new text begin Subdivision 1. new text end

new text begin Authorization; establishment. new text end

new text begin A political subdivision or other
public entity that creates or has created an actuarial liability to pay postemployment
benefits to employees or officers after their termination of service may establish a trust to
pay those benefits. For purposes of this section, the term "postemployment benefits" means
benefits giving rise to a liability under Statement No. 45 of the Governmental Accounting
Standards Board and the term "trust" means a trust, a trust account, or a custodial account
or contract authorized under section 401(f) of the Internal Revenue Code.
new text end

new text begin Subd. 2. new text end

new text begin Purpose of trust. new text end

new text begin The trust established under this section may only be
used to pay postemployment benefits and may be either revocable or irrevocable.
new text end

new text begin Subd. 3. new text end

new text begin Trust administrator. new text end

new text begin The trust administrator of a trust established under
this section shall be either:
new text end

new text begin (1) the Public Employees Retirement Association;
new text end

new text begin (2) a bank or banking association incorporated under the laws of the United States or
of any state and authorized by the laws under which it is organized to exercise corporate
trust powers; or
new text end

new text begin (3) an insurance company or agency qualified to do business in Minnesota which has
at least five years' experience in investment products and services for group retirement
benefits and which has a specialized department dedicated to services for retirement
investment products.
new text end

new text begin A political subdivision or public entity may, in its discretion and in compliance
with any applicable trust document, change trust administrators and transfer trust assets
accordingly.
new text end

new text begin Subd. 4. new text end

new text begin Account maintenance. new text end

new text begin A political subdivision or other public entity may
establish a trust account to be held under the supervision of the trust administrator for the
purposes of this section. A trust administrator shall establish a separate account for each
participating political subdivision or public entity. The trust administrator may charge
participating political subdivisions and public entities fees for reasonable administrative
costs. The amount of any fees charged by the Public Employees Retirement Association
is appropriated to the association from the account. A trust administrator may establish
other reasonable terms and conditions for creation and maintenance of these accounts.
The trust administrator must report to the political subdivision or other public entity on the
investment returns of invested trust assets and on all investment fees or costs incurred by
the trust. The annual rates of return, along with investment and administrative fees and
costs for the trust, must be disclosed in the political subdivision's or public entity's annual
financial audit in a manner prescribed by the state auditor.
new text end

new text begin Subd. 5. new text end

new text begin Investment. new text end

new text begin (a) The assets of a trust or trust account shall be invested and
held as stipulated in paragraphs (b) to (e).
new text end

new text begin (b) The Public Employees Retirement Association must certify all money in the trust
accounts for which it is trust administrator to the State Board of Investment for investment
created under section 11A.14, subject to the policies and procedures established by the
State Board of Investment. Investment earnings must be credited to the trust account of
the individual political subdivision or public entity.
new text end

new text begin (c) A trust administrator, other than the Public Employees Retirement Association,
must ensure that all money in the trust accounts for which it is trust administrator is
invested by a registered investment adviser, a bank investment trust department or an
insurance company or agency retirement investment department. Investment earnings
must be credited to the trust account of the individual political subdivision or public entity.
new text end

new text begin (d) For trust assets invested by the State Board of Investment, the investment
restrictions shall be the same as those generally applicable to the State Board of
Investment. For trust assets invested by a trust administrator other than the Public
Employees Retirement Association, the assets may only be invested in investments
authorized under chapter 118A or section 356A.06, subdivision 7, in the manner specified
in the applicable trust document.
new text end

new text begin (e) A political subdivision or public entity may provide investment direction to a
trust administrator in compliance with any applicable trust document.
new text end

new text begin Subd. 6. new text end

new text begin Limit on deposit. new text end

new text begin A political subdivision or public entity may not
deposit money in a trust or trust account created pursuant to this section if the total
amount invested by that political subdivision or public entity would exceed the political
subdivision's or public entity's actuarially determined liabilities for postemployment
benefits due to officers and employees, as determined under the applicable standards of the
Governmental Accounting Standards Board.
new text end

new text begin Subd. 7. new text end

new text begin Withdrawal of funds and termination of account. new text end

new text begin (a) For a revocable
account, a political subdivision or public entity may withdraw some or all of its money
or terminate the trust account for any reason. Money and accrued investment earnings
withdrawn from a revocable account must be deposited in a fund separate and distinct from
any other funds of the political subdivision or public entity. This money, with accrued
investment earnings, must be used to pay legally enforceable postemployment benefits
to former officers and employees, unless (i) there has been a change in state or federal
law affecting that political subdivision's or public entity's liabilities for postemployment
benefits, or (ii) there has been a change in the demographic composition of that political
subdivision's or public entity's employees eligible for postemployment benefits, or (iii)
there has been a change in the provisions or terms of the postemployment benefits in that
political subdivision or public entity including, but not limited to, the portion of the costs
eligible employees must pay to receive the benefits, or (iv) other factors exist that have
a material effect on that political subdivision's or public entity's actuarially determined
liabilities for postemployment benefits, in which event any amount in excess of 100
percent of that political subdivision's or public entity's actuarially determined liabilities for
postemployment benefits, as determined under standards of the Government Accounting
Standards Board, may be withdrawn and used for any purpose.
new text end

new text begin (b) For an irrevocable account, a political subdivision or public entity may withdraw
money only:
new text end

new text begin (1) as needed to pay postemployment benefits owed to former officers and employees
of the political subdivision or public entity; or
new text end

new text begin (2) when all postemployment benefit liability owed to former officers or employees
of the political subdivision or public entity has been satisfied or otherwise defeased.
new text end

new text begin (c) A political subdivision or public entity requesting withdrawal of money from
an account created under this section must do so at a time and in the manner required by
the executive director of the Public Employees Retirement Association or specified in an
applicable trust document. The political subdivision or public entity that created the trust
must ensure that withdrawals comply with the requirements of this section.
new text end

new text begin (d) The legislature may not divert funds in these trusts or trust accounts for use
for another purpose.
new text end

new text begin Subd. 8. new text end

new text begin Status of irrevocable trust. new text end

new text begin (a) All money in an irrevocable trust or
trust account created in this section is held in trust for the exclusive benefit of former
officers and employees of the participating political subdivision or public entity, and are
not subject to claims by creditors of the state, the participating political subdivision or
public entity, the current or former officers and employees of the political subdivision
or public entity, or the trust administrator.
new text end

new text begin (b) An irrevocable trust fund or trust account created in this section shall be deemed
an arrangement equivalent to a trust for all legal purposes.
new text end