 (e) The augmentation provided by this subdivision applies 49.21 to the benefit provided in section 354.46, subdivision 2. 49.22 (f) The augmentation provided by this subdivision shall not 49.23 apply to any period in which a person is on an approved leave of 49.24 absence from an employer unit covered by the provisions of this 49.25 chapter. 49.26 (g) The retirement annuity or disability benefit of, or the 49.27 survivor benefit payable on behalf of, a former teacher who 49.28 terminated service before July 1, 1997, which is not first 49.29 payable until after June 30, 1997, must be increased on an 49.30 actuarial equivalent basis to reflect the change in the post 49.31 retirement interest rate actuarial assumption under section 56 49.32 from five percent to six percent under a calculation procedure 49.33 and tables adopted by the board as recommended by an approved 49.34 actuary and approved by the actuary retained by the legislative 49.35 commission on pensions and retirement. 49.36 Sec. 53. [356.19] [RETIREMENT BENEFIT FORMULA 50.1 PERCENTAGES.] 50.2 Subdivision 1. [COORDINATED PLAN MEMBERS.] The applicable 50.3 benefit accrual rate is 1.2 percent. 50.4 Subd. 2. [COORDINATED PLAN MEMBERS.] The applicable 50.5 benefit accrual rate is 1.7 percent. 50.6 Subd. 3. [BASIC PLAN MEMBERS.] The applicable benefit 50.7 accrual rate is 2.2 percent. 50.8 Subd. 4. [BASIC PLAN MEMBERS.] The applicable benefit 50.9 accrual rate is 2.7 percent. 50.10 Subd. 5. [CORRECTIONAL PLAN MEMBERS.] The applicable 50.11 benefit accrual rate is 2.4 percent. 50.12 Subd. 6. [STATE TROOPERS PLAN AND POLICE/FIRE PLAN 50.13 MEMBERS.] The applicable benefit accrual rate is 3.0 percent. 50.14 Subd. 7. [JUDGES PLAN.] The applicable benefit accrual 50.15 rate is 2.7 percent. 50.16 Subd. 8. [JUDGES PLAN.] The applicable benefit accrual 50.17 rate is 3.2 percent. 50.18 Subd. 9. [FUTURE BENEFIT ACCRUAL RATE INCREASES.] After 50.19 January 2, 1998, benefit accrual rate increases under this 50.20 section must apply only to allowable service or formula service 50.21 rendered after the effective date of the benefit accrual rate 50.22 increase. 50.23 Sec. 54. Minnesota Statutes 1996, section 356.20, 50.24 subdivision 2, is amended to read: 50.25 Subd. 2. [COVERED PUBLIC PENSION FUNDS.] This section 50.26 applies to the following public pension plans: 50.27 (1) State employees retirement fund. 50.28 (2) Public employees retirement fund. 50.29 (3) Teachers retirement association. 50.30 (4) State patrol retirement fund. 50.31 (5) Minneapolis teachers retirement fund association. 50.32 (6) St. Paul teachers retirement fund association. 50.33 (7) Duluth teachers retirement fund association. 50.34 (8) Minneapolis employees retirement fund. 50.35 (9) University of Minnesota faculty retirement plan. 50.36 (10) University of Minnesota faculty supplemental 51.1 retirement plan. 51.2 (11) Judges retirement fund. 51.3 (12) Any police or firefighter's relief association 51.4 enumerated in section 69.77, subdivision 1a or 69.771, 51.5 subdivision 1. 51.6 (13) Public employees police and fire fund. 51.7 (14) Minnesota state retirement system correctional 51.8 officers retirement fund. 51.9(15) Public employees local government correctional service51.10retirement plan.51.11 Sec. 55. Minnesota Statutes 1996, section 356.215, 51.12 subdivision 2, is amended to read: 51.13 Subd. 2. [REQUIREMENTS.] (a) It is the policy of the 51.14 legislature that it is necessary and appropriate to determine 51.15 annually the financial status of tax supported retirement and 51.16 pension plans for public employees. To achieve this goal, the 51.17 legislative commission on pensions and retirement shall have 51.18 prepared by the actuary retained by the commission annual 51.19 actuarial valuations of the retirement plans enumerated in 51.20 section 3.85, subdivision 11, paragraph (b),andquadrennial 51.21 experience studies of the retirement plans enumerated in section 51.22 3.85, subdivision 11, paragraph (b), clauses (1), (2), and (7), 51.23 and, two years after each set of quadrennial experience studies, 51.24 quadrennial projection valuations of the retirement plans 51.25 enumerated in section 3.85, subdivision 11, paragraph (b), 51.26 clauses (1), (2), and (7), and of any other retirement plan 51.27 enumerated in section 3.85, subdivision 11, paragraph (b), for 51.28 which it determines that the analysis is beneficial. The 51.29 governing or managing board or administrative officials of each 51.30 public pension and retirement fund or plan enumerated in section 51.31 356.20, subdivision 2, clauses (9), (10), and (12), shall have 51.32 prepared by an approved actuary annual actuarial valuations of 51.33 their respective funds as provided in this section. This 51.34 requirement also applies to any fund that is the successor to 51.35 any organization enumerated in section 356.20, subdivision 2, or 51.36 to the governing or managing board or administrative officials 52.1 of any newly formed retirement fund or association operating 52.2 under the control or supervision of any public employee group, 52.3 governmental unit, or institution receiving a portion of its 52.4 support through legislative appropriations, and any local police 52.5 or fire fund coming within the provisions of section 356.216. 52.6 (b) The quadrennial projection valuations required under 52.7 paragraph (a) are intended to serve as an additional analytical 52.8 tool with which policy makers may assess the future funding 52.9 status of public plans through forecasting and testing various 52.10 potential outcomes over time if certain plan assumptions or 52.11 valuation methods were to be modified. In consultation with the 52.12 executive director of the legislative commission on pensions and 52.13 retirement, the retirement fund directors, the state economist, 52.14 the state demographer, the commissioner of finance, and the 52.15 commissioner of employee relations, the actuary retained by the 52.16 legislative commission on pensions and retirement shall perform 52.17 the quadrennial projection valuations, testing future 52.18 implications for plan funding by modifying assumptions and 52.19 methods currently in place. The commission-retained actuary 52.20 shall provide advice to the commission as to the periods over 52.21 which such projections should be made, the nature and scope of 52.22 the scenarios to be analyzed, the measures of funding status to 52.23 be employed, and shall report the results of these analyses in 52.24 the same manner as for quadrennial experience studies. 52.25 Sec. 56. Minnesota Statutes 1996, section 356.215, 52.26 subdivision 4d, is amended to read: 52.27 Subd. 4d. [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 52.28 governed bychapterschapter 352B, 353C, and by sections 52.29 352.90throughto 352.951 and 353.63throughto 353.68, the 52.30 actuarial valuation must use a preretirement interest assumption 52.31 of 8.5 percent, a postretirement interest assumption offivesix 52.32 percent, and a future salary increase assumption of 6.5 percent. 52.33 (b) For funds governed by chapter 354A, the actuarial 52.34 valuation must use preretirement and postretirement assumptions 52.35 of 8.5 percent and a future salary increase assumption of 6.5 52.36 percent, but the actuarial valuation must reflect the payment of 53.1 postretirement adjustments to retirees, based on the methods 53.2 specified in the bylaws of the fund as approved by the 53.3 legislature. For a fund governed by chapter 422A, the actuarial 53.4 valuation shall use a preretirement interest assumption of six 53.5 percent, a postretirement interest assumption of five percent, 53.6 and an assumption that in each future year the salary on which a 53.7 retirement or other benefit is based is 1.04 multiplied by the 53.8 salary for the preceding year. 53.9 (c) For all other funds not specified in paragraph (a), 53.10 (b), (d), or (e), the actuarial valuation must use a 53.11 preretirement interest assumption of five percent, a 53.12 postretirement interest assumption of five percent, and a future 53.13 salary increase assumption of 3.5 percent. 53.14 (d) For funds governed by chapters 3A, 352C, and 490, the 53.15 actuarial valuation must use a preretirement interest assumption 53.16 of 8.5 percent, a postretirement interest assumption offivesix 53.17 percent, and a future salary increase assumption of 6.5 percent 53.18 in each future year in which the salary amount payable is not 53.19 determinable from section 3.099, 15A.081, subdivision 6, or 53.20 15A.083, subdivision 1, whichever applies, or from applicable 53.21 compensation council recommendations under section 15A.082. 53.22 (e) For funds governed by sections 352.01 through 352.86, 53.23 353.01 through 353.46, and chapter 354, the actuarial valuation 53.24 must use a preretirement interest assumption of 8.5, a 53.25 postretirement interest assumption offivesix percent, and a 53.26 graded rate future salary increase assumption as follows: 53.27 General state General public 53.28 employees employees Teachers 53.29 retirement retirement retirement 53.30 Age plan plan plan 53.31 16 7.2500% 8.71% 7.25% 53.32 17 7.2500 8.71 7.25 53.33 18 7.2500 8.70 7.25 53.34 19 7.2500 8.70 7.25 53.35 20 7.2500 7.70 7.25 53.36 21 7.1454 7.70 7.25 54.1 22 7.1094 7.70 7.25 54.2 23 7.0725 7.70 7.20 54.3 24 7.0363 7.70 7.15 54.4 25 7.0000 7.60 7.10 54.5 26 7.0000 7.51 7.05 54.6 27 7.0000 7.39 7.00 54.7 28 7.0000 7.30 7.00 54.8 29 7.0000 7.20 7.00 54.9 30 7.0000 7.20 7.00 54.10 31 7.0000 7.10 7.00 54.11 32 7.0000 7.10 7.00 54.12 33 7.0000 7.00 7.00 54.13 34 7.0000 7.00 7.00 54.14 35 7.0000 6.90 7.00 54.15 36 6.9019 6.80 7.00 54.16 37 6.8074 6.70 7.00 54.17 38 6.7125 6.60 6.90 54.18 39 6.6054 6.50 6.80 54.19 40 6.5000 6.40 6.70 54.20 41 6.3540 6.30 6.60 54.21 42 6.2087 6.30 6.50 54.22 43 6.0622 6.30 6.35 54.23 44 5.9048 6.20 6.20 54.24 45 5.7500 6.20 6.05 54.25 46 5.6940 6.09 5.90 54.26 47 5.6375 6.00 5.75 54.27 48 5.5822 5.90 5.70 54.28 49 5.5405 5.80 5.65 54.29 50 5.5000 5.70 5.60 54.30 51 5.4384 5.70 5.55 54.31 52 5.3776 5.70 5.50 54.32 53 5.3167 5.70 5.45 54.33 54 5.2826 5.70 5.40 54.34 55 5.2500 5.70 5.35 54.35 56 5.2500 5.70 5.30 54.36 57 5.2500 5.70 5.25 55.1 58 5.2500 5.70 5.25 55.2 59 5.2500 5.70 5.25 55.3 60 5.2500 5.00 5.25 55.4 61 5.2500 5.00 5.25 55.5 62 5.2500 5.00 5.25 55.6 63 5.2500 5.00 5.25 55.7 64 5.2500 5.00 5.25 55.8 65 5.2500 5.00 5.25 55.9 66 5.2500 5.00 5.25 55.10 67 5.2500 5.00 5.25 55.11 68 5.2500 5.00 5.25 55.12 69 5.2500 5.00 5.25 55.13 70 5.2500 5.00 5.25 55.14 Sec. 57. Minnesota Statutes 1996, section 356.215, 55.15 subdivision 4g, is amended to read: 55.16 Subd. 4g. [AMORTIZATION CONTRIBUTIONS.] (a) In addition to 55.17 the exhibit indicating the level normal cost, the actuarial 55.18 valuation must contain an exhibit indicating the additional 55.19 annual contribution sufficient to amortize the unfunded 55.20 actuarial accrued liability. For funds governed by chapters 3A, 55.21 352, 352B, 352C, 353,353C,354, 354A, and 490, the additional 55.22 contribution must be calculated on a level percentage of covered 55.23 payroll basis by the established date for full funding in effect 55.24 when the valuation is prepared. For funds governed by chapter 55.25 3A, sections 352.90 through 352.951, chapters 352B, 352C, 55.26 sections 353.63 through 353.68, and chapters 353C, 354A, and 55.27 490, the level percent additional contribution must be 55.28 calculated assuming annual payroll growth of 6.5 percent. For 55.29 funds governed by sections 352.01 through 352.86 and chapter 55.30 354, the level percent additional contribution must be 55.31 calculated assuming an annual payroll growth of five percent. 55.32 For the fund governed by sections 353.01 through 353.46, the 55.33 level percent additional contribution must be calculated 55.34 assuming an annual payroll growth of six percent. For all other 55.35 funds, the additional annual contribution must be calculated on 55.36 a level annual dollar amount basis. 56.1 (b) For any fund other than the Minneapolis employees 56.2 retirement fund, after the first actuarial valuation date 56.3 occurring after June 1, 1989, if there has not been a change in 56.4 the actuarial assumptions used for calculating the actuarial 56.5 accrued liability of the fund, a change in the benefit plan 56.6 governing annuities and benefits payable from the fund, a change 56.7 in the actuarial cost method used in calculating the actuarial 56.8 accrued liability of all or a portion of the fund, or a 56.9 combination of the three, which change or changes by themselves 56.10 without inclusion of any other items of increase or decrease 56.11 produce a net increase in the unfunded actuarial accrued 56.12 liability of the fund, the established date for full funding for 56.13 the first actuarial valuation made after June 1, 1989, and each 56.14 successive actuarial valuation is the first actuarial valuation 56.15 date occurring after June 1, 2020. 56.16 (c) For any fund or plan other than the Minneapolis 56.17 employees retirement fund, after the first actuarial valuation 56.18 date occurring after June 1, 1989, if there has been a change in 56.19 any or all of the actuarial assumptions used for calculating the 56.20 actuarial accrued liability of the fund, a change in the benefit 56.21 plan governing annuities and benefits payable from the fund, a 56.22 change in the actuarial cost method used in calculating the 56.23 actuarial accrued liability of all or a portion of the fund, or 56.24 a combination of the three, and the change or changes, by 56.25 themselves and without inclusion of any other items of increase 56.26 or decrease, produce a net increase in the unfunded actuarial 56.27 accrued liability in the fund, the established date for full 56.28 funding must be determined using the following procedure: 56.29 (i) the unfunded actuarial accrued liability of the fund 56.30 must be determined in accordance with the plan provisions 56.31 governing annuities and retirement benefits and the actuarial 56.32 assumptions in effect before an applicable change; 56.33 (ii) the level annual dollar contribution or level 56.34 percentage, whichever is applicable, needed to amortize the 56.35 unfunded actuarial accrued liability amount determined under 56.36 item (i) by the established date for full funding in effect 57.1 before the change must be calculated using the interest 57.2 assumption specified in subdivision 4d in effect before the 57.3 change; 57.4 (iii) the unfunded actuarial accrued liability of the fund 57.5 must be determined in accordance with any new plan provisions 57.6 governing annuities and benefits payable from the fund and any 57.7 new actuarial assumptions and the remaining plan provisions 57.8 governing annuities and benefits payable from the fund and 57.9 actuarial assumptions in effect before the change; 57.10 (iv) the level annual dollar contribution or level 57.11 percentage, whichever is applicable, needed to amortize the 57.12 difference between the unfunded actuarial accrued liability 57.13 amount calculated under item (i) and the unfunded actuarial 57.14 accrued liability amount calculated under item (iii) over a 57.15 period of 30 years from the end of the plan year in which the 57.16 applicable change is effective must be calculated using the 57.17 applicable interest assumption specified in subdivision 4d in 57.18 effect after any applicable change; 57.19 (v) the level annual dollar or level percentage 57.20 amortization contribution under item (iv) must be added to the 57.21 level annual dollar amortization contribution or level 57.22 percentage calculated under item (ii); 57.23 (vi) the period in which the unfunded actuarial accrued 57.24 liability amount determined in item (iii) is amortized by the 57.25 total level annual dollar or level percentage amortization 57.26 contribution computed under item (v) must be calculated using 57.27 the interest assumption specified in subdivision 4d in effect 57.28 after any applicable change, rounded to the nearest integral 57.29 number of years, but not to exceed 30 years from the end of the 57.30 plan year in which the determination of the established date for 57.31 full funding using the procedure set forth in this clause is 57.32 made and not to be less than the period of years beginning in 57.33 the plan year in which the determination of the established date 57.34 for full funding using the procedure set forth in this clause is 57.35 made and ending by the date for full funding in effect before 57.36 the change; and 58.1 (vii) the period determined under item (vi) must be added 58.2 to the date as of which the actuarial valuation was prepared and 58.3 the date obtained is the new established date for full funding. 58.4 (d) For the Minneapolis employees retirement fund, the 58.5 established date for full funding is June 30, 2020. 58.6 (e) For the public employees retirement association police 58.7 and firefundplan, the correctional employees retirement plan 58.8 of the Minnesota state retirement system, and the state patrol 58.9 retirement plan, an excess of valuation assets over actuarial 58.10 accrued liabilitywillmust be amortized in the same manner over 58.11 the same period as an unfunded actuarial accrued liability 58.12 butwillmust serve to reduce the required contribution instead 58.13 of increasing it. 58.14 Sec. 58. Minnesota Statutes 1996, section 356.217, is 58.15 amended to read: 58.16 356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.] 58.17 (a)The actuary retained by the legislative commission on58.18pensions and retirement is not required to prepare actuarial58.19valuations of the public employees local government correctional58.20employees retirement plan unless the plan is implemented by a58.21county under section 353C.04.58.22(b)The cost of any requested benefit projections by the 58.23 commission-retained actuary relating to the Minnesota 58.24 postretirement investment fund for the state board of investment 58.25 is payable by the state board of investment. 58.26(c)(b) Actuarial valuations under section 356.215, for 58.27 July 1, 1991, and thereafter, are not required to have an 58.28 individual commentary section. The commentary section, if 58.29 omitted from the individual plan actuarial valuation, must be 58.30 included in an appropriate generalized format as part of the 58.31 report to the legislature under section 3.85, subdivision 11. 58.32(d)(c) Actuarial valuations under section 356.215, for 58.33 July 1, 1991, and thereafter, are not required to contain 58.34 separate actuarial valuation results for basic and coordinated 58.35 programs unless each program has a membership of at least ten 58.36 percent of the total membership of the fund. Actuarial 59.1 valuations under section 356.215, for July 1, 1991, and 59.2 thereafter, are not required to contain cash flow forecasts. 59.3(e)(d) Actuarial valuations of the public employees police 59.4 and fire fund local consolidation accounts for July 1, 1991, and 59.5 thereafter, are not required to contain separate tabulations or 59.6 summaries of active member, service retirement, disability 59.7 retirement, and survivor data for each local consolidation 59.8 account. 59.9(f)(e) The commission-retained actuary is: 59.10 (1) required to publish experience findings for plans for 59.11 which experience findings are required only on a quadrennial 59.12 basis for the four-year period ending June 30, 1992, and every 59.13 four years thereafter; 59.14 (2) not required to prepare a separate experience analysis 59.15 or publish separate experience findings for basic and 59.16 coordinated programs if separate actuarial valuation results for 59.17 the programs are not required; and 59.18 (3) not required to calculate investment rate of return 59.19 experience results on any basis other than current asset value 59.20 as defined in section 356.215, subdivision 1, clause (6). 59.21 Sec. 59. Minnesota Statutes 1996, section 356.30, 59.22 subdivision 1, is amended to read: 59.23 Subdivision 1. [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 59.24 Notwithstanding any provisions to the contrary of the laws 59.25 governing the funds enumerated in subdivision 3, a person who 59.26 has met the qualifications of clause (2) may elect to receive a 59.27 retirement annuity from each fund in which the person has at 59.28 least six months allowable service, based on the allowable 59.29 service in each fund, subject to the provisions of clause (3). 59.30 (2) A person may receive upon retirement a retirement 59.31 annuity from each fund in which the person has at least six 59.32 months allowable service, and augmentation of a deferred annuity 59.33 calculated under the laws governing each public pension plan or 59.34 fund named in subdivision 3, from the date the person terminated 59.35 all public service if: 59.36 (a) the person has allowable service totaling an amount 60.1 that allows the person to receive an annuity in any two or more 60.2 of the enumerated funds; and 60.3 (b) the person has not begun to receive an annuity from any 60.4 enumerated fund or the person has made application for benefits 60.5 from all funds and the effective dates of the retirement annuity 60.6 with each fund under which the person chooses to receive an 60.7 annuity are within a one-year period. 60.8 (3) The retirement annuity from each fund must be based 60.9 upon the allowable service in each fund, except that: 60.10 (a) The laws governing annuities must be the law in effect 60.11 on the date of termination from the last period of public 60.12 service under a covered fund with which the person earned a 60.13 minimum of one-half year of allowable service credit during that 60.14 employment. 60.15 (b) The "average salary" on which the annuity from each 60.16 covered fund in which the employee has credit in a formula plan 60.17 shall be based on the employee's highest five successive years 60.18 of covered salary during the entire service in covered funds. 60.19 (c) The formula percentages to be used by each fund must be 60.20 those percentages prescribed by each fund's formula as continued 60.21 for the respective years of allowable service from one fund to 60.22 the next, recognizing all previous allowable service with the 60.23 other covered funds. 60.24 (d) Allowable service in all the funds must be combined in 60.25 determining eligibility for and the application of each fund's 60.26 provisions in respect to actuarial reduction in the annuity 60.27 amount for retirement prior to normal retirement. 60.28 (e) The annuity amount payable for any allowable service 60.29 under a nonformula plan of a covered fund must not be affected 60.30 but such service and covered salary must be used in the above 60.31 calculation. 60.32 (f) This section shall not apply to any person whose final 60.33 termination from the last public service under a covered fund is 60.34 prior to May 1, 1975. 60.35 (g) For the purpose of computing annuities under this 60.36 section the formula percentages used by any covered fund, except 61.1the basic program of the teachers retirement association,the 61.2 public employees police and fire fund, and the state patrol 61.3 retirement fund, must not exceed2-1/2the percent specified in 61.4 section 356.19, subdivision 4, per year of service for any year 61.5 of service or fraction thereof. The formula percentage used by 61.6 the public employees police and fire fund and the state patrol 61.7 retirement fund must not exceed2.65the percent specified in 61.8 section 356.19, subdivision 6, per year of service for any year 61.9 of service or fraction thereof.The formula percentage used by61.10the teachers retirement association must not exceed 2.63 percent61.11per year of basic program service for any year of basic program61.12service or fraction thereof.The formula percentage used by the 61.13 legislators retirement plan and the elective state officers 61.14 retirement must not exceed 2.5 percent, but this limit does not 61.15 apply to the adjustment provided under section 3A.02, 61.16 subdivision 1, paragraph (c), or 352C.031, paragraph (b). 61.17 (h) Any period of time for which a person has credit in 61.18 more than one of the covered funds must be used only once for 61.19 the purpose of determining total allowable service. 61.20 (i) If the period of duplicated service credit is more than 61.21 six months, or the person has credit for more than six months 61.22 with each of the funds, each fund shall apply its formula to a 61.23 prorated service credit for the period of duplicated service 61.24 based on a fraction of the salary on which deductions were paid 61.25 to that fund for the period divided by the total salary on which 61.26 deductions were paid to all funds for the period. 61.27 (j) If the period of duplicated service credit is less than 61.28 six months, or when added to other service credit with that fund 61.29 is less than six months, the service credit must be ignored and 61.30 a refund of contributions made to the person in accord with that 61.31 fund's refund provisions. 61.32 Sec. 60. Minnesota Statutes 1996, section 356.30, 61.33 subdivision 3, is amended to read: 61.34 Subd. 3. [COVERED FUNDS.] This section applies to the 61.35 following retirement funds: 61.36 (1) state employees retirement fund, established pursuant 62.1 to chapter 352; 62.2 (2) correctional employees retirement program, established 62.3 pursuant to chapter 352; 62.4 (3) unclassified employees retirement plan, established 62.5 pursuant to chapter 352D; 62.6 (4) state patrol retirement fund, established pursuant to 62.7 chapter 352B; 62.8 (5) legislators' retirement plan, established pursuant to 62.9 chapter 3A; 62.10 (6) elective state officers' retirement plan, established 62.11 pursuant to chapter 352C; 62.12 (7) public employees retirement association, established 62.13 pursuant to chapter 353; 62.14 (8) public employees police and fire fund, established 62.15 pursuant to chapter 353; 62.16 (9) teachers retirement association, established pursuant 62.17 to chapter 354; 62.18 (10) Minneapolis employees retirement fund, established 62.19 pursuant to chapter 422A; 62.20 (11) Minneapolis teachers retirement fund association, 62.21 established pursuant to chapter 354A; 62.22 (12) St. Paul teachers retirement fund association, 62.23 established pursuant to chapter 354A; 62.24 (13) Duluth teachers retirement fund association, 62.25 established pursuant to chapter 354A; 62.26(14) public employees local government correctional service62.27retirement plan established by sections 353C.01 to 353C.10;and 62.28(15)(14) judges' retirement fund, established by sections 62.29 490.121 to 490.132. 62.30 Sec. 61. Minnesota Statutes 1996, section 356.32, 62.31 subdivision 2, is amended to read: 62.32 Subd. 2. [COVERED FUNDS.] The provisions of this section 62.33 shall apply to the following retirement funds: 62.34 (1) state employees retirement fund, established pursuant 62.35 to chapter 352; 62.36 (2) correctional employees retirement program, established 63.1 pursuant to chapter 352; 63.2 (3) state patrol retirement fund, established pursuant to 63.3 chapter 352B; 63.4 (4) public employees retirement fund, established pursuant 63.5 to chapter 353; 63.6 (5) public employees police and fire fund, established 63.7 pursuant to chapter 353; 63.8 (6) teachers retirement association, established pursuant 63.9 to chapter 354; 63.10 (7) Minneapolis employees retirement fund, established 63.11 pursuant to chapter 422A; 63.12 (8) Duluth teachers retirement fund association, 63.13 established pursuant to chapter 354A; 63.14 (9) Minneapolis teachers retirement fund association, 63.15 established pursuant to chapter 354A; and 63.16 (10) St. Paul teachers retirement fund association, 63.17 established pursuant to chapter 354A;63.18(11) public employees local government correctional service63.19retirement plan established by sections 353B.01 to 353B.10. 63.20 Sec. 62. Minnesota Statutes 1996, section 422A.06, 63.21 subdivision 8, is amended to read: 63.22 Subd. 8. [RETIREMENT BENEFIT FUND.] (a) The retirement 63.23 benefit fund shall consist of amounts held for payment of 63.24 retirement allowances for members retired pursuant to this 63.25 chapter. 63.26 (b) Assets equal to the required reserves for retirement 63.27 allowances pursuant to this chapter determined in accordance 63.28 with the appropriate mortality table adopted by the board of 63.29 trustees based on the experience of the fund as recommended by 63.30 the commission-retained actuary shall be transferred from the 63.31 deposit accumulation fund to the retirement benefit fund as of 63.32 the last business day of the month in which the retirement 63.33 allowance begins. The income from investments of these assets 63.34 shall be allocated to this fund. There shall be paid from this 63.35 fund the retirement annuities authorized by law. A required 63.36 reserve calculation for the retirement benefit fund must be made 64.1 by the actuary retained by the legislative commission on 64.2 pensions and retirement and must be certified to the retirement 64.3 board by the commission-retained actuary. 64.4 (c) The retirement benefit fund shall be governed by the 64.5 applicable laws governing the accounting and audit procedures, 64.6 investment, actuarial requirements, calculation and payment of 64.7 postretirement benefit adjustments, discharge of any deficiency 64.8 in the assets of the fund when compared to the actuarially 64.9 determined required reserves, and other applicable operations 64.10 and procedures regarding the Minnesota postretirement investment 64.11 fund in effect on June 30, 1997, establishedpursuant tounder 64.12 Minnesota Statutes 1996, section 11A.18, and any legal or 64.13 administrative interpretations of those laws of the state board 64.14 of investment, the legal advisor to the board of investment and 64.15 the executive director of the state board of investment in 64.16 effect on June 30, 1997. If a deferred yield adjustment account 64.17 is established for the Minnesota postretirement investment 64.18 fund before June 30, 1997, under Minnesota Statutes 1996, 64.19 section 11A.18, subdivision 5, the retirement board shall also 64.20 establish and maintain a deferred yield adjustment account 64.21 within this fund. 64.22 (d) Annually, following the calculation of any 64.23 postretirement adjustment payable from the retirement benefit 64.24 fund, the board of trustees shall submit a report to the 64.25 executive director of the legislative commission on pensions and 64.26 retirement and to the commissioner of finance indicating the 64.27 amount of any postretirement adjustment and the underlying 64.28 calculations on which that postretirement adjustment amount is 64.29 based, including the amount of dividends, the amount of 64.30 interest, and the amount of net realized capital gains or losses 64.31 utilized in the calculations. 64.32 (e) With respect to a former contributing member who began 64.33 receiving a retirement annuity or disability benefit under 64.34 section 422A.151, paragraph (a), clause (2), after June 30, 64.35 1997, or with respect to a survivor of a former contributing 64.36 member who began receiving a survivor benefit under section 65.1 422A.151, paragraph (a), clause (2), after June 30, 1997, the 65.2 reserves attributable to the one percent lower amount of the 65.3 cost-of-living adjustment payable to those annuity or benefit 65.4 recipients annually must be transferred back to the deposit 65.5 accumulation fund to the credit of the metropolitan airports 65.6 commission. The calculation of this annual reduced 65.7 cost-of-living adjustment reserve transfer must be reviewed by 65.8 the actuary retained by the legislative commission on pensions 65.9 and retirement. 65.10 Sec. 63. Minnesota Statutes 1996, section 422A.151, is 65.11 amended to read: 65.12 422A.151 [ALTERNATIVE CALCULATION OF ANNUITY.] 65.13 (a) In the case of a contributing member of the Minneapolis 65.14 employees retirement fund who is employed as a licensed peace 65.15 officer or firefighter with the metropolitan airports commission 65.16 and who retires, becomes disabled within the meaning of section 65.17 422A.18, or dies, the retirement, disability, or survivor 65.18 allowance is equal to the higher of the following: 65.19 (1) the retirement, disability, or survivor allowance 65.20 calculated for the person under the applicable provisions of the 65.21 Minneapolis employees retirement fund; or 65.22 (2) the retirement, disability, or survivor benefit that 65.23 the person would be entitled to upon meeting the applicable age 65.24 and allowable service requirements of section 353.651, 353.656, 65.25 or 353.657 if all employment as a licensed peace officer or 65.26 firefighter with the metropolitan airports commission had been 65.27 allowable service under the public employees retirement 65.28 association police and fire fund, instead of being covered by 65.29 the Minneapolis employees retirement fund. In computing the 65.30 alternative benefit under section 353.651, 353.656, or 353.657, 65.31 the applicable definitions and related provisions of chapter 353 65.32 must be used. 65.33 A firefighter or licensed peace officer terminating 65.34 employment by the metropolitan airports commission after June 65.35 30, 1997, or the survivor of a deceased firefighter or licensed 65.36 peace officer terminating employment by the metropolitan 66.1 airports commission after June 30, 1997, under section 353.651, 66.2 353.656, or 353.657, shall receive a one percent lower 66.3 cost-of-living adjustment than otherwise payable under section 66.4 422A.06, subdivision 5. If the cost-of-living adjustment 66.5 payable under section 422A.06, subdivision 5, is less than one 66.6 percent, the firefighter or licensed peace officer who retired 66.7 after June 30, 1997, must not have a reduction in the previously 66.8 received annuity or benefit amount, but future cost-of-living 66.9 adjustments must be modified equal to the percentage the benefit 66.10 would have been reduced below the person's current annuity or 66.11 benefit amount to reflect the one percent lower cost-of-living 66.12 adjustment under section 422A.06, subdivision 5. 66.13 (b) If a contributing member under paragraph (a) has 66.14 periods of coverage by the Minneapolis employees retirement fund 66.15 that include service other than employment as a licensed peace 66.16 officer or firefighter as well as employment as a licensed peace 66.17 officer or firefighter, the calculation of the benefit under 66.18 paragraph (a), clause (2), may only utilize service as a 66.19 licensed peace officer or firefighter employed by the 66.20 metropolitan airports commission. 66.21 Sec. 64. Minnesota Statutes 1996, section 490.124, 66.22 subdivision 1, is amended to read: 66.23 Subdivision 1. [BASIC RETIREMENT ANNUITY.] Except as 66.24 qualified hereinafter from and after mandatory retirement date, 66.25 normal retirement date, early retirement date, or one year from 66.26 the disability retirement date, as the case may be, a retirement 66.27 annuity shall be payable to a retiring judge from the judges' 66.28 retirement fund in an amount equal to: (1)2-1/2the percentof66.29 specified in section 356.19, subdivision 7, multiplied by the 66.30 judge's final average compensation multiplied by the number of 66.31 years and fractions of years of allowable service rendered prior 66.32 to July 1, 1980; plus (2)threethe percentofspecified in 66.33 section 356.19, subdivision 8, multiplied by the judge's final 66.34 average compensation multiplied by the number of years and 66.35 fractions of years of allowable service rendered after June 30, 66.36 1980; provided that the annuityshallmust not exceed6570 67.1 percent of the judge's annual salary for the 12 months 67.2 immediately preceding retirement. 67.3 Sec. 65. Minnesota Statutes 1996, section 490.124, 67.4 subdivision 5, is amended to read: 67.5 Subd. 5. [DEFERRED BENEFITS.] (a) Any benefit to which a 67.6 judge is entitled under this section may be deferred until early 67.7 or normal retirement date, notwithstanding termination of such 67.8 judge's service prior thereto. 67.9 (b) The retirement annuity of, or the survivor benefit 67.10 payable on behalf of, a former judge, who terminated service 67.11 before July 1, 1997, which is not first payable until after June 67.12 30, 1997, must be increased on an actuarial equivalent basis to 67.13 reflect the change in the post retirement interest rate 67.14 actuarial assumption under section 56 from five percent to six 67.15 percent under a calculation procedure and tables adopted by the 67.16 board of directors of the Minnesota state retirement system and 67.17 approved by the actuary retained by the legislative commission 67.18 on pensions and retirement. 67.19 Sec. 66. [APPROPRIATIONS; DEPARTMENT OF CORRECTIONS AND 67.20 LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.] 67.21 (a) For fiscal years 1998 and 1999, $900,000 is 67.22 appropriated to the commissioner of corrections. The 67.23 commissioner of finance shall include this amount in the base 67.24 budget for the agency when developing the governor's budget 67.25 recommendations for the biennium ending June 30, 2001. 67.26 (b) For fiscal year 1999, $50,000 is appropriated to the 67.27 legislative coordinating commission for allocation to the 67.28 legislative commission on pensions and retirement. 67.29 Sec. 67. [APPROPRIATION REDUCTION.] 67.30 Subdivision 1. [REDUCTIONS BY RETIREMENT PLAN AND 67.31 EMPLOYER.] In fiscal years 1998 and 1999, the commissioner of 67.32 finance shall reduce allotments and cancel to the general fund 67.33 the amounts determined by multiplying the general fund supported 67.34 salaries of employees who are members of the teachers retirement 67.35 association according to clauses (1) and (2), and for employees 67.36 who are members of the general state employees retirement plan 68.1 of the Minnesota state retirement system according to clauses 68.2 (3), (4), and (5): 68.3 (1) 0.90 percent for the Minnesota state colleges and 68.4 universities; 68.5 (2) 1.50 percent for all agencies other than the Minnesota 68.6 state colleges and universities 68.7 (3) 0.20 percent for all agencies other than the Minnesota 68.8 state colleges and universities and the university of Minnesota; 68.9 (4) 0.12 percent for the Minnesota state colleges and 68.10 universities; 68.11 (5) 0.0728 percent for the university of Minnesota. 68.12 Subd. 2. [APPROPRIATION REDUCTIONS APPLIED TO BASE 68.13 BUDGETS.] The commissioner of finance shall include the 68.14 reductions under subdivision 1 when developing the base budgets 68.15 for all affected organizations as submitted with the governor's 68.16 recommended budget for the biennium ending June 30, 2001. 68.17 Subd. 3. [PROJECTED SAVINGS.] For the biennium ending June 68.18 30, 1999, the projected general fund savings attributable to the 68.19 reductions under subdivision 1 are as follows: 68.20 fiscal year 68.21 1998 1999 68.22 subdivision 1, clauses (1) and (2) $1,937,000 $2,053,000 68.23 subdivision 1, clauses (3) $1,162,000 $1,233,000 68.24 subdivision 1, clauses (4) and (5) $ 480,000 $ 509,000 68.25 Sec. 68. [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.] 68.26 A monthly survivor, disability, or retirement benefit paid 68.27 under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 352D, 68.28 353, 353A, 354, and 490, on June 30, 1997, is permanently 68.29 increased effective July 1, 1997, to reflect the change in the 68.30 postretirement fund interest assumption from five percent to six 68.31 percent. The benefit payable under the six percent 68.32 postretirement interest assumption must be actuarially 68.33 equivalent to the benefit payable under the five percent 68.34 interest assumption and must be based on tables adopted by the 68.35 applicable board and approved by the actuary retained by the 68.36 legislative commission on pensions and retirement. 69.1 Sec. 69. [MANDATED PENSION COMMISSION STUDY; DISPOSITION 69.2 OF PERA-P&F CONSOLIDATION ACCOUNTS.] 69.3 (a) The legislative commission on pensions and retirement, 69.4 in consultation with the affected constituencies, shall study 69.5 the advantages and disadvantages of the blending of some or all 69.6 local police and salaried firefighter consolidation accounts 69.7 into the public employees police and fire retirement plan 69.8 established under Minnesota Statutes, sections 353.63 to 353.68. 69.9 (b) The report must be transmitted on or before January 31, 69.10 1998, to the chair of the committee on governmental operations 69.11 and veterans of the senate, the chair of the governmental 69.12 operations budget division of the senate, the chair of the 69.13 committee on governmental operations of the house of 69.14 representatives, and the chair of the state government finance 69.15 division of the house of representatives. 69.16 Sec. 70. [MANDATED PENSION COMMISSION STUDY; FIRST CLASS 69.17 CITY TEACHER RETIREMENT FUND CONSOLIDATION OPTIONS.] 69.18 (a) The legislative commission on pensions and retirement, 69.19 in consultation with the affected constituencies, shall study 69.20 the advantages and disadvantages of the restructuring or the 69.21 consolidation of the first class city teacher retirement fund 69.22 associations and the statewide teachers retirement association. 69.23 In its deliberations, the commission shall review the future 69.24 state funding needs of the Minneapolis employees retirement fund 69.25 and other applicable state pension funding resources. 69.26 (b) The report must be transmitted on or before January 31, 69.27 1998, to the chair of the committee on governmental operations 69.28 and veterans of the senate, the chair of the governmental 69.29 operations budget division of the senate, the chair of the 69.30 committee on governmental operations of the house of 69.31 representatives, and the chair of the state governmental finance 69.32 division of the house of representatives. 69.33 Sec. 71. [REPEALER.] 69.34 (a) Minnesota Statutes 1996, sections 124.195, subdivision 69.35 12; 124.2139; 356.70; and 356.88, subdivision 2, are repealed. 69.36 (b) Minnesota Statutes 1996, sections 353C.01; 353C.02; 70.1 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 70.2 and 353C.10, are repealed. 70.3 Sec. 72. [EFFECTIVE DATES.] 70.4 Sections 36 and 37 are effective the first full pay period 70.5 after December 31, 1997. Sections 15, 16, 19, 20, 27, and 28 70.6 are effective the first full pay period after June 30, 1997. 70.7 Sections 46, 47, and 48 are effective for all salary paid July 70.8 1, 1997, or later. Sections 1 to 14, 17, 18, 21 to 26, 29 to 70.9 35, 38 to 45, and 49 to 71 are effective July 1, 1997. 70.10 ARTICLE 2 70.11 LEGISLATORS AND CONSTITUTIONAL OFFICERS 70.12 Section 1. Minnesota Statutes 1996, section 3A.07, is 70.13 amended to read: 70.14 3A.07 [APPLICATION.] 70.15 This chapter applies to members of the legislature in 70.16 serviceuponafter July 1, 1965,or thereafter,who otherwise 70.17 meet the requirements of this chapter, except that members 70.18 elected for the first time after June 30, 1997, are covered by 70.19 the elected officers plan in chapter 352E. 70.20 Sec. 2. [352C.011] [APPLICABILITY.] 70.21 This chapter applies only to constitutional officers first 70.22 elected before July 1, 1997, to a constitutional office. 70.23 Constitutional officers elected for the first time to a 70.24 constitutional office after June 30, 1997, are covered by the 70.25 elected officers plan under chapter 352E. 70.26 Sec. 3. [352E.051] [ESTABLISHMENT.] 70.27 A retirement program for legislators and constitutional 70.28 officers to be known as the elected officers plan is established 70.29 in the Minnesota state retirement system. 70.30 Sec. 4. [352E.052] [DEFINITIONS.] 70.31 Subdivision 1. [TERMS.] As used in this chapter, unless 70.32 the language, context, or subject matter indicates otherwise, 70.33 the terms in this section have the meanings given them. 70.34 Subd. 2. [COVERED EMPLOYMENT.] "Covered employment" means 70.35 any period for which a constitutional officer or legislator 70.36 serves in office. 71.1 Subd. 3. [ELECTED OFFICERS PLAN.] "Elected officers plan" 71.2 means the retirement program established by this chapter for 71.3 legislators and constitutional officers who were elected for the 71.4 first time to their positions after June 30, 1997. 71.5 Subd. 4. [EMPLOYEE SHARES.] "Employee shares" means shares 71.6 in the supplemental fund purchased with the elected officer's 71.7 contributions. 71.8 Subd. 5. [EMPLOYER SHARES.] "Employer shares" means shares 71.9 in the supplemental fund purchased with the employer's 71.10 contributions. 71.11 Subd. 6. [SUPPLEMENTAL FUND.] "Supplemental fund" means 71.12 the fund established and governed by section 11A.17. 71.13 Subd. 7. [TOTAL SHARES.] "Total shares" means all the 71.14 employee shares and employer shares credited to a participant. 71.15 Where applicable, the term contributions means shares. 71.16 Subd. 8. [VALUE.] "Value" means cash value at the end of 71.17 the month following receipt of an application. If no 71.18 application is required, value means the cash value at the end 71.19 of the month in which the event necessitating the transfer 71.20 occurs. 71.21 Subd. 9. [EXECUTIVE DIRECTOR.] "Executive director" means 71.22 the executive director of the Minnesota state retirement system 71.23 appointed under section 352.03, subdivision 5. 71.24 Subd. 10. [PARTICIPANT.] "Participant" means any elected 71.25 official who has shares invested in the elected officers plan. 71.26 Sec. 5. [352E.053] [COVERAGE.] 71.27 First-time constitutional officers elected to any 71.28 constitutional office and first-time legislators elected after 71.29 June 30, 1997, are eligible for coverage under the elected 71.30 officers plan. 71.31 Sec. 6. [352E.0535] [MEMBER AND EMPLOYER CONTRIBUTIONS.] 71.32 (a) The money used to purchase shares under this section 71.33 are the employee and employer contributions provided in this 71.34 subdivision. 71.35 (b) The employee contribution is five percent of salary. 71.36 (c) The employer contribution is an amount equal to five 72.1 percent of salary. 72.2 (d) These contributions must be made by deduction from 72.3 salary in the manner provided in section 352.04, subdivisions 4, 72.4 5, and 6. 72.5 Sec. 7. [352E.054] [INVESTMENT OPTIONS.] 72.6 (a) An employee may elect to purchase shares in one or a 72.7 combination of the income share account, growth share account, 72.8 international share account, money market account, bond market 72.9 account, fixed interest account, or common stock index account 72.10 established in section 11A.17. The employee may elect to 72.11 participate in one or more of the investment accounts in the 72.12 fund by specifying, on a form provided by the executive 72.13 director, the percentage of the employee's contributions 72.14 provided in subdivision 2 to be used to purchase shares in each 72.15 of the accounts. 72.16 (b) A participant may indicate in writing on forms provided 72.17 by the Minnesota state retirement system a choice of options for 72.18 subsequent purchases of shares. Until a different written 72.19 indication is made by the participant, the executive director 72.20 shall purchase shares in the supplemental fund as selected by 72.21 the participant. If no initial option is chosen, 100 percent 72.22 income shares must be purchased for a participant. 72.23 (c) A participant or former participant may also change the 72.24 investment options selected for all or a portion of the 72.25 participant's shares previously purchased in accounts. 72.26 Sec. 8. [352E.055] [WITHDRAWAL OPTIONS.] 72.27 Subdivision 1. [PAYMENT AFTER TERMINATION.] No withdrawal 72.28 of shares shall be permitted prior to termination of covered 72.29 employment. 72.30 Subd. 2. [WITHDRAWAL OPTIONS.] After termination of 72.31 covered employment or any time thereafter, a participant is 72.32 entitled, upon application, to withdraw the cash value of the 72.33 participant's total shares or leave such shares on deposit with 72.34 the supplemental retirement fund. Shares not withdrawn remain 72.35 on deposit with the supplemental retirement fund until the 72.36 former participant becomes at least 55 years old, and applies 73.1 for an annuity under section 352E.06, subdivision 1. 73.2 Sec. 9. [352E.06] [ANNUITIES.] 73.3 Subdivision 1. [ANNUITY PURCHASE.] When a participant 73.4 attains at least age 55, is retired from covered service, and 73.5 applies for a retirement annuity, the cash value of the 73.6 participant's shares must be transferred to the Minnesota 73.7 postretirement investment fund and used to provide an annuity 73.8 for the retired employee based upon the participant's age when 73.9 the benefit begins to accrue according to the reserve basis used 73.10 by the state employees retirement fund in determining pensions 73.11 and reserves. 73.12 Subd. 2. [LUMP SUM PLUS ANNUITY OPTION.] A participant has 73.13 the option in an application for an annuity to apply for and 73.14 receive the value of one-half of the total shares and thereafter 73.15 receive an annuity, as provided in subdivision 1, based on the 73.16 value of one-half of the total shares. 73.17 Subd. 3. [ANNUITY ACCRUED.] An annuity under this section 73.18 begins to accrue the first day of the first full month after an 73.19 application is received or after termination of state service, 73.20 whichever is later. 73.21 Sec. 10. [352E.07] [DISABILITY BENEFITS.] 73.22 Subdivision 1. [PAYMENT OPTION.] A participant who becomes 73.23 totally and permanently disabled has the option to receive: 73.24 (1) the value of the participant's total shares; 73.25 (2) the value of one-half of the total shares and an 73.26 annuity based on the value of one-half of the total shares; or 73.27 (3) an annuity based on the value of the participant's 73.28 total shares. 73.29 Subd. 2. [ACCRUAL.] The annuity payable under this section 73.30 begins to accrue the first day of the month following the day of 73.31 disability and is based on the participant's age when the 73.32 annuity begins to accrue. The shares must be valued as of the 73.33 end of the month following authorization of payments. 73.34 Subd. 3. [PAYMENT IN ADDITION TO WORKERS' 73.35 COMPENSATION.] The benefits payable under this section must not 73.36 be reduced by amounts received or receivable under applicable 74.1 workers' compensation laws. 74.2 Subd. 4. [REPAYMENT PROHIBITION.] A participant who 74.3 returns to covered service after receiving benefits under this 74.4 section shall not be required or allowed to repay such benefits. 74.5 Sec. 11. [352E.08] [DEATH BENEFITS.] 74.6 Subdivision 1. [SURVIVOR BENEFITS.] If a participant dies 74.7 leaving a spouse and there is no named beneficiary who survives 74.8 to receive payment or the spouse is named beneficiary, the 74.9 spouse may receive: 74.10 (1) the value of the participant's total shares; 74.11 (2) the value of one-half of the total shares, and receive 74.12 an annuity based on the value of one-half of the total shares, 74.13 provided that if the spouse dies before receiving any annuity 74.14 payments the value of the shares must be paid to the spouse's 74.15 children in equal shares, but if no such children survive, then 74.16 to the parents of the spouse in equal shares, but if no such 74.17 children or parents survive, then to the estate of the spouse; 74.18 or 74.19 (3) an annuity based on the value of the total shares, 74.20 provided that if the spouse dies before receiving any annuity 74.21 payments the value of the shares must be paid to the spouse's 74.22 children in equal shares, but if no such children survive, then 74.23 to the parents of the spouse in equal shares, but if no such 74.24 children or parent survive, then to the estate of the spouse; 74.25 and further provided, if the spouse dies after receiving annuity 74.26 payments but before receiving payments equal to the value of the 74.27 employee shares, the value of the employee shares remaining must 74.28 be paid to the spouse's children in equal shares, but if no such 74.29 children survive, then to the parents of the spouse in equal 74.30 shares, but if no such children or parents survive, then to the 74.31 estate of the spouse. 74.32 Subd. 2. [PAYMENT WITHOUT BENEFICIARY DESIGNATION.] If a 74.33 participant dies and has named a beneficiary, the value of the 74.34 total shares must be paid to the beneficiary, but if the 74.35 beneficiary dies before receiving payment, or if no beneficiary 74.36 has been named and there is no spouse, the value of the shares 75.1 must be paid to the children of the participant in equal shares, 75.2 but if no such children survive then in equal shares to the 75.3 parents of the participant, but if no such children or parents 75.4 survive, then to the estate of the participant. 75.5 Sec. 12. [352E.09] [ADMINISTRATION.] 75.6 Subdivision 1. [FIDUCIARY RESPONSIBILITY.] The elected 75.7 officers plan and the provisions of this chapter must be 75.8 administered by the Minnesota state retirement system. 75.9 Fiduciary activities of the elected officers plan must be 75.10 undertaken in a manner consistent with chapter 356A. 75.11 Subd. 2. [REDEMPTION OR PURCHASE OF SHARES.] Whenever 75.12 redemption or purchases from the supplemental retirement fund 75.13 are required to be made, the executive director shall make them. 75.14 Subd. 3. [PROSPECTUS.] The executive director shall 75.15 annually distribute the prospectus prepared by the supplemental 75.16 fund to each participant in covered employment. 75.17 Subd. 4. [APPLICATION.] Whenever benefits or withdrawals 75.18 are authorized or required to be paid, payment must be made only 75.19 after receipt of an application signed by the person or 75.20 representative authorized to receive the benefit or withdrawal. 75.21 Such application must be made only on forms authorized by the 75.22 executive director. 75.23 Subd. 5. [DISBURSEMENT OF ACCOUNT.] If the beneficiary, 75.24 surviving spouse, or estate has not made application for 75.25 benefits within ten years after the date of death of a 75.26 participant, the value of the shares must be appropriated to the 75.27 regular fund according to section 352.12, subdivision 12. If a 75.28 former participant fails to make a claim for benefits by April 1 75.29 following the year in which the former participant attains the 75.30 age of 70 years and six months, the value of the shares are 75.31 appropriated to the general employees retirement fund according 75.32 to section 352.22, subdivision 8. 75.33 Subd. 6. [ADMINISTRATIVE FEES.] Up to one-tenth of one 75.34 percent of salary must be deducted from the employee 75.35 contributions and up to one-tenth of one percent salary must be 75.36 deducted from the employer contributions, as authorized by 76.1 section 352E.054, subdivision 2, to pay the administrative 76.2 expenses of the elected officers plan. 76.3 Sec. 13. [EFFECTIVE DATE.] 76.4 Sections 1 to 12 are effective July 1, 1997. 76.5 ARTICLE 3 76.6 FIRST CLASS CITY TEACHER RETIREMENT FUNDS 76.7 Section 1. Minnesota Statutes 1996, section 354A.011, 76.8 subdivision 15a, is amended to read: 76.9 Subd. 15a. [NORMAL RETIREMENT AGE.] "Normal retirement 76.10 age" means age 65 for a person who first became a member of the 76.11 coordinated program of the Minneapolis or St. Paul teachers 76.12 retirement fund association or the new law coordinated program 76.13 of the Duluth teachers retirement fund association or a member 76.14 of a pension fund listed in section 356.30, subdivision 3, 76.15 before July 1, 1989. For a person who first became a member of 76.16 the coordinated program of the Minneapolis or St. Paul teachers 76.17 retirement fund association or the new law coordinated program 76.18 of the Duluth teachers retirement fund association after June 76.19 30, 1989, normal retirement age means the higher of age 65 or 76.20 retirement age, as defined in United States Code, title 42, 76.21 section 416(l), as amended, but not to exceed age 66. For a 76.22 person who is a member of the basic program of the Minneapolis 76.23 or St. Paul teachers retirement fund association or the old law 76.24 coordinated program of the Duluth teachers retirement fund 76.25 association, normal retirement age means the age at which a 76.26 teacher becomes eligible for a normal retirement annuity 76.27 computed upon meeting the age and service requirements specified 76.28 in the applicable provisions of the articles of incorporation or 76.29 bylaws of the respective teachers retirement fund association. 76.30 Sec. 2. Minnesota Statutes 1996, section 354A.12, 76.31 subdivision 1, is amended to read: 76.32 Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] The contribution 76.33 required to be paid by each member of a teachers retirement fund 76.34 association shall not be less than the percentage of total 76.35 salary specified below for the applicable association and 76.36 program: 77.1 Association and Program Percentage of 77.2 Total Salary 77.3 Duluth teachers retirement 77.4 association 77.5 old law and new law 77.6 coordinated programs 5.5 percent 77.7 Minneapolis teachers retirement 77.8 association 77.9 basic program 8.5 percent 77.10 coordinated program4.55.5 percent 77.11 St. Paul teachers retirement 77.12 association 77.13 basic program 8 percent 77.14 coordinated program4.55.5 percent 77.15 Contributions shall be made by deduction from salary and 77.16 must be remitted directly to the respective teachers retirement 77.17 fund association at least once each month. 77.18 Sec. 3. Minnesota Statutes 1996, section 354A.12, 77.19 subdivision 2a, is amended to read: 77.20 Subd. 2a. [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 77.21 RATES.] (a) The employing units shall make the following 77.22 employer contributions to teachers retirement fund associations: 77.23 (1) for any coordinated member of a teachers retirement 77.24 fund association in a city of the first class, the employing 77.25 unit shall pay the employer social security taxes in accordance 77.26 with section 355.46, subdivision 3, clause (b); 77.27 (2) for any coordinated member of one of the following 77.28 teachers retirement fund associations in a city of the first 77.29 class, the employing unit shall make a regular employer 77.30 contribution to the respective retirement fund association in an 77.31 amount equal to the designated percentage of the salary of the 77.32 coordinated member as provided below: 77.33 Duluth teachers retirement 77.34 fund association 4.50 percent 77.35 Minneapolis teachers retirement 77.36 fund association 4.50 percent 78.1 St. Paul teachers retirement 78.2 fund association 4.50 percent; 78.3 (3) for any basic member of one of the following teachers 78.4 retirement fund associations in a city of the first class, the 78.5 employing unit shall make a regular employer contribution to the 78.6 respective retirement fund in an amount equal to the designated 78.7 percentage of the salary of the basic member as provided below: 78.8 Minneapolis teachers retirement 78.9 fund association 8.50 percent 78.10 St. Paul teachers retirement 78.11 fund association 8.00 percent 78.12 (4) for a basic member of a teachers retirement fund 78.13 association in a city of the first class, the employing unit 78.14 shall make an additional employer contribution to the respective 78.15 fund in an amount equal to the designated percentage of the 78.16 salary of the basic member, as provided below: 78.17 Minneapolis teachers retirement 78.18 fund association 78.19 July 1, 1993 - June 30, 1994 4.85 percent 78.20 July 1, 1994, and thereafter 3.64 percent 78.21 St. Paul teachers retirement 78.22 fund association 78.23 July 1, 1993 - June 30, 1995 4.63 percent 78.24 July 1, 1995, and thereafter 3.64 percent 78.25 (5) for a coordinated member of a teachers retirement fund 78.26 association in a city of the first class, the employing unit 78.27 shall make an additional employer contribution to the respective 78.28 fund in an amount equal to the applicable percentage of the 78.29 coordinated member's salary, as provided below: 78.30 Duluth teachers retirement 78.31 fund association 1.29 percent 78.32 Minneapolis teachers retirement 78.33 fund association 78.34 July 1, 1993 - June 30, 1994 0.50 percent 78.35 July 1, 1994, and thereafter 3.64 percent 78.36 St. Paul teachers retirement 79.1 fund association 79.2 July 1, 1993 - June 30, 1994 0.50 percent 79.3 July 1, 1994 - June 30, 1995 1.50 percent 79.4 July 1,19951997, and thereafter3.6479.5 3.84 percent 79.6 (b) The regular and additional employer contributions must 79.7 be remitted directly to the respective teachers retirement fund 79.8 association at least once each month. Delinquent amounts are 79.9 payable with interest under the procedure in subdivision 1a. 79.10 (c) Payments of regular and additional employer 79.11 contributions for school district or technical college employees 79.12 who are paid from normal operating funds must be made from the 79.13 appropriate fund of the district or technical college. 79.14 Sec. 4. Minnesota Statutes 1996, section 354A.12, 79.15 subdivision 3a, is amended to read: 79.16 Subd. 3a. [SPECIAL DIRECT STATE AID TOST. PAULFIRST 79.17 CLASS CITY TEACHERS RETIREMENT FUNDASSOCIATIONASSOCIATIONS.] 79.18 (a) In fiscal year 1998, the state shall pay $5,545,000 to the 79.19 St. Paul teachers retirement fund association$500,000 in fiscal79.20year 1994, $21,324,000 to the Minneapolis teachers retirement 79.21 fund association, and $486,000 to the Duluth teachers retirement 79.22 fund association. In each subsequent fiscal year,the payment79.23 these payments to theSt. Paulfirst class city teachers 79.24 retirement fundassociationassociations must beincreased at79.25the same rate as the increase in the general education revenue79.26formula allowance under section 124A.22, subdivision 2, in79.27subsequent fiscal years$2,827,000 for St. Paul, $12,954,000 for 79.28 Minneapolis, and $486,000 for Duluth. 79.29 (b) The direct stateaid isaids under this subdivision are 79.30 payable October 1 annually. The commissioner of finance shall 79.31 pay the direct state aid. The amount required under this 79.32 subdivision is appropriated annually from the general fund to 79.33 the commissioner of finance. 79.34 Sec. 5. Minnesota Statutes 1996, section 354A.12, 79.35 subdivision 3c, is amended to read: 79.36 Subd. 3c. [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND 80.1 DIRECT MATCHING AND STATE AID.] (a) The supplemental 80.2 contributions payable to the Minneapolis teachers retirement 80.3 fund association by special school district No. 1 and the city 80.4 of Minneapolis under section 423A.02, subdivision 3, or to the 80.5 St. Paul teachers retirement fund association by independent 80.6 school district No. 625 under section 423A.02, subdivision 3, or 80.7 the direct stateaidaids under subdivision 3a to theSt. Paul80.8 first class city teachers retirementassociationassociations, 80.9 and the direct matching and state aid under subdivision 3b to 80.10 the Minneapolis teachers retirement fund associationterminates80.11 terminate for the respective fund at the end of the fiscal year 80.12 in which the accrued liability funding ratio for that fund, as 80.13 determined in the most recent actuarial report for that fund by 80.14 the actuary retained by the legislative commission on pensions 80.15 and retirement, equals or exceeds the accrued liability funding 80.16 ratio for the teachers retirement association, as determined in 80.17 the most recent actuarial report for the teachers retirement 80.18 association by the actuary retained by the legislative 80.19 commission on pensions and retirement. 80.20 (b) If the state direct matching, state supplemental, or 80.21 state aid is terminated forthe St. Paula first class city 80.22 teachers retirement fund associationor the Minneapolis teachers80.23retirement fund associationunder paragraph (a), it may not 80.24 again be received by that fund. 80.25 (c) If either the Minneapolis teachers retirement fund 80.26 association,orthe St. Paul teachers retirement fund 80.27 association, or the Duluth teachers retirement fund association 80.28 remain funded at less than the funding ratio applicable to the 80.29 teachers retirement association when the provisions of paragraph 80.30 (b) become effective, then any state aid not distributed to that 80.31 association must be immediately transferred to the other 80.32associationassociations in proportion to the relative sizes of 80.33 their unfunded actuarial accrued liabilities. 80.34 Sec. 6. [354A.29] [ST. PAUL TEACHERS RETIREMENT FUND 80.35 ASSOCIATION POSTRETIREMENT ADJUSTMENT.] 80.36 Subdivision 1. [ARTICLES OF INCORPORATION AND 81.1 BYLAWS.] Permission is granted for the St. Paul teachers 81.2 retirement fund association under Minnesota Statutes, section 81.3 354A.12, subdivision 4, to amend its articles of incorporation 81.4 and bylaws to provide postretirement adjustments under this 81.5 section. 81.6 Subd. 2. [ELIMINATION OF PRIOR LUMP SUM POSTRETIREMENT 81.7 ADJUSTMENT MECHANISM.] As a condition precedent to the 81.8 implementation of subdivisions 3 to 6, the lump sum 81.9 postretirement adjustment mechanism in effect on the date of 81.10 enactment of this section must be eliminated and the articles of 81.11 incorporation and bylaws of the association must be amended 81.12 accordingly. 81.13 Subd. 3. [POSTRETIREMENT ADJUSTMENT.] (a) The 81.14 postretirement adjustment described in the articles and bylaws 81.15 of the St. Paul teachers retirement fund association must be 81.16 determined by the board annually after June 30 using the 81.17 procedures under this section. 81.18 (b) Each eligible person who has been receiving an annuity 81.19 or benefit under the articles of incorporation, the bylaws, or 81.20 this chapter for at least 12 months as of the end of the fiscal 81.21 year is eligible to receive a postretirement adjustment of 2.0 81.22 percent that is payable each January 1. 81.23 Subd. 4. [ADDITIONAL INVESTMENT PERCENTAGE 81.24 ADJUSTMENT.] (a) An excess investment earnings percentage 81.25 adjustment must be computed and paid under this subdivision to 81.26 those annuitants and eligible benefit recipients who have been 81.27 receiving an annuity or benefit for at least 12 months as 81.28 determined each June 30 by the board of trustees. 81.29 (b) The board shall also determine the five-year annualized 81.30 rate of return attributable to the assets of the St. Paul 81.31 teachers retirement fund association under the formula specified 81.32 in section 11A.04, clause (11), and the amount of the excess 81.33 five-year annualized rate of return over the preretirement 81.34 interest assumption specified in Minnesota Statutes, section 81.35 356.215. 81.36 (c) The excess investment percentage adjustment must be 82.1 determined by multiplying the quantity one minus the rate of 82.2 contribution deficiency, as specified in the most recent 82.3 actuarial report of the actuary retained by the legislative 82.4 commission on pensions and retirement under section 356.215, by 82.5 the rate of return excess as determined in paragraph (b). 82.6 (d) The excess investment percentage adjustment is payable 82.7 to all annuitants and benefit recipients on the following 82.8 January 1. 82.9 Subd. 5. [EFFECT ON ANNUITY.] The adjustments calculated 82.10 under subdivisions 3 and 4 must be included in all annuities or 82.11 benefits paid to the recipient after the adjustments take effect. 82.12 Subd. 6. [LUMP SUM POSTRETIREMENT ADJUSTMENT 82.13 TRANSITION.] This subdivision applies to all annuitants and 82.14 beneficiaries of the association who received a lump sum 82.15 postretirement adjustment before the calculation of the first 82.16 postretirement adjustment under subdivisions 3 and 4. Before 82.17 the calculation of the first postretirement adjustment under 82.18 subdivisions 3 and 4, the annual retirement annuity must be 82.19 increased by the amount of the lump sum postretirement 82.20 adjustment described in the association bylaws and paid to the 82.21 annuitant or beneficiary in 1997 before the effective date of 82.22 this section or if the annuitant or beneficiary was not eligible 82.23 for a lump sum postretirement adjustment, then the annual 82.24 benefit paid to that annuitant or benefit recipient must be 82.25 increased by the cumulative percentage increase in the Consumer 82.26 Price Index for urban wage earners and clerical workers All 82.27 Items Index published by the United States Department of Labor, 82.28 Bureau of Labor Statistics, from the date of the initial receipt 82.29 of a retirement annuity or benefit of the person whose service 82.30 is the basis of the benefit to June 30, 1997. 82.31 Sec. 7. Minnesota Statutes 1996, section 354A.31, 82.32 subdivision 4, is amended to read: 82.33 Subd. 4. [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 82.34 ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 82.35 applies to the coordinated programs of the Minneapolis teachers 82.36 retirement fund association and the St. Paul teachers retirement 83.1 fund association. 83.2 (b) The normal coordinated retirement annuity shall be an 83.3 amount equal to a retiring coordinated member's average salary 83.4 multiplied by the retirement annuity formula percentage. 83.5 Average salary for purposes of this section shall mean an amount 83.6 equal to the average salary upon which contributions were made 83.7 for the highest five successive years of service credit, but 83.8 which shall not in any event include any more than the 83.9 equivalent of 60 monthly salary payments. Average salary must 83.10 be based upon all years of service credit if this service credit 83.11 is less than five years. 83.12 (c) This paragraph, in conjunction with subdivision 6, 83.13 applies to a person who first became a member or a member in a 83.14 pension fund listed in section 356.30, subdivision 3, before 83.15 July 1, 1989, unless paragraph (d), in conjunction with 83.16 subdivision 7, produces a higher annuity amount, in which case 83.17 paragraph (d) will apply. The retirement annuity formula 83.18 percentage for purposes of this paragraph isonethe percent 83.19 specified in section 356.19, subdivision 1, per year for each 83.20 year of coordinated service for the first ten years and1.5the 83.21 percent specified in section 356.19, subdivision 2, for each 83.22 year of coordinated service thereafter. 83.23 (d) This paragraph applies to a person who has become at 83.24 least 55 years old and who first becomes a member after June 30, 83.25 1989, and to any other member who has become at least 55 years 83.26 old and whose annuity amount, when calculated under this 83.27 paragraph and in conjunction with subdivision 7 is higher than 83.28 it is when calculated under paragraph (c), in conjunction with 83.29 the provisions of subdivision 6. The retirement annuity formula 83.30 percentage for purposes of this paragraph is1.5the percent 83.31 specified in section 356.19, subdivision 2, for each year of 83.32 coordinated service. 83.33 Sec. 8. Minnesota Statutes 1996, section 354A.31, 83.34 subdivision 4a, is amended to read: 83.35 Subd. 4a. [COMPUTATION OF THE NORMAL COORDINATED 83.36 RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 84.1 to the new law coordinated program of the Duluth teachers 84.2 retirement fund association. 84.3 (b) The normal coordinated retirement annuity is an amount 84.4 equal to a retiring coordinated member's average salary 84.5 multiplied by the retirement annuity formula percentage. 84.6 Average salary for purposes of this section means an amount 84.7 equal to the average salary upon which contributions were made 84.8 for the highest five successive years of service credit, but may 84.9 not in any event include any more than the equivalent of 60 84.10 monthly salary payments. Average salary must be based upon all 84.11 years of service credit if this service credit is less than five 84.12 years. 84.13 (c) This paragraph, in conjunction with subdivision 6, 84.14 applies to a person who first became a member or a member in a 84.15 pension fund listed in section 356.30, subdivision 3, before 84.16 July 1, 1989, unless paragraph (d), in conjunction with 84.17 subdivision 7, produces a higher annuity amount, in which case 84.18 paragraph (d) applies. The retirement annuity formula 84.19 percentage for purposes of this paragraph is1.13the percent 84.20 specified in section 356.19, subdivision 1, per year for each 84.21 year of coordinated service for the first ten years and1.63the 84.22 percent specified in section 356.19, subdivision 2, for each 84.23 subsequent year of coordinated service. 84.24 (d) This paragraph applies to a person who is at least 55 84.25 years old and who first becomes a member after June 30, 1989, 84.26 and to any other member who is at least 55 years old and whose 84.27 annuity amount, when calculated under this paragraph and in 84.28 conjunction with subdivision 7, is higher than it is when 84.29 calculated under paragraph (c) in conjunction with subdivision 84.30 6. The retirement annuity formula percentage for purposes of 84.31 this paragraph is1.63the percent specified in section 356.19, 84.32 subdivision 2, for each year of coordinated service. 84.33 Sec. 9. Laws 1979, chapter 109, section 1, as amended by 84.34 Laws 1981, chapter 157, section 1, is amended to read: 84.35 Section 1. Authorization is hereby granted in accordance 84.36 with Minnesota Statutes, Section 354A.12, for the St. Paul 85.1 teachers retirement fund association to amend its bylaws as 85.2 follows: 85.3 (1)Paragraph 9 of Section 3 of Article IV of the bylaws85.4may be amended to provide a lump sum payment to annuitants and85.5survivor benefit recipients who have been receiving annuities or85.6benefits for at least three years, payable three months85.7following the end of a fiscal year. The payments shall only be85.8made if the investment income of the fund during the preceding85.9fiscal year was in excess of 5-1/2 percent of the asset value of85.10the fund at the end of that fiscal year. The amount that each85.11eligible annuitant or benefit recipient shall be entitled to85.12receive shall be determined as follows:85.13(a) The years of service of each annuitant as credited by85.14the fund and the years of service of each person on behalf of85.15whom a survivor benefit is paid as credited by the fund shall be85.16totaled;85.17(b) The dollar amount equal to one-half of one percent of85.18the asset value of the fund at the end of the previous fiscal85.19year shall be determined;85.20(c) The dollar amount determined pursuant to clause (b)85.21shall be divided by the aggregate years of credited service85.22totaled pursuant to clause (a), the result to be considered the85.23bonus figure per year of service credit;85.24(d) For each eligible annuitant and benefit recipient, the85.25payment shall be equal to the bonus figure per year of service85.26credit determined pursuant to clause (c) multiplied by each year85.27of service credited for that person by the fund.85.28(2)A new paragraph may be added to Section 2 of Article IV 85.29 of the bylaws to provide that any active member of the fund with 85.30 service credit prior to July 1, 1978, who elects in the social 85.31 security referendum to become a coordinated member shall be 85.32 entitled to a retirement annuity when otherwise qualified, the 85.33 calculation of which shall utilize the formula specified in Laws 85.34 1977, Chapter 429, Section 61 for that portion of credited 85.35 service which was served prior to July 1, 1978, and the new 85.36 coordinated formula specified in the bylaws for the remainder of 86.1 credited service, both applied to the average salary as 86.2 specified in Paragraph 2 of Section 1 of Article IX. The 86.3 formula percentages to be used in calculating the coordinated 86.4 portion of a retirement annuity on coordinated service shall 86.5 recognize the coordinated service as a continuation of any 86.6 service prior to July 1, 1978. 86.7(3)(2) Paragraph 5 of Section 3 of Article IV of the 86.8 bylaws in effect on June 1, 1978, may be amended to provide that 86.9 the recomputation of a disability benefit in an amount equal to 86.10 a service pension shall occur when the member attains the age of 86.11 60 years and shall be recomputed without any reduction for early 86.12 retirement, and that if the disability terminates prior to age 86.13 60 the member shall be eligible for benefits as provided in 86.14 Paragraph 1 of Section 3 of Article IV and the years of service 86.15 and final average salary accrued to disability termination date 86.16 would be used as provided in Paragraph 5 of Section 3 of Article 86.17 IV of the bylaws in effect June 1, 1978, and that Paragraph 3 of 86.18 Section 4 of Article IV be amended to conform to this provision. 86.19(4)(3) Article VIII of the bylaws in effect July 1, 1978, 86.20 may be amended by adding a new section 5 providing augmentation 86.21 of benefits in the same manner as Minnesota Statutes 1978, 86.22 Section 354.55, Subdivision 11. 86.23 Sec. 10. [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 86.24 INCREASE FORMULAS.] 86.25 In accordance with Minnesota Statutes, section 354A.12, 86.26 subdivision 4, approval is granted for the Duluth teachers 86.27 retirement fund association to amend its articles of 86.28 incorporation or bylaws by increasing the formula percentage 86.29 used in computing annuities for old law coordinated program 86.30 members in the Duluth teachers retirement fund association to 86.31 1.45 percent for each year of credited service. 86.32 Sec. 11. [REPEALER.] 86.33 (a) Minnesota Statutes 1996, section 354A.12, subdivision 86.34 2b, is repealed. 86.35 (b) Laws 1985, chapter 259, section 3; and Laws 1993, 86.36 chapter 336, article 3, section 1, are repealed. 87.1 Sec. 12. [EFFECTIVE DATES.] 87.2 Sections 2 and 3 are effective for all salary paid on or 87.3 after July 1, 1997. Sections 1 and 4 to 11 are effective July 87.4 1, 1997. 87.5 ARTICLE 4 87.6 MINNEAPOLIS POLICE AND FIREFIGHTERS 87.7 Section 1. Minnesota Statutes 1996, section 423B.01, 87.8 subdivision 9, is amended to read: 87.9 Subd. 9. [EXCESS INVESTMENT INCOME.] "Excess investment 87.10 income" means the amount, if any, by which the average time 87.11 weighted total rate of return earned by the fund in the most 87.12 recent prior five fiscal years has exceeded the actual average 87.13 percentage increase in the current monthly salary of a first 87.14 grade patrol officer in the most recent prior five fiscal years 87.15 plus two percent, and must be expressed as a dollar amountand. 87.16 The amount may not exceed one percent of the total assets of the 87.17 fund, except when the actuarial value of assets of the fund 87.18 according to the most recent annual actuarial valuation prepared 87.19 in accordance with sections 356.215 and 356.216 is greater than 87.20 102 percent of its actuarial accrued liabilities, in which case 87.21 the amount must not exceed 1-1/2 percent of the total assets of 87.22 the fund, and does not exist unless the yearly average 87.23 percentage increase of the time weighted total rate of return of 87.24 the fund for the previous five years exceeds by two percent the 87.25 yearly average percentage increase in monthly salary of a first 87.26 grade patrol officer during the previous five calendar years. 87.27 Sec. 2. Minnesota Statutes 1996, section 423B.01 is 87.28 amended by adding a new subdivision to read: 87.29 Subd. 15. [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 87.30 or "actuarially equivalent" means the condition of one annuity 87.31 or benefit having an equal actuarial present value as another 87.32 annuity or benefit, determined as of a given date at a specified 87.33 age with each actuarial present value based on the appropriate 87.34 mortality table adopted by the board of directors based on the 87.35 experience of the fund and approved by the actuary retained by 87.36 the legislative commission on pensions and retirement and using 88.1 the applicable preretirement or postretirement interest rate 88.2 assumptions specified in section 356.216. 88.3 Sec. 3. Minnesota Statutes 1996, section 423B.06, is 88.4 amended by adding a subdivision to read: 88.5 Subd. 5. [TAX LEVY.] Notwithstanding any provision of 88.6 section 69.77 to the contrary, if in any year after the 88.7 actuarial value of assets of the fund according to the most 88.8 recent annual actuarial valuation prepared in accordance with 88.9 sections 356.215 and 356.216 is greater than 102 percent of the 88.10 actuarial accrued liabilities of the fund and subsequently the 88.11 actuarial value of assets are less than 100 percent of the 88.12 actuarial accrued liabilities, the city of Minneapolis is not 88.13 required to levy a property tax to amortize any unfunded 88.14 actuarial accrued liability unless the fund experiences two 88.15 successive years when the actuarial value of assets are less 88.16 than 100 percent of the actuarial accrued liabilities according 88.17 to the most recent annual actuarial valuation prepared in 88.18 accordance with sections 356.215 and 356.216. 88.19 Sec. 4. Minnesota Statutes 1996, section 423B.07, is 88.20 amended to read: 88.21 423B.07 [AUTHORIZED FUND DISBURSEMENTS.] 88.22 The police pension fund may be used only for the payment of: 88.23 (1) service, disability, or dependency pensions; 88.24 (2) notwithstanding a contrary provision of section 69.80, 88.25 the salary of the secretary of the association in an amount not 88.26 to exceed 30 percent of the base salary of a first grade patrol 88.27 officer, the salary of the president of the association in an 88.28 amount not to exceed ten percent of the base salary of a first 88.29 grade patrol officer, and the salaries of the other elected 88.30 members of the board of trustees in an amount not to exceed 88.31 three units; 88.32 (3) expenses of officers and employees of the association 88.33 in connection with the protection of the fund; 88.34 (4) expenses of operating and maintaining the association, 88.35 including the administrative expenses related to the 88.36 administration of the insurance plan authorized in section 89.1 423B.08; 89.2(5) support for hospital and medical insurance for89.3pensioners who have completed 20 years or more of service or89.4permanent disabilitants and surviving spouses of deceased active89.5members, disabilitants, or service pensioners who have completed89.620 years or more of service in an amount equal to one unit per89.7month, to be added to the pension otherwise provided;89.8(6) health and welfare benefits of one unit per month in89.9addition to other benefits for members who retired after July 1,89.101980, and have completed 20 years or more of service or for89.11members who are permanent disabilitants;and 89.12(7)(5) other expenses authorized by section 69.80, or 89.13 other applicable law. 89.14 Sec. 5. Minnesota Statutes 1996, section 423B.09, 89.15 subdivision 1, is amended to read: 89.16 Subdivision 1. [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 89.17 RECEIVE PENSIONS.] The association shall grant pensions payable 89.18 from the police pension fund in monthly installments to persons 89.19 entitled to pensions in the manner and for the following 89.20 purposes. 89.21 (a) When the actuarial value of assets of the fund 89.22 according to the most recent annual actuarial valuation 89.23 performed in accordance with sections 356.215 and 356.216 is 89.24 less than 90 percent of the actuarial accrued liabilities, an 89.25 active member or a deferred pensioner who has performed duty as 89.26 a member of the police department of the city for five years or 89.27 more, upon written application after retiring from duty and 89.28 reaching at least age 50, is entitled to be paid monthly for 89.29 life a service pension equal to eight units. For full years of 89.30 service beyond five years, the service pension increases by 1.6 89.31 units for each full year, to a maximum of 40 units. When the 89.32 actuarial value of assets of the fund according to the most 89.33 recent annual actuarial valuation prepared in accordance with 89.34 sections 356.215 and 356.216 is of greater than 90 percent of 89.35 actuarial accrued liabilities, active members, deferred members, 89.36 and service pensioners are entitled to a service pension 90.1 according to the following schedule: 90.2 5 years 8.0 units 90.3 6 years 9.6 units 90.4 7 years 11.2 units 90.5 8 years 12.8 units 90.6 9 years 14.4 units 90.7 10 years 16.0 units 90.8 11 years 17.6 units 90.9 12 years 19.2 units 90.10 13 years 20.8 units 90.11 14 years 22.4 units 90.12 15 years 24.0 units 90.13 16 years 25.6 units 90.14 17 years 27.2 units 90.15 18 years 28.8 units 90.16 19 years 30.4 units 90.17 20 years 34.0 units 90.18 21 years 35.6 units 90.19 22 years 37.2 units 90.20 23 years 38.8 units 90.21 24 years 40.4 units 90.22 25 years 42.0 units 90.23 Fractional years of service may not be used in computing 90.24 pensions. 90.25 (b) An active member who after five years' service but less 90.26 than 20 years' service with the police department of the city, 90.27 becomes superannuated so as to be permanently unable to perform 90.28 the person's assigned duties, is entitled to be paid monthly for 90.29 life a superannuation pension equal to two units for five years 90.30 of service and an additional two units for each full year of 90.31 service over five years and less than 20 years. 90.32 (c) An active member who is not eligible for a service 90.33 pension and who, while a member of the police department of the 90.34 city, becomes diseased or sustains an injury while in the 90.35 service that permanently unfits the member for the performance 90.36 of police duties is entitled to be paid monthly for life a 91.1 pension equal to 32 units while so disabled. 91.2 Sec. 6. Minnesota Statutes 1996, section 423B.09, is 91.3 amended by adding a subdivision to read: 91.4 Subd. 6. [OPTIONAL ANNUITIES.] A member who is retired or 91.5 disabled on the effective date of this subdivision may elect an 91.6 optional retirement annuity within 60 days of the effective date 91.7 instead of the normal retirement annuity. A member who retires 91.8 or becomes disabled after the effective date of this subdivision 91.9 may elect an optional retirement annuity prior to the receipt of 91.10 any benefits. The optional retirement annuity may be a 50 91.11 percent, a 75 percent, or a 100 percent joint and survivor 91.12 annuity without reinstatement in the event of the designated 91.13 beneficiary predeceasing the member or a 50 percent, a 75 91.14 percent, or a 100 percent joint and survivor annuity with 91.15 reinstatement in the event of the designated beneficiary 91.16 predeceasing the member. Optional retirement annuity forms must 91.17 be actuarially equivalent to the service pension and automatic 91.18 survivor coverage otherwise payable to the retiring member and 91.19 the member's beneficiaries. Once selected, the optional annuity 91.20 is irrevocable. 91.21 Sec. 7. Minnesota Statutes 1996, section 423B.10, 91.22 subdivision 1, is amended to read: 91.23 Subdivision 1. [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 91.24 surviving spouse of a deceased service pensioner, disability 91.25 pensioner, deferred pensioner, superannuation pensioner, or 91.26 active member, who was the legally married spouse of the 91.27 decedent, residing with the decedent, and who was married while 91.28 or before the time the decedent was on the payroll of the police 91.29 department, and who, if the deceased member was a service or 91.30 deferred pensioner, was legally married to the member for a 91.31 period of at least one year before retirement from the police 91.32 department, is entitled to a surviving spouse benefit. The 91.33 surviving spouse benefit is equal to2122 units per month if 91.34 the person is the surviving spouse of a deceased active member 91.35 or disabilitant. The surviving spouse benefit is equal to six 91.36 units per month, plus an additional one unit for each year of 92.1 service to the credit of the decedent in excess of five years, 92.2 to a maximum of2122 units per month, if the person is the 92.3 surviving spouse of a deceased service pensioner, deferred 92.4 pensioner, or superannuation pensioner. The surviving spouse 92.5 benefit is payable for the life of the surviving spouse. 92.6 (b) A surviving child of a deceased service pensioner, 92.7 disability pensioner, deferred pensioner, superannuation 92.8 pensioner, or active member, who was living while the decedent 92.9 was an active member of the police department or was born within 92.10 nine months after the decedent terminated active service in the 92.11 police department, is entitled to a surviving child benefit. 92.12 The surviving child benefit is equal to eight units per month if 92.13 the person is the surviving child of a deceased active member or 92.14 disabilitant. The surviving child benefit is equal to two units 92.15 per month, plus an additional four-tenths of one unit per month 92.16 for each year of service to the credit of the decedent in excess 92.17 of five years, to a maximum of eight units, if the person is the 92.18 surviving child of a deceased service pensioner, deferred 92.19 pensioner, or superannuation pensioner. The surviving child 92.20 benefit is payable until the person attains age 18, or, if in 92.21 full-time attendance during the normal school year, in a school 92.22 approved by the board of directors, until the person receives a 92.23 bachelor's degree or attains the age of 22 years, whichever 92.24 occurs first. In the event of the death of both parents leaving 92.25 a surviving child or children entitled to a surviving child 92.26 benefit as determined in this paragraph, the surviving child is, 92.27 or the surviving children are, entitled to a surviving child 92.28 benefit in such sums as determined by the board of directors to 92.29 be necessary for the care and education of such surviving child 92.30 or children, but not to exceed the family maximum benefit per 92.31 month, to the children of any one family. 92.32 (c) The surviving spouse and surviving child benefits are 92.33 subject to a family maximum benefit. The family maximum benefit 92.34 is4041 units per month. 92.35 (d) A surviving spouse who is otherwise not qualified may 92.36 receive a benefit if the surviving spouse was married to the 93.1 decedent for a period of five years and was residing with the 93.2 decedent at the time of death. The surviving spouse benefit is 93.3 the same as that provided in paragraph (a), except that if the 93.4 surviving spouse is younger than the decedent, the surviving 93.5 spouse benefit must be actuarially equivalent to a surviving 93.6 spouse benefit that would have been paid to the member's spouse 93.7 had the member been married to a person of the same age or a 93.8 greater age than the member's age before retirement. 93.9 Sec. 8. Minnesota Statutes 1996, section 423B.15, 93.10 subdivision 2, is amended to read: 93.11 Subd. 2. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 93.12 board of trustees of the relief association shall determine by 93.13 May 1 of each year whether or not the fund has excess investment 93.14 income. The amount of excess investment income, if any, must be 93.15 stated as a dollar amount and reported by the chief 93.16 administrative officer of the relief association to the mayor 93.17 and governing body of the city, the state auditor, the 93.18 commissioner of finance, and the executive director of the 93.19 legislative commission on pensions and retirement. The dollar 93.20 amount of excess investment income up to one percent of the 93.21 assets of the fund, except when the actuarial value of assets of 93.22 the fund according to the most recent annual actuarial valuation 93.23 prepared in accordance with sections 356.215 and 356.216 is 93.24 greater than 102 percent of its actuarial accrued liabilities in 93.25 which case the amount may not exceed 1-1/2 percent of the assets 93.26 of the fund, must be applied for the purpose specified in 93.27 subdivision 3. Excess investment income must not be considered 93.28 as income to or assets of the fund for actuarial valuations of 93.29 the fund for that year under sections 69.77, 356.215, and 93.30 356.216 and the provisions of this section except to offset the 93.31 annual postretirement payment. Additional investment income is 93.32 any realized or unrealized investment income other than the 93.33 excess investment income and must be included in the actuarial 93.34 valuations performed under sections 69.77, 356.215, and 356.216 93.35 and the provisions of this section. 93.36 Sec. 9. Minnesota Statutes 1996, section 423B.15, 94.1 subdivision 3, is amended to read: 94.2 Subd. 3. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 94.3 amount determined under subdivision 2 must be applied in 94.4 accordance with this subdivision. When the actuarial value of 94.5 assets of the fund according to the most recent annual actuarial 94.6 valuation prepared in accordance with sections 356.215 and 94.7 356.216 is less than 102 percent of its total actuarial 94.8 liabilities, the relief association shall apply the first 94.9 one-half of excess investment income to the payment of an annual 94.10 postretirement payment as specified in this subdivision.and the 94.11 second one-half of excess investment income up to one-half of 94.12 one percent of the assets of the fund must be applied to reduce 94.13 the state amortization state aid or supplementary amortization 94.14 state aid payments otherwise due to the relief association under 94.15 section 423A.02 for the current calendar year. When the 94.16 actuarial value of assets of the fund according to the most 94.17 recent annual actuarial valuation prepared in accordance with 94.18 sections 356.215 and 356.216 is less than 102 percent funded and 94.19 other conditions are met, the relief association shall pay an 94.20 annual postretirement payment to all eligible members in an 94.21 amount not to exceed one-half of one percent of the assets of 94.22 the fund. When the actuarial value of assets of the fund 94.23 according to the most recent annual actuarial valuation prepared 94.24 in accordance with sections 356.215 and 356.216 is greater than 94.25 102 percent of its actuarial accrued liabilities, the relief 94.26 association shall pay an annual postretirement payment to all 94.27 eligible members in an amount not to exceed 1-1/2 percent of the 94.28 assets of the fund. Payment of the annual postretirement 94.29 payment must be in a lump sum amount on June 1 following the 94.30 determination date in any year. Payment of the annual 94.31 postretirement payment may be made only if the average time 94.32 weighted total rate of return for the most recent prior five 94.33 years exceeds by two percent the actual average percentage 94.34 increase in the current monthly salary of a top grade patrol 94.35 officer in the most recent prior five fiscal years. The total 94.36 amount of all payments to members may not exceed the amount 95.1 determined under this subdivision. Payment to each eligible 95.2 member must be calculated by dividing the total number of 95.3 pension units to which eligible members are entitled into the 95.4 excess investment income available for distribution to members, 95.5 and then multiplying that result by the number of units to which 95.6 each eligible member is entitled to determine each eligible 95.7 member's annual postretirement payment. When the actuarial 95.8 value of assets of the fund according to the most recent annual 95.9 actuarial valuation prepared in accordance with sections 356.215 95.10 and 356.216 is less than 102 percent of its actuarial accrued 95.11 liabilities, payment to each eligible member may not exceed an 95.12 amount equal to the total monthly benefit that the eligible 95.13 member was entitled to in the prior year under the terms of the 95.14 benefit plan of the relief association or each eligible member's 95.15 proportionate share of the excess investment income, whichever 95.16 is less. When the actuarial value of assets of the fund 95.17 according to the most recent annual actuarial valuation prepared 95.18 in accordance with sections 356.215 and 356.216 is greater than 95.19 102 percent of its actuarial accrued liabilities, payment to 95.20 each eligible member must not exceed the member's proportionate 95.21 share of 1-1/2 percent of the assets of the fund. 95.22 A person who received a pension or benefit for the entire 95.23 12 months before the determination date is eligible for a full 95.24 annual postretirement payment. A person who received a pension 95.25 or benefit for less than 12 months before the determination date 95.26 is eligible for a prorated annual postretirement payment. 95.27 Sec. 10. Minnesota Statutes 1996, section 423B.15, 95.28 subdivision 6, is amended to read: 95.29 Subd. 6. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 95.30 No provision of or payment made under this section may be 95.31 interpreted or relied upon by any member of the relief 95.32 association to guarantee or entitle a member to annual 95.33 postretirement payments for a period when no excess investment 95.34 income is earned by the fund. If the actuarial value of assets 95.35 of the fund according to the most recent annual actuarial 95.36 valuation prepared in accordance with sections 356.215 and 96.1 356.216 is less than 102 percent of its actuarial accrued 96.2 liabilities, the distribution of assets under this section must 96.3 not exceed one-half of one percent. 96.4 Sec. 11. Minnesota Statutes 1996, section 423B.15, is 96.5 amended by adding a subdivision to read: 96.6 Subd. 7. [ANNUAL ACTUARIAL VALUATION DATE.] 96.7 Notwithstanding any provision of section 69.77, subdivision 2h, 96.8 356.215, or 356.216 to the contrary, the annual actuarial 96.9 valuation of the fund must be completed by May 1 of each year. 96.10 Sec. 12. Laws 1965, chapter 519, section 1, as amended by 96.11 Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, 96.12 section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 96.13 164, section 2; Laws 1990, chapter 589, article 1, section 5; 96.14 Laws 1992, chapter 454, section 2; and Laws 1994, chapter 591, 96.15 article 1, section 1, is amended to read: 96.16 Section 1. [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF 96.17 ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding 96.18 the provisions of Minnesota Statutes 1965, Section 69.48, to the 96.19 contrary, when a service pensioner, disability pensioner, or 96.20 deferred pensioner, or an active member of a relief association 96.21 dies, leaving: 96.22 (1) A surviving spouse who was a legally married spouse, 96.23 residing with the decedent, and who was married while or prior 96.24 to the time the decedent was on the payroll of the fire 96.25 department in the case of a deceased active member; and who, in 96.26 case the deceased member was a service or deferred pensioner was 96.27 legally married to the member at least five years before death; 96.28 or 96.29 (2) A child or children who were living while the deceased 96.30 was on the payroll of the fire department, or born within nine 96.31 months after the decedent was withdrawn from the payroll of the 96.32 fire department, the surviving spouse and the child or children 96.33 shall be entitled to a pension or pensions, as follows: 96.34 (a) To the surviving spouse, a pension of not less than 17 96.35 units, and not to exceed the total of 22 units per month, as the 96.36 bylaws of the association provide, for life;provided, that if97.1the spouse shall remarry then the pension shall cease and97.2terminate as of the date of remarriage; provided, further, if97.3the remarriage terminates for any reason, the surviving spouse97.4shall again be entitled to a pension as the bylaws of the97.5association provide;97.6 (b) To the child or children, if their other parent is 97.7 living, a pension of not to exceed eight units per month for 97.8 each child up to the time each child reaches the age of not less 97.9 than 16 years and not to exceed an age of 18 years; provided, 97.10 however, upon approval by the board of trustees, such a child 97.11 who is a full-time student, upon proof of compliance with the 97.12 provisions of this act, may be entitled to such pension so long 97.13 as the child is a full-time student and has not reached 22 years 97.14 of age, all in conformity with the bylaws of the association; 97.15 provided, further, the total pensions hereunder for the 97.16 surviving spouse and children of the deceased member shall not 97.17 exceed the sum of 41 units per month; 97.18 (c) A child or children of a deceased member after the 97.19 death of their other parent, or in the event their other parent 97.20 predeceases the member, be entitled to receive a pension or 97.21 pensions in such amount as the board of trustees of the 97.22 association shall deem necessary to properly support the child 97.23 or children until they reach the age of not less than 16 and not 97.24 more than 18 years; provided, however, upon approval by the 97.25 board of trustees, such a child who is a full-time student, upon 97.26 proof of compliance with the provisions of this act, may be 97.27 entitled to such pension so long as the child is a full-time 97.28 student and has not reached 22 years of age, as the bylaws of 97.29 the association may provide; but the total amount of the pension 97.30 or pensions hereunder for any child or children shall not exceed 97.31 the sum of 41 units per month; 97.32 (d) For the purposes of this act, a full-time student is 97.33 defined as an individual who is in full-time attendance as a 97.34 student at an educational institution. Whether or not the 97.35 student was in full-time attendance would be determined by the 97.36 board of trustees of the association in the light of the 98.1 standards and practices of the school involved. Specifically 98.2 excluded is a person who is paid by the person's employer while 98.3 attending school at the request of the person's employer. 98.4 Benefits may continue during any period of four calendar months 98.5 or less in any 12 month period in which a person does not attend 98.6 school if the person shows to the satisfaction of the board of 98.7 trustees that the person intends to continue in full-time school 98.8 attendance immediately after the end of the period. An 98.9 educational institution is defined so as to permit the payment 98.10 of benefits to students taking vocational or academic courses in 98.11 all approved, accredited or licensed schools, colleges, and 98.12 universities. The board of trustees shall make the final 98.13 determination of eligibility for benefits if any question arises 98.14 concerning the approved status of the educational institution 98.15 which the student attends or proposes to attend; 98.16 (e) In the event that a child who is receiving a pension as 98.17 provided above shall marry before the age of 22 years, the 98.18 pension shall cease as of the date of the marriage.; and 98.19 (f) A surviving spouse of a deceased service pensioner, 98.20 disability pensioner, deferred pensioner, or service pensioner 98.21 who is otherwise not qualified may receive a benefit if the 98.22 surviving spouse was legally married to the decedent for a 98.23 period of five years and was residing with the decedent at the 98.24 time of death. The surviving spouse benefit is the same as that 98.25 provided under paragraph (a), except that if the surviving 98.26 spouse is younger than the decedent, the surviving spouse 98.27 benefit must be actuarially equivalent to a surviving spouse 98.28 benefit that would have been paid to the member's spouse had the 98.29 member been married to a person of the same age or a greater age 98.30 than the member's age prior to retirement. A benefit paid under 98.31 this paragraph may be less than 17 units, notwithstanding the 17 98.32 unit minimum established under paragraph (a). 98.33 Sec. 13. Laws 1989, chapter 319, article 19, section 7, 98.34 subdivision 1, as amended by Laws 1992, chapter 471, article 2, 98.35 section 5, and Laws 1996, chapter 438, article 4, section 12, is 98.36 amended to read: 99.1 Subdivision 1. [MINNEAPOLIS FIRE DEPARTMENT RELIEF 99.2 ASSOCIATION; DEFINITIONS.] For the purposes of this section, 99.3 each of the terms in this subdivision have the meanings given 99.4 them in paragraphs (a) to (h). 99.5 (a) "Annual postretirement payment" means the payment of a 99.6 lump sum postretirement benefit to an eligible member on June 1 99.7 following the determination date in any year. 99.8 (b) "City" means the city of Minneapolis. 99.9 (c) "Determination date" means December 31 of each year. 99.10 (d) "Eligible member" means a person, including a service 99.11 pensioner, a disability pensioner, a survivor, or dependent of a 99.12 deceased active member, service pensioner, or disability 99.13 pensioner, who received a pension or benefit from the relief 99.14 association during the 12 months before the determination date. 99.15 A person who received a pension or benefit for the entire 12 99.16 months before the determination date is eligible for a full 99.17 annual postretirement payment. A person who received a pension 99.18 or benefit for less than 12 months before the determination date 99.19 is eligible for a prorated annual postretirement payment. 99.20 (e) "Excess investment income" means the amount by which 99.21 the average time weighted total rate of return earned by the 99.22 fund in the most recent prior five fiscal years has exceeded the 99.23 actual average percentage increase in the current monthly salary 99.24 of a top grade firefighter in the most recent prior five fiscal 99.25 years plus two percent. The excess investment income must be 99.26 expressed as a dollar amount and may not exceed one percent of 99.27 the total assets of the fund, except when the actuarial value of 99.28 assets of the fund according to the most recent annual actuarial 99.29 valuation prepared in accordance with Minnesota Statutes, 99.30 sections 356.215 and 356.216, is greater than 102 percent of its 99.31 actuarial accrued liabilities in which case the amount must not 99.32 exceed 1-1/2 percent of the assets of the funds. 99.33 (f) "Fund" means the Minneapolis fire department relief 99.34 association. 99.35 (g) "Relief association" means the Minneapolis fire 99.36 department relief association. 100.1 (h) "Time weighted total rate of return" means the 100.2 percentage amount determined by using the formula or formulas 100.3 established by the state board of investment under Minnesota 100.4 Statutes, section 11A.04, clause (11), and in effect on January 100.5 1, 1987. 100.6 Sec. 14. Laws 1989, chapter 319, article 19, section 7, 100.7 subdivision 3, is amended to read: 100.8 Subd. 3. [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 100.9 board of trustees of the relief association shall determine by 100.10 May 1 of each year whether or not the relief association has 100.11 excess investment income. The amount of excess investment 100.12 income, if any, must be stated as a dollar amount and reported 100.13 by the chief administrative officer of the relief association to 100.14 the mayor and governing body of the city, the state auditor, the 100.15 commissioner of finance, and the executive director of the 100.16 legislative commission on pensions and retirement. The dollar 100.17 amount of excess investment income up to one percent of the 100.18 assets of the fund, except if the actuarial value of assets of 100.19 the fund according to the most recent annual actuarial valuation 100.20 prepared in accordance with Minnesota Statutes, sections 356.215 100.21 and 356.216, is greater than 102 percent of its actuarial 100.22 accrued liabilities, must be applied for the purpose specified 100.23 in subdivision 4. Excess investment income must not be 100.24 considered as income to or assets of the fund for actuarial 100.25 valuations of the fund for that year under sections 69.77, 100.26 356.215, and 356.216 and the provisions of this section except 100.27 to offset the annual postretirement payment. Additional 100.28 investment income is any realized or unrealized investment 100.29 income other than the excess investment income and must be 100.30 included in the actuarial valuations performed under sections 100.31 69.77, 356.215, and 356.216 and the provisions of this section. 100.32 Sec. 15. Laws 1989, chapter 319, article 19, section 7, 100.33 subdivision 4, as amended by Laws 1990, chapter 570, article 12, 100.34 section 63, Laws 1992, chapter 471, article 2, section 6, and 100.35 Laws 1996, chapter 438, article 4, section 13, is amended to 100.36 read: 101.1 Subd. 4. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 101.2 amount determined under subdivision 3 must be applied in 101.3 accordance with this subdivision. When the actuarial value of 101.4 assets of the fund according to the most recent annual actuarial 101.5 valuation prepared in accordance with Minnesota Statutes, 101.6 sections 356.215 and 356.216, is less than 102 percent of its 101.7 actuarial accrued liabilities, the relief association shall 101.8 apply the first one-half of one percent of assets which 101.9 constitute excess investment income to the payment of an annual 101.10 postretirement payment as specified in this subdivision.and the 101.11 second one-half of one percent of assets which constitute excess 101.12 investment income shall be applied to reduce the state 101.13 amortization state aid or supplementary amortization state aid 101.14 payments otherwise due to the relief association under section 101.15 423A.02 for the current calendar year. When the actuarial value 101.16 of assets of the fund according to the most recent annual 101.17 actuarial valuation prepared in accordance with Minnesota 101.18 Statutes, sections 356.215 and 356.216, is less than 102 percent 101.19 of its actuarial accrued liabilities, the relief association 101.20 shall pay an annual postretirement payment to all eligible 101.21 members in an amount not to exceed one-half of one percent of 101.22 the assets of the fund. Payment of the annual postretirement 101.23 payment must be in a lump sum amount on June 1 following the 101.24 determination date in any year. When the actuarial value of 101.25 assets of the fund according to the most recent annual actuarial 101.26 valuation prepared in accordance with Minnesota Statutes, 101.27 section 356.215 and 356.216, is greater than 102 percent of its 101.28 actuarial accrued liabilities, the relief association shall pay 101.29 an annual postretirement payment to all eligible members in an 101.30 amount not to exceed 1-1/2 percent of the assets of the fund. 101.31 Payment of the annual postretirement payment may be made only if 101.32 the average time weighted total rate of return in the most 101.33 recent prior five fiscal years exceeds by two percent the actual 101.34 average percentage increase in the current monthly salary of a 101.35 top grade firefighter in the most recent prior five fiscal 101.36 years. The total amount of all payments to members may not 102.1 exceed the amount determined under subdivision 3. Payment to 102.2 each eligible member must be calculated by dividing the total 102.3 number of pension units to which eligible members are entitled 102.4 into the excess investment income available for distribution to 102.5 members, and then multiplying that result by the number of units 102.6 to which each eligible member is entitled to determine each 102.7 eligible member's annual postretirement payment. When the fund 102.8 actuarial value of assets according to the most recent annual 102.9 actuarial valuation prepared in accordance with Minnesota 102.10 Statutes, sections 356.215 and 356.216, is less than 102 percent 102.11 of its actuarial accrued liabilities, payment to each eligible 102.12 member may not exceed an amount equal to the total monthly 102.13 benefit that the eligible member was entitled to in the prior 102.14 year under the terms of the benefit plan of the relief 102.15 association or each eligible member's proportionate share of the 102.16 excess investment income, whichever is less. When the actuarial 102.17 value of assets of the fund according to the most recent annual 102.18 actuarial valuation prepared in accordance with Minnesota 102.19 Statutes, sections 356.215 and 356.216, is greater than 102 102.20 percent of its actuarial accrued liabilities, payment to each 102.21 eligible member may not exceed the member's proportionate share 102.22 of 1-1/2 percent of assets of the fund. 102.23 Sec. 16. Laws 1989, chapter 319, article 19, section 7, 102.24 subdivision 7, is amended to read: 102.25 Subd. 7. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 102.26 No provision of or payment made under this section may be 102.27 interpreted or relied upon by any member of the relief 102.28 association to guarantee or entitle a member to annual 102.29 postretirement payments for a period when no excess investment 102.30 income is earned by the fund. If the actuarial value of assets 102.31 of the fund according to the most recent annual actuarial 102.32 valuation prepared in accordance with Minnesota Statutes, 102.33 sections 356.215 and 356.216, is less than 102 percent of its 102.34 actuarial accrued liabilities, a distribution of the fund assets 102.35 must not exceed one-half of one percent. 102.36 Sec. 17. Laws 1993, chapter 125, article 1, section 1, is 103.1 amended to read: 103.2 Section 1. [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.] 103.3 Notwithstanding the provisions of Minnesota Statutes, 103.4 section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, 103.5 chapter 607, article XV, section 9, to the contrary, when the 103.6 actuarial value of assets of the fund according to the most 103.7 recent annual actuarial valuation prepared in accordance with 103.8 Minnesota Statutes, sections 356.215 and 356.216, is less than 103.9 90 percent of its actuarial accrued liabilities, the service 103.10 pensions payable by the Minneapolis fire department relief 103.11 association for members terminating active service as a 103.12 Minneapolis firefighter after June 1, 1993, must be computed as 103.13 follows: 103.14 length of service 103.15 credited service pension payable 103.16 10 years 16.0 units 103.17 11 years 17.6 units 103.18 12 years 19.2 units 103.19 13 years 20.8 units 103.20 14 years 22.4 units 103.21 15 years 24.0 units 103.22 16 years 25.6 units 103.23 17 years 27.2 units 103.24 18 years 28.8 units 103.25 19 years 30.4 units 103.26 20 years 33.0 units 103.27 21 years 34.6 units 103.28 22 years 36.2 units 103.29 23 years 37.8 units 103.30 24 years 39.4 units 103.31 25 years 41.0 units 103.32 When the actuarial value of assets of the fund according to 103.33 the most recent annual actuarial valuation prepared in 103.34 accordance with Minnesota Statutes, sections 356.215 and 103.35 356.216, is of greater than 90 percent of actuarial accrued 103.36 liabilities, the following schedule applies to all active 104.1 members and retired service pensioners who otherwise met the 104.2 then existing requirements to receive a benefit: 104.3 length of service 104.4 credited service pension payable 104.5 5 years 8.0 units 104.6 6 years 9.6 units 104.7 7 years 11.2 units 104.8 8 years 12.8 units 104.9 9 years 14.4 units 104.10 10 years 16.0 units 104.11 11 years 17.6 units 104.12 12 years 19.2 units 104.13 13 years 20.8 units 104.14 14 years 22.4 units 104.15 15 years 24.0 units 104.16 16 years 25.6 units 104.17 17 years 27.2 units 104.18 18 years 28.8 units 104.19 19 years 30.4 units 104.20 20 years33.033.5 units 104.21 21 years34.635.1 units 104.22 22 years36.237.7 units 104.23 23 years37.838.3 units 104.24 24 years39.439.9 units 104.25 25 years41.041.5 units 104.26 When the actuarial value of assets of the fund according to 104.27 the most recent annual actuarial valuation prepared in 104.28 accordance with Minnesota Statutes, sections 356.215 and 104.29 356.216, is of greater than 92.5 percent of actuarial accrued 104.30 liabilities, the following schedule applies to all active 104.31 members and retired service pensioners who otherwise met the 104.32 then existing requirements to receive a benefit: 104.33 length of service 104.34 credited service pension payable 104.35 5 years 8.0 units 104.36 6 years 9.6 units 105.1 7 years 11.2 units 105.2 8 years 12.8 units 105.3 9 years 14.4 units 105.4 10 years 16.0 units 105.5 11 years 17.6 units 105.6 12 years 19.2 units 105.7 13 years 20.8 units 105.8 14 years 22.4 units 105.9 15 years 24.0 units 105.10 16 years 25.6 units 105.11 17 years 27.2 units 105.12 18 years 28.8 units 105.13 19 years 30.4 units 105.14 20 years 34.0 units 105.15 21 years 35.6 units 105.16 22 years 37.2 units 105.17 23 years 38.8 units 105.18 24 years 40.4 units 105.19 25 years 42.0 units 105.20 Sec. 18. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; 105.21 OPTIONAL ANNUITIES.] 105.22 A member of the Minneapolis fire department relief 105.23 association who is retired or disabled on the effective date of 105.24 this section may elect an optional retirement annuity within 60 105.25 days of the effective date instead of the normal retirement 105.26 pension. A member who retires or becomes disabled after the 105.27 effective date of this section may elect an optional retirement 105.28 annuity prior to the receipt of any benefits. The optional 105.29 retirement annuity may be a 50 percent, a 75 percent, or a 100 105.30 percent joint and survivor annuity without reinstatement in the 105.31 event of the designated beneficiary predeceasing the member or a 105.32 joint and survivor annuity with reinstatement in the event of 105.33 the designated beneficiary predeceasing the member. An optional 105.34 retirement annuity must be actuarially equivalent to the service 105.35 pension and automatic survivor coverage otherwise payable to the 105.36 retiring member and the member's beneficiaries. Once selected, 106.1 the optional annuity is irrevocable. 106.2 Sec. 19. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION 106.3 TAX LEVY.] 106.4 If in any year after the Minneapolis fire department relief 106.5 actuarial value of assets of the association according to the 106.6 most recent annual actuarial valuation prepared in accordance 106.7 with Minnesota Statutes, sections 356.215 and 356.216, is 106.8 greater than 102 percent of the actuarial accrued liabilities of 106.9 the fund and subsequently the actuarial value of assets are less 106.10 than 100 percent of the actuarial accrued liabilities according 106.11 to the most recent annual actuarial valuation prepared in 106.12 accordance with Minnesota Statutes, sections 356.215 and 106.13 356.216, the city of Minneapolis is not required to levy a 106.14 property tax to fund any deficit unless the fund has two 106.15 successive years when the actuarial value of assets are less 106.16 than 100 percent of the actuarial accrued liabilities according 106.17 to the most recent annual actuarial valuation prepared in 106.18 accordance with Minnesota Statutes, sections 356.215 and 356.216. 106.19 Sec. 20. [ACTUARIAL VALUATION DATE.] 106.20 Notwithstanding Minnesota Statutes, section 69.77, 106.21 subdivision 2h, 356.215, or 356.216, the annual actuarial 106.22 valuation of the Minneapolis fire department relief association 106.23 must be completed by May 1 of each year. 106.24 Sec. 21. [ACTUARIAL EQUIVALENT.] 106.25 For the purposes of the Minneapolis fire department relief 106.26 association, "actuarial equivalent" or "actuarially equivalent" 106.27 means the condition of one annuity or benefit having an equal 106.28 actuarial present value as another annuity or benefit, 106.29 determined as of a given date at a specified age with each 106.30 actuarial present value based on the appropriate mortality table 106.31 adopted by the board of directors based on the experience of the 106.32 fund and approved by the actuary retained by the legislative 106.33 commission on pensions and retirement and using the applicable 106.34 preretirement or postretirement interest rate assumptions 106.35 specified in Minnesota Statutes, section 356.216. 106.36 Sec. 22. [BENEFIT EXCHANGE.] 107.1 The one unit health and welfare benefit granted to members 107.2 of the Minneapolis fire department relief association in Laws 107.3 1980, chapter 667, article XV, section 9, who retired after July 107.4 1, 1980, must be reduced by one-half unit upon the 107.5 implementation of the benefit improvement in section 17 when the 107.6 actuarial value of assets of the fund according to the most 107.7 recent annual actuarial valuation report under Minnesota 107.8 Statutes, sections 356.215 and 356.216, exceeds 90 percent of 107.9 its actuarial accrued liabilities and the benefit must be 107.10 eliminated when the actuarial value of assets of the fund 107.11 exceeds 92.5 percent of its actuarial accrued liabilities and 107.12 the benefit in section 15 is fully implemented. 107.13 Sec. 23. [EFFECTIVE DATE.] 107.14 The sections of this article are effective on the day after 107.15 compliance by the governing body of the city of Minneapolis with 107.16 Minnesota Statutes, section 645.021, subdivision 2. Section 4 107.17 is effective when the provisions of section 5 take effect. 107.18 Sections 7 and 12 are effective retroactive to July 1, 1996, and 107.19 apply to all current spouses of members, except that the unit 107.20 increases for surviving spouses in section 7 shall not otherwise 107.21 increase the surviving spouse benefit beyond 22 units.