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HF 889

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to retirement; Public Employees Retirement Association; making
changes primarily of an administrative nature; increasing deferred death while
active survivor benefits; authorizing health insurance withholding for certain
public safety retirees of various plans; revising receivables allocation procedures
for various plans; amending Minnesota Statutes 2006, sections 353.01,
subdivisions 2a, 2b, 6, 28; 353.03, subdivisions 3, 3a, 4; 353.27, subdivision 12;
353.28, subdivision 6; 353.29, subdivision 3; 353.30, subdivisions 1a, 1b, 1c;
353.32, subdivisions 1a, 1b; 353.34, subdivision 3; 356.87; proposing coding for
new law in Minnesota Statutes, chapter 356; repealing Minnesota Statutes 2006,
sections 353.30, subdivision 1; 353.34, subdivision 7; 353.69.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 353.01, subdivision 2a, is amended to read:


Subd. 2a.

Included employees.

(a) Public employees whose salary from
new text begin employment in one or more positions within new text endone governmental subdivision exceeds $425
in any month shall participate as members of the association. If the salary is less than
$425 in a subsequent month, the employee retains membership eligibility. Eligible public
employees shall participate as members of the association with retirement coverage by
the public employees retirement plan or the public employees police and fire retirement
plan under this chapter, or the local government correctional employees retirement plan
under chapter 353E, whichever applies, as a condition of their employment on the first
day of employment unless they:

(1) are specifically excluded under subdivision 2b;

(2) do not exercise their option to elect retirement coverage in the association as
provided in subdivision 2d, paragraph (a); or

(3) are employees of the governmental subdivisions listed in subdivision 2d,
paragraph (b), where the governmental subdivision has not elected to participate as a
governmental subdivision covered by the association.

(b) A public employee who was a member of the association on June 30, 2002,
based on employment that qualified for membership coverage by the public employees
retirement plan or the public employees police and fire plan under this chapter, or the
local government correctional employees retirement plan under chapter 353E as of June
30, 2002, retains that membership new text beginfor the duration of the person's employment in that
position or incumbency in elected office. Except as provided in subdivision 28, the person
shall participate as a member
new text enduntil the employee new text beginor elected official new text endterminates public
employment under subdivision 11a or terminates membership under subdivision 11b.

(c) Public employees under paragraph (a) include physicians under section 353D.01,
subdivision 2, who do not elect public employees defined contribution plan coverage
under section 353D.02, subdivision 2.

Sec. 2.

Minnesota Statutes 2006, section 353.01, subdivision 2b, is amended to read:


Subd. 2b.

Excluded employees.

The following public employees are not eligible
to participate as members of the association with retirement coverage by the public
employees retirement plan, the local government correctional employees retirement plan
under chapter 353E, or the public employees police and fire retirement plan:

(1) public officers, other than county sheriffs, who are elected to a governing body,
or persons who are appointed to fill a vacancy in an elective office of a governing body,
whose term of office commences on or after July 1, 2002, for the service to be rendered
in that elective positiondeleted text begin. Elected governing body officials who were active members
of the association's coordinated or basic retirement plans as of June 30, 2002, continue
participation throughout incumbency in office until termination of public service occurs as
defined in subdivision 11a
deleted text end;

(2) election officers or election judges;

(3) patient and inmate personnel who perform services for a governmental
subdivision;

(4) except as otherwise specified in subdivision 12a, employees who are hired for
a temporary position as defined under subdivision 12a, and employees who resign from
a nontemporary position and accept a temporary position within 30 days in the same
governmental subdivision;

(5) employees who are employed by reason of work emergency caused by fire,
flood, storm, or similar disaster;

(6) employees who by virtue of their employment in one governmental subdivision
are required by law to be a member of and to contribute to any of the plans or funds
administered by the Minnesota State Retirement System, the Teachers Retirement
Association, the Duluth Teachers Retirement Fund Association, the Minneapolis Teachers
Retirement Fund Association, the St. Paul Teachers Retirement Fund Association, the
Minneapolis Employees Retirement Fund, or any police or firefighters relief association
governed by section 69.77 that has not consolidated with the Public Employees Retirement
Association, or any local police or firefighters consolidation account who have not elected
the type of benefit coverage provided by the public employees police and fire fund under
sections 353A.01 to 353A.10, or any persons covered by section 353.665, subdivision 4,
5, or 6, who have not elected public employees police and fire plan benefit coverage. This
clause must not be construed to prevent a person from being a member of and contributing
to the Public Employees Retirement Association and also belonging to and contributing to
another public pension plan or fund for other service occurring during the same period
of time. A person who meets the definition of "public employee" in subdivision 2 by
virtue of other service occurring during the same period of time becomes a member of the
association unless contributions are made to another public retirement fund on the salary
based on the other service or to the Teachers Retirement Association by a teacher as
defined in section 354.05, subdivision 2;

(7) persons who are members of a religious order and are excluded from coverage
under the federal Old Age, Survivors, Disability, and Health Insurance Program for the
performance of service as specified in United States Code, title 42, section 410(a)(8)(A),
as amended through January 1, 1987, if no irrevocable election of coverage has been made
under section 3121(r) of the Internal Revenue Code of 1954, as amended;

(8) employees of a governmental subdivision who have not reached the age of
23 and are enrolled on a full-time basis to attend or are attending classes on a full-time
basis at an accredited school, college, or university in an undergraduate, graduate, or
professional-technical program, or a public or charter high school;

(9) resident physicians, medical interns, and pharmacist residents and pharmacist
interns who are serving in a degree or residency program in public hospitals;

(10) students who are serving in an internship or residency program sponsored
by an accredited educational institution;

(11) persons who hold a part-time adult supplementary technical college license who
render part-time teaching service in a technical college;

(12) except for employees of Hennepin County or Hennepin Healthcare System,
Inc., foreign citizens working for a governmental subdivision with a work permit of less
than three years, or an H-1b visa valid for less than three years of employment. Upon
notice to the association that the work permit or visa extends beyond the three-year period,
the foreign citizens must be reported for membership from the date of the extension;

(13) public hospital employees who elected not to participate as members of the
association before 1972 and who did not elect to participate from July 1, 1988, to October
1, 1988;

(14) except as provided in section 353.86, volunteer ambulance service personnel,
as defined in subdivision 35, but persons who serve as volunteer ambulance service
personnel may still qualify as public employees under subdivision 2 and may be members
of the Public Employees Retirement Association and participants in the public employees
retirement fund or the public employees police and fire fund, whichever applies, on the
basis of compensation received from public employment service other than service as
volunteer ambulance service personnel;

(15) except as provided in section 353.87, volunteer firefighters, as defined in
subdivision 36, engaging in activities undertaken as part of volunteer firefighter duties;
provided that a person who is a volunteer firefighter may still qualify as a public
employee under subdivision 2 and may be a member of the Public Employees Retirement
Association and a participant in the public employees retirement fund or the public
employees police and fire fund, whichever applies, on the basis of compensation received
from public employment activities other than those as a volunteer firefighter;

(16) pipefitters and associated trades personnel employed by Independent School
District No. 625, St. Paul, with coverage under a collective bargaining agreement by the
pipefitters local 455 pension plan who were either first employed after May 1, 1997, or,
if first employed before May 2, 1997, elected to be excluded under Laws 1997, chapter
241, article 2, section 12;

(17) electrical workers, plumbers, carpenters, and associated trades personnel
employed by Independent School District No. 625, St. Paul, or the city of St. Paul,
who have retirement coverage under a collective bargaining agreement by the Electrical
Workers Local 110 pension plan, the United Association Plumbers Local 34 pension plan,
or the Carpenters Local 87 pension plan who were either first employed after May 1,
2000, or, if first employed before May 2, 2000, elected to be excluded under Laws 2000,
chapter 461, article 7, section 5;

(18) bricklayers, allied craftworkers, cement masons, glaziers, glassworkers,
painters, allied tradesworkers, and plasterers employed by the city of St. Paul or
Independent School District No. 625, St. Paul, with coverage under a collective
bargaining agreement by the Bricklayers and Allied Craftworkers Local 1 pension plan,
the Cement Masons Local 633 pension plan, the Glaziers and Glassworkers Local L-1324
pension plan, the Painters and Allied Trades Local 61 pension plan, or the Twin Cities
Plasterers Local 265 pension plan who were either first employed after May 1, 2001, or if
first employed before May 2, 2001, elected to be excluded under Laws 2001, First Special
Session chapter 10, article 10, section 6;

(19) plumbers employed by the Metropolitan Airports Commission, with coverage
under a collective bargaining agreement by the Plumbers Local 34 pension plan, who either
were first employed after May 1, 2001, or if first employed before May 2, 2001, elected to
be excluded under Laws 2001, First Special Session chapter 10, article 10, section 6;

(20) employees who are hired after June 30, 2002, to fill seasonal positions under
subdivision 12b which are limited in duration by the employer to 185 consecutive calendar
days or less in each year of employment with the governmental subdivision;

(21) persons who are provided supported employment or work-study positions
by a governmental subdivision and who participate in an employment or industries
program maintained for the benefit of these persons where the governmental subdivision
limits the position's duration to three years or less, including persons participating in a
federal or state subsidized on-the-job training, work experience, senior citizen, youth, or
unemployment relief program where the training or work experience is not provided as a
part of, or for, future permanent public employment;

(22) independent contractors and the employees of independent contractors; and

(23) reemployed annuitants of the association during the course of that
reemployment.

Sec. 3.

Minnesota Statutes 2006, section 353.01, subdivision 6, is amended to read:


Subd. 6.

Governmental subdivision.

(a) "Governmental subdivision" means
a county, city, town, school district within this state, or a department deleted text beginordeleted text endnew text begin,new text end unit new text beginor
instrumentality
new text endof state new text beginor local new text endgovernment, or any public body deleted text beginwhose revenues are
derived
deleted text end new text beginestablished under state or local authority that has a governmental purpose, is
under public control, is responsible for the employment and payment of the salaries of
employees of the entity, and receives a major portion of its revenues
new text endfrom taxation, fees,
assessments or from other new text beginpublic new text endsources.

(b) Governmental subdivision also means the Public Employees Retirement
Association, the League of Minnesota Cities, the Association of Metropolitan
Municipalities, new text begincharter schools formed under section 124D.10, service cooperatives
exercising retirement plan participation under section 123A.21, subdivision 5, joint powers
boards organized under section 471.59, subdivision 11, paragraph (a), family service
collaboratives and children's mental health collaboratives organized under section 471.59,
subdivision 11, paragraph (b) or (c), provided that the entities creating the collaboratives
are governmental units that otherwise qualify for retirement plan membership,
new text endpublic
hospitals owned or operated by, or an integral part of, a governmental subdivision or
governmental subdivisions, the Association of Minnesota Counties, the deleted text beginMetropolitandeleted text end
new text begin Minnesota new text endIntercounty Association, the Minnesota Municipal Utilities Association, the
Metropolitan Airports Commission, the University of Minnesota with respect to police
officers covered by the public employees police and fire retirement plan, the Minneapolis
Employees Retirement Fund for employment initially commenced after June 30, 1979, the
Range Association of Municipalities and Schools, soil and water conservation districts,
economic development authorities created or operating under sections 469.090 to
469.108, the Port Authority of the city of St. Paul, the Spring Lake Park Fire Department,
incorporated, the Lake Johanna Volunteer Fire Department, incorporated, the Red Wing
Environmental Learning Center, the Dakota County Agricultural Society, and Hennepin
Healthcare System, Inc.

(c) Governmental subdivision does not mean any municipal housing and
redevelopment authority organized under the provisions of sections 469.001 to 469.047;
or any port authority organized under sections 469.048 to 469.089 other than the Port
Authority of the city of St. Paul; or any hospital district organized or reorganized prior
to July 1, 1975, under sections 447.31 to 447.37 or the successor of the districtdeleted text begin, nor
the Minneapolis Community Development Agency
deleted text endnew text begin; or the board of a family service
collaborative or children's mental health collaborative organized under sections 124D.23,
245.491 to 245.495, or 471.59, if that board is not controlled by representatives of
governmental units
new text end.

new text begin (d) A nonprofit corporation governed by chapter 317A or organized under Internal
Revenue Code, section 501(c)(3), which is not covered by paragraph (a) or (b), is not a
governmental subdivision unless the entity has obtained a written advisory opinion from
the United States Department of Labor or a ruling from the Internal Revenue Service
declaring the entity to be an instrumentality of the state so as to provide that any future
contributions by the entity on behalf of its employees are contributions to a governmental
plan within the meaning of Internal Revenue Code, section 414(d).
new text end

new text begin (e) A public body created by state or local authority may request membership on
behalf of its employees by providing sufficient evidence that it meets the requirements in
paragraph (a).
new text end

new text begin (f) An entity determined to be a governmental subdivision shall be subject to the
reporting requirements of this chapter on a prospective basis upon receipt of a written
notice of eligibility from the association.
new text end

Sec. 4.

Minnesota Statutes 2006, section 353.01, subdivision 28, is amended to read:


Subd. 28.

Retirement.

(a) "Retirement" means the commencement of payment of
an annuity based on a date designated by the board of trustees. This date determines
the rights under this chapter which occur either before or after retirement. A right to
retirement is subject to termination of public service under subdivision 11a. A right to
retirement requires a complete and continuous separation for 30 days from employment as
a public employee and from the provision of paid services to that employer.

(b) An individual who separates from employment as a public employee and who,
within 30 days of separation, returns to provide service to a governmental subdivision
as an independent contractor or as an employee of an independent contractor, has not
satisfied separation requirements under paragraph (a).

deleted text begin (c) A former member of the basic or police and fire fund who becomes a coordinated
member upon returning to eligible, nontemporary public service, terminates employment
before obtaining six months' allowable service under subdivision 16, paragraph (a), in
the coordinated fund, and is eligible to receive an annuity the first day of the month after
the most recent termination date shall not accrue a right to a retirement annuity under the
coordinated fund. An annuity otherwise payable to the former member must be based on
the laws in effect on the date of termination of the most recent service under the basic or
police and fire fund and shall be retroactive to the first day of the month following that
termination date or one year preceding the filing of an application for retirement annuity
as provided by section deleted text begin353.29, subdivision 7deleted text end, whichever is later. The annuity payment
must be suspended under the provisions of section , if earned compensation for the
reemployment equals or exceeds the amounts indicated under that section. The association
will refund the employee deductions made to the coordinated fund, with interest under
section deleted text begin353.34, subdivision 2deleted text end, return the accompanying employer contributions, and
remove the allowable service credits covering the deductions refunded.
deleted text end

deleted text begin (d)deleted text end new text begin(c) new text endNotwithstanding the 30-day separation requirement under paragraph (a), a
member of deleted text beginthedeleted text end new text begina new text enddefined benefit plan under this chapter, who also participates in the public
employees defined contribution plan under chapter 353D for other public service, may be
paid, if eligible, a retirement annuity from the defined benefit plan while participating in the
defined contribution plan.new text begin A retirement annuity is also payable from a defined benefit plan
under this chapter to an eligible member who terminates public service and who, within
30 days of separation, takes office as an elected official of a governmental subdivision.
new text end

new text begin (d) Elected officials included in association membership under subdivisions 2a and
2d meet the 30-day separation requirement under this section by resigning from office
prior to filing for a subsequent term in the same office and by remaining completely and
continuously separated from that office for 30 days prior to the date of the election.
new text end

Sec. 5.

Minnesota Statutes 2006, section 353.03, subdivision 3, is amended to read:


Subd. 3.

Duties and powers of the board.

(a) The board shallnew text begin:
new text end

new text begin (1)new text end elect a president and vice-presidentdeleted text begin. The board shalldeleted text endnew text begin;
new text end

new text begin (2)new text end approve the staffing complementnew text begin, as recommended by the executive director,new text end
necessary to administer the funddeleted text begin. The cost of administering this chapter must be paid by
the fund.
deleted text endnew text begin;
new text end

deleted text begin (b) The board shalldeleted text endnew text begin (3)new text end adopt bylaws for its own government and for the management
of the fund consistent with the laws of the state and may modify them at pleasuredeleted text begin. It shalldeleted text endnew text begin;
new text end

new text begin (4)new text end adopt, alter, and enforce reasonable rules consistent with the laws of the state
new text begin and the terms of the applicable benefit plans new text endfor the administration and management of the
fund, for the payment and collection of payments from membersdeleted text begin,deleted text end and for the payment
of withdrawals and benefitsdeleted text begin. It shalldeleted text endnew text begin, and that are necessary in order to comply with the
applicable federal Internal Revenue Service and Department of Labor requirements;
new text end

new text begin (5)new text end pass upon and allow or disallow all applications for membership in the fund
and shall allow or disallow claims for withdrawals, pensions, or benefits payable from
the funddeleted text begin. It shalldeleted text endnew text begin;
new text end

new text begin (6)new text end adopt an appropriate mortality table based on experience of the fund as
recommended by the association actuarynew text begin and approved under section 356.215, subdivision
18
new text end, with interest set at the rate specified in section 356.215, subdivision 8deleted text begin. It shalldeleted text endnew text begin;
new text end

new text begin (7)new text end provide for the payment out of the fund of new text beginthe cost of administering this
chapter, of
new text endall necessary expenses for the administration of the fund and of all claims for
withdrawals, pensions, or benefits alloweddeleted text begin. The board shalldeleted text endnew text begin; and
new text end

new text begin (8)new text end approve or disapprove all recommendations and actions of the executive director
made subject to its approval or disapproval by subdivision 3a.

deleted text begin (c)deleted text end new text begin(b) new text endIn passing upon all applications and claims, the board may summon, swear,
hear, and examine witnesses and, in the case of claims for disability benefits, may require
the claimant to submit to a medical examination by a physician of the board's choice, at the
expense of the fund, as a condition precedent to the passing on the claim, and, in the case
of all applications and claims, may conduct investigations necessary to determine their
validity and merit. The board shall establish procedures to assure that a benefit applicant
and recipient may have a review of a benefit eligibility or benefit amount determination
affecting the applicant or recipient. The review procedure may afford the benefit applicant
or benefit recipient an opportunity to present views at any review proceeding conducted,
but is not a contested case under chapter 14.

deleted text begin (d)deleted text end new text begin(c) new text endThe board may continue to authorize the sale of life insurance to members
under the insurance program in effect on January 1, 1985, but must not change that
program without the approval of the commissioner of finance. The association shall
not receive any financial benefit from the life insurance program beyond the amount
necessary to reimburse the association for costs incurred in administering the program.
The association shall not engage directly or indirectly in any other activity involving the
sale or promotion of goods or services, or both, whether to members or nonmembers.

deleted text begin (e)deleted text end new text begin(d) new text endThe board shall establish procedures governing reimbursement of expenses to
board members. These procedures shall define the types of activities and expenses that
qualify for reimbursement, shall provide that all out-of-state travel must be authorized
by the board, and shall provide for independent verification of claims for expense
reimbursement. The procedures must comply with applicable rules and policies of the
Department of Finance, the Department of Administration, and the Department of
Employee Relations.

deleted text begin (f)deleted text end new text begin(e) new text endThe board may purchase fiduciary liability insurance and official bonds for the
officers and members of the board of trustees and employees of the association and may
purchase property insurance or may establish a self-insurance risk reserve including, but
not limited to, data processing insurance and "extra-expense" coverage.

Sec. 6.

Minnesota Statutes 2006, section 353.03, subdivision 3a, is amended to read:


Subd. 3a.

Executive director.

(a) Appointment. The board shall appointdeleted text begin, with
the advice and consent of the senate,
deleted text end an executive director on the basis of education,
experience in the retirement field, and leadership ability. The executive director shall have
had at least five years' experience in an executive level management position, which
has included responsibility for pensions, deferred compensation, or employee benefits.
The executive director serves at the pleasure of the board. The salary of the executive
director is as provided by section 15A.0815.

(b) Duties. The management of the association is vested in the executive director
who shall be the executive and administrative head of the association. The executive
director shall act as adviser to the board on all matters pertaining to the association and
shall also act as the secretary of the board. The executive director shall:

(1) attend all meetings of the board;

(2) prepare and recommend to the board appropriate rules to carry out the provisions
of this chapter;

(3) establish and maintain an adequate system of records and accounts following
recognized accounting principles and controls;

(4) designate, with the approval of the board, up to two persons who deleted text beginshalldeleted text end new text beginmay new text endserve
in the unclassified service and whose deleted text beginsalary isdeleted text end new text beginsalaries are new text endset in accordance with section
43A.18, subdivision 3, appoint a confidential secretary in the unclassified service, and
appoint employees to carry out this chapter, who are subject to chapters 43A and 179A
in the same manner as are executive branch employees;

(5) organize the work of the association as the director deems necessary to fulfill
the functions of the association, and define the duties of its employees and delegate to
them any powers or duties, subject to the control of, and under such conditions as, the
executive director may prescribe;

(6) with the approval of the board, contract for the services of an approved actuary,
professional management services, and any other consulting services as necessary
to fulfill the purposes of this chapter. All contracts are subject to chapter 16C. The
commissioner of administration shall not approve, and the association shall not enter
into, any contract to provide lobbying services or legislative advocacy of any kind.
Any approved actuary retained by the executive director shall function as the actuarial
advisor of the board and the executive director and may perform actuarial valuations and
experience studies to supplement those performed by the actuary retained under section
356.214. Any supplemental actuarial valuations or experience studies shall be filed with
the executive director of the Legislative Commission on Pensions and Retirement. Copies
of professional management survey reports shall be transmitted to the secretary of the
senate, the chief clerk of the house of representatives, and the Legislative Reference
Library as provided by section 3.195, and to the executive director of the commission at
the same time as reports are furnished to the board. Only management firms experienced
in conducting management surveys of federal, state, or local public retirement systems
shall be qualified to contract with the director hereunder;

(7) with the approval of the board provide in-service training for the employees
of the association;

(8) make refunds of accumulated contributions to former members and to the
designated beneficiary, surviving spouse, legal representative or next of kin of deceased
members or deceased former members, as provided in this chapter;

(9) determine the amount of the annuities and disability benefits of members covered
by the association and authorize payment of the annuities and benefits beginning as of
the dates on which the annuities and benefits begin to accrue, in accordance with the
provisions of this chapter;

(10) pay annuities, refunds, survivor benefits, salaries, and necessary operating
expenses of the association;

(11) prepare and submit to the board and the legislature an annual financial report
covering the operation of the association, as required by section 356.20;

(12) prepare and submit biennial and annual budgets to the board for its approval
and submit the approved budgets to the Department of Finance for approval by the
commissioner;

(13) reduce all or part of the accrued interest payable under section 353.27,
subdivisions 12, 12a, and 12b
, or 353.28, subdivision 5, upon receipt of proof by the
association of an unreasonable processing delay or other extenuating circumstances of
the employing unit. The executive director shall prescribe and submit for approval by the
board the conditions under which such interest may be reduced; and

(14) with the approval of the board, perform such other duties as may be required for
the administration of the association and the other provisions of this chapter and for the
transaction of its business.

Sec. 7.

Minnesota Statutes 2006, section 353.03, subdivision 4, is amended to read:


Subd. 4.

Offices.

The commissioner of administration shall make provision for
suitable office space in the deleted text beginstate capitol or other state office buildings, or at such other
location as is determined by the commissioner for the use of the board of trustees and its
executive director. The commissioner shall give the board at least four months notice
for any proposed removal from their present location. Any and all rental charges shall
be paid by the trustees from the public employees retirement fund
deleted text end new text beginpublic pension fund
facilities created under section 356B.10
new text end.

Sec. 8.

Minnesota Statutes 2006, section 353.27, subdivision 12, is amended to read:


Subd. 12.

Omitted salary deductions; obligations.

(a) In the case of omission
of required deductions from the salary of an employee, the department head or designee
shall immediately, upon discovery, report the employee for membership and deduct the
employee deductions under subdivision 4 during the current pay period or during the pay
period immediately following the discovery of the omission. Payment for the omitted
obligations may only be made in accordance with reporting procedures and methods
established by the executive director.

(b) When the entire omission period of an employee does not exceed 60 days, the
governmental subdivision may report and submit payment of the omitted employee
deductions and the omitted employer contributions through the reporting processes under
subdivision 4.

(c) When the omission period of an employee exceeds 60 days, the governmental
subdivision shall furnish to the association sufficient data and documentation upon which
the obligation for omitted employee and employer contributions can be calculated. The
omitted employee deductions must be deducted from the employee's subsequent salary
payment or payments and remitted to the association. The employee shall pay omitted
employee deductions due for the 60 days prior to the end of the last pay period in the
omission period during which salary was earned. The employer shall pay any remaining
omitted employee deductions and any omitted employer contributions, plus cumulative
interest at an annual rate of 8.5 percent compounded annually, from the date or dates each
omitted employee contribution was first payable.

(d) An employer shall not hold an employee liable for omitted employee deductions
beyond the pay period dates under paragraph (c), nor attempt to recover from the employee
those employee deductions paid by the employer on behalf of the employee. Omitted
deductions due under paragraph (c) which are not paid by the employee constitute a
liability of the employer that failed to deduct the omitted deductions from the employee's
salary. The employer shall make payment with interest at an annual rate of 8.5 percent
compounded annually. Omitted employee deductions are no longer due if an employee
terminates public service before making payment of omitted employee deductions to
the association, but the employer remains liable to pay omitted employer contributions
plus interest at an annual rate of 8.5 percent compounded annually from the date the
contributions were first payable.

(e) The association may not commence action for the recovery of omitted employee
deductions and employer contributions after the expiration of three calendar years after
the calendar year in which the contributions and deductions were omitted. Except as
provided under paragraph (b), no payment may be made or accepted unless the association
has already commenced action for recovery of omitted deductions. An action for recovery
commences on the date of the mailing of any written correspondence from the association
requesting information from the governmental subdivision upon which to determine
whether or not omitted deductions occurred.

new text begin (f) The association shall not commence action for the recovery of omitted employer
contributions or omitted employee deductions for any period prior to the initial plan
coverage date of the governmental subdivision.
new text end

Sec. 9.

Minnesota Statutes 2006, section 353.28, subdivision 6, is amended to read:


Subd. 6.

Collection of unpaid amounts.

(a) If a governmental subdivision which
receives the direct proceeds of property taxation fails to pay an amount due under chapter
353, 353A, 353B, 353C, or 353D, the executive director shall certify the amount to the
governmental subdivision for payment. If the governmental subdivision fails to remit the
sum so due in a timely fashion, the executive director shall certify the amount to the
applicable county auditor for collection. The county auditor shall collect the amount
out of the revenue of the governmental subdivision, or shall add the amount to the levy
of the governmental subdivision and make payment directly to the association. This
tax must be levied, collected, and apportioned in the manner that other taxes are levied,
collected, and apportioned.

(b) If a governmental subdivision which is not funded directly from the proceeds
of property taxation fails to pay an amount due under this chapter, the executive
director shall certify the amount to the governmental subdivision for payment. If the
governmental subdivision fails to pay the amount for a period of 60 days after the date
of the certification, the executive director shall certify the amount to the commissioner
of finance, who shall deduct the amount from any subsequent state-aid payment or state
appropriation amount applicable to the governmental subdivision and make payment
directly to the association.new text begin If the amount of the state-aid payment or state appropriation is
not sufficient to pay the full sum due, the amounts paid to the association shall be applied
first to the unpaid employee deductions withheld from the employees' wages and next to
the unpaid employer contributions. Any remaining amount received by the association
must be applied to the interest due on the employee and employer contribution amounts.
If a government subdivision under this paragraph owes amounts to more than one public
retirement plan, section 356.98 applies.
new text end

new text begin (c) If a governmental subdivision has been dissolved or closed, the requirements in
paragraph (b) of a certification to the governmental subdivision and the related 60-day
waiting period do not apply. The executive director is authorized to immediately certify
the applicable amount to the commissioner of finance.
new text end

Sec. 10.

Minnesota Statutes 2006, section 353.29, subdivision 3, is amended to read:


Subd. 3.

Retirement annuity formula.

(a) This paragraph, in conjunction with
section 353.30, subdivisions deleted text begin1,deleted text end 1a, 1b, and 1c, applies to any member who first became a
public employee or a member of a pension fund listed in section 356.30, subdivision 3,
before July 1, 1989, unless paragraph (b), in conjunction with section 353.30, subdivision
5
, produces a higher annuity amount, in which case paragraph (b) will apply. The average
salary as defined in section 353.01, subdivision 17a, multiplied by the percent specified in
section 356.315, subdivision 3, for each year of allowable service for the first ten years
and thereafter by the percent specified in section 356.315, subdivision 4, per year of
allowable service and completed months less than a full year for deleted text beginthe "basic member,"deleted text end new text begina
basic member,
new text endand the percent specified in section 356.315, subdivision 1, for each year of
allowable service for the first ten years and thereafter by the percent specified in section
356.315, subdivision 2, per year of allowable service and completed months less than a
full year for deleted text beginthe "coordinated member,"deleted text end new text begina coordinated member new text endshall determine the amount
of the deleted text begin"normal"deleted text end new text beginnormal new text endretirement annuity.

(b) This paragraph applies to a member who has become at least 55 years old and
first became a public employee after June 30, 1989, and to any other member whose
annuity amount, when calculated under this paragraph and in conjunction with section
353.30, subdivision 5, is higher than it is when calculated under paragraph (a), in
conjunction with section 353.30, subdivisions deleted text begin1,deleted text end 1a, 1b, and 1c. The average salary, as
defined in section 353.01, subdivision 17a, multiplied by the percent specified in section
356.315, subdivision 4, for each year of allowable service and completed months less than
a full year for a basic member and the percent specified in section 356.315, subdivision 2,
per year of allowable service and completed months less than a full year for a coordinated
member, shall determine the amount of the normal retirement annuity.

Sec. 11.

Minnesota Statutes 2006, section 353.30, subdivision 1a, is amended to read:


Subd. 1a.

Pre-July 1, 1989 members: rule of 90.

deleted text beginAnydeleted text end new text beginUpon termination of
public service under section 353.01, subdivision 11a, a
new text endperson who first became a public
employee or a member of a pension fund listed in section 356.30, subdivision 3, before
July 1, 1989, and whose attained age plus credited allowable service totals 90 years is
entitled upon application to a retirement annuity in an amount equal to the normal annuity
provided in section 353.29, deleted text beginsubdivisions 2 anddeleted text end new text beginsubdivision new text end3, paragraph (a), without any
reduction in annuity deleted text beginby reason of suchdeleted text end new text begindue to new text endearly retirement.

Sec. 12.

Minnesota Statutes 2006, section 353.30, subdivision 1b, is amended to read:


Subd. 1b.

Pre-July 1, 1989 members: 30 years of service.

deleted text beginAnydeleted text end new text beginUpon termination
of public service under section 353.01, subdivision 11a, a
new text endperson who first became a
public employee or a member of a pension fund listed in section 356.30, subdivision
3
, before July 1, 1989, with 30 years or more of allowable service credit, who elects
deleted text begin early retirement under subdivision 1deleted text endnew text begin to retire prior to normal retirement agenew text end, shall receive
an annuity in an amount equal to the normal annuity provided under section 353.29,
deleted text begin subdivisions 2 anddeleted text end new text beginsubdivision new text end3
, paragraph (a), reduced by one-quarter of one percent for
each month that the member is under age 62 at the time of retirement.

Sec. 13.

Minnesota Statutes 2006, section 353.30, subdivision 1c, is amended to read:


Subd. 1c.

Pre-July 1, 1989 members: early retirement.

deleted text beginAnydeleted text end new text beginUpon termination of
public service, a
new text endperson who first became a public employee or a member of a pension
fund listed in section 356.30, subdivision 3, before July 1, 1989, deleted text beginand who has received
credit for at least 30 years of allowable service or
deleted text end who has become at least 55 years old but
not normal retirement age, and has received credit for at least three years of allowable
service is entitled upon application to a retirement annuity in an amount equal to the
normal annuity provided in section 353.29, deleted text beginsubdivisions 2 anddeleted text end new text beginsubdivision new text end3, paragraph
(a), reduced by one-quarter of one percent for each month that the member is under normal
retirement age at the time of retirementdeleted text begin, except that for any member who has 30 or more
years of allowable service the reduction shall be applied only for each month that the
member is under age 62 at the time of retirement
deleted text end.

Sec. 14.

Minnesota Statutes 2006, section 353.32, subdivision 1a, is amended to read:


Subd. 1a.

Surviving spouse optional annuity.

(a) If a member or former member
who has credit for not less than three years of allowable service and dies before the
annuity or disability benefit begins to accrue under section 353.29, subdivision 7, or
353.33, subdivision 2, notwithstanding any designation of beneficiary to the contrary, the
surviving spouse may elect to receive, instead of a refund with interest under subdivision
1, or surviving spouse benefits otherwise payable under section 353.31, an annuity equal
to deleted text beginthedeleted text end new text begina new text end100 percent joint and survivor annuity deleted text beginthat the member could have qualified for
had the member terminated service on the date of death
deleted text endnew text begin computed consistent with section
353.30, subdivision 1a, 1c, or 5, whichever is applicable
new text end.

(b) If deleted text beginthedeleted text end new text begina new text endmember deleted text beginwas under age 55deleted text end new text beginfirst became a public employee or a member of
a pension fund listed in section 356.30, subdivision 3, before July 1, 1989,
new text endand has credit
for at least 30 years of allowable service on the date of death, the surviving spouse may
elect to receive a 100 percent joint and survivor annuity deleted text beginbased on the age of the member
and surviving spouse on the date of death. The annuity is payable using
deleted text end new text begincomputed using
section 353.30, subdivision 1b, except that
new text endthe deleted text beginfulldeleted text end early retirement reduction under deleted text beginsection
353.30, subdivisions 1b and 1c, to
deleted text end new text beginthat provision will be applied from new text endage new text begin62 back to age new text end55
and one-half of the early retirement reduction from age 55 new text beginback new text endto the age payment begins.

(c) If deleted text beginthedeleted text end new text begina new text endmember new text beginwho new text endwas under age 55 and has credit for at least three years of
allowable service deleted text beginon the date of deathdeleted text end new text begindies, new text endbut did not qualify for retirementnew text begin on the date
of death
new text end, the surviving spouse may elect to receive deleted text beginthedeleted text end new text begina new text end100 percent joint and survivor
annuity deleted text beginbased on the age of the member and surviving spouse at the time of death. The
annuity is payable
deleted text end new text begincomputed new text endusing new text beginsection 353.30, subdivision 1c or 5, as applicable,
except that
new text endthe deleted text beginfulldeleted text end early retirement reduction deleted text beginunder section 353.30, subdivision 1, 1b, 1c,
or 5,
deleted text end new text beginspecified in the applicable subdivision will be applied new text endto age 55 and one-half of the
early retirement reduction from age 55 new text beginback new text endto the age payment begins.

(d) Notwithstanding the definition of surviving spouse in section 353.01, subdivision
20
, a former spouse of the member, if any, is entitled to a portion of the monthly surviving
spouse optional annuity if stipulated under the terms of a marriage dissolution decree filed
with the association. If there is no surviving spouse or child or children, a former spouse
may be entitled to a lump-sum refund payment under subdivision 1, if provided for in a
marriage dissolution decree, but not a monthly surviving spouse optional annuity, despite
the terms of a marriage dissolution decree filed with the association.

(e) The surviving spouse eligible for surviving spouse benefits under paragraph (a)
may apply for the annuity at any time after the date on which the deceased employee would
have attained the required age for retirement based on the employee's allowable service.
The surviving spouse eligible for surviving spouse benefits under paragraph (b) or (c) may
apply for an annuity any time after the member's death. deleted text beginThe annuity must be computed
under sections 353.29, subdivisions 2 and 3; and 353.30, subdivisions 1, 1a, 1b, 1c, and 5.
deleted text end

(f) Sections 353.34, subdivision 3, and 353.71, subdivision 2, apply to a deferred
annuity or surviving spouse benefit payable under this subdivision. deleted text beginNo payment may
accrue beyond the end of the month in which entitlement to the annuity has terminated or
upon expiration of the term certain benefit payment under subdivision 1b.
deleted text end

new text begin (g)new text end An amount equal to any excess of the accumulated contributions that were
credited to the account of the deceased employee over and above the total of the annuities
paid and payable to the surviving spouse must be paid to the surviving spouse's estate.

deleted text begin (g)deleted text end new text begin(h) new text endA member may specify in writing that this subdivision does not apply and
that payment may be made only to the designated beneficiary as otherwise provided by
this chapter. The waiver of a surviving spouse annuity under this section does not make a
dependent child eligible for benefits under subdivision 1c.

new text begin (i) If the deceased member or former member first became a public employee or a
member of a public pension plan listed in section 356.30, subdivision 3, on or after July
1, 1989, a survivor annuity computed under paragraph (a) or (c) must be computed as
specified in section 353.30, subdivision 5, except for the revised early retirement reduction
specified in paragraph (c), if paragraph (c) is the applicable provision.
new text end

new text begin (j) For any survivor annuity determined under this subdivision, the payment is to
be based on the total allowable service the member had accrued as of the date of death,
and, on the date payment begins, the age the member or former member would have
been and the age of the surviving spouse.
new text end

Sec. 15.

Minnesota Statutes 2006, section 353.32, subdivision 1b, is amended to read:


Subd. 1b.

Survivor coverage term certain.

(a) In lieu of the 100 percent optional
annuity under subdivision 1a, or a refund under subdivision 1, the surviving spouse of
a deceased member may elect to receive survivor coverage for a term certain period of
ten, 15, or 20 years, but monthly payments must not exceed 75 percent of the average
high-five monthly salary of the deceased member. new text beginThe benefit terminates at the end of
the specified term certain period. Except as otherwise specified in this subdivision,
new text endthe
monthly term certain annuity must be actuarially equivalent to the 100 percent optional
annuity under subdivision 1a.

(b) If a surviving spouse elects a term certain annuity and dies before the expiration
of the specified term certain period, the commuted value of the remaining annuity
payments must be paid in a lump sum to the survivor's estate.

Sec. 16.

Minnesota Statutes 2006, section 353.34, subdivision 3, is amended to read:


Subd. 3.

Deferred annuity; eligibility; computation.

A member with at least
three years of allowable service when termination of public service or termination of
membership occurs has the option of leaving the accumulated deductions in the fund and
being entitled to a deferred retirement annuity commencing at normal retirement age
or to a deferred early retirement annuity under section 353.30, subdivision deleted text begin1,deleted text end 1a, 1b,
1c, or 5. The deferred annuity must be computed under section 353.29, deleted text beginsubdivisions 2
and
deleted text end new text beginsubdivision new text end3
, on the basis of the law in effect on the date of termination of public
service or termination of membershipnew text begin, whichever is earlier,new text end and must be augmented as
provided in section 353.71, subdivision 2. A former member qualified to apply for a
deferred retirement annuity may revoke this option at any time before the commencement
of deferred annuity payments by making application for a refund. The person is entitled to
a refund of accumulated member contributions within 30 days following date of receipt of
the application by the executive director.

Sec. 17.

Minnesota Statutes 2006, section 356.87, is amended to read:


356.87 HEALTH INSURANCE WITHHOLDING.

new text begin Subdivision 1. new text end

new text begin Public employees insurance program withholding. new text end

(a) Upon
authorization of a person entitled to receive a retirement annuity, disability benefit or
survivor benefit, the executive director of a public pension fund enumerated in section
356.20, subdivision 2, shall withhold health insurance premium amounts from the
retirement annuity, disability benefit or survivor benefit, and shall pay the premium
amounts to the public employees insurance program.

(b) The public employees insurance program shall reimburse a public pension fund
for the administrative expense of withholding the premium amounts and shall assume
liability for the failure of a public pension fund to properly withhold the premium amounts.

new text begin Subd. 2. new text end

new text begin Public safety retiree insurance withholding. new text end

new text begin (a) For purposes of this
subdivision, "governing board" means the governing board or body that has been assigned
the chief policy making powers and management duties of the applicable pension plan.
new text end

new text begin (b) The governing board may, for a pension plan providing monthly annuity
payments and which is enumerated in section 356.20, subdivision 2, direct the plan's chief
administrative officer to withhold health, accident, and long-term care insurance premiums
from the retirement annuity or disability benefit and to transmit the amount to an approved
insurance provider specified by the eligible person. A governing board which agrees to
participate may revise or revoke that decision at a later date, providing reasonable notice
is provided to the applicable parties.
new text end

new text begin (c) An eligible person is a person who:
new text end

new text begin (1) is a retiree or disabilitant from a participating plan;
new text end

new text begin (2) was a public safety officer as defined in United States Code, title 42, section
3796b;
new text end

new text begin (3) terminated service as a public safety officer upon attainment of normal retirement
age and commences receipt of an annuity without any period of deferral, or is receiving
a disability benefit; and
new text end

new text begin (4) satisfies any other requirements to have all or a portion of the health, accident,
or long-term care insurance premiums excluded from income for taxation purposes, as
specified in the Pension Protection Act of 2006, section 845.
new text end

new text begin (d) An approved insurance provider is:
new text end

new text begin (1) any regulated, licensed insurance company;
new text end

new text begin (2) a fraternal or any other organization sponsoring a regulated, licensed insurance
program; or
new text end

new text begin (3) an employer-sponsored insurance program, whether directly through the
employer or a third-party administrator.
new text end

new text begin (e) Using a form determined by the chief administrative officer of the applicable
plan, an eligible person may elect to have the applicable plan administrator withhold and
transmit the insurance amounts described in paragraph (b).
new text end

new text begin (f) A pension fund and the plan fiduciaries which authorize or administer
withholding of insurance premiums under this subdivision shall not be held liable for
failure to properly withhold or transmit the premium amounts.
new text end

COMPREHENSIVE EMPLOYMENT TRAINING ACT

SERVICE CREDIT PURCHASE

Sec. 18.

new text begin [356.95] PURCHASE OF PRIOR COMPREHENSIVE EMPLOYMENT
TRAINING ACT SERVICE.
new text end

new text begin Subdivision 1. new text end

new text begin Eligibility. new text end

new text begin An eligible person is a person who:
new text end

new text begin (1) is currently an active plan member in a plan included under section 356.30,
subdivision 3, other than clause (3);
new text end

new text begin (2) was excluded from pension coverage under the provisions of Laws 1978, chapter
720; and
new text end

new text begin (3) subsequently became employed in unsubsidized public employment covered by
a pension plan included under section 356.30, subdivision 3, other than clause (3), with
the same public employer which provided the subsidized employment or other public
employer.
new text end

new text begin Subd. 2. new text end

new text begin Authorization. new text end

new text begin An eligible person under subdivision 1 is authorized to
purchase service credit for that period of uncovered prior subsidized public employment,
other than a period of prior subsidized public employment for which a repayment of a
refund was made, with a public pension plan specified in subdivision 1, clause (3), which,
except for the exclusion provided by Laws 1978, chapter 720, would have provided
pension coverage for the subsidized employment.
new text end

new text begin Subd. 3. new text end

new text begin Procedures. new text end

new text begin Section 356.551 applies to purchases under this section,
except that payment must be made before the expiration date of this section or termination
from eligible employment covered by a pension plan under subdivision 1, clause (1),
whichever is earlier.
new text end

new text begin Subd. 4. new text end

new text begin Restriction. new text end

new text begin (a) Pre-July 1, 1989, service credit purchased under this
section does not extend eligibility to plan benefits applicable to individuals who became
members prior to July 1, 1989, of a plan listed in section 356.30, subdivision 3.
new text end

new text begin (b) Service credit may not be purchased for any period for which the individual
has service credit in a covered pension plan, as defined in section 356A.01, subdivision
8, other than a volunteer firefighter plan.
new text end

new text begin Subd. 5. new text end

new text begin Expiration. new text end

new text begin This section expires on June 30, 2009.
new text end

RECEIVABLES

Sec. 19.

new text begin [356.98] ALLOCATION OF RECEIVABLES.
new text end

new text begin If an employing unit is dissolved or closed and amounts are owed to more than one
Minnesota public pension plan, any amounts available to cover payments to the plans
shall be applied first to the employee contributions owed to the applicable plans, and
next to the unpaid employer contributions, including any applicable employer additional
contributions, and finally to the interest due on the employee and employer amounts. If, at
any stage in this allocation process, the available amount is insufficient to fully cover the
amount required, the remaining available payment amount must be prorated among the
applicable plans based on each plan's share of combined covered payroll.
new text end

Sec. 20. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2006, sections 353.30, subdivision 1; 353.34, subdivision 7;
and 353.69,
new text end new text begin are repealed.
new text end

Sec. 21. new text beginEFFECTIVE DATE.
new text end

new text begin (a) Sections 1 to 13 and 15, 16, 18, 19, and 20 are effective the day following
enactment.
new text end

new text begin (b) Section 3, paragraphs (e) and (f), and section 8 apply to initial plan coverage
dates occurring on or after the effective date of the applicable section.
new text end

new text begin (c) Section 14 is effective for survivor benefits based on a date of death occurring
on or after July 1, 2007. Section 14, other than paragraph (j), is not intended to increase,
modify, impair, or diminish the benefit entitlements specified in the subdivision within
the Minnesota Statutes being amended. If the executive director of the Public Employees
Retirement Association determines that any provision of section 14, other than paragraph
(j), does increase, modify, impair, or diminish the benefit entitlements as reflected in
applicable law just before the effective date of this section, the executive director shall
certify that determination and a recommendation as to the required legislative correction
to the chairs of the Legislative Commission on Pensions and Retirement, the house
Governmental Operations and Veterans Affairs Policy Committee, the senate State and
Local Governmental Operations Committee, and the executive director of the Legislative
Commission on Pensions and Retirement.
new text end

new text begin (d) Section 17 is effective January 1, 2007.
new text end