Journal of the House - 55th Day - Monday, May 15, 2017 - Top of Page 5727

STATE OF MINNESOTA

 

Journal of the House

 

NINETIETH SESSION - 2017

 

_____________________

 

FIFTY-FIFTH DAY

 

Saint Paul, Minnesota, Monday, May 15, 2017

 

 

The House of Representatives convened at 12:00 noon and was called to order by Kurt Daudt, Speaker of the House.

 

Prayer was offered by the Reverend Dr. Ryan D. Brodin, Abiding Savior Lutheran Church, Mounds View, Minnesota.

 

The members of the House gave the pledge of allegiance to the flag of the United States of America.

 

The roll was called and the following members were present:

 


Albright

Allen

Anderson, P.

Anderson, S.

Anselmo

Applebaum

Backer

Bahr, C.

Baker

Barr, R.

Becker-Finn

Bennett

Bernardy

Bly

Carlson, A.

Carlson, L.

Christensen

Clark

Considine

Cornish

Daniels

Davids

Davnie

Dean, M.

Dehn, R.

Dettmer

Drazkowski

Ecklund

Erickson

Fabian

Fenton

Fischer

Flanagan

Franke

Franson

Freiberg

Garofalo

Green

Grossell

Gruenhagen

Gunther

Haley

Hamilton

Hansen

Hausman

Heintzeman

Hertaus

Hilstrom

Hoppe

Hornstein

Hortman

Howe

Jessup

Johnson, B.

Johnson, C.

Johnson, S.

Jurgens

Kiel

Knoblach

Koegel

Koznick

Kresha

Kunesh-Podein

Layman

Lee

Lesch

Liebling

Lien

Lillie

Loeffler

Lohmer

Loon

Loonan

Lucero

Lueck

Mahoney

Marquart

Masin

Maye Quade

Miller

Moran

Murphy, E.

Murphy, M.

Nash

Nelson

Neu

Newberger

Nornes

Olson

Omar

O'Neill

Pelowski

Peppin

Petersburg

Peterson

Pierson

Pinto

Poppe

Poston

Pryor

Pugh

Quam

Rarick

Rosenthal

Runbeck

Sandstede

Sauke

Schomacker

Schultz

Scott

Smith

Swedzinski

Thissen

Torkelson

Uglem

Urdahl

Vogel

Wagenius

Ward

West

Whelan

Wills

Youakim

Zerwas

Spk. Daudt


 

A quorum was present.

 

Bliss, Halverson, Mariani and Theis were excused.

 

McDonald and O'Driscoll were excused until 12:35 p.m. Slocum was excused until 1:05 p.m. Metsa and Sundin were excused until 3:10 p.m.

 

The Chief Clerk proceeded to read the Journal of the preceding day. There being no objection, further reading of the Journal was dispensed with and the Journal was approved as corrected by the Chief Clerk.


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REPORTS OF CHIEF CLERK

 

S. F. No. 550 and H. F. No. 1265, which had been referred to the Chief Clerk for comparison, were examined and found to be not identical.

 

Heintzeman moved that S. F. No. 550 be substituted for H. F. No. 1265 and that the House File be indefinitely postponed. The motion prevailed.

 

 

PETITIONS AND COMMUNICATIONS

 

 

The following communications were received:

 

 

STATE OF MINNESOTA

OFFICE OF THE GOVERNOR

SAINT PAUL 55155

 

May 12, 2017

 

The Honorable Kurt Daudt

Speaker of the House of Representatives

The State of Minnesota

 

Dear Speaker Daudt:

 

I have vetoed and am returning H. F. No. 888, Chapter No. 42, a bill relating to state government, appropriating money for environment and natural resources.

 

Our environment and natural resources are central to our economy, culture, and wellbeing. House File 888 puts at risk core values that define our state's identity of practical and common sense protections supported by efficient government programs that guarantee a clean, healthy environment where all Minnesotans can thrive.

 

In a time of surplus, and after years of implementing improvements to our permitting and environmental review systems, this bill leaves a significant funding gap and makes unwarranted policy changes that would thwart the progress we have made together. Ultimately, this bill would lead to a significant reduction of environmental services and layoffs of public servants.

 

Outdoor enthusiasts are passionate constituents unwilling to see their outdoors experience diminished. My proposed budget includes reasonable operating and fees increases for the Department of Natural Resources (DNR) to ensure state programs and services are maintained. Hunting, fishing, and outdoor recreation in a clean environment and with open public access defines us as a people. While the conference committee proposal does include fee increases for state parks, it does not include fee increases for hunting and fishing licenses and for certain recreational vehicle registrations. Neither does it include operating adjustments. Without these funds, services and facilities will be reduced. Some state park campgrounds will be closed or their seasons shortened. Fewer lakes will be stocked with fish. DNR's ability to coordinate and collaborate with lake associations and conservation clubs will be reduced. The refusal to invest in Minnesota's outdoor heritage is an affront to all who hunt, fish, boat, use ATVs, and snowmobile.


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My administration has strived to improve the efficiency of the permitting and environmental review process to ensure that our state is competitive and supportive of business. We have worked to balance this with the need to protect, manage, and restore the air, water, and land that make the quality of living so great in Minnesota.

 

Lack of funding for operating adjustments will mean slower decision times for businesses seeking permits from DNR and the Minnesota Pollution Control Agency (MPCA). This bill also discontinues the funding of an effort to modernize the Environmental Review program through the Environmental Quality Board (EQB). As a further attack on the EQB, it shifts all of its base funds into the MPCA's Environmental Fund, thereby funding one office exclusively through the fees collected by a separate agency. Moreover, the policies included in this bill add on layers of unneeded procedural steps and oversight, undermining the abilities of the agencies to swiftly do their work and make timely decisions.

 

The MPCA is the messenger of information that can be a challenge to address, and this has clearly made it a target in this bill. The agency mission to protect and restore our air, land, and water is critical for public health and natural resource management. This bill will hamstring the agency by diminishing needed flexibility to address emerging problems for emergency response or legacy pollution cleanup by making unwarranted changes to the Environmental Fund. The bill cancels more than $5 million of the fund, sending it back to the General Fund. It caps transfers to the Remediation Fund at $34 million, reducing resources available to cleanup Superfund and brownfield sites, and other programs. Further, the bill transfers almost $11 million of program costs from General Fund into Environmental Fund without adding resources to pay for them, putting the fund and critical programs at risk of going into the red, and eliminates all General Fund from the agency.

 

In my travels across the state, I have heard a common reaction to the buffer law locals know best how to protect and restore their lakes and rivers. Soil and Water Conservation Districts (SWCDs) are at the front lines, working with landowners to support practices that protect our water and soils. However, they do not have fee or levy‑generating mechanisms to support their capacity for staff or the matching funds required for grants. That is why I am so concerned about the elimination of $22 million for capacity building from the General Fund. While this funding appears as a two-year appropriation in the Legacy Bill, the proposed shift does not provide the stability the 2015 Legislature decided was needed when it established General Fund base support starting in FY18. Further, the shift creates a series of domino effects, cutting funding for projects approved by the citizen councils that recommend appropriations from the Lessard-Sams Outdoor Heritage Fund and the Environment and Natural Resources Trust Fund.

 

In addition to the shifts and cuts noted above, the bill contains the following omissions:

 

         Minimal funding without an operating increase for DNR enforcement will result in a zero net increase in enforcement officers.

         Lack of an operating adjustment will impact the DNR's Forestry program, resulting in reduced forest inventory, forest stand improvement and forest road management.

         No operating adjustment for the Board of Water and Soil Resources (BWSR).

         No appropriation increase for MPCA's air quality services, totaling $453,000 for FY2018-19 biennium, is included, putting MPCA in violation of state and federal law.

         No funds to address groundwater contamination at demolition and construction landfills.

         No funds to conduct a study of the Pineland Sands area, which could better prepare the state and businesses for activities in this area.

 

In addition to the objectionable budget cuts and shifts, this bill is full of controversial policy provisions, despite my repeated statements in opposition to policy being included in the budget bills. This bill violates the single-subject rule as directed by the State Constitution.


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My concerns with these myriad policy provisions, in no particular order, are:

 

         Numerous policies that effectively gut the Buffer Law and delay it.

         Restricting the Environmental Quality Board jurisdiction, and adding unreasonable criteria for all citizen applicants to participate.

         Transferring final decisions on contested case hearings from an agency Commissioner to the Office of Administrative Hearings.

         Transferring final decisions on science underlying all water-related decisions by the MPCA Commissioner to the Office of Administrative Hearings.

         Allowing contested case hearings on draft impaired waters list.

         Putting Minnesota tax payers on the hook for cleaning up the Freeway Landfill without providing a path forward to condemn the landfill or give the state access to clean up the site.

         Slowing down permitting, banning guidance and other forms of assistance to permittees, and creating new "hoops" that make the expedited permitting process more complicated and restrictive.

         Requiring legislative appropriation of the VW Settlement funds (estimated to be $47 million for Minnesota), which may risk our state's eligibility to receive the funds.

         Preempting local government decisions on solid waste management, specifically preventing plastic bag bans.

         Removing protection of calcareous fens.

         Eroding DNR's ability to manage groundwater supplies by automatically transferring water permits.

         Allowing the importation of golden shiner minnows, presenting a serious risk of introductions of environmentally devastating invasive species.

         A lead shot rulemaking prohibition that limits the DNR's authority to provide wildlife health protections on state land.

         Delaying permitting and create significant fiscal burden by determining that guidance documents are unpromulgated rules.

         Prescribing Sand Dunes State Forest Management Plan.

         Allowing two line fishing.

 

With less than two weeks remaining in this legislative session, I urge you to return to work to craft a bill that demonstrates to Minnesotans a shared commitment to our outdoor heritage, natural resource management, and preserving our environment for future generations.

 

 

Sincerely,

 

Mark Dayton

Governor

 

 

STATE OF MINNESOTA

OFFICE OF THE GOVERNOR

SAINT PAUL 55155

 

May 12, 2017

 

The Honorable Kurt Daudt

Speaker of the House of Representatives

The State of Minnesota

 

Dear Speaker Daudt:

 

I have vetoed and returned to you H. F. No. 890, Chapter No. 43, the omnibus E-12 education appropriations bill.


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In my 2017 State of the State address, I said that we should look closely at every budget expenditure decision and ask how it will help our children and grandchildren in the years ahead. Unfortunately, House File 890 falls well short in delivering the public investment in education that will ensure our children the ability to achieve their full potential.

 

Despite public assurances of support for an education bill including at least a 2 percent increase in the basic per pupil formula, the bill you've passed virtually ensures significant teacher and staff layoffs in school districts across the state. The 1.5 percent annual increases in the basic formula in the bill are inadequate to sustain school operations in the face of rising costs, and will result in larger class sizes, loss of programming, and higher property taxes. Securing a solid foundation upon which schools can operate is imperative and recent formula increases have not yet made up for previous low funding. Similarly, the bill contains no additional funding to address the special education cross-subsidy, which at $643 million and rising puts tremendous pressure on district budgets and should be addressed.

 

My budget proposal would provide more than 17,000 4-year olds with high quality prekindergarten across our state in order to meet the known demand for the program next year, and to provide the early learning opportunities we all agree are important in closing educational gaps. Yet this bill eliminates voluntary prekindergarten as an option for families, completely disregarding the needs and interests of thousands of families across the state for this high-quality, early learning option. This is not acceptable. Parent choice is further diminished by the cap in the bill on Pathway II early learning scholarships.

 

The bill also disregards the educational needs of our American Indian students by not continuing the additional state aid enacted in 2015 for the Bureau of Indian Education schools. Just as the federal government lags in funding special education, so too has federal funding for the BIE schools and they consistently operate on less aid than Minnesota's school districts and charter schools. Adequately funding all of our schools is our Constitutional and moral responsibility.

 

Further, students who are interested in and have a talent for the arts should not be punished by closing the Perpich Center for Arts Education. Although a recent OLA report identified governance issues, the new board chair and members are diligently addressing those issues. I insist that the school remain open. A school devoted to arts education is a statewide asset. And I will not permit you to desecrate the memory and legacy of one of Minnesota's Governors.

 

The H. F. 890 makes unwarranted cuts to the Department of Education. The work done by state employees to support our students, teachers, schools and families is an important element of our entire education enterprise and the bill's reductions amount to a reduction of 25 percent of the department's state-funded staff, compromising the ability to assist struggling schools, make timely state aid payments, administer grants, oversee charter schools, and investigate reports of student maltreatment.

 

In addition, the bill contains the following omissions:

 

         No funding for pensions for school districts and charters.

         No funding to replace a decades old mainframe at the Minnesota Department of Education, which processes payments for billions of dollars each year for schools districts and charters.

         Less than a third of the operating increase sought by the Minnesota State Academies for the Deaf and the Blind.

 

Furthermore, despite my repeated clear request that we follow the constitutional practice of separating policy provisions from budget bills, you have insisted on inserting a number of troubling policy provisions, including:

 

         Changing unrequested leave of absence statutes.

        


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Delaying by six years the requirement that providers receiving early learning scholarships are three- or four‑star rated through Parent Aware.

         Erecting barriers to low-income students taking the ACT or SAT.

         Interfering with the federal system of accountability by barring inclusion of important non-academic factors like chronic absenteeism.

 

With less than two weeks remaining in this legislative session, I urge you to return to work to craft a bill that demonstrates to Minnesotans the commitment to our children and our state's future you promised at the state of this session.

 

 

Sincerely,

 

Mark Dayton

Governor

 

 

REPORTS OF STANDING COMMITTEES AND DIVISIONS

 

 

O'Driscoll from the Committee on Government Operations and Elections Policy to which was referred:

 

H. F. No. 565, A bill for an act relating to retirement; making administrative changes to the Minnesota State Retirement System, Teachers Retirement Association, Public Employees Retirement Association, and St. Paul Teachers Retirement Fund Association; clarifying refund repayment procedures; modifying executive director credentials; clarifying service requirements; revising appeal procedures; modifying service credit purchase procedures; establishing new procedures for disability applications due to private disability insurance requirements; clarifying disability benefit payment provisions; modifying annual benefit limitations for federal tax code compliance; authorizing use of IRS correction procedures; clarifying benefit offsets for certain refund payments; clarifying police and fire plan coverage for certain Hennepin Healthcare System supervisors; modifying various economic actuarial assumptions; adopting recommendations of the Volunteer Firefighter Relief Association Working Group; increasing relief association lump-sum service pension maximums; lowering certain vesting requirements for Eden Prairie Volunteer Firefighters Relief Association; adopting definition of the Hometown Heroes Act related to public safety officer death benefits; allowing service credit purchase and Rule of 90-eligibility for certain Minnesota Department of Transportation employees; authorizing MnSCU employees to elect retroactive and prospective TRA coverage; authorizing MnSCU employee to transfer past service from IRAP to PERA; increasing maximum employer contribution to a supplemental laborers pension fund; authorizing certain additional sources of retirement plan funding; making technical and conforming changes; amending Minnesota Statutes 2016, sections 3A.03, subdivisions 2, 3; 16A.14, subdivision 2a; 352.03, subdivisions 5, 6; 352.113, subdivision 2; 352.23; 352B.11, subdivision 4; 352D.05, subdivision 4; 353.01, subdivisions 16, 43; 353.012; 353.0162; 353.32, subdivisions 1, 4; 353.34, subdivision 2; 353.64, subdivision 10; 353G.02, subdivision 6; 354.05, by adding a subdivision; 354.06, subdivisions 2, 2a; 354.095; 354.44, subdivision 9; 354.46, subdivision 6; 354.48, subdivision 1; 354.52, subdivision 4; 354A.011, subdivision 29; 354A.093, subdivisions 4, 6; 354A.095; 354A.096; 354A.35, subdivision 2; 354A.38; 356.215, subdivision 8; 356.24, subdivision 1; 356.50, subdivision 2; 356.551, subdivision 2; 356.635, subdivision 10, by adding subdivisions; 356.96, subdivisions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13; 423A.02, subdivision 3; 424A.01, by adding subdivisions; 424A.015, by adding a subdivision; 424A.02, subdivision 3; 424B.20, subdivision 4; 490.124, subdivision 12; proposing coding for new law in Minnesota Statutes, chapters 356;


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424A; repealing Minnesota Statutes 2016, sections 352.04, subdivision 11; 353.0161; 353.34, subdivision 6; 354A.12, subdivisions 2c, 3c; 354A.31, subdivision 3; 356.47, subdivision 1; 356.611, subdivisions 3, 3a, 4, 5; 356.96, subdivisions 14, 15; 424A.02, subdivision 13.

 

Reported the same back with the following amendments:

 

Delete everything after the enacting clause and insert:

 

"ARTICLE 1

MINNESOTA STATE RETIREMENT SYSTEM BENEFIT AND CONTRIBUTION CHANGES

 

Section 1. Minnesota Statutes 2016, section 3A.02, subdivision 4, is amended to read:

 

Subd. 4. Deferred annuities augmentation. (a) The deferred retirement allowance of any former legislator must be computed as provided in subdivision 1 on the basis of allowable service and augmented as provided herein.(b) The required reserves applicable to the deferred retirement allowance, determined as of the date the benefit begins to accrue using an appropriate mortality table and an interest assumption of six percent, must be augmented by interest compounded annually from the first of the month following the termination of active service, or July 1, 1973, whichever is later, to the first day of the month in which the allowance begins to accrue effective date of retirement, at the following annually compounded rate or rates:

 

(1) five percent until January 1, 1981;

 

(2) three percent from January 1, 1981, or from the first day of the month following the termination of active service, whichever is later, until January 1 of the year in which the former legislator attains age 55 or until January 1, 2012, whichever is earlier;

 

(3) five percent from the period end date under clause (2) until the effective date of retirement or until January 1, 2012, whichever is earlier; and

 

(4) two percent after December 31, 2011. from January 1, 2012, until December 31, 2017; and

 

(5) after December 31, 2017, the deferred annuity must not be augmented.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 352.116, subdivision 1a, is amended to read:

 

Subd. 1a. Actuarial reduction for early retirement. This subdivision applies to a person who has become at least 55 years old and first became a covered employee after June 30, 1989, and to any other covered employee who has become at least 55 years old and whose annuity is higher when calculated under section 352.115, subdivision 3, paragraph (b), in conjunction with this subdivision than when calculated under section 352.115, subdivision 3, paragraph (a), in conjunction with subdivision 1. A covered employee who retires before the normal retirement age shall be paid the normal retirement annuity provided in section 352.115, subdivisions 2 and 3, paragraph (b), reduced so that as described in clause (1) or (2), as applicable.

 

(1) For covered employees who retire on or after July 1, 2018, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an the applicable annual rate of three percent, compounded annually, from the day the annuity begins to accrue until the normal retirement age. The applicable


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annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee for the period until the employee reaches normal retirement age. The applicable annual rates are the following:

 

(i) until June 30, 2018, three percent if the employee became an employee before July 1, 2006, and 2.5 percent if the employee became an employee after June 30, 2006;

 

(ii) a rate that changes each month, beginning July 1, 2018, through June 30, 2023, which is determined by reducing the rate in item (i) to zero in equal monthly increments over the five-year period; and

 

(iii) after June 30, 2023, zero percent.

 

After June 30, 2023, actuarial equivalent, for the purpose of determining the reduced annuity commencing before normal retirement age under this clause, shall not take into account any augmentation.

 

(2) For covered employees who retire before July 1, 2018, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an annual rate of three percent, compounded annually, from the day the annuity begins to accrue until normal retirement age if the employee became an employee before July 1, 2006, and at an annual rate of 2.5 percent, compounded annually, from the day the annuity begins to accrue until the normal retirement age if the employee initially becomes became an employee after June 30, 2006.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 352.22, subdivision 2, is amended to read:

 

Subd. 2. Amount of refund. Except as provided in subdivision 3, the refund payable to a person who ceased to be a state employee by reason of a termination of state service is an amount equal to employee accumulated contributions plus interest until the date on which the refund is paid, at the rate of following rates for the applicable period:

 

(a) six percent per year compounded daily from the date that the contribution was made until June 30, 2011, or until the date on which the refund is paid, whichever is earlier, and at the rate of;

 

(b) four percent per year compounded daily from the date that the contribution was made or from July 1, 2011, whichever is later, until the date on which the refund is paid. until June 30, 2017; and

 

(c) three percent per year compounded daily from the date that the contribution was made or July 1, 2017, whichever is later.

 

Included with the refund is any interest paid as part of repayment of a past refund, plus interest thereon from the date of repayment.

 

Sec. 4. Minnesota Statutes 2016, section 352.22, is amended by adding a subdivision to read:

 

Subd. 2b. Refund repayment. Any person who has received a refund from the state employees retirement plan, and who is a member of any of the retirement plans specified in section 356.311, paragraph (b), may repay the refund with interest to the state employees retirement plan. If a refund is repaid to the plan and more than one refund has been received from the plan, all refunds must be repaid. Repayment must be made as provided in section 352.23, and under terms and conditions consistent with that section as agreed upon with the director.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 5. Minnesota Statutes 2016, section 352.22, subdivision 3, is amended to read:

 

Subd. 3. Deferred annuity. (a) An employee who has at least three years of allowable service if employed before July 1, 2010, or who has at least five years of allowable service if employed after June 30, 2010, when termination occurs may elect to leave the accumulated contributions in the fund and thereby be entitled to a deferred retirement annuity. The annuity must be computed under the law in effect when state service terminated, on the basis of the allowable service credited to the person before the termination of service.

 

(b) An employee on layoff or on leave of absence without pay, except a leave of absence for health reasons, and who does not return to state service must have an annuity, deferred annuity, or other benefit to which the employee may become entitled computed under the law in effect on the employee's last working day.

 

(c) No application for a deferred annuity may be made more than 60 days before the time the former employee reaches the required age for entitlement to the payment of the annuity. The deferred annuity begins to accrue no earlier than 60 days before the date the application is filed in the office of the system, but not (1) before the date on which the employee reaches the required age for entitlement to the annuity nor (2) before the day following the termination of state service in a position which is not covered by the retirement system.

 

(d) Application for the accumulated contributions left on deposit with the fund may be made at any time following the date of the termination of service.

 

(e) Deferred annuities must be augmented as provided in section 352.72, subdivision 2 subdivision 3a.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 6. Minnesota Statutes 2016, section 352.22, is amended by adding a subdivision to read:

 

Subd. 3a. Computation of deferred annuity. (a) The deferred annuity, if any, accruing under subdivision 3, on the basis of allowable service before termination of state service and augmented by interest compounded annually from the first day of the month following the month in which the employee ceased to be a state employee, or July 1, 1971, whichever is later, to the effective date of retirement.

 

(b) For a person who became a state employee before July 1, 2006, the annuity must be augmented at the following rate or rates:

 

(1) five percent until January 1, 1981;

 

(2) three percent thereafter until January 1 of the year following the year in which the former employee attains age 55 or until January 1, 2012, whichever is earlier;

 

(3) five percent from the January 1 next following the attainment of age 55 until December 31, 2011;

 

(4) two percent from January 1, 2012, until December 31, 2017; and

 

(5) after December 31, 2017, the deferred annuity must not be augmented.

 

(c) For a person who became a state employee after June 30, 2006, the annuity must be augmented at the following rate or rates:

 

(1) 2.5 percent until December 31, 2011;


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(2) two percent from January 1, 2012, until December 31, 2017; and

 

(3) after December 31, 2017, the deferred annuity must not be augmented.

 

(d) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former state employee who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and the tables adopted by the board and approved by the actuary retained under section 356.214.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 7. Minnesota Statutes 2016, section 352B.08, is amended by adding a subdivision to read:

 

Subd. 2b. Computation of deferred annuity. (a) Deferred annuities must be computed according to this chapter on the basis of allowable service before termination of service and augmented by interest compounded annually from the first day of the month following the month in which the member terminated service, or July 1, 1971, whichever is later, to the effective date of retirement.

 

(b) For a person who became an employee before July 1, 2006, the annuity must be augmented at the following rate or rates:

 

(1) five percent until January 1, 1981;

 

(2) three percent from January 1, 1981, until December 31, 2011;

 

(3) two percent from January 1, 2012, until December 31, 2017; and

 

(4) after December 31, 2017, the deferred annuity must not be augmented.

 

(c) For a person who became an employee after June 30, 2006, the annuity must be augmented as follows:

 

(1) 2.5 percent until December 31, 2011;

 

(2) two percent from January 1, 2012, until December 31, 2017; and

 

(3) after December 31, 2017, the deferred annuity must not be augmented.

 

(d) The mortality table and interest assumption used to compute the annuity must be those in effect when the member files application for annuity.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 8. Minnesota Statutes 2016, section 352D.085, subdivision 1, is amended to read:

 

Subdivision 1. Combined service. Except as provided in section 356.30, 356.302, or 356.303, service under the unclassified program for which the employee has been credited with employee shares may be used for the limited purpose of qualifying for benefits under sections 352.115, 352.72, subdivision 1, 352.113, 354.44, 354.45, 354.48, and 354.60 356.311. The service also may not be used to qualify for a disability benefit under section


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352.113 or 354.48 if a participant was under the unclassified program at the time of the disability. Also, the years of service and salary paid while the participant was in the unclassified program may not be used in determining the amount of benefits.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 9. Minnesota Statutes 2016, section 490.121, subdivision 25, is amended to read:

 

Subd. 25. Tier I. "Tier I" is the benefit program of the retirement plan with a membership specified by section 490.1221, paragraph (b), and governed by sections 356.415, subdivisions 1 and subdivision 1f; and 490.121 to 490.133, except as modified in sections 490.121, subdivision 21f, paragraph (b); 490.1222; 490.123, subdivision 1a, paragraph (b); and 490.124, subdivision 1, paragraphs (c) and (d).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 10. Minnesota Statutes 2016, section 490.121, subdivision 26, is amended to read:

 

Subd. 26. Tier II. "Tier II" is the benefit program of the retirement plan with a membership specified by section 490.1221, paragraph (c), and governed by sections 356.415, subdivisions 1 and subdivision 1f; 490.121 to 490.133, as modified in section 490.121, subdivision 21f, paragraph (b); 490.1222; 490.123, subdivision 1a, paragraph (b); and 490.124, subdivision 1, paragraphs (c) and (d).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 11. REPEALER.

 

Minnesota Statutes 2016, sections 3A.12; 352.045; 352.72; and 352B.30, are repealed.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

ARTICLE 2

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION

BENEFIT AND CONTRIBUTION CHANGES

 

Section 1. Minnesota Statutes 2016, section 353.30, subdivision 5, is amended to read:

 

Subd. 5. Actuarial reduction for early retirement. (a) This subdivision 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 who has become at least 55 years old and whose annuity is higher when calculated under section 353.29, subdivision 3, paragraph (b), in conjunction with this subdivision than when calculated under section 353.29, subdivision 3, paragraph (a), in conjunction with subdivision 1, 1a, 1b, or 1c. An employee who retires before normal retirement age shall be paid the retirement annuity provided in section 353.29, subdivision 3, paragraph (b), reduced so that as described in paragraph (b) or (c), as applicable.

 

(b) For members who retire on or after July 1, 2018, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an the applicable annual rate of three percent, compounded annually, from the day the annuity begins to accrue until the normal retirement age. The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee for the period until the employee reaches normal retirement age. The applicable annual rates are the following:


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(i) until June 30, 2018, three percent if the employee became an employee before July 1, 2006, and 2.5 percent if the employee became an employee after June 30, 2006;

 

(ii) a rate that changes each month, beginning July 1, 2018, through June 30, 2023, which is determined by reducing the rate in item (i) to zero in equal monthly increments over the five-year period; and

 

(iii) after June 30, 2023, zero percent.

 

After June 30, 2023, actuarial equivalent, for the purpose of determining the reduced annuity commencing before normal retirement age under this paragraph, shall not take into account any augmentation.

 

(c) For members who retire before July 1, 2018, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an annual rate of three percent, compounded annually, from the day the annuity begins to accrue until normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent, compounded annually, from the day the annuity begins to accrue until the normal retirement age if the employee initially becomes became an employee after June 30, 2006.

 

EFFECTIVE DATE. This section is effective for reduced annuities with an annuity starting date that is on or after July 1, 2018, notwithstanding the member's date of termination of public service.

 

Sec. 2. Minnesota Statutes 2016, section 353.34, subdivision 2, is amended to read:

 

Subd. 2. Refund with interest. (a) Except as provided in subdivision 1, any person who ceases to be a public employee is entitled to receive a refund in an amount equal to accumulated deductions with annual compound interest to the first day of the month in which the refund is processed.

 

(b) Annual compound interest on a refund under paragraph (a) shall be as follows:

 

(i) for a person who ceases to be a public employee before July 1, 2011, the refund interest is at the rate of six percent to June 30, 2011, at the rate of four percent after June 30, 2011, to June 30, 2017, and at the rate of four three percent after June 30, 2011. 2017;

 

(ii) for a person who ceases to be a public employee after July 1 June 30, 2011, and before July 1, 2017, the refund interest is at the rate of four percent. to June 30, 2017, and at the rate of three percent after June 30, 2017; and

 

(iii) for a person who ceases to be a public employee after June 30, 2017, the refund interest is at the rate of three percent.

 

(c) If a person repays a refund and subsequently applies for another refund, the repayment amount, including interest, is added to the fiscal year balance in which the repayment was made.

 

(d) If the refund payable to a member is based on employee deductions that are determined to be invalid under section 353.27, subdivision 7, the interest payable on the invalid employee deductions is four percent.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 353.34, subdivision 3, is amended to read:

 

Subd. 3. Deferred annuity; eligibility; computation. (a) A member who is vested under section 353.01, subdivision 47, 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 1a, 1b, 1c, or 5.


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(b) The deferred annuity must be computed under section 353.29, subdivision 3, on the basis of the law in effect on the date of termination of public service or termination of membership, whichever is earlier, and must be augmented as provided in section 353.71, subdivision 2 paragraph (c).

 

(c) The deferred annuity accruing under subdivision 3, section 353.68, subdivision 4, or section 356.311, must be computed on the basis of allowable service prior to the termination of public service and augmented by interest compounded annually from the first day of the month following the month in which the former member ceased to be a public employee, or July 1, 1971, whichever is later, to the effective date of retirement.

 

(d) For a person who became a public employee before July 1, 2006, and who has a termination of public service before January 1, 2012, the deferred annuity must be augmented at the following rate or rates:

 

(1) five percent until January 1, 1981;

 

(2) three percent from January 1, 1981, until January 1 of the year following the year in which the former member attains age 55 or until December 31, 2011, whichever is earlier;

 

(3) five percent from January 1 of the year following the year in which the former member attains age 55, or until December 31, 2011, whichever is earlier;

 

(4) one percent from January 1, 2012, until December 31, 2017; and

 

(5) after December 31, 2017, the deferred annuity must not be augmented.

 

(e) For a person who became a public employee after June 30, 2006, and who has a termination of public service before January 1, 2012, the deferred annuity must be augmented at the following rate or rates:

 

(1) 2.5 percent until December 31, 2011;

 

(2) one percent from January 1, 2012, until December 31, 2017; and

 

(3) after December 31, 2017, the deferred annuity must not be augmented.

 

(f) For a person who has a termination of public service after December 31, 2011, the deferred annuity must not be augmented.

 

(g) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former member who terminated service before July 1, 1997, or the survivor benefit payable on behalf of a basic or police and fire member who was receiving disability benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained under section 356.214.

 

(c) (h) 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.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 4. REPEALER.

 

Minnesota Statutes 2016, sections 353.27, subdivision 3b; and 353.71, are repealed.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

ARTICLE 3

TEACHERS RETIREMENT ASSOCIATION BENEFIT

AND CONTRIBUTION CHANGES

 

Section 1. Minnesota Statutes 2016, section 354.436, subdivision 3, is amended to read:

 

Subd. 3. Aid expiration. The aid amounts specified in this section terminate and this section expires on the October 1 next following the later of the following dates: (1) when the date on which the current assets of the Teachers Retirement Association fund equal or exceed the actuarial accrued liabilities of the fund as determined in the most recent actuarial valuation report for the Teachers Retirement Association fund by the actuary retained under section 356.214; or (2) when the member and employer contribution rates are first determined to be eligible for a reduction under section 354.42, subdivisions 4a, 4b, 4c, and 4d.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 354.44, subdivision 6, is amended to read:

 

Subd. 6. Computation of formula program retirement annuity. (a) The formula retirement annuity must be computed in accordance with the applicable provisions of the formulas stated in paragraph (b) or (d) on the basis of each member's average salary under section 354.05, subdivision 13a, for the period of the member's formula service credit.

 

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The average salary as defined in section 354.05, subdivision 13a, multiplied by the following percentages per year of formula service credit shall determine the amount of the annuity to which the member qualifying therefor is entitled for service rendered before July 1, 2006:

 

 

Period

 

Coordinated Member

 

Basic Member

 

Each year of service during first ten

1.2 percent per year

 

2.2 percent per year

Each year of service thereafter

1.7 percent per year

 

2.7 percent per year

 

For service rendered on or after July 1, 2006, by a member other than a member who was a member of the former Duluth Teachers Retirement Fund Association between January 1, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member who was a member of the former Duluth Teachers Retirement Fund Association between January 1, 2013, and June 30, 2015, the average salary as defined in section 354.05, subdivision 13a, multiplied by the following percentages per year of service credit, determines the amount the annuity to which the member qualifying therefor is entitled:

 

 

Period

 

Coordinated Member

 

Basic Member

 

Each year of service during first ten

1.4 percent per year

2.2 percent per year

Each year of service after ten years of service

 

1.9 percent per year

 

2.7 percent per year


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(c)(i) This paragraph applies only to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction with this paragraph than when calculated under paragraph (d), in conjunction with paragraph (e).

 

(ii) Where any member retires prior to normal retirement age under a formula annuity, the member shall be paid a retirement annuity in an amount equal to the normal annuity provided in paragraph (b) reduced by one-quarter of one percent for each month that the member is under normal retirement age at the time of retirement except that for any member who has 30 or more years of allowable service credit, the reduction shall be applied only for each month that the member is under age 62.

 

(iii) Any member 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 paragraph (b), without any reduction by reason of early retirement.

 

(d) This paragraph applies to a member who has become at least 55 years old and first became a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity amount when calculated under this paragraph and in conjunction with paragraph (e), is higher than it is when calculated under paragraph (b), in conjunction with paragraph (c). For a basic member, the average salary, as defined in section 354.05, subdivision 13a, multiplied by 2.7 percent for each year of service for a basic member determines the amount of the retirement annuity to which the basic member is entitled. The annuity of a basic member who was a member of the former Minneapolis Teachers Retirement Fund Association as of June 30, 2006, must be determined according to the annuity formula under the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association in effect as of that date. For a coordinated member, the average salary, as defined in section 354.05, subdivision 13a, multiplied by 1.7 percent for each year of service rendered before July 1, 2006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a member other than a member who was a member of the former Duluth Teachers Retirement Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the amount of the retirement annuity to which the coordinated member is entitled.

 

(e) This paragraph applies to a person who has become at least 55 years old and first becomes a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b), in conjunction with paragraph (c). An employee who retires under the formula annuity before the normal retirement age shall be paid the normal annuity provided in paragraph (d) reduced so that as described in clause (1) or (2), as applicable. Except in regards to section 354.46 and paragraph (g), this paragraph remains in effect until June 30, 2015.

 

(1) For employees who retire on or after July 1, 2018, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an the applicable annual rate of three percent, compounded annually, from the day the annuity begins to accrue until the normal retirement age. The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee for the period until the employee reaches normal retirement age. The applicable annual rates are the following:

 

(i) until June 30, 2018, three percent if the employee became an employee before July 1, 2006, and 2.5 percent if the employee became an employee after June 30, 2006;


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(ii) a rate that changes each month, beginning July 1, 2018, through June 30, 2023, which is determined by reducing the rate in item (i) to zero in equal monthly increments over the five-year period; and

 

(iii) after June 30, 2023, zero percent.

 

After June 30, 2023, actuarial equivalent, for the purpose of determining the reduced annuity commencing before normal retirement age under this clause, shall not take into account any augmentation;

 

(2) for members who retire before July 1, 2018, the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an annual rate of three percent, compounded annually, from the day the annuity begins to accrue until normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent, compounded annually, from the day the annuity begins to accrue until normal retirement age if the employee becomes became an employee after June 30, 2006. Except in regards to section 354.46, this paragraph remains in effect until June 30, 2015.

 

(f) After June 30, 2020, this paragraph applies to a person who has become at least 55 years old and first becomes a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b) in conjunction with paragraph (c). An employee who retires under the formula annuity before the normal retirement age is entitled to receive the normal annuity provided in paragraph (d) reduced as described in clause (1) or (2), as applicable.

 

For a person who (1) If the member retires when the member is at least age 62 or older and has at least 30 years of service, the annuity must be reduced by an early reduction factor of six percent per year of the annuity that would be payable to the employee if the employee deferred receipt of the annuity and the annuity amount were augmented at an annual rate of three percent, compounded annually, from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee became an employee after June 30, 2006. For a person who

 

The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee for the period until the employee reaches normal retirement age. The applicable annual rates are the following:

 

(2) if the member retires when the member is not at least age 62 or older and does not have at least 30 years of service, the annuity would must be reduced by an early reduction factor of for each year that the member's age of retirement precedes normal retirement age. The early reduction factors are four percent per year for ages 55 through 59 and seven percent per year for ages 60 through normal retirement age. of The resulting annuity that would be payable to the employee must be further adjusted to take into account augmentation as if the employee deferred receipt of the annuity until normal retirement age and the annuity amount were augmented at an the applicable annual rate of three percent, compounded annually, from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee became an employee after June 30, 2006. The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee for the period until the employee reaches normal retirement age. The applicable annual rates are the following:

 

(i) until June 30, 2018, three percent if the employee became an employee before July 1, 2006, and 2.5 percent if the employee became an employee after June 30, 2006;

 

(ii) a rate that changes each month, beginning July 1, 2018, through June 30, 2023, which is determined by reducing the rate in item (i) to zero in equal monthly increments over the five-year period; and


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(iii) after June 30, 2023, zero percent.

 

After June 30, 2023, the reduced annuity commencing before normal retirement age under this clause shall not take into account any augmentation.

 

(g) After June 30, 2015, and before July 1, 2020, for a person who would have a reduced retirement annuity under either paragraph (e) or (f) if they were applicable, the employee is entitled to receive a reduced annuity which must be calculated using a blended reduction factor augmented monthly by 1/60 of the difference between the reduction required under paragraph (e) and the reduction required under paragraph (f).

 

(h) No retirement annuity is payable to a former employee with a salary that exceeds 95 percent of the governor's salary unless and until the salary figures used in computing the highest five successive years average salary under paragraph (a) have been audited by the Teachers Retirement Association and determined by the executive director to comply with the requirements and limitations of section 354.05, subdivisions 35 and 35a.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 354.49, subdivision 2, is amended to read:

 

Subd. 2. Calculation. (a) Except as provided in section 354.44, subdivision 1, any person who ceases to be a member by reason of termination of teaching service, is entitled to receive a refund in an amount equal to the accumulated deductions credited to the account plus interest compounded annually using the following interest rates:

 

(1) before July 1, 1957, no interest accrues;

 

(2) July 1, 1957, to June 30, 2011, six percent; and

 

(3) after June 30 July 1, 2011, to June 30, 2017, four percent; and

 

(4) after June 30, 2017, three percent.

 

For the purpose of this subdivision, interest must be computed on fiscal year end balances to the first day of the month in which the refund is issued.

 

(b) If the person has received permanent disability payments under section 354.48, the refund amount must be reduced by the amount of those payments.

 

Sec. 4. Minnesota Statutes 2016, section 354.55, subdivision 11, is amended to read:

 

Subd. 11. Deferred annuity; augmentation. (a) Any person covered under section 354.44, subdivision 6, who ceases to render teaching service, may leave the person's accumulated deductions in the fund for the purpose of receiving a deferred annuity at retirement.

 

(b) The amount of the deferred retirement annuity is determined by section 354.44, subdivision 6, and must be augmented as provided in this subdivision. The required reserves for the annuity which had accrued when the member ceased to render teaching service must be augmented, as further specified in this subdivision, by the applicable interest rate compounded annually from the first day of the month following the month during which the member ceased to render teaching service to the effective date of retirement.


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(c) No augmentation is not creditable if the deferral period is less than three months or if deferral commenced before July 1, 1971.

 

(d) For persons who became covered employees before July 1, 2006, with a deferral period commencing after June 30, 1971, the annuity must be augmented as follows:

 

(1) five percent interest compounded annually until January 1, 1981;

 

(2) three percent interest compounded annually from January 1, 1981, until January 1 of the year following the year in which the deferred annuitant attains age 55 or until June 30, 2012, whichever is earlier;

 

(3) five percent interest compounded annually from the date established in clause (2) to the effective date of retirement or until June 30, 2012, whichever is earlier; and

 

(4) two percent interest compounded annually after June 30, 2012 from July 1, 2012, until June 30, 2018; and

 

(5) after June 30, 2018, the deferred annuity must not be augmented.

 

(e) For persons who become covered employees after June 30, 2006, the interest rate used to augment the deferred annuity is must be augmented as follows:

 

(1) 2.5 percent interest compounded annually until June 30, 2012, or until the effective date of retirement, whichever is earlier, and;

 

(2) two percent interest compounded annually after June 30 from July 1, 2012, until June 30, 2018; and

 

(3) after June 30, 2018, the deferred annuity must not be augmented.

 

(f) If a person has more than one period of uninterrupted service, a separate average salary determined under section 354.44, subdivision 6, must be used for each period and the required reserves related to each period must be augmented as specified in this subdivision. The sum of the augmented required reserves is the present value of the annuity. For the purposes of this subdivision, "period of uninterrupted service" means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year.

 

(g) If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has allowable service credit in the Teachers Retirement Association.

 

(h) If a person does not render teaching service in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of the resumption of teaching service must be those applicable to new members.

 

(i) The mortality table and interest rate actuarial assumption used to compute the annuity must be the applicable mortality table established by the board under section 354.07, subdivision 1, and the interest rate actuarial assumption under section 356.215 in effect when the member retires.

 

(j) (f) In no case may the annuity payable under this subdivision be less than the amount of annuity payable under section 354.44, subdivision 6.

 

(k) (g) The requirements and provisions for retirement before normal retirement age contained in section 354.44, subdivision 6, also apply to an employee fulfilling the requirements with a combination of service as provided in section 354.60 356.311.


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(l) (h) The augmentation provided by this subdivision applies to the benefit provided in section 354.46, subdivision 2.

 

(m) (i) The augmentation provided by this subdivision does not apply to any period in which a person is on an approved leave of absence from an employer unit covered by the provisions of this chapter.

 

(n) (j) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former teacher who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and tables adopted by the board as recommended by an approved actuary and approved by the actuary retained under section 356.214.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. REPEALER.

 

Minnesota Statutes 2016, sections 354.42, subdivisions 4a, 4b, 4c, and 4d; and 354.60, are repealed.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

ARTICLE 4

ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION BENEFIT

AND CONTRIBUTION CHANGES

 

Section 1. Minnesota Statutes 2016, section 354A.011, subdivision 3a, is amended to read:

 

Subd. 3a. Actuarial equivalent. "Actuarial equivalent" means the condition of one annuity or benefit having an equal actuarial present value as another annuity or benefit, determined as of a given date with each actuarial present value based on the appropriate mortality table adopted by the appropriate board of trustees based on the experience of that retirement fund association as recommended by the actuary retained under section 356.214, and approved under section 356.215, subdivision 18, and using the applicable preretirement or postretirement interest rate investment return assumption specified in section 356.215, subdivision 8.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 354A.29, subdivision 7, is amended to read:

 

Subd. 7. Eligibility for payment of Postretirement adjustments. (a) Annually, after June 30, the board of trustees of the St. Paul Teachers Retirement Fund Association must determine the amount of any postretirement adjustment using the procedures in this subdivision and subdivision 8 or 9, whichever is applicable.

 

(b) On January 1 (a) Except as set forth in paragraph (c), each person who has been receiving an annuity or benefit under the articles of incorporation, the bylaws, or this chapter, whose effective date of benefit commencement occurred on or before July 1 of the calendar year immediately before the adjustment, is eligible to receive a an annual postretirement increase as specified in subdivision 8 or 9. adjustment, effective as of each January 1, as follows:

 

(1) there shall be no postretirement adjustment on January 1, 2018, and January 1, 2019; and

 

(2) the postretirement adjustment shall be one percent on January 1, 2020, and each January 1 thereafter.


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(b) The amount determined under paragraph (a), clause (2), is the full postretirement adjustment to be applied as a permanent increase to the regular payment of each eligible member on January 1 of the next calendar year. For any eligible member whose effective date of benefit commencement occurred after January 1 of the calendar year immediately before the postretirement adjustment is applied, the amount determined under paragraph (a), clause (2), must be reduced by 50 percent.

 

(c) Each person who retires on or after January 1, 2023, is entitled to an annual postretirement adjustment, effective as of each January 1, beginning with the year following the year in which the member attains normal retirement age.

 

(d) Paragraph (c) does not apply to members who retire under section 354A.31, subdivision 6, paragraph (b).

 

EFFECTIVE DATE. This section is effective the day following final enactment.

 

Sec. 3. Minnesota Statutes 2016, section 354A.31, subdivision 7, is amended to read:

 

Subd. 7. Reduction for early retirement. (a) This subdivision applies to a person who has become at least 55 years old and first becomes a coordinated member after June 30, 1989, and to any other coordinated member who has become at least 55 years old and whose annuity is higher when calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), or subdivision 4a, paragraph (d), as applicable, in conjunction with this subdivision than when calculated under subdivision 4, paragraph (c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6. An employee who retires under the formula annuity before the normal retirement age shall be paid the normal annuity reduced as described in paragraph (b) if the person retires on or after July 1, 2018, or in paragraph (c) if the person retires before July 1, 2018, as applicable.

 

(b) A coordinated member who retires before the normal retirement age and on or after July 1, 2018, is entitled to receive a retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), or subdivision 4a, paragraph (d), whichever applies, reduced as described in clause (1) or (2), as applicable.

 

(1) If the member retires when the member is younger than age 62 or with fewer than 30 years of service, the annuity must be reduced by an early reduction factor for each year that the member's age of retirement precedes normal retirement age. The early reduction factors are four percent per year for ages 55 through 59 and seven percent per year for ages 60 through normal retirement age. The resulting annuity must be further adjusted to take into account augmentation as if the employee had deferred receipt of the annuity until normal retirement age and the annuity were augmented at the applicable annual rate, compounded annually, from the day the annuity begins to accrue until normal retirement age. The applicable annual rate is the rate in effect on the employee's effective date of retirement and shall be considered as fixed for the employee. The applicable annual rates are the following:

 

(i) until June 30, 2018, 2.5 percent;

 

(ii) a rate that changes each month, beginning July 1, 2018, through June 30, 2023, which is determined by reducing the rate in item (i) to zero in equal monthly increments over the five-year period; and

 

(iii) after June 30, 2023, zero percent.

 

After June 30, 2023, the reduced annuity commencing before normal retirement age under this clause shall not take into account any augmentation.

 

(2) If the member retires when the member is at least age 62 or older and has at least 30 years of service, the member is entitled to receive a retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), or subdivision 4a, paragraph (c), whichever applies, multiplied by the applicable early retirement factor specified for members "Age 62 or older with 30 years of service" in the table in paragraph (c).


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(c) A coordinated member who retires before the normal retirement age and before July 1, 2018, is entitled to receive a retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), or subdivision 4a, paragraph (d), whichever applies, multiplied by the applicable early retirement factor specified below:

 

Under age 62

Age 62 or older

 

or less than 30 years of service

with 30 years of service

 

Normal retirement age:

65

66

65

66

 

Age at retirement

 

 

 

 

 

55

0.5376

0.4592

 

 

56

0.5745

0.4992

 

 

57

0.6092

0.5370

 

 

58

0.6419

0.5726

 

 

59

0.6726

0.6062

 

 

60

0.7354

0.6726

 

 

61

0.7947

0.7354

 

 

62

0.8507

0.7947

0.8831

0.8389

63

0.9035

0.8507

0.9246

0.8831

64

0.9533

0.9035

0.9635

0.9246

65

1.0000

0.9533

1.0000

0.9635

66

 

1.0000

 

1.0000

 

For normal retirement ages between ages 65 and 66, the early retirement factors must be determined by linear interpolation between the early retirement factors applicable for normal retirement ages 65 and 66.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 4. Minnesota Statutes 2016, section 354A.37, subdivision 2, is amended to read:

 

Subd. 2. Eligibility for deferred retirement annuity. (a) Any coordinated member who ceases to render teaching services for the school district in which the teachers retirement fund association is located, with sufficient allowable service credit to meet the minimum service requirements specified in section 354A.31, subdivision 1, shall be entitled to a deferred retirement annuity in lieu of a refund under subdivision 1.

 

(b) The deferred retirement annuity must be computed under section 354A.31 and shall be augmented as provided in this subdivision by the applicable interest rate compounded annually from the first day of the month following the month during which the member ceased to render teaching service to the effective date of retirement. There is no augmentation if this period is less than three months.

 

(c) The deferred annuity commences upon application after the person on deferred status attains at least the minimum age specified in section 354A.31, subdivision 1.

 

(b) The monthly annuity amount that had accrued when the member ceased to render teaching service must be augmented from the first day of the month following the month during which the member ceased to render teaching service to the effective date of retirement. There is no augmentation if this period is less than three months. The rate of augmentation is


Journal of the House - 55th Day - Monday, May 15, 2017 - Top of Page 5748

(d) For a person who became a covered employee before July 1, 2006, the annuity must be augmented as follows:

 

(1) three percent compounded annually until January 1 of the year following the year in which the former member attains age 55, or until June 30, 2012, whichever is earlier;

 

(2) five percent compounded annually after that date to July 1 from the January 1, next following the attainment of age 55 or until June 30, 2012, and;

 

(3) two percent compounded annually after that date to the effective date of retirement if the employee became an employee before July 1, 2006, and at from July 1, 2012, until June 30, 2018; and

 

(4) after June 30, 2018, the deferred annuity must not be augmented.

 

(e) For a person who became a covered employee after June 30, 2006, the annuity must be augmented as follows:

 

(1) 2.5 percent compounded annually to July 1, 2012, and until June 30, 2012;

 

(2) two percent compounded annually after that date to the effective date of retirement if the employee became an employee after June 30, 2006 from July 1, 2012, until June 30, 2018; and

 

. If a person has more than one period of uninterrupted service, a separate average salary determined under section 354A.31 must be used for each period, and the monthly annuity amount related to each period must be augmented as provided in this subdivision. The sum of the augmented monthly annuity amounts determines the total deferred annuity payable. If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has credit with the fund. If a person does not render teaching services in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of resumption of teaching service are those applicable to new members. The mortality table and interest assumption used to compute the annuity are the table established by the fund to compute other annuities, and the interest assumption under section 356.215 in effect when the member retires. A period of uninterrupted service for the purpose of this subdivision means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year.

 

(3) after June 30, 2018, the deferred annuity must not be augmented.

 

(c) (f) The augmentation provided by this subdivision applies to the benefit provided in section 354A.35, subdivision 2.

 

(g) The augmentation provided by this subdivision does not apply to any period in which a person is on an approved leave of absence from an employer unit.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. Minnesota Statutes 2016, section 354A.37, subdivision 3, is amended to read:

 

Subd. 3. Computation of refund amount. A former coordinated member who qualifies for a refund under subdivision 1 is entitled to receive a refund equal to the amount of the former coordinated member's accumulated employee contributions with interest at the rate of following rates for the applicable period:


Journal of the House - 55th Day - Monday, May 15, 2017 - Top of Page 5749

(a) Six percent per annum compounded annually to July 1, 2011, if the person is a former member of the St. Paul Teachers Retirement Fund Association, and;

 

(b) four percent per annum compounded annually to July 1, 2017; and

 

(c) three percent per annum compounded annually thereafter.

 

Sec. 6. REPEALER.

 

(a) Minnesota Statutes 2016, section 354A.29, subdivisions 8 and 9, are repealed.

 

(b) Minnesota Statutes 2016, section 354A.39, is repealed.

 

EFFECTIVE DATE. Paragraph (a) is effective the day following final enactment. Paragraph (b) is effective July 1, 2017.

 

ARTICLE 5

POSTRETIREMENT ADJUSTMENTS FOR STATEWIDE PLANS

AND GENERAL PROVISIONS

 

Section 1. Minnesota Statutes 2016, section 356.215, subdivision 8, is amended to read:

 

Subd. 8. Interest and salary Actuarial assumptions. (a) The actuarial valuation must use the applicable following interest investment return assumption:

 

(1) select and ultimate interest rate assumption

 

 

plan

ultimate interest rate assumption

 

 

teachers retirement plan

8.5%

 

 

The select preretirement interest rate assumption for the period through June 30, 2017, is eight percent.

 

(2) single rate interest rate assumption

 

 

plan

interest rate investment return assumption

 

 

 

 

general state employees retirement plan

8 7.5 %

 

correctional state employees retirement plan

8 7.5

 

 

State Patrol retirement plan

8 7.5

 

 

legislators retirement plan, and for the constitutional officers calculation of total plan liabilities

 

0

 

 

judges retirement plan

8 7.5

 

 

general public employees retirement plan

8 7.5

 

 

public employees police and fire retirement plan

8 7.5

 

 

local government correctional service retirement plan

8 7.5

 

 

teachers retirement plan

7.5

 

 

St. Paul teachers retirement plan

8 7.5

 

 

Bloomington Fire Department Relief Association

6

 

 


Journal of the House - 55th Day - Monday, May 15, 2017 - Top of Page 5750

local monthly benefit volunteer firefighter relief associations

 

5

 

 

monthly benefit retirement plans in the statewide volunteer firefighter retirement plan

 

6

 

 

 

(b) (1) If funding stability has been attained, The actuarial valuation for each of the covered retirement plans listed in section 356.415, subdivision 2, must use a take into account the postretirement adjustment rate actuarial assumption equal to the postretirement adjustment rate or rates applicable to the plan as specified in section 354A.27, subdivision 7; 354A.29, subdivision 9 7; or 356.415, subdivision 1, whichever applies.

 

(2) If funding stability has not been attained, the valuation must use a select postretirement adjustment rate actuarial assumption equal to the postretirement adjustment rate specified in section 354A.27, subdivision 6a; 354A.29, subdivision 8; or 356.415, subdivision 1a, 1b, 1c, 1d, 1e, or 1f, whichever applies, for a period ending when the approved actuary estimates that the plan will attain the defined funding stability measure, and thereafter an ultimate postretirement adjustment rate actuarial assumption equal to the postretirement adjustment rate under section 354A.27, subdivision 7; 354A.29, subdivision 9; or 356.415, subdivision 1, for the applicable period or periods beginning when funding stability is projected to be attained.

 

(c) The actuarial valuation must use the applicable following single rate future salary increase assumption, the applicable following modified single rate future salary increase assumption, or the applicable following graded rate future salary increase assumption:

 

(1) single rate future salary increase assumption

 

plan

future salary increase assumption

 

legislators retirement plan

 

5%

judges retirement plan

 

2.75

Bloomington Fire Department Relief Association

 

4

 

(2) age-related future salary increase age-related select and ultimate future salary increase assumption or graded rate future salary increase assumption

 

plan

future salary increase assumption

 

local government correctional service retirement plan

assumption B

St. Paul teachers retirement plan

assumption A

 

For plans other than the St. Paul teachers retirement plan and the local government correctional service retirement plan, the select calculation is: during the designated select period, a designated percentage rate is multiplied by the result of the designated integer minus T, where T is the number of completed years of service, and is added to the applicable future salary increase assumption. The designated select period is ten years and the designated integer is ten for the local government correctional service retirement plan and 15 for the St. Paul Teachers Retirement Fund Association. The designated percentage rate is 0.2 percent for the St. Paul Teachers Retirement Fund Association.


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The ultimate future salary increase assumption is:

 

age

A

B

 

 

16

5.9%

8.75%

 

17

5.9

8.75

 

18

5.9

8.75

 

19

5.9

8.75

 

20

5.9

8.75

 

21

5.9

8.5

 

22

5.9

8.25

 

23

5.85

8

 

24

5.8

7.75

 

25

5.75

7.5

 

26

5.7

7.25

 

27

5.65

7

 

28

5.6

6.75

 

29

5.55

6.5

 

30

5.5

6.5

 

31

5.45

6.25

 

32

5.4

6.25

 

33

5.35

6.25

 

34

5.3

6

 

35

5.25

6

 

36

5.2

5.75

 

37

5.15

5.75

 

38

5.1

5.75

 

39

5.05

5.5

 

40

5

5.5

 

41

4.95

5.5

 

42

4.9

5.25

 

43

4.85

5

 

44

4.8

5

 

45

4.75

4.75

 

46

4.7

4.75

 

47

4.65

4.75

 

48

4.6

4.75

 

49

4.55

4.75

 

50

4.5

4.75

 

51

4.45

4.75

 

52

4.4

4.75

 

53

4.35

4.75

 

54

4.3

4.75

 

55

4.25

4.5

 

56

4.2

4.5

 

57

4.15

4.25

 

58

4.1

4

 

59

4.05

4

 

60

4

4

 

61

4

4

 

62

4

4

 


Journal of the House - 55th Day - Monday, May 15, 2017 - Top of Page 5752

63

4

4

 

64

4

4

 

65

4

3.75

 

66

4

3.75

 

67

4

3.75

 

68

4

3.75

 

69

4

3.75

 

70

4

3.75

 

 

(3) service-related ultimate future salary increase assumption

 

general state employees retirement plan of the Minnesota State Retirement System

assumption A

general employees retirement plan of the Public Employees Retirement Association

assumption B

Teachers Retirement Association

assumption C

public employees police and fire retirement plan

assumption D

State Patrol retirement plan

assumption E

correctional state employees retirement plan of the Minnesota State Retirement System

assumption F

 

service length

A

B

C

D

E

F

 

1

10.25%

11.78%

12%

12.75%

7.75%

5.75%

2

7.85

8.65

9

10.75

7.25

5.6

3

6.65

7.21

8

8.75

6.75

5.45

4

5.95

6.33

7.5

7.75

6.5

5.3

5

5.45

5.72

7.25

6.25

6.25

5.15

6

5.05

5.27

7

5.85

6

5

7

4.75

4.91

6.85

5.55

5.75

4.85

8

4.45

4.62

6.7

5.35

5.6

4.7

9

4.25

4.38

6.55

5.15

5.45

4.55

10

4.15

4.17

6.4

5.05

5.3

4.4

11

3.95

3.99

6.25

4.95

5.15

4.3

12

3.85

3.83

6

4.85

5

4.2

13

3.75

3.69

5.75

4.75

4.85

4.1

14

3.55

3.57

5.5

4.65

4.7

4

15

3.45

3.45

5.25

4.55

4.55

3.9

16

3.35

3.35

5

4.55

4.4

3.8

17

3.25

3.26

4.75

4.55

4.25

3.7

18

3.25

3.25

4.5

4.55

4.1

3.6

19

3.25

3.25

4.25

4.55

3.95

3.5

20

3.25

3.25

4

4.55

3.8

3.5

21

3.25

3.25

3.9

4.45

3.75

3.5

22

3.25

3.25

3.8

4.35

3.75

3.5

23

3.25

3.25

3.7

4.25

3.75

3.5

24

3.25

3.25

3.6

4.25

3.75

3.5

25

3.25

3.25

3.5

4.25

3.75

3.5

26

3.25

3.25

3.5

4.25

3.75

3.5

27

3.25

3.25

3.5

4.25

3.75

3.5

28

3.25

3.25

3.5

4.25

3.75

3.5

29

3.25

3.25

3.5

4.25

3.75

3.5

30 or more

3.25

3.25

3.5

4.25

3.75

3.5


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(d) The actuarial valuation must use the applicable following payroll growth assumption for calculating the amortization requirement for the unfunded actuarial accrued liability where the amortization retirement is calculated as a level percentage of an increasing payroll:

 

plan

payroll growth assumption

 

general state employees retirement plan of the Minnesota State Retirement System

3.5%

 

correctional state employees retirement plan

3.5

 

State Patrol retirement plan

3.5

 

judges retirement plan

2.75

 

general employees retirement plan of the Public Employees Retirement Association

3.5

 

public employees police and fire retirement plan

3.5

 

local government correctional service retirement plan

3.5

 

teachers retirement plan

3.75

 

St. Paul teachers retirement plan

4

 

 

(e) The assumptions set forth in paragraphs (c) and (d) continue to apply, unless a different salary assumption or a different payroll increase assumption:

 

(1) has been proposed by the governing board of the applicable retirement plan;

 

(2) is accompanied by the concurring recommendation of the actuary retained under section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the most recent actuarial valuation report if section 356.214 does not apply; and

 

(3) has been approved or deemed approved under subdivision 18.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 356.215, subdivision 9, is amended to read:

 

Subd. 9. Other assumptions. The (a) Each plan's actuarial valuation must use assumptions concerning base mortality rates, disability, retirement, withdrawal, retirement age, and any other relevant demographic or economic factor. These assumptions must be set at levels consistent with those determined in the most recent quadrennial experience study completed under subdivision 16, if required, or representative of the best estimate of future experience as recommended by the plan's approved actuary, if a quadrennial experience study is not required.

 

(b) The actuarial valuation may use an assumption concerning future mortality improvement. This assumption may be set at levels consistent with those determined in the most recent mortality improvement scale published by the Society of Actuaries or as otherwise recommended by the plan's approved actuary.

 

(c) The actuarial valuation must contain an exhibit indicating any the actuarial assumptions used in preparing the valuation report.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 356.215, subdivision 11, is amended to read:

 

Subd. 11. Amortization contributions. (a) In addition to the exhibit indicating the level normal cost, the actuarial valuation of the retirement plan must contain an exhibit for financial reporting purposes indicating the additional annual contribution sufficient to amortize the unfunded actuarial accrued liability and must contain an


Journal of the House - 55th Day - Monday, May 15, 2017 - Top of Page 5754

exhibit for contribution determination purposes indicating the additional contribution sufficient to amortize the unfunded actuarial accrued liability. For the retirement plans listed in subdivision 8, paragraph (c), but excluding the legislators retirement plan, the additional contribution must be calculated on a level percentage of covered payroll basis by the established date for full funding in effect when the valuation is prepared, assuming annual payroll growth at the applicable percentage rate set forth in subdivision 8, paragraph (d). For all other retirement plans and for the legislators retirement plan, the additional annual contribution must be calculated on a level annual dollar amount basis.

 

(b) For any retirement plan other than a retirement plan governed by paragraph (d), (e), (f), (g), (h), (i), or (j), if there has not been a change in the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, which change or changes by itself or by themselves without inclusion of any other items of increase or decrease produce a net increase in the unfunded actuarial accrued liability of the fund, the established date for full funding is the first actuarial valuation date occurring after June 1, 2020.

 

(c) For any retirement plan, if there has been a change in any or all of the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, and the change or changes, by itself or by themselves and without inclusion of any other items of increase or decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the established date for full funding must be determined using the following procedure:

 

(i) the unfunded actuarial accrued liability of the fund must be determined in accordance with the plan provisions governing annuities and retirement benefits and the actuarial assumptions in effect before an applicable change;

 

(ii) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the unfunded actuarial accrued liability amount determined under item (i) by the established date for full funding in effect before the change must be calculated using the interest assumption specified in subdivision 8 in effect before the change;

 

(iii) the unfunded actuarial accrued liability of the fund must be determined in accordance with any new plan provisions governing annuities and benefits payable from the fund and any new actuarial assumptions and the remaining plan provisions governing annuities and benefits payable from the fund and actuarial assumptions in effect before the change;

 

(iv) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the difference between the unfunded actuarial accrued liability amount calculated under item (i) and the unfunded actuarial accrued liability amount calculated under item (iii) over a period of 30 years from the end of the plan year in which the applicable change is effective must be calculated using the applicable interest assumption specified in subdivision 8 in effect after any applicable change;

 

(v) the level annual dollar or level percentage amortization contribution under item (iv) must be added to the level annual dollar amortization contribution or level percentage calculated under item (ii);

 

(vi) the period in which the unfunded actuarial accrued liability amount determined in item (iii) is amortized by the total level annual dollar or level percentage amortization contribution computed under item (v) must be calculated using the interest assumption specified in subdivision 8 in effect after any applicable change, rounded to the nearest integral number of years, but not to exceed 30 years from the end of the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and not to be less than the period of years beginning in the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and ending by the date for full funding in effect before the change; and


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(vii) the period determined under item (vi) must be added to the date as of which the actuarial valuation was prepared and the date obtained is the new established date for full funding.

 

(d) For the general employees retirement plan of the Public Employees Retirement Association, the established date for full funding is June 30, 2031 2047.

 

(e) For the Teachers Retirement Association, the established date for full funding is June 30, 2037 2047.

 

(f) For the correctional state employees retirement plan and the State Patrol retirement plan of the Minnesota State Retirement System, the established date for full funding is June 30, 2038 2047.

 

(g) For the judges retirement plan, the established date for full funding is June 30, 2038 2047.

 

(h) For the local government correctional service retirement plan and the public employees police and fire retirement plan, the established date for full funding is June 30, 2038 2047.

 

(i) For the St. Paul Teachers Retirement Fund Association, the established date for full funding is June 30, 2042. In addition to other requirements of this chapter, the annual actuarial valuation must contain an exhibit indicating the funded ratio and the deficiency or sufficiency in annual contributions when comparing liabilities to the market value of the assets of the fund as of the close of the most recent fiscal year 2047.

 

(j) For the general state employees retirement plan of the Minnesota State Retirement System, the established date for full funding is June 30, 2040 2047.

 

(k) For the retirement plans for which the annual actuarial valuation indicates an excess of valuation assets over the actuarial accrued liability, the valuation assets in excess of the actuarial accrued liability must be recognized as a reduction in the current contribution requirements by an amount equal to the amortization of the excess expressed as a level percentage of pay over a 30-year period beginning anew with each annual actuarial valuation of the plan.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 4. Minnesota Statutes 2016, section 356.30, subdivision 1, is amended to read:

 

Subdivision 1. Eligibility; computation of annuity. (a) Notwithstanding any provisions of the laws governing the covered retirement plans enumerated listed in subdivision 3, a person who has met the qualifications of paragraph (b) may elect to receive, upon retirement, a retirement annuity from each enumerated covered retirement plan in which the person has at least one-half year of allowable service, based on the allowable service in each plan, subject to the provisions of paragraph (c) (b), if the person has:

 

(1) allowable service in any two or more of the covered plans;

 

(2) at least one-half year of allowable service in each covered plan, based on the allowable service in each plan;

 

(3) total allowable service that equals or exceeds the longest service credit vesting requirement of the applicable retirement plan; and

 

(4) not begun to receive an annuity from any covered plan or has made application for benefits from each applicable plan and the retirement annuity effective dates of each plan are within a one-year period.


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(b) A person may receive, upon retirement, a retirement annuity from each enumerated retirement plan in which the person has at least one-half year of allowable service, and augmentation of a deferred annuity calculated at the appropriate rate under the laws governing each public pension plan or fund named in subdivision 3, based on the date of the person's initial entry into public employment from the date the person terminated all public service if:

 

(1) the person has allowable service in any two or more of the enumerated plans;

 

(2) the person has sufficient allowable service in total that equals or exceeds the applicable service credit vesting requirement of the retirement plan with the longest applicable service credit vesting requirement; and

 

(3) the person has not begun to receive an annuity from any enumerated plan or the person has made application for benefits from each applicable plan and the effective dates of the retirement annuity with each plan under which the person chooses to receive an annuity are within a one-year period.

 

(c) (b) If all requirements in paragraph (a) have been satisfied, the retirement annuity from each plan must be based upon the allowable service, accrual rates, and average salary in the applicable plan except as further specified or modified in the following clauses:

 

(1) the laws governing annuities must be the law in effect on the date of termination from the last period of public service under a covered retirement plan with which the person earned a minimum of one-half year of allowable service credit during that employment;

 

(2) the "average salary" on which the annuity from each covered plan in which the employee has credit in a used to calculate the annuity for each formula plan must be based on the employee's highest five successive years of covered salary during the entire service in covered plans;

 

(3) the accrual rates to be used by under each plan must be those the percentages prescribed by each plan's formula as continued in effect for the respective years of allowable service from one plan to the next, recognizing all previous allowable service with the other covered plans;

 

(4) the allowable service in all the covered plans must be combined in determining eligibility for and the application of each plan's provisions in with respect to reduction in the annuity amount for retirement prior to normal retirement age; and

 

(5) the annuity amount payable for any allowable service under a nonformula plan of that is a covered plan must not be affected, but such service and covered salary must be used in the above calculation.

 

(c) If a person eligible for an annuity under paragraph (a) from each covered plan terminates all public service, the deferred annuity must be augmented from the date of termination until the earlier of:

 

(1) the effective date of retirement; or

 

(2) December 31, 2017, for the Minnesota State Retirement System and the Public Employees Retirement Association or June 30, 2018, for the Teachers Retirement Association and the St. Paul Teachers Retirement Association.

 

A deferred annuity must not be augmented after the applicable dates under clause (2). The appropriate rate of augmentation is the rate in effect on the date on which the person entered into public employment and subsequently adjusted according to the laws governing each covered plan, as applicable.


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(d) This section does not apply to any person whose final termination from the last public service under a covered plan was before May 1, 1975.

 

(e) For the purpose of computing annuities under this section, the accrual rates used by any covered plan, except the public employees police and fire plan, the judges retirement fund, and the State Patrol retirement plan, must not exceed 2.7 percent per year of service for any year of service or fraction thereof. The formula percentage used by:

 

(1) the judges retirement fund accrual rate must not exceed 3.2 percent per year of service for any year of service or fraction thereof. The accrual rate used by;

 

(2) the public employees police and fire plan and the State Patrol retirement plan accrual rate must not exceed 3.0 percent per year of service for any year of service or fraction thereof. The accrual rate or rates used by;

 

(3) the legislators retirement plan accrual rate must not exceed 2.5 percent, but this limit does not apply to the adjustment provided under section 3A.02, subdivision 1, paragraph (c); and

 

(4) any other covered plan's accrual rate must not exceed 2.7 percent per year of service for any year of service or fraction thereof.

 

(f) Any period of time for which a person has credit in more than one of the covered plans must be used only once for the purpose of determining total allowable service.

 

(g) If the period of duplicated service credit is more than one-half year, or the person has credit for more than one-half year, with each of the plans, each plan must apply its formula to a prorated service credit for the period of duplicated service based on a fraction of the salary on which deductions were paid to that fund for the period divided by the total salary on which deductions were paid to all plans for the period.

 

(h) If the period of duplicated service credit is less than one-half year, or when added to other service credit with that plan is less than one-half year, the service credit must be ignored and a refund of contributions made to the person in accord with that plan's refund provisions.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. [356.311] COVERAGE BY MORE THAN ONE PLAN.

 

(a) Any person who has been a member of two or more of the retirement plans listed in paragraph (b) is entitled, when qualified, to an annuity from each fund if:

 

(i) the person's combined service in any two or more retirement plans equals or exceeds the vesting requirement of the fund with the longest vesting requirement; and

 

(ii) the person has not taken a refund from any of the retirement plans.

 

(b) This section applies to any defined benefit plan administered by the Minnesota State Retirement System, including the State Patrol Retirement Plan; the Public Employees Retirement Association, including the public employees police and fire plan; the Teachers Retirement Association; and the St. Paul Teachers Retirement Fund Association, except as noted in paragraph (c).

 

(c) This section does not apply to plans providing benefits for police officers or firefighters under sections 424A.091 to 424A.096 or the Bloomington Fire Department Relief Association.


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(d) No portion of the service upon which the retirement annuity from one retirement plan is based shall be again used in the computation of a retirement annuity from another plan. The annuity from each plan must be determined under the laws applicable to that plan except that the requirement that a person meet the vesting requirement in any particular plan shall not apply, provided the combined service in any two or more plans equals or exceeds the vesting requirement of the plan with the longest vesting requirement.

 

(e) Any deferred annuity payable under this section shall be subject to augmentation under the laws applicable to the deferred annuity.

 

(f) Any person to whom an annuity is not payable under this section because the person took a refund from one of the funds shall be entitled to repay the refund in accordance with the laws governing the refund. Upon repayment, the person is entitled to annuities under this section, if the person would otherwise be entitled.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 6. Minnesota Statutes 2016, section 356.415, subdivision 1, is amended to read:

 

Subdivision 1. Annual postretirement adjustments; generally Minnesota State Retirement System general state employees retirement plan, legislators retirement plan, and unclassified state employees retirement program. (a) Except as otherwise provided in subdivision 1a, 1b, 1c, 1d, 1e, or 1f set forth in paragraph (c), recipients of a retirement annuity, disability benefit, or survivor benefit recipients of a covered from the general state employees retirement plan, the legislators retirement plan, or the unclassified state employees retirement program are entitled to a an annual postretirement adjustment annually on, effective as of each January 1, as follows:

 

(1) effective January 1, 2018, through December 31, 2022, a postretirement increase of 2.5 one percent must be applied each year, effective January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) effective January 1, 2018, through December 31, 2022, for each annuitant or benefit recipient who has been receiving an annuity or a benefit amount for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 one percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit amount of the annuitant or benefit recipient;

 

(3) effective January 1, 2023, and thereafter, a postretirement increase of 1.5 percent must be applied each year to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(4) effective January 1, 2023, and thereafter, for each annuitant or benefit recipient who has been receiving an annuity or a benefit amount for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 1.5 percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit amount of the annuitant or benefit recipient.

 

(b) An increase in annuity or benefit payments under this section subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the covered retirement plan requesting that the increase not be made.


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(c) Members who retire on or after January 1, 2023, under the general state employees retirement plan, the legislators retirement plan, or the unclassified state employees retirement program are entitled to an annual postretirement adjustment of the member's retirement annuity, effective as of each January 1, beginning with the year following the year in which the member attains normal retirement age, as follows:

 

(1) if a member has been receiving an annuity for at least 12 full months as of the June 30 of the calendar year immediately before the date of the adjustment, a postretirement increase equal to the percentage specified in paragraph (a), clause (1) or (3), as applicable, must be applied, effective on January 1, to the member's monthly annuity;

 

(2) if a member has been receiving an annuity for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the date of adjustment, a postretirement increase of 1/12 of the percentage specified in clause (1) for each month that the member has been receiving an annuity must be applied, effective on January 1, to the member's monthly annuity; or

 

(3) if a member has been receiving an annuity for fewer than six months before the date of adjustment, a postretirement increase shall not be applied until the next January 1 and the amount of the adjustment shall be the amount determined under clause (2).

 

(d) Paragraph (c) does not apply to members who retire under section 352.116, subdivision 1, paragraph (c).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 7. Minnesota Statutes 2016, section 356.415, subdivision 1a, is amended to read:

 

Subd. 1a. Annual postretirement adjustments; Minnesota State Retirement System plans other than State Patrol correctional state employees retirement plan. (a) Retirement annuity, disability benefit, or survivor benefit recipients of the legislators retirement plan, including constitutional officers as specified in chapter 3A, the general state employees retirement plan, the correctional state employees retirement plan, and the unclassified state employees retirement program are entitled to a an annual postretirement adjustment annually on, effective as of each January 1, as follows:

 

(1) for each successive January 1, if the definition of funding stability under paragraph (b) has not been met as of the prior July 1 for or with respect to the applicable retirement plan, a postretirement increase of two 1.5 percent must be applied each year, effective on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each successive January 1, if the definition of funding stability under paragraph (b) has not been met as of the prior July 1 for or with respect to the applicable retirement plan, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of two 1.5 percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit amount of each annuitant or benefit recipient.

 

(b) Increases under this subdivision for the general state employees retirement plan or the correctional state employees retirement plan terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicate that the market value of assets of the retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under subdivision 1 recommence after that date. Increases under this subdivision for the legislators


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retirement plan established under chapter 3A, including the constitutional officers specified in that chapter, and for the unclassified state employees retirement program, terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicate that the market value of assets of the general state employees retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under subdivision 1 recommence after that date.

 

(c) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, for the general state employees retirement plan or the correctional state employees retirement plan, is again to be applied in a subsequent year or years if the market value of assets of the applicable plan equals or is less than:

 

(1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or

 

(2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation.

 

(d) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, for the legislators retirement plan, including the constitutional officers, and for the unclassified state employees retirement program, is again to be applied in a subsequent year or years if the market value of assets of the general state employees retirement plan equals or is less than:

 

(1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or

 

(2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation.

 

(e) (b) An increase in annuity or benefit payments under this subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the applicable covered retirement plan requesting that the increase not be made.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 8. Minnesota Statutes 2016, section 356.415, subdivision 1b, is amended to read:

 

Subd. 1b. Annual postretirement adjustments; PERA; general employees retirement plan and local government correctional retirement plan. (a) Except as set forth in paragraph (c), recipients of a retirement annuity, disability benefit, or survivor benefit recipients of the general employees retirement plan of the Public Employees Retirement Association and the local government correctional service retirement plan are entitled to a an annual postretirement adjustment annually on, effective as of each January 1, as follows:

 

(1) for each successive January 1 until funding stability is restored for the applicable retirement plan, a postretirement increase of one percent must be applied each year, effective on January 1, to the monthly annuity or benefit amount of each annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each successive January 1 until funding stability is restored for the applicable retirement plan, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of one percent for each month the person has been receiving an annuity or benefit must be applied; to the monthly annuity or benefit amount of each annuitant or benefit recipient.


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(3) for each January 1 following the restoration of funding stability for the applicable retirement plan, a postretirement increase of 2.5 percent must be applied each year, effective January 1, to the monthly annuity or benefit amount of each annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(4) for each January 1 following restoration of funding stability for the applicable retirement plan, for each annuity or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 percent for each month the person has been receiving an annuity or benefit must be applied.

 

(b) Funding stability is restored when the market value of assets of the applicable retirement plan equals or exceeds 90 percent of the actuarial accrued liabilities of the applicable plan in the two most recent consecutive actuarial valuations prepared under section 356.215 and the standards for actuarial work by the approved actuary retained by the Public Employees Retirement Association under section 356.214.

 

(c) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, is again to be applied in a subsequent year or years if the market value of assets of the applicable plan equals or is less than:

 

(1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or

 

(2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation.

 

(d) (b) An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the Public Employees Retirement Association requesting that the increase not be made.

 

(c) Members who retire on or after January 1, 2023, are entitled to an annual postretirement adjustment of the member's retirement annuity, effective as of each January 1, beginning with the year following the year in which the member attains normal retirement age, as follows:

 

(1) if a member has been receiving an annuity for at least 12 full months as of the June 30 of the calendar year immediately before the date of the adjustment, a postretirement increase equal to the percentage specified in paragraph (a), clause (1), must be applied, effective on January 1, to the member's monthly annuity;

 

(2) if a member has been receiving an annuity for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the date of adjustment, a postretirement increase of 1/12 of the percentage specified in clause (1) for each month that the member has been receiving an annuity must be applied, effective on January 1 to the member's monthly annuity; or

 

(3) if a member has been receiving an annuity for fewer than six months before the date of adjustment, a postretirement increase shall not be applied until the next January 1 and the amount of the adjustment shall be the amount determined under clause (2).

 

(d) Paragraph (c) does not apply to members who retire under section 353.30, subdivision 1a.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 9. Minnesota Statutes 2016, section 356.415, subdivision 1c, is amended to read:

 

Subd. 1c. Annual postretirement adjustments; PERA-police and fire. (a) Retirement annuity, disability benefit, or survivor benefit recipients of the public employees police and fire retirement plan are entitled to a an annual postretirement adjustment annually on, effective as of each January 1, if the definition of funding stability under paragraph (c) has not been met, as follows:

 

(1) for each annuitant or benefit recipient whose annuity or benefit effective date is on or before June 1, 2014, who has been receiving the annuity or benefit for at least 12 full months as of the immediate preceding June 30, an amount equal to one percent in each year; or

 

(2) for each annuitant or benefit recipient whose annuity or benefit effective date is on or before June 1, 2014, who has been receiving the annuity or benefit for at least one full month, but less than 12 months, as of the immediate preceding June 30, an amount equal to 1/12 of one percent for each month of annuity or benefit receipt; and

 

(3) (1) for each annuitant or benefit recipient whose annuity or benefit effective date is after June 1, 2014, who will have been receiving an annuity or benefit for at least 36 full months as of the immediate preceding June 30, an amount equal to a postretirement increase of one percent must be applied each year to the monthly annuity or benefit amount of the annuitant or benefit recipient; or

 

(4) (2) for each annuitant or benefit recipient whose annuity or benefit effective date is after June 1, 2014, who has been receiving the annuity or benefit for at least 25 full months, but less than 36 months as of the immediate preceding June 30, an amount equal to a postretirement increase of 1/12 of one percent for each full month of that the person has been receiving an annuity or benefit receipt during the fiscal year in which the annuity or benefit was effective must be applied each year to the monthly annuity or benefit amount of the annuitant or benefit recipient.

 

(b) Retirement annuity, disability benefit, or survivor benefit recipients of the public employees police and fire retirement plan are entitled to a postretirement adjustment annually on each January 1 following the restoration of funding stability as defined under paragraph (c) and during the continuation of funding stability as defined under paragraph (c), as follows:

 

(1) for each annuitant or benefit recipient who has been receiving the annuity or benefit for at least 36 full months as of the immediate preceding June 30, an amount equal to 2.5 percent; and

 

(2) for each annuitant or benefit recipient who has been receiving the annuity or benefit for at least 25 full months, but less than 36 full months, as of the immediate preceding June 30, an amount equal to 1/12 of 2.5 percent for each full month of annuity or benefit receipt during the fiscal year in which the annuity or benefit was effective.

 

(c) Funding stability is restored when the market value of assets of the public employees police and fire retirement plan equals or exceeds 90 percent of the actuarial accrued liabilities of the applicable plan in the two most recent consecutive actuarial valuations prepared under section 356.215 and under the standards for actuarial work of the Legislative Commission on Pensions and Retirement by the approved actuary retained by the Public Employees Retirement Association under section 356.214.

 

(d) After having met the definition of funding stability under paragraph (c), a full or prorated increase, as provided in paragraph (a), clause (1), (2), (3), or (4), whichever applies, rather than adjustments under paragraph (b), is again applied in a subsequent year or years if the market value of assets of the public employees police and fire retirement plan equals or is less than:

 

(1) 85 percent of the actuarial accrued liabilities of the applicable plan for two consecutive actuarial valuations; or


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(2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most recent actuarial valuation.

 

(e) (b) An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the Public Employees Retirement Association requesting that the increase not be made.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 10. Minnesota Statutes 2016, section 356.415, subdivision 1d, is amended to read:

 

Subd. 1d. Teachers Retirement Association annual postretirement adjustments. (a) Except as set forth in paragraph (d), recipients of a retirement annuity, disability benefit, or survivor benefit recipients of the Teachers Retirement Association are entitled to a an annual postretirement adjustment annually on, effective as of each January 1, as follows:

 

(1) for each January 1 until funding stability is restored, a postretirement increase of two one percent must be applied each year, effective on January 1, to the monthly annuity or benefit amount of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each January 1 until funding stability is restored, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of two one percent for each month the person has been receiving an annuity or benefit must be applied;.

 

(3) for each January 1 following the restoration of funding stability, a postretirement increase of 2.5 percent must be applied each year, effective January 1, to the monthly annuity or benefit amount of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(4) for each January 1 following the restoration of funding stability, for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 percent for each month the person has been receiving an annuity or benefit must be applied.

 

(b) Funding stability is restored when the market value of assets of the Teachers Retirement Association equals or exceeds 90 percent of the actuarial accrued liabilities of the Teachers Retirement Association in the two most recent prior actuarial valuations prepared under section 356.215 and the standards for actuarial work by the approved actuary retained by the Teachers Retirement Association under section 356.214.

 

(c) After having met the definition of funding stability under paragraph (b), the increase provided in paragraph (a), clauses (1) and (2), rather than an increase under subdivision 1, or the increase under paragraph (a), clauses (3) and (4), is again to be applied in a subsequent year or years if the market value of assets of the plan equals or is less than:

 

(1) 85 percent of the actuarial accrued liabilities of the plan for two consecutive actuarial valuations; or

 

(2) 80 percent of the actuarial accrued liabilities of the plan for the most recent actuarial valuation.

 

(d) (b) An increase in annuity or benefit payments under this section must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the Teachers Retirement Association requesting that the increase not be made.


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(e) (c) The retirement annuity payable to a person who retires before becoming eligible for Social Security benefits and who has elected the optional payment as provided in section 354.35 must be treated as the sum of a period-certain retirement annuity and a life retirement annuity for the purposes of any postretirement adjustment. The period-certain retirement annuity plus the life retirement annuity must be the annuity amount payable until age 62, 65, or normal retirement age, as selected by the member at retirement, for an annuity amount payable under section 354.35. A postretirement adjustment granted on the period-certain retirement annuity must terminate when the period-certain retirement annuity terminates.

 

(d) Members who retire on or after January 1, 2023, are entitled to an annual postretirement adjustment of the member's retirement annuity, effective as of each January 1, beginning with the year following the year in which the member attains normal retirement age, as follows:

 

(1) if a member has been receiving an annuity for at least 12 full months as of the June 30 of the calendar year immediately before the date of the adjustment, a postretirement increase equal to the percentage specified in paragraph (a), clause (1), must be applied, effective on January 1 to the member's monthly annuity;

 

(2) if a member has been receiving an annuity for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the date of adjustment, a postretirement increase of 1/12 of the percentage specified in clause (1) for each month that the member has been receiving an annuity must be applied, effective on January 1, to the member's monthly annuity; or

 

(3) if a member has been receiving an annuity for fewer than six months before the date of adjustment, a postretirement increase shall not be applied until the next January 1 and the amount of the adjustment shall be the amount determined under clause (2).

 

(e) Paragraph (d) does not apply to members who retire under section 354.44, subdivision 6, paragraph (c), item (iii).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 11. Minnesota Statutes 2016, section 356.415, subdivision 1e, is amended to read:

 

Subd. 1e. Annual postretirement adjustments; State Patrol retirement plan. (a) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol retirement plan are entitled to a an annual postretirement adjustment annually on, effective as of each January 1 if the definition of funding stability under paragraph (b) has not been met, as follows:

 

(1) a postretirement increase of one percent must be applied each year, effective on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of one percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit of each annuitant or benefit recipient.

 

(b) Increases under paragraph (a) for the State Patrol retirement plan terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations for the plan prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicates that the market value of assets of the retirement plan equals or exceeds 85 percent of the actuarial accrued liability of the retirement plan. Thereafter, increases under paragraph (a) become effective again on the December 31 of the calendar year in which the actuarial valuation, or prior consecutive actuarial


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valuations for the plan prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicates that the market value of the assets of the retirement plan equals or is less than 80 percent of the actuarial accrued liability of the retirement plan for two years, or equals or is less than 75 percent of the actuarial accrued liability of the retirement plan for one year and increases under paragraph (c) commence after that date.

 

(c) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol retirement plan are entitled to a postretirement adjustment annually on January 1, as follows:

 

(1) a postretirement increase of 1.5 percent must be applied each year, effective on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 1.5 percent for each month that the person has been receiving an annuity or benefit must be applied.

 

(d) Increases under paragraph (c) for the State Patrol retirement plan terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work adopted by the Legislative Commission on Pensions and Retirement indicates that the market value of assets of the retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under subdivision 1 recommence after that date.

 

(e) (b) An increase in annuity or benefit payments under this subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the applicable covered retirement plan requesting that the increase not be made.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 12. Minnesota Statutes 2016, section 356.415, subdivision 1f, is amended to read:

 

Subd. 1f. Annual postretirement adjustments; Minnesota State Retirement System judges retirement plan. (a) The increases provided under this subdivision are in lieu of increases under subdivision 1 or 1a for retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan.

 

(b) (a) Retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan are entitled to a an annual postretirement adjustment annually on, effective as of each January 1, if the definition of funding stability under paragraph (b) has not been met, as follows:

 

(1) a postretirement increase of 1.75 percent must be applied each year, effective on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 1.75 percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit of each annuitant or benefit recipient.

 

(c) (b) Increases under this subdivision paragraph (a) terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under sections 356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicates


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that the market value of assets of the judges retirement plan equals or exceeds 70 percent of the actuarial accrued liability of the retirement plan. and increases under subdivision 1 or 1a, whichever is applicable, paragraph (c) begin on the January 1 next following after that date.

 

(c) Retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan are entitled to a postretirement adjustment annually, effective as of each January 1 if the definition of funding stability under paragraph (d) has not been met, as follows:

 

(1) a postretirement increase of two percent must be applied each year to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of two percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit amount of the annuitant or benefit recipient.

 

(d) Increases under paragraph (c) terminate on December 31 of the calendar year in which two prior consecutive actuarial valuations prepared by the approved actuary under section 356.214 and the standards for actuarial work promulgated by the Legislative Commission on Pensions and Retirement indicate that the market value of assets of the judges retirement plan equals or exceeds 90 percent of the actuarial accrued liability of the retirement plan and increases under paragraph (e) begin after that date.

 

(e) Retirement annuity, disability benefit, or survivor benefit recipients of the judges retirement plan are entitled to a postretirement adjustment annually, effective as of each January 1, as follows:

 

(1) a postretirement increase of 2.5 percent must be applied each year to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and

 

(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, an annual postretirement increase of 1/12 of 2.5 percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit amount of the annuitant or benefit recipient.

 

(d) (f) An increase in annuity or benefit payments under this subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the applicable covered retirement plan requesting that the increase not be made.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 13. Minnesota Statutes 2016, section 356.415, is amended by adding a subdivision to read:

 

Subd. 1g. Annual postretirement adjustments; PERA local government correctional retirement plan. (a) Retirement annuity, disability benefit, or survivor benefit recipients of the public employees local government correctional service retirement plan are entitled to an annual postretirement adjustment, effective as of each January 1 as follows:

 

(1) a postretirement increase of 1.5 percent must be applied each year to the monthly annuity or benefit of each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least 12 full months as of the June 30 of the calendar year immediately before the adjustment; and


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(2) for each annuitant or benefit recipient who has been receiving an annuity or a benefit for at least one full month, but less than 12 full months as of the June 30 of the calendar year immediately before the adjustment, a postretirement increase of 1/12 of 1.5 percent for each month that the person has been receiving an annuity or benefit must be applied to the monthly annuity or benefit amount of the annuitant or benefit recipient.

 

(b) An increase in annuity or benefit payments under this subdivision must be made automatically unless written notice is filed by the annuitant or benefit recipient with the executive director of the applicable covered retirement plan requesting that the increase not be made.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 14. STUDY.

 

Before December 31, 2020, the Legislative Commission on Pensions and Retirement must conduct a study of the rates of the postretirement adjustments for the covered plans as defined in Minnesota Statutes, section 356.415, subdivision 2, and the St. Paul Teachers Retirement Fund Association, and make recommendations regarding whether they should be modified and whether a new methodology for determining postretirement adjustment should be adopted. The Legislative Commission on Pensions and Retirement shall make a determination based on the study during the 2021 legislative session.

 

EFFECTIVE DATE. This section is effective the day following final enactment.

 

ARTICLE 6

INTEREST RATE CONFORMING CHANGES

 

Section 1. Minnesota Statutes 2016, section 3A.03, subdivision 2, is amended to read:

 

Subd. 2. Refund. (a) A former member who has made contributions under subdivision 1 and who is no longer a member of the legislature is entitled to receive, upon written application to the executive director on a form prescribed by the executive director, a refund from the general fund of all contributions credited to the member's account with interest computed as provided in section 352.22, subdivision 2.

 

(b) The refund of contributions as provided in paragraph (a) terminates all rights of a former member of the legislature and the survivors of the former member under this chapter.

 

(c) If the former member of the legislature again becomes a member of the legislature after having taken a refund as provided in paragraph (a), the member is a member of the unclassified employees retirement program of the Minnesota State Retirement System.

 

(d) However, the member may reinstate the rights and credit for service previously forfeited under this chapter if the member repays all refunds taken, plus interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the date on which the refund was taken to the date on which the refund is repaid.

 

(e) A member of the legislature who has received a refund from any of the retirement plans specified in section 356.311, paragraph (b), may repay the refund to the respective plan under such terms and conditions consistent with the law governing the retirement plan if the law governing the plan permits the repayment of refunds. If the total amount to be repaid, including principal and interest exceeds $2,000, repayment may be made in three equal installments over a period of 18 months, with the interest accrued during the period of the repayment added to the final installment.


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(e) (f) No person may be required to apply for or to accept a refund.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 352.01, subdivision 13a, is amended to read:

 

Subd. 13a. Reduced salary during period of workers' compensation. An employee on leave of absence receiving temporary workers' compensation payments and a reduced salary or no salary from the employer who is entitled to allowable service credit for the period of absence, may make payment to the fund for the difference between salary received, if any, and the salary the employee would normally receive if not on leave of absence during the period. The employee shall pay an amount equal to the employee and employer contribution rate under section 352.04, subdivisions 2 and 3, on the differential salary amount for the period of the leave of absence.

 

The employing department, at its option, may pay the employer amount on behalf of its employees. Payment made under this subdivision must include interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter per year applicable annual rate or rates specified in section 356.59, subdivision 2, and must be completed within one year of the return from leave of absence.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 352.017, subdivision 2, is amended to read:

 

Subd. 2. Purchase procedure. (a) An employee covered by a plan specified in this chapter may purchase credit for allowable service in that plan for a period specified in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c), whichever applies. The employing unit, at its option, may pay the employer portion of the amount specified in paragraph (b) on behalf of its employees.

 

(b) If payment is received by the executive director within one year from the date the employee returned to work following the authorized leave, the payment amount is equal to the employee and employer contribution rates specified in law for the applicable plan at the end of the leave period multiplied by the employee's hourly rate of salary on the date of return from the leave of absence and by the days and months of the leave of absence for which the employee is eligible for allowable service credit. The payment must include compound interest at the monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafter applicable monthly rate or rates specified in section 356.59, subdivision 2, from the last day of the leave period until the last day of the month in which payment is received. If payment is received by the executive director after one year, the payment amount is the amount determined under section 356.551. Payment under this paragraph must be made before the date of termination from public employment covered under this chapter.

 

(c) If the employee terminates employment covered by this chapter during the leave or following the leave rather than returning to covered employment, payment must be received by the executive director within 30 days after the termination date. The payment amount is equal to the employee and employer contribution rates specified in law for the applicable plan on the day prior to the termination date, multiplied by the employee's hourly rate of salary on that date and by the days and months of the leave of absence prior to termination.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 4. Minnesota Statutes 2016, section 352.04, subdivision 8, is amended to read:

 

Subd. 8. Department required to pay omitted salary deductions. (a) If a department fails to take deductions past due for a period of 60 days or less from an employee's salary as provided in this section, those deductions must be taken on later payroll abstracts.


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(b) If a department fails to take deductions past due for a period in excess of 60 days from an employee's salary as provided in this section, the department, and not the employee, must pay on later payroll abstracts the employee and employer contributions and an amount equivalent to 8.5 percent until June 30, 2015, and eight percent thereafter of the total amount due in lieu of interest, or if the delay in payment exceeds one year, 8.5 percent until June 30, 2015, and eight percent thereafter compound annual interest at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the date the employee and employer contributions should have been deducted to the date payment of the total amount due is paid by the department.

 

(c) If a department fails to take deductions past due for a period of 60 days or less and the employee is no longer in state service so that the required deductions cannot be taken from the salary of the employee, the department must nevertheless pay the required employer contributions. If any department fails to take deductions past due for a period in excess of 60 days and the employee is no longer in state service, the omitted contributions must be recovered under paragraph (b).

 

(d) If an employee from whose salary required deductions were past due for a period of 60 days or less leaves state service before the payment of the omitted deductions and subsequently returns to state service, the unpaid amount is considered the equivalent of a refund. The employee accrues no right by reason of the unpaid amount, except that the employee may pay the amount of omitted deductions as provided in section 352.23.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. Minnesota Statutes 2016, section 352.04, subdivision 9, is amended to read:

 

Subd. 9. Erroneous deductions, canceled warrants. (a) Deductions taken from the salary of an employee for the retirement fund in excess of required amounts must, upon discovery and verification by the department making the deduction, be refunded to the employee.

 

(b) If a deduction for the retirement fund is taken from a salary warrant or check, and the check is canceled or the amount of the warrant or check returned to the funds of the department making the payment, the sum deducted, or the part of it required to adjust the deductions, must be refunded to the department or institution if the department applies for the refund on a form furnished by the director. The department's payments must likewise be refunded to the department.

 

(c) If erroneous employee deductions and employer contributions are caused by an error in plan coverage involving the plan and any other plans specified in section 356.99, that section applies. If the employee should have been covered by the plan governed by chapter 352D, 353D, 354B, or 354D, the employee deductions and employer contributions taken in error must be directly transferred to the applicable employee's account in the correct retirement plan, with interest at the rate of 0.71 percent per month until June 30, 2015, and 0.667 percent per month thereafter applicable monthly rate or rates specified in section 356.59, subdivision 2, compounded annually, from the first day of the month following the month in which coverage should have commenced in the correct defined contribution plan until the end of the month in which the transfer occurs.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 6. Minnesota Statutes 2016, section 352.23, is amended to read:

 

352.23 TERMINATION OF RIGHTS; REPAYMENT OF REFUND.

 

(a) When any employee accepts a refund as provided in section 352.22, all existing allowable service credits and all rights and benefits to which the employee was entitled before accepting the refund terminate.


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(b) Terminated service credits and rights must not again be restored until the former employee acquires at least six months of allowable service credit after taking the last refund. In that event, the employee may repay all refunds previously taken from the retirement fund.

 

(c) Repayment of refunds entitles the employee only to credit for service covered by (1) salary deductions; (2) payments previously made in lieu of salary deductions as permitted under law in effect when the payment in lieu of deductions was made; (3) payments made to obtain credit for service as permitted by laws in effect when payment was made; and (4) allowable service previously credited while receiving temporary workers' compensation as provided in section 352.01, subdivision 11, paragraph (a), clause (3).

 

(d) Payments under this section for repayment of refunds are to be paid with interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the date the refund was taken until the date the refund is repaid. They may be paid in a lump sum or by payroll deduction in the manner provided in section 352.04. Payment may be made in a lump sum up to six months after termination from service.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 7. Minnesota Statutes 2016, section 352.27, is amended to read:

 

352.27 CREDIT FOR BREAK IN SERVICE TO PROVIDE UNIFORMED SERVICE.

 

(a) An employee who is absent from employment by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), and who returns to state service upon discharge from service in the uniformed service within the time frames required in United States Code, title 38, section 4312(e), may obtain service credit for the period of the uniformed service as further specified in this section, provided that the employee did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions.

 

(b) The employee may obtain credit by paying into the fund an equivalent employee contribution based upon the contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the employee would have received if the employee had continued to be employed in covered employment rather than to provide uniformed service, or, if the determination of that rate is not reasonably certain, the annual salary rate is the employee's average salary rate during the 12-month period of covered employment rendered immediately preceding the period of the uniformed service.

 

(c) The equivalent employer contribution and, if applicable, the equivalent additional employer contribution provided in this chapter must be paid by the department employing the employee from funds available to the department at the time and in the manner provided in this chapter, using the employer and additional employer contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent employee contribution.

 

(d) If the employee equivalent contributions provided in this section are not paid in full, the employee's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total employee contribution received by the total employee contribution otherwise required under this section.

 

(e) To receive service credit under this section, the contributions specified in this section must be transmitted to the Minnesota State Retirement System during the period which begins with the date on which the individual returns to state service and which has a duration of three times the length of the uniformed service period, but not to exceed five years. If the determined payment period is less than one year, the contributions required under this section to receive service credit may be made within one year of the discharge date.


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(f) The amount of service credit obtainable under this section may not exceed five years unless a longer purchase period is required under United States Code, title 38, section 4312.

 

(g) The employing unit shall pay interest on all equivalent employee and employer contribution amounts payable under this section. Interest must be computed at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the end of each fiscal year of the leave or the break in service to the end of the month in which the payment is received.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 8. Minnesota Statutes 2016, section 352.955, subdivision 3, is amended to read:

 

Subd. 3. Payment of additional equivalent contributions. (a) An eligible employee who is transferred to plan coverage and who elects to transfer past service credit under this section must pay an additional member contribution for that prior service period. The additional member contribution is the amount computed under paragraph (b), plus the greater of the amount computed under paragraph (c), or 40 percent of the unfunded actuarial accrued liability attributable to the past service credit transfer.

 

(b) The executive director shall compute, for the most recent 12 months of service credit eligible for transfer, or for the entire period eligible for transfer if less than 12 months, the difference between the employee contribution rate or rates for the general state employees retirement plan and the employee contribution rate or rates for the correctional state employees retirement plan applied to the eligible employee's salary during that transfer period, plus compound interest at the applicable monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafter or rates specified in section 356.59, subdivision 2.

 

(c) The executive director shall compute, for any service credit being transferred on behalf of the eligible employee and not included under paragraph (b), the difference between the employee contribution rate or rates for the general state employees retirement plan and the employee contribution rate or rates for the correctional state employees retirement plan applied to the eligible employee's salary during that transfer period, plus compound interest at the monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafter applicable monthly rate or rates specified in section 356.59, subdivision 2.

 

(d) The executive director shall compute an amount using the process specified in paragraph (b), but based on differences in employer contribution rates between the general state employees retirement plan and the correctional state employees retirement plan rather than employee contribution rates.

 

(e) The executive director shall compute an amount using the process specified in paragraph (c), but based on differences in employer contribution rates between the general state employees retirement plan and the correctional state employees retirement plan rather than employee contribution rates.

 

(f) The additional equivalent member contribution under this subdivision must be paid in a lump sum. Payment must accompany the election to transfer the prior service credit. No transfer election or additional equivalent member contribution payment may be made by a person or accepted by the executive director after the one year anniversary date of the effective date of the retirement coverage transfer, or the date on which the eligible employee terminates state employment, whichever is earlier.

 

(g) If an eligible employee elects to transfer past service credit under this section and pays the additional equivalent member contribution amount under paragraph (a), the applicable department shall pay an additional equivalent employer contribution amount. The additional employer contribution is the amount computed under paragraph (d), plus the greater of the amount computed under paragraph (e), or 60 percent of the unfunded actuarial accrued liability attributable to the past service credit transfer.


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(h) The unfunded actuarial accrued liability attributable to the past service credit transfer is the present value of the benefit obtained by the transfer of the service credit to the correctional state employees retirement plan reduced by the amount of the asset transfer under subdivision 4, by the amount of the member contribution equivalent payment computed under paragraph (b), and by the amount of the employer contribution equivalent payment computed under paragraph (d).

 

(i) The additional equivalent employer contribution under this subdivision must be paid in a lump sum and must be paid within 30 days of the date on which the executive director of the Minnesota State Retirement System certifies to the applicable department that the employee paid the additional equivalent member contribution.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 9. Minnesota Statutes 2016, section 352B.013, subdivision 2, is amended to read:

 

Subd. 2. Purchase procedure. (a) An employee covered by the plan specified in this chapter may purchase credit for allowable service in the plan for a period specified in subdivision 1 if the employee makes a payment as specified in paragraph (b) or (c), whichever applies. The employing unit, at its option, may pay the employer portion of the amount specified in paragraph (b) on behalf of its employees.

 

(b) If payment is received by the executive director within one year from the date the employee returned to work following the authorized leave, the payment amount is equal to the employee and employer contribution rates specified in section 352B.02 at the end of the leave period multiplied by the employee's hourly rate of salary on the date of return from the leave of absence and by the days and months of the leave of absence for which the employee is eligible for allowable service credit. The payment must include compound interest at the monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent per month thereafter applicable monthly rate or rates specified in section 356.59, subdivision 2, from the last day of the leave period until the last day of the month in which payment is received. If payment is received by the executive director after one year from the date the employee returned to work following the authorized leave, the payment amount is the amount determined under section 356.551. Payment under this paragraph must be made before the date of termination from public employment covered under this chapter.

 

(c) If the employee terminates employment covered by this chapter during the leave or following the leave rather than returning to covered employment, payment must be received by the executive director within 30 days after the termination date. The payment amount is equal to the employee and employer contribution rates specified in section 352B.02 on the day prior to the termination date, multiplied by the employee's hourly rate of salary on that date and by the days and months of the leave of absence prior to termination.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 10. Minnesota Statutes 2016, section 352B.085, is amended to read:

 

352B.085 SERVICE CREDIT FOR CERTAIN DISABILITY LEAVES OF ABSENCE.

 

A member on leave of absence receiving temporary workers' compensation payments and a reduced salary or no salary from the employer who is entitled to allowable service credit for the period of absence under section 352B.011, subdivision 3, paragraph (b), may make payment to the fund for the difference between salary received, if any, and the salary that the member would normally receive if the member was not on leave of absence during the period. The member shall pay an amount equal to the member and employer contribution rate under section 352B.02, subdivisions 1b and 1c, on the differential salary amount for the period of the leave of absence. The employing department, at its option, may pay the employer amount on behalf of the member. Payment made under


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this subdivision must include interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter per year applicable annual rate or rates specified in section 356.59, subdivision 2, and must be completed within one year of the member's return from the leave of absence.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 11. Minnesota Statutes 2016, section 352B.086, is amended to read:

 

352B.086 SERVICE CREDIT FOR UNIFORMED SERVICE.

 

(a) A member who is absent from employment by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), and who returns to state employment in a position covered by the plan upon discharge from service in the uniformed services within the time frame required in United States Code, title 38, section 4312(e), may obtain service credit for the period of the uniformed service, provided that the member did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions.

 

(b) The member may obtain credit by paying into the fund an equivalent member contribution based on the member contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the member would have received if the member had continued to provide employment services to the state rather than to provide uniformed service, or if the determination of that rate is not reasonably certain, the annual salary rate is the member's average salary rate during the 12-month period of covered employment rendered immediately preceding the purchase period.

 

(c) The equivalent employer contribution and, if applicable, the equivalent employer additional contribution, must be paid by the employing unit, using the employer and employer additional contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent member contribution.

 

(d) If the member equivalent contributions provided for in this section are not paid in full, the member's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total member contributions received by the total member contributions otherwise required under this section.

 

(e) To receive allowable service credit under this section, the contributions specified in this section must be transmitted to the fund during the period which begins with the date on which the individual returns to state employment covered by the plan and which has a duration of three times the length of the uniformed service period, but not to exceed five years. If the determined payment period is calculated to be less than one year, the contributions required under this section to receive service credit must be transmitted to the fund within one year from the discharge date.

 

(f) The amount of allowable service credit obtainable under this section may not exceed five years, unless a longer purchase period is required under United States Code, title 38, section 4312.

 

(g) The employing unit shall pay interest on all equivalent member and employer contribution amounts payable under this section. Interest must be computed at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the end of each fiscal year of the leave or break in service to the end of the month in which payment is received.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 12. Minnesota Statutes 2016, section 352B.11, subdivision 4, is amended to read:

 

Subd. 4. Reentry into state service; refund repayment. (a) When a former member, who has become separated from state service that entitled the member to membership and has received a refund of retirement payments, reenters the state service in a position that entitles the member to membership, that member shall receive credit for the period of prior allowable state service if the member repays into the fund the amount of the refund, plus interest on it at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, at any time before subsequent retirement. Repayment may be made in installments or in a lump sum.

 

(b) A person who has received a refund from the State Patrol retirement fund who is a member of a public retirement system included in section 356.311 may repay the refund with interest to the State Patrol retirement fund as provided in paragraph (a).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 13. Minnesota Statutes 2016, section 352D.05, subdivision 4, is amended to read:

 

Subd. 4. Repayment of refund. (a) A participant in the unclassified program may repay regular refunds taken under section 352.22, as provided in section 352.23.

 

(b) A participant in the unclassified program or an employee covered by the general employees retirement plan who has withdrawn the value of the total shares may repay the refund taken and thereupon restore the service credit, rights and benefits forfeited by paying into the fund the amount refunded plus interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the date that the refund was taken until the date that the refund is repaid. If the participant had withdrawn only the employee shares as permitted under prior laws, repayment must be pro rata.

 

(c) Except as provided in section 356.441, the repayment of a refund under this section must be made in a lump sum.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 14. Minnesota Statutes 2016, section 352D.11, subdivision 2, is amended to read:

 

Subd. 2. Payments by employee. An employee entitled to purchase service credit may make the purchase by paying to the state retirement system an amount equal to the current employee contribution rate in effect for the state retirement system applied to the current or final salary rate multiplied by the months and days of prior temporary, intermittent, or contract legislative service. Payment shall be made in one lump sum unless the executive director of the state retirement system agrees to accept payment in installments over a period of not more than three years from the date of the agreement. Installment payments shall be charged interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 15. Minnesota Statutes 2016, section 352D.12, is amended to read:

 

352D.12 TRANSFER OF PRIOR SERVICE CONTRIBUTIONS.

 

(a) An employee who is a participant in the unclassified program and who has prior service credit in a covered plan under chapter 352, 353, 354, 354A, or 422A may, within the time limits specified in this section, elect to transfer to the unclassified program prior service contributions to one or more of those plans.

 

(b) For participants with prior service credit in a plan governed by chapter 352, 353, 354, 354A, or 422A, "prior service contributions" means the accumulated employee and equal employer contributions with interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, based on fiscal year balances.

 

(c) If a participant has taken a refund from a retirement plan listed in this section, the participant may repay the refund to that plan, notwithstanding any restrictions on repayment to that plan, plus 8.5 percent interest until June 30, 2015, and eight percent interest thereafter with interest at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, and have the accumulated employee and equal employer contributions transferred to the unclassified program with interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually based on fiscal year balances. If a person repays a refund and subsequently elects to have the money transferred to the unclassified program, the repayment amount, including interest, is added to the fiscal year balance in the year which the repayment was made.

 

(d) A participant electing to transfer prior service contributions credited to a retirement plan governed by chapter 352, 353, 354, 354A, or 422A as provided under this section must complete a written application for the transfer and repay any refund within one year of the commencement of the employee's participation in the unclassified program.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 16. Minnesota Statutes 2016, section 353.01, subdivision 16, is amended to read:

 

Subd. 16. Allowable service; limits and computation. (a) "Allowable service" means:

 

(1) service during years of actual membership in the course of which employee deductions were withheld from salary and contributions were made at the applicable rates under section 353.27, 353.65, or 353E.03;

 

(2) periods of service covered by payments in lieu of salary deductions under sections 353.27, subdivisions 12 and 12a, and 353.35;

 

(3) service in years during which the public employee was not a member but for which the member later elected, while a member, to obtain credit by making payments to the fund as permitted by any law then in effect;

 

(4) a period of authorized leave of absence during which the employee receives pay as specified in subdivision 10, paragraph (a), clause (4) or (5), from which deductions for employee contributions are made, deposited, and credited to the fund;

 

(5) a period of authorized leave of absence without pay, or with pay that is not included in the definition of salary under subdivision 10, paragraph (a), clause (4) or (5), for which salary deductions are not authorized, and for which a member obtained service credit for up to 12 months of the authorized leave period by payment under section 353.0161 or 353.0162, to the fund made in place of salary deductions;


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(6) a periodic, repetitive leave that is offered to all employees of a governmental subdivision. The leave program may not exceed 208 hours per annual normal work cycle as certified to the association by the employer. A participating member obtains service credit by making employee contributions in an amount or amounts based on the member's average salary, excluding overtime pay, that would have been paid if the leave had not been taken. The employer shall pay the employer and additional employer contributions on behalf of the participating member. The employee and the employer are responsible to pay interest on their respective shares at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable rate or rates specified in section 356.59, subdivision 3, compounded annually, from the end of the normal cycle until full payment is made. An employer shall also make the employer and additional employer contributions, plus 8.5 percent interest until June 30, 2015, and eight percent interest thereafter at the applicable rate or rates specified in section 356.59, subdivision 3, compounded annually, on behalf of an employee who makes employee contributions but terminates public service. The employee contributions must be made within one year after the end of the annual normal working cycle or within 30 days after termination of public service, whichever is sooner. The executive director shall prescribe the manner and forms to be used by a governmental subdivision in administering a periodic, repetitive leave. Upon payment, the member must be granted allowable service credit for the purchased period;

 

(7) an authorized temporary or seasonal layoff under subdivision 12, limited to three months allowable service per authorized temporary or seasonal layoff in one calendar year. An employee who has received the maximum service credit allowed for an authorized temporary or seasonal layoff must return to public service and must obtain a minimum of three months of allowable service subsequent to the layoff in order to receive allowable service for a subsequent authorized temporary or seasonal layoff;

 

(8) a period during which a member is absent from employment by a governmental subdivision by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), if the member returns to public service with the same governmental subdivision upon discharge from service in the uniformed service within the time frames required under United States Code, title 38, section 4312(e), provided that the member did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions. The service must be credited if the member pays into the fund equivalent employee contributions based upon the contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the member would have received if the member had continued to be employed in covered employment rather than to provide uniformed service, or, if the determination of that rate is not reasonably certain, the annual salary rate is the member's average salary rate during the 12-month period of covered employment rendered immediately preceding the period of the uniformed service. Payment of the member equivalent contributions must be made during a period that begins with the date on which the individual returns to public employment and that is three times the length of the military leave period, or within five years of the date of discharge from the military service, whichever is less. If the determined payment period is less than one year, the contributions required under this clause to receive service credit may be made within one year of the discharge date. Payment may not be accepted following 30 days after termination of public service under subdivision 11a. If the member equivalent contributions provided for in this clause are not paid in full, the member's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total member contributions received by the total member contributions otherwise required under this clause. The equivalent employer contribution, and, if applicable, the equivalent additional employer contribution must be paid by the governmental subdivision employing the member if the member makes the equivalent employee contributions. The employer payments must be made from funds available to the employing unit, using the employer and additional employer contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent member contribution. The governmental subdivision involved may appropriate money for those payments. The amount of service credit obtainable under this section may not exceed five years unless a longer purchase period is required under United States Code, title 38, section 4312. The employing unit shall pay interest on all equivalent member and employer contribution amounts payable under this clause. Interest must be computed


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at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable rate or rates specified in section 356.59, subdivision 3, compounded annually, from the end of each fiscal year of the leave or the break in service to the end of the month in which the payment is received. Upon payment, the employee must be granted allowable service credit for the purchased period; or

 

(9) a period specified under section 353.0162.

 

(b) No member may receive more than 12 months of allowable service credit in a year either for vesting purposes or for benefit calculation purposes.

 

(c) For an active member who was an active member of the former Minneapolis Firefighters Relief Association on December 29, 2011, "allowable service" is the period of service credited by the Minneapolis Firefighters Relief Association as reflected in the transferred records of the association up to December 30, 2011, and the period of service credited under paragraph (a), clause (1), after December 30, 2011. For an active member who was an active member of the former Minneapolis Police Relief Association on December 29, 2011, "allowable service" is the period of service credited by the Minneapolis Police Relief Association as reflected in the transferred records of the association up to December 30, 2011, and the period of service credited under paragraph (a), clause (1), after December 30, 2011.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 17. Minnesota Statutes 2016, section 353.0162, is amended to read:

 

353.0162 REDUCED SALARY PERIODS SALARY CREDIT PURCHASE.

 

(a) A member may purchase additional salary credit for a period specified in this section.

 

(b) The applicable period is a period during which the member is receiving a reduced salary from the employer while the member is:

 

(1) receiving temporary workers' compensation payments related to the member's service to the public employer;

 

(2) on an authorized leave of absence; or

 

(3) on an authorized partial paid leave of absence as a result of a budgetary or salary savings program offered or mandated by a governmental subdivision.

 

(c) The differential salary amount is the difference between the average monthly salary received by the member during the period of reduced salary under this section and the average monthly salary of the member, excluding overtime, on which contributions to the applicable plan were made during the period of the last six months of covered employment occurring immediately before the period of reduced salary, applied to the member's normal employment period, measured in hours or otherwise, as applicable.

 

(d) To receive eligible salary credit, the member shall pay an amount equal to:

 

(1) the applicable employee contribution rate under section 353.27, subdivision 2; 353.65, subdivision 2; or 353E.03, subdivision 1, as applicable, multiplied by the differential salary amount;

 

(2) plus an employer equivalent payment equal to the applicable employer contribution rate in section 353.27, subdivision 3; 353.65, subdivision 3; or 353E.03, subdivision 2, as applicable, multiplied by the differential salary amount;


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(3) plus, if applicable, an equivalent employer additional amount equal to the additional employer contribution rate in section 353.27, subdivision 3a, multiplied by the differential salary amount.

 

(e) The employer, by appropriate action of its governing body and documented in its official records, may pay the employer equivalent contributions and, as applicable, the equivalent employer additional contributions on behalf of the member.

 

(f) Payment under this section must include interest on the contribution amount or amounts, whichever applies, at an 8.5 percent annual rate until June 30, 2015, and at an eight percent annual rate thereafter the applicable rate or rates specified in section 356.59, subdivision 3, compounded annually, prorated for applicable the number of months, if less than 12 months, from the date on which the period of reduced salary specified under this section terminates to the date on which the payment or payments are received by the executive director. Payment under this section must be completed within the earlier of 30 days from termination of public service by the employee under section 353.01, subdivision 11a, or one year after the termination of the period specified in paragraph (b), as further restricted under this section.

 

(g) The period for which additional allowable salary credit may be purchased is limited to the period during which the person receives temporary workers' compensation payments or for those business years in which the governmental subdivision offers or mandates a budget or salary savings program, as certified to the executive director by a resolution of the governing body of the governmental subdivision. For an authorized leave of absence, the period for which allowable salary credit may be purchased may not exceed 12 months of authorized leave.

 

(h) To purchase salary credit for a subsequent period of temporary workers' compensation benefits or subsequent authorized medical leave of absence, the member must return to public service and render a minimum of three months of allowable service.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 18. Minnesota Statutes 2016, section 353.27, subdivision 3c, is amended to read:

 

Subd. 3c. Former MERF members; member and employer contributions. (a) For the period July 1, 2015, through December 31, 2031, the member contributions for former members of the Minneapolis Employees Retirement Fund and by the former Minneapolis Employees Retirement Fund-covered employing units are governed by this subdivision.

 

(b) The member contribution for a public employee who was a member of the former Minneapolis Employees Retirement Fund on June 29, 2010, is 9.75 percent of the salary of the employee.

 

(c) The employer regular contribution with respect to a public employee who was a member of the former Minneapolis Employees Retirement Fund on June 29, 2010, is 9.75 percent of the salary of the employee.

 

(d) For calendar years 2015 and 2016, the employer supplemental contribution is the employing unit's share of $31,000,000. For calendar years 2017 through 2031, the employer supplemental contribution is the employing unit's share of $21,000,000.

 

(e) Each employing unit's share under paragraph (d) is the amount determined from an allocation between each employing unit in the portion equal to the unit's employer supplemental contribution paid or payable under Minnesota Statutes 2012, section 353.50, during calendar year 2014.

 

(f) The employer supplemental contribution amount under paragraph (d) for calendar year 2015 must be invoiced by the executive director of the Public Employees Retirement Association by July 1, 2015. The calendar year 2015 payment is payable in a single amount on or before September 30, 2015. For subsequent calendar years,


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the employer supplemental contribution under paragraph (d) must be invoiced on January 31 of each year and is payable in two parts, with the first half payable on or before July 31 and with the second half payable on or before December 15. Late payments are payable with compound interest, compounded annually, at the rate of 0.71 percent applicable rate or rates specified in section 356.59, subdivision 3, per month for each month or portion of a month that has elapsed after the due date.

 

(g) The employer supplemental contribution under paragraph (d) terminates on December 31, 2031.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 19. Minnesota Statutes 2016, section 353.27, subdivision 7a, is amended to read:

 

Subd. 7a. Deductions or contributions transmitted by error. (a) If employee deductions and employer contributions under this section, section 353.50, 353.65, or 353E.03 were erroneously transmitted to the association, but should have been transmitted to a plan covered by chapter 352D, 353D, 354B, or 354D, the executive director shall transfer the erroneous employee deductions and employer contributions to the appropriate retirement fund or individual account, as applicable. The time limitations specified in subdivisions 7 and 12 do not apply. The transfer to the applicable defined contribution plan account must include interest at the rate of 0.71 percent per month until June 30, 2015, and 0.667 percent applicable rate or rates specified in section 356.59, subdivision 3, per month thereafter, compounded annually, from the first day of the month following the month in which coverage should have commenced in the defined contribution plan until the end of the month in which the transfer occurs.

 

(b) A potential transfer under paragraph (a) that is reasonably determined to cause the plan to fail to be a qualified plan under section 401(a) of the federal Internal Revenue Code, as amended, must not be made by the executive director of the association. Within 30 days after being notified by the Public Employees Retirement Association of an unmade potential transfer under this paragraph, the employer of the affected person must transmit an amount representing the applicable salary deductions and employer contributions, without interest, to the retirement fund of the appropriate Minnesota public pension plan, or to the applicable individual account if the proper coverage is by a defined contribution plan. The association must provide the employing unit a credit for the amount of the erroneous salary deductions and employer contributions against future contributions from the employer. If the employing unit receives a credit under this paragraph, the employing unit is responsible for refunding to the applicable employee any amount that had been erroneously deducted from the person's salary.

 

(c) If erroneous employee deductions and employer contributions reflect a plan coverage error involving any Public Employees Retirement Association plan specified in section 356.99 and any other plan specified in that section, section 356.99 applies.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 20. Minnesota Statutes 2016, section 353.27, subdivision 12, is amended to read:

 

Subd. 12. Omitted salary deductions; obligations. (a) In the case of omission of required deductions for the general employees retirement plan, the public employees police and fire retirement plan, or the local government correctional employees retirement plan 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.


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(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 for deposit in the applicable retirement fund. 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 the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter 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 the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable rate or rates specified in section 356.59, subdivision 3, 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 the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable rate or rates specified in section 356.59, subdivision 3, 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.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 21. Minnesota Statutes 2016, section 353.27, subdivision 12a, is amended to read:

 

Subd. 12a. Terminated employees: omitted deductions. A terminated employee who was a member of the general employees retirement plan of the Public Employees Retirement Association, the public employees police and fire retirement plan, or the local government correctional employees retirement plan and who has a period of employment in which previously omitted employer contributions were made under subdivision 12 but for whom no, or only partial, omitted employee contributions have been made, or a member who had prior coverage in the association for which previously omitted employer contributions were made under subdivision 12 but who terminated service before required omitted employee deductions could be withheld from salary, may pay the omitted employee deductions for the period on which omitted employer contributions were previously paid plus interest at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable rate or rates specified in section 356.59, subdivision 3, compounded annually. A terminated employee may pay the omitted employee deductions plus interest within six months of an initial notification from the association of eligibility to pay those omitted deductions. If a terminated employee is reemployed in a position covered under a public pension fund under section 356.30, subdivision 3, and elects to pay omitted employee deductions, payment must be made no later than six months after a subsequent termination of public service.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 22. Minnesota Statutes 2016, section 353.27, subdivision 12b, is amended to read:

 

Subd. 12b. Terminated employees: immediate eligibility. If deductions were omitted from salary adjustments or final salary of a terminated employee who was a member of the general employees retirement plan, the public employees police and fire retirement plan, or the local government correctional employees retirement plan and who is immediately eligible to draw a monthly benefit, the employer shall pay the omitted employer and employer additional contributions plus interest on both the employer and employee amounts due at an annual rate of 8.5 percent the applicable rate or rates specified in section 356.59, subdivision 3, compounded annually. The employee shall pay the employee deductions within six months of an initial notification from the association of eligibility to pay omitted deductions or the employee forfeits the right to make the payment.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 23. Minnesota Statutes 2016, section 353.28, subdivision 5, is amended to read:

 

Subd. 5. Interest chargeable on amounts due. Any amount due under this section or section 353.27, subdivision 4, is payable with interest at the annual compound rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable rate or rates specified in section 356.59, subdivision 3, compounded annually, from the date due until the date payment is received by the association, with a minimum interest charge of $10.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 24. Minnesota Statutes 2016, section 353.35, subdivision 1, is amended to read:

 

Subdivision 1. Refund rights. (a) Except as provided in paragraph (b), when any former member accepts a refund, all existing service credits and all rights and benefits to which the person was entitled prior to the acceptance of the refund must terminate.

 

(b) A refund under section 353.651, subdivision 3, paragraph (c), does not result in a forfeiture of salary credit for the allowable service credit covered by the refund.

 

(c) The rights and benefits of a former member must not be restored until the person returns to active service and acquires at least six months of allowable service credit after taking the last refund and repays the refund or refunds taken and interest received under section 353.34, subdivisions 1 and 2, plus interest at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable rate or rates specified in section 356.59, subdivision 3, compounded annually. If the person elects to restore service credit in a particular fund from which the person has taken more than one refund, the person must repay all refunds to that fund. All refunds must be repaid within six months of the last date of termination of public service.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 25. Minnesota Statutes 2016, section 354.50, subdivision 2, is amended to read:

 

Subd. 2. Interest charge. If a member desires to repay the refunds, payment shall include interest at an annual rate of 8.5 percent the applicable annual rate or rates specified in section 356.59, subdivision 4, compounded annually, from date of withdrawal to the date payment is made and shall be credited to the fund.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 26. Minnesota Statutes 2016, section 354.51, subdivision 5, is amended to read:

 

Subd. 5. Payment of shortages. (a) Except as provided in paragraph (b), in the event that full required member contributions are not deducted from the salary of a teacher, payment of shortages in member deductions on salary earned are the sole obligation of the employing unit and are payable by the employing unit upon notification by the executive director of the shortage. The amount of the shortage shall be paid with interest at an annual rate of 8.5 percent the applicable annual rate or rates specified in section 356.59, subdivision 4, compounded annually, from the end of the fiscal year in which the shortage occurred to the end of the month in which payment is made and the interest must be credited to the fund. The employing unit shall also pay the employer contributions as specified in section 354.42, subdivisions 3 and 5 for the shortages. If the shortage payment is not paid by the employing unit within 60 days of notification, and if the executive director does not use the recovery procedure in section 354.512, the executive director shall certify the amount of the shortage to the applicable county auditor, who shall spread a levy in the amount of the shortage payment over the taxable property of the taxing district of the employing unit if the employing unit is supported by property taxes. Payment may not be made for shortages in member deductions on salary paid or payable under paragraph (b) or for shortages in member deductions for persons employed by the Minnesota State Colleges and Universities system in a faculty position or in an eligible unclassified administrative position and whose employment was less than 25 percent of a full academic year, exclusive of the summer session, for the applicable institution that exceeds the most recent 36 months.

 

(b) For a person who is employed by the Minnesota State Colleges and Universities system in a faculty position or in an eligible unclassified administrative position and whose employment was less than 25 percent of a full academic year, exclusive of the summer session, for the applicable institution, upon the person's election under section 354B.21 of retirement coverage under this chapter, the shortage in member deductions on the salary for employment by the Minnesota State Colleges and Universities system institution of less than 25 percent of a full academic year, exclusive of the summer session, for the applicable institution for the most recent 36 months and the associated employer contributions must be paid by the Minnesota State Colleges and Universities system institution, plus annual compound interest at the rate of 8.5 percent applicable annual rate or rates specified in section 356.59, subdivision 4, compounded annually, from the end of the fiscal year in which the shortage occurred to the end of the month in which the Teachers Retirement Association coverage election is made. An individual electing coverage under this paragraph shall repay the amount of the shortage in member deductions, plus interest, through deduction from salary or compensation payments within the first year of employment after the election under section 354B.21, subject to the limitations in section 16D.16. The Minnesota State Colleges and Universities system may use any means available to recover amounts which were not recovered through deductions from salary or compensation payments. No payment of the shortage in member deductions under this paragraph may be made for a period longer than the most recent 36 months.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 27. Minnesota Statutes 2016, section 354.52, subdivision 4, is amended to read:

 

Subd. 4. Reporting and remittance requirements. An employer shall remit all amounts due to the association and furnish a statement indicating the amount due and transmitted with any other information required by the executive director. If an amount due is not received by the association within 14 calendar days of the payroll warrant, the amount accrues interest at an annual rate of 8.5 percent employer shall pay interest on the amount due at the applicable annual rate or rates specified in section 356.59, subdivision 4, compounded annually, from the due date until the amount is received by the association. All amounts due and other employer obligations not remitted within 60 days of notification by the association must be certified to the commissioner of management and budget who shall deduct the amount from any state aid or appropriation amount applicable to the employing unit.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 28. Minnesota Statutes 2016, section 354.53, subdivision 5, is amended to read:

 

Subd. 5. Interest requirements. The employer shall pay interest on all equivalent employee and employer contribution amounts payable under this section. Interest must be computed at a rate of 8.5 percent at the applicable annual rate or rates specified in section 356.59, subdivision 4, compounded annually, from the end of each fiscal year of the leave or the break in service to the end of the month in which the payment is received.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 29. Minnesota Statutes 2016, section 354A.093, subdivision 6, is amended to read:

 

Subd. 6. Interest requirements. The employer shall pay interest on all equivalent employee and employer contribution amounts payable under this section. Interest must be computed at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 5, compounded annually, from the end of each fiscal year of the leave or break in service to the end of the month in which payment is received.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 30. Minnesota Statutes 2016, section 354A.096, is amended to read:

 

354A.096 MEDICAL LEAVE.

 

Any teacher in the coordinated program of the St. Paul Teachers Retirement Fund Association who is on an authorized medical leave of absence and subsequently returns to teaching service is entitled to receive allowable service credit, not to exceed one year, for the period of leave, upon making the prescribed payment to the fund. This payment must include the required employee and employer contributions at the rates specified in section 354A.12, subdivisions 1 and 2a, as applied to the member's average full-time monthly salary rate on the date the leave of absence commenced plus annual interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter per year applicable annual rate or rates specified in section 356.59, subdivision 5, compounded annually, from the end of the fiscal year during which the leave terminates to the end of the month during which payment is made. The member must pay the total amount required unless the employing unit, at its option, pays the employer contributions. The total amount required must be paid by the end of the fiscal year following the fiscal year in which the leave of absence terminated or before the member retires, whichever is earlier. Payment must be accompanied by a copy of the resolution or action of the employing authority granting the leave and the employing authority, upon granting the leave, must certify the leave to the association in a manner specified by the executive director. A member may not receive more than one year of allowable service credit during any fiscal year by making payment under this section. A member may not receive disability benefits under section 354A.36 and receive allowable service credit under this section for the same period of time.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 31. Minnesota Statutes 2016, section 354A.12, subdivision 1a, is amended to read:

 

Subd. 1a. Obligation for omitted salary deductions. If the full required contributions are not deducted from the salary of a teacher, payment of the shortage in such deductions is the sole obligation of the employing unit during the three-year period following the end of the fiscal year in which the shortage occurred. The shortage is payable by the employing unit upon notification of the shortage by the executive director of the applicable retirement fund association. The employing unit shall also pay any employer contributions related to the shortage. The amount of the shortage in employee contributions and associated employer contributions is payable with interest at the preretirement interest assumption for the retirement fund as specified in section 356.215, subdivision 8, stated


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as a monthly rate applicable annual rate or rates specified in section 356.59, subdivision 5, from the date due until the date payment is received in the office of the association, compounded annually, with a minimum interest charge of $10. If the shortage payment and interest is not paid by the employing unit within 60 days of notification, the executive director shall certify the amount of the shortage payment and interest to the commissioner of management and budget, who shall deduct the amount from any state aid or appropriation amount applicable to the employing unit.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 32. Minnesota Statutes 2016, section 354A.12, subdivision 7, is amended to read:

 

Subd. 7. Recovery of benefit overpayments. (a) If the executive director discovers, within the time period specified in subdivision 8 following the payment of a refund or the accrual date of any retirement annuity, survivor benefit, or disability benefit, that benefit overpayment has occurred due to using invalid service or salary, or due to any erroneous calculation procedure, the executive director must recalculate the annuity or benefit payable and recover any overpayment. The executive director shall recover the overpayment by requiring direct repayment or by suspending or reducing the payment of a retirement annuity or other benefit payable under this chapter to the applicable person or the person's estate, whichever applies, until all outstanding amounts have been recovered. If a benefit overpayment or improper payment of benefits occurred caused by a failure of the person to satisfy length of separation requirements for retirement under section 354A.011, subdivision 21, the executive director shall recover the improper payments by requiring direct repayment. The repayment must include interest at the rate of 0.71 percent per month applicable annual rate or rates specified in section 356.59, subdivision 5, from the first of the month in which a monthly benefit amount was paid to the first of the month in which the amount is repaid, with annual compounding.

 

(b) In the event the executive director determines that an overpaid annuity or benefit that is the result of invalid salary included in the average salary used to calculate the payment amount must be recovered, the executive director must determine the amount of the employee deductions taken in error on the invalid salary, with interest as determined under 354A.37, subdivision 3, and must subtract that amount from the total annuity or benefit overpayment, and the remaining balance of the overpaid annuity or benefit, if any, must be recovered.

 

(c) If the invalid employee deductions plus interest exceed the amount of the overpaid benefits, the balance must be refunded to the person to whom the benefit or annuity is being paid.

 

(d) Any invalid employer contributions reported on the invalid salary must be credited against future contributions payable by the employer.

 

(e) If a member or former member, who is receiving a retirement annuity or disability benefit for which an overpayment is being recovered, dies before recovery of the overpayment is completed and an optional annuity or refund is payable, the remaining balance of the overpaid annuity or benefit must continue to be recovered from the payment to the optional annuity beneficiary or refund recipient.

 

(f) The board of trustees shall adopt policies directing the period of time and manner for the collection of any overpaid retirement or optional annuity, and survivor or disability benefit, or a refund that the executive director determines must be recovered as provided under this section.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 33. Minnesota Statutes 2016, section 354A.34, is amended to read:

 

354A.34 DISPOSITION OF UNPAID PERIOD CERTAIN FOR LIFE OR GUARANTEED REFUND OPTIONAL ANNUITIES.

 

If a retiree from a coordinated program who has elected a period certain and for life thereafter or a guaranteed refund optional annuity form dies without having a designated beneficiary who has survived the retiree, any remaining unpaid guaranteed annuity payments shall be computed at the rate of interest specified in section 356.215, subdivision 8, and paid in one lump sum to the estate of the retiree. If a retiree from a coordinated program who has elected a period certain and for life or a guaranteed refund optional annuity form dies with a designated beneficiary who has survived the retiree but the designated beneficiary dies without there existing another designated beneficiary, any remaining unpaid guaranteed annuity payments shall be computed at the rate of with interest at the applicable annual rate or rates specified in section 356.215, subdivision 8 356.59, subdivision 5, and paid in one lump sum to the estate of the designated beneficiary.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 34. Minnesota Statutes 2016, section 354A.38, subdivision 3, is amended to read:

 

Subd. 3. Computation of refund repayment amount. If the coordinated member elects to repay a refund under subdivision 2, the repayment to the fund must be in an amount equal to refunds the member has accepted been issued plus interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 5, compounded annually, from the date that the refund was accepted issued to the date that the refund is repaid.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 35. Minnesota Statutes 2016, section 356.195, subdivision 2, is amended to read:

 

Subd. 2. Purchase procedure for strike periods. (a) An employee covered by a plan specified in subdivision 1 may purchase allowable service credit in the applicable plan for any period of time during which the employee was on a public employee strike without pay, not to exceed a period of one year, if the employee makes a payment in lieu of salary deductions as specified in paragraph (b) or (c), whichever applies. The employing unit, at its option, may pay the employer portion of the amount specified in paragraph (b) on behalf of its employees.

 

(b) If payment is received by the applicable pension plan executive director within one year from the end of the strike, the payment amount is equal to the applicable employee and employer contribution rates specified in law for the applicable plan during the strike period, applied to the employee's rate of salary in effect at the conclusion of the strike for the period of the strike without pay, plus compound interest at the monthly rate of 0.71 percent for any period for the Teachers Retirement Association and at the monthly rate of 0.71 percent until June 30, 2015, and 0.667 percent thereafter for any other retirement plan listed in section 356.30, subdivision 3 applicable monthly rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies, from the last day of the strike period until the date payment is received.

 

(c) If payment is received by the applicable pension fund director after one year and before five years from the end of the strike, the payment amount is the amount determined under section 356.551.

 

(d) Payments may not be made more than five years after the end of the strike.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 36. Minnesota Statutes 2016, section 356.44, is amended to read:

 

356.44 PARTIAL PAYMENT OF PENSION PLAN REFUND.

 

(a) Notwithstanding any provision of law to the contrary, a member of a pension plan listed in section 356.30, subdivision 3, with at least two years of forfeited service taken from a single pension plan, may repay a portion of all refunds. A partial refund repayment must comply with this section.

 

(b) The minimum portion of a refund repayment is one-third of the total service credit period of all refunds taken from a single plan.

 

(c) The cost of the partial refund repayment is the product of the cost of the total repayment multiplied by the ratio of the restored service credit to the total forfeited service credit. The total repayment amount includes interest at the annual rate of 8.5 percent for any period for the Teachers Retirement Association and is 8.5 percent until June 30, 2015, and eight percent thereafter for any other retirement plan listed in section 356.30, subdivision 3 at the applicable annual rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies, compounded annually, from the refund date to the date repayment is received.

 

(d) The restored service credit must be allocated based on the relationship the restored service bears to the total service credit period for all refunds taken from a single pension plan.

 

(e) This section does not authorize a public pension plan member to repay a refund if the law governing the plan does not authorize the repayment of a refund of member contributions.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 37. Minnesota Statutes 2016, section 356.50, subdivision 2, is amended to read:

 

Subd. 2. Service credit procedure. (a) To obtain the public pension plan allowable service credit, the eligible person under subdivision 1 shall pay the required member contribution amount. The required member contribution amount is the member contribution rate or rates in effect for the pension plan during the period of service covered by the back pay award, applied to the unpaid gross salary amounts of the back pay award including unemployment insurance, workers' compensation, or wages from other sources which reduced the back award. No contributions may be made under this clause for compensation covered by a public pension plan listed in section 356.30, subdivision 3, for employment during the removal period. The person shall pay the required member contribution amount within 60 days of the date of receipt of the back pay award or within 60 days of a billing from the retirement fund, whichever is later.

 

(b) The public employer who wrongfully discharged the public employee must pay an employer contribution on the back pay award. The employer contribution must be based on the employer contribution rate or rates in effect for the pension plan during the period of service covered by the back pay award, applied to the salary amount on which the member contribution amount was determined under paragraph (a). Interest on both the required member and employer contribution amount must be paid by the employer at the annual compound rate of 8.5 percent for any period for the Teachers Retirement Association and 8.5 percent until June 30, 2015, and eight percent thereafter, for any other retirement plan listed in section 356.30, subdivision 3, per year, expressed monthly The employer must pay compound interest on both the required member and employer contribution amounts at the applicable monthly rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies, between the date the contribution amount would have been paid to the date of actual payment. The employer payment must be made within 30 days of the payment under paragraph (a).

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 38. Minnesota Statutes 2016, section 356.551, subdivision 2, is amended to read:

 

Subd. 2. Determination. (a) Unless the minimum purchase amount set forth in paragraph (c) applies, the prior service credit purchase amount is an amount equal to the actuarial present value, on the date of payment, as calculated by the chief administrative officer of the pension plan and reviewed by the actuary retained under section 356.214, of the amount of the additional retirement annuity obtained by the acquisition of the additional service credit in this section.

 

(b) Calculation of this amount must be made using the preretirement interest rate applicable to the public pension plan specified in section 356.215, subdivision 8, and the mortality table adopted for the public pension plan. The calculation must assume continuous future service in the public pension plan until, and retirement at, the age at which the minimum requirements of the fund for normal retirement or retirement with an annuity unreduced for retirement at an early age, including section 356.30, are met with the additional service credit purchased. The calculation must also assume a full-time equivalent salary, or actual salary, whichever is greater, and a future salary history that includes annual salary increases at the applicable salary increase rate for the plan specified in section 356.215, subdivision 4d 8.

 

(c) The prior service credit purchase amount may not be less than the amount determined by applying, for each year or fraction of a year being purchased, the sum of the employee contribution rate, the employer contribution rate, and the additional employer contribution rate, if any, applicable during that period, to the person's annual salary during that period, or fractional portion of a year's salary, if applicable, plus interest at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter applicable annual rate or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies, compounded annually, from the end of the year in which contributions would otherwise have been made to the date on which the payment is received.

 

(d) Unless otherwise provided by statutes governing a specific plan, payment must be made in one lump sum within one year of the prior service credit authorization or prior to the member's effective date of retirement, whichever is earlier. Payment of the amount calculated under this section must be made by the applicable eligible person.

 

(e) However, the current employer or the prior employer may, at its discretion, pay all or any portion of the payment amount that exceeds an amount equal to the employee contribution rates in effect during the period or periods of prior service applied to the actual salary rates in effect during the period or periods of prior service, plus interest at the applicable annual rate of 8.5 percent a year or rates specified in section 356.59, subdivision 2, 3, 4, or 5, whichever applies, compounded annually, from the date on which the contributions would otherwise have been made to the date on which the payment is made. If the employer agrees to payments under this subdivision, the purchaser must make the employee payments required under this subdivision within 90 days of the prior service credit authorization. If that employee payment is made, the employer payment under this subdivision must be remitted to the chief administrative officer of the public pension plan within 60 days of receipt by the chief administrative officer of the employee payments specified under this subdivision.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 39. [356.59] INTEREST RATES.

 

Subdivision 1. Applicable interest rates. Whenever the payment of interest is required with respect to any payment, including refunds, remittances, shortages, contributions, or repayments, the rate of interest is the rate or rates specified in subdivisions 2 to 5 for each public retirement plan.


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Subd. 2. Minnesota State Retirement System. The interest rates for all retirement plans administered by the Minnesota State Retirement System are as follows:

 

 

 

 

Annual

 

Monthly

 

 

before July 1, 2015

8.5 percent

0.71 percent

 

from July 1, 2015, to June 30, 2017

8.0 percent

0.667 percent

 

after June 30, 2017

7.5 percent

0.625 percent

 

Subd. 3. Public Employees Retirement Association. The interest rates for all retirement plans administered by the Public Employees Retirement Association are as follows:

 

 

before July 1, 2015

8.5 percent

 

 

from July 1, 2015, to June 30, 2017

8.0 percent

 

 

after June 30, 2017

7.5 percent

 

 

Subd. 4. Teachers Retirement Association. The interest rates for the retirement plan administered by the Teachers Retirement Association are as follows:

 

 

 

 

Annual

 

Monthly

 

before July 1, 2017

8.5 percent

0.71 percent

 

after June 30, 2017

7.5 percent

0.625 percent

 

Subd. 5. St. Paul Teachers Retirement Fund Association. The interest rates for the retirement plan administered by the St. Paul Teachers Retirement Fund Association are as follows:

 

 

 

 

Annual

 

Monthly

 

 

before July 1, 2015

8.5 percent

0.71 percent

 

from July 1, 2015, to June 30, 2017

8.0 percent

0.667 percent

 

after June 30, 2017

7.5 percent

0.625 percent

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 40. Minnesota Statutes 2016, section 490.121, subdivision 4, is amended to read:

 

Subd. 4. Allowable service. (a) "Allowable service" means any calendar month, subject to the service credit limit in subdivision 22, served as a judge at any time, during which the judge received compensation for that service from the state, municipality, or county, whichever applies, and for which the judge made any required member contribution. It also includes any month served as a referee in probate for all referees in probate who were in office before January 1, 1974.

 

(b) "Allowable service" also means a period of authorized leave of absence for which the judge has made a payment in lieu of contributions, not in an amount in excess of the service credit limit under subdivision 22. To obtain the service credit, the judge shall pay an amount equal to the normal cost of the judges retirement plan on the date of return from the leave of absence, as determined in the most recent actuarial report for the plan filed with the Legislative Commission on Pensions and Retirement, multiplied by the judge's average monthly salary rate during the authorized leave of absence and multiplied by the number of months of the authorized leave of absence, plus annual compound interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter interest at the


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applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the date of the termination of the leave to the date on which payment is made. The payment must be made within one year of the date on which the authorized leave of absence terminated. Service credit for an authorized leave of absence is in addition to a uniformed service leave under section 490.1211.

 

(c) "Allowable service" does not mean service as a retired judge.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 41. Minnesota Statutes 2016, section 490.1211, is amended to read:

 

490.1211 UNIFORMED SERVICE.

 

(a) A judge who is absent from employment by reason of service in the uniformed services, as defined in United States Code, title 38, section 4303(13), and who returns to state employment as a judge upon discharge from service in the uniformed service within the time frame required in United States Code, title 38, section 4312(e), may obtain service credit for the period of the uniformed service, provided that the judge did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions.

 

(b) The judge may obtain credit by paying into the fund equivalent member contribution based on the contribution rate or rates in effect at the time that the uniformed service was performed multiplied by the full and fractional years being purchased and applied to the annual salary rate. The annual salary rate is the average annual salary during the purchase period that the judge would have received if the judge had continued to provide employment services to the state rather than to provide uniformed service, or if the determination of that rate is not reasonably certain, the annual salary rate is the judge's average salary rate during the 12-month period of judicial employment rendered immediately preceding the purchase period.

 

(c) The equivalent employer contribution and, if applicable, the equivalent employer additional contribution, must be paid by the employing unit, using the employer and employer additional contribution rate or rates in effect at the time that the uniformed service was performed, applied to the same annual salary rate or rates used to compute the equivalent member contribution.

 

(d) If the member equivalent contributions provided for in this section are not paid in full, the judge's allowable service credit must be prorated by multiplying the full and fractional number of years of uniformed service eligible for purchase by the ratio obtained by dividing the total member contributions received by the total member contributions otherwise required under this section.

 

(e) To receive allowable service credit under this section, the contributions specified in this section and section 490.121 must be transmitted to the fund during the period which begins with the date on which the individual returns to judicial employment and which has a duration of three times the length of the uniformed service period, but not to exceed five years. If the determined payment period is calculated to be less than one year, the contributions required under this section to receive service credit may be within one year from the discharge date.

 

(f) The amount of allowable service credit obtainable under this section and section 490.121 may not exceed five years, unless a longer purchase period is required under United States Code, title 38, section 4312.

 

(g) The state court administrator shall pay interest on all equivalent member and employer contribution amounts payable under this section. Interest must be computed at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the end of each fiscal year of the leave or break in service to the end of the month in which payment is received.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 42. Minnesota Statutes 2016, section 490.124, subdivision 12, is amended to read:

 

Subd. 12. Refund. (a) A person who ceases to be a judge is entitled to a refund in an amount that is equal to all of the member's employee contributions to the judges' retirement fund plus interest computed under section 352.22, subdivision 2.

 

(b) A refund of contributions under paragraph (a) terminates all service credits and all rights and benefits of the judge and the judge's survivors under this chapter.

 

(c) A person who becomes a judge again after taking a refund under paragraph (a) may reinstate the previously terminated allowable service credit, rights, and benefits by repaying the total amount of the previously received refund. The refund repayment must include interest on the total amount previously received at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter at the applicable annual rate or rates specified in section 356.59, subdivision 2, compounded annually, from the date on which the refund was received until the date on which the refund is repaid.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

ARTICLE 7

CONTRIBUTION RATES

 

Section 1. Minnesota Statutes 2016, section 352.04, subdivision 2, is amended to read:

 

Subd. 2. Employee contributions. (a) The employee contribution to the fund must be equal to the following percent of salary:

 

 

from July 1, 2010, to June 30, 2014

5

 

from July 1, 2014, and thereafter to June 30, 2017

5.5

 

from July 1, 2017, to June 30, 2018

5.75

 

after June 30, 2018

6

 

(b) These contributions must be made by deduction from salary as provided in subdivision 4.

 

(c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 352.04, subdivision 3, is amended to read:

 

Subd. 3. Employer contributions. (a) The employer contribution to the fund must be equal to the following percent of salary:

 

 

from July 1, 2010, to June 30, 2014

5

 

from July 1, 2014, and thereafter to June 30, 2017

5.5

 

from July 1, 2017, to June 30, 2018

5.875

 

after June 30, 2018

6.25

 

(b) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 3. Minnesota Statutes 2016, section 352.92, subdivision 1, is amended to read:

 

Subdivision 1. Employee contributions. (a) Employee contributions of covered correctional employees must be in an amount equal to the following percent of salary:

 

 

from July 1, 2010, to June 30, 2014

8.6

 

from July 1, 2014, and thereafter to June 30, 2017

9.1

 

after June 30, 2017

9.6

 

(b) These contributions must be made by deduction from salary as provided in section 352.04, subdivision 4.

 

(c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 4. Minnesota Statutes 2016, section 352.92, subdivision 2, is amended to read:

 

Subd. 2. Employer contributions. (a) The employer shall contribute for covered correctional employees an amount equal to the following percent of salary:

 

 

from July 1, 2010, to June 30, 2014

12.1

 

from July 1, 2014, and thereafter to June 30, 2017

12.85

 

after June 30, 2017

14.4

 

(b) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. Minnesota Statutes 2016, section 352.92, is amended by adding a subdivision to read:

 

Subd. 2a. Supplemental employer contribution. (a) Effective July 1, 2018, the employer shall pay a supplemental contribution. The supplemental contribution shall be 1.45 percent of salary for covered correctional employees from July 1, 2018, through June 30, 2019; 2.95 percent of salary for covered correctional employees from July 1, 2019, through June 30, 2020; and 4.45 percent of salary for covered correctional employees thereafter. The supplemental contribution rate of 4.45 percent shall remain in effect until the market value of the assets of the correctional state employees retirement plan of the Minnesota State Retirement System equals or exceeds the actuarial accrued liability of the plan as determined by the actuary retained under section 356.214. The expiration of the supplemental employer contribution is effective the first day of the first full pay period of the fiscal year immediately following the issuance of the actuarial valuation upon which the expiration is based.

 

(b) The supplemental contribution under paragraph (a) must be paid starting the first day of the first full pay period after the effective date.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 6. Minnesota Statutes 2016, section 352B.02, subdivision 1a, is amended to read:

 

Subd. 1a. Member contributions. (a) The member contribution is the following percentage of the member's salary:

 

 

(1) before the first day of the first pay period beginning after July 1, 2014

12.4 percent

 

(2) on or after the first day of the first pay period beginning after from July 1, 2014, to June 30, 2016

 

13.4 percent

 

(3) after June 30, 2016 from July 1, 2016, to June 30, 2017

14.4 percent

 

from July 1, 2017, to June 30, 2019

14.9

 

after June 30, 2019

15.4

 

(b) These contributions must be made by deduction from salary as provided in section 352.04, subdivision 4.

 

(c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 7. Minnesota Statutes 2016, section 352B.02, subdivision 1c, is amended to read:

 

Subd. 1c. Employer contributions and supplemental employer contribution. (a) In addition to member contributions, department heads shall pay a sum equal to the specified percentage of the salary upon which deductions were made, which constitutes the employer contribution to the fund as follows:

 

 

(1) before the first day of the first pay period beginning after July 1, 2014

18.6 percent

 

(2) on or after the first day of the first pay period beginning after from July  1, 2014, to June 30, 2016

 

20.1 percent

 

(3) after June 30, 2016 from July 1, 2016, to June 30, 2017

21.6 percent

 

from July 1, 2017, to June 30, 2018

22.35

 

after June 30, 2018

23.1

 

(b) Department contributions must be paid out of money appropriated to departments for this purpose.

 

(c) Contribution increases under paragraph (a) must be paid starting the first day of the first full pay period after the effective date of the increase.

 

(d) Effective July 1, 2017, department heads shall pay a supplemental employer contribution. The supplemental contribution shall be 1.75 percent of the salary upon which deductions are made from July 1, 2017, through June 30, 2018; three percent of the salary upon which deductions are made from July 1, 2018, through June 30, 2019; five percent of the salary which deductions are made from July 1, 2019, through June 30, 2020; and seven percent of the salary upon which deductions are made thereafter. The supplemental contribution must be paid starting the first day of the first full pay period after the effective date. The supplemental contribution rate of seven percent shall remain in effect until the market value of the assets of the State Patrol retirement plan of the Minnesota State Retirement System equals or exceeds the actuarial accrued liability of the plan as determined by the actuary retained under section 356.214. The expiration of the supplemental employer contribution is effective the first day of the first full pay period of the fiscal year immediately following the issuance of the actuarial valuation upon which the expiration is based.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 8. Minnesota Statutes 2016, section 352D.04, subdivision 2, is amended to read:

 

Subd. 2. Contribution rates. (a) The money used to purchase shares under this section is the employee and employer contributions provided in this subdivision.

 

(b) The employee contribution is an amount equal to the 5.5 percent of salary specified in section 352.04, subdivision 2, or 352.045, subdivision 3a.

 

(c) The employer contribution is an amount equal to six percent of salary.

 

(d) For members of the legislature, the contributions under this subdivision also must be made on per diem payments received during a regular or special legislative session, but may not be made on per diem payments received outside of a regular or special legislative session, on the additional compensation attributable to a leadership position under section 3.099, subdivision 3, living expense payments under section 3.101, or special session living expense payments under section 3.103.

 

(e) For a judge who is a member of the unclassified plan under section 352D.02, subdivision 1, paragraph (c), clause (16), the employee contribution rate is eight percent of salary, and there is no employer contribution.

 

(f) These contributions must be made in the manner provided in section 352.04, subdivisions 4, 5, and 6.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 9. Minnesota Statutes 2016, section 353.65, subdivision 2, is amended to read:

 

Subd. 2. Employee contribution. (a) For members other than members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, or for members other than members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employee contribution is an amount equal to the following percentage of the total salary of each member, as follows: 9.6 percent before calendar year 2014; 10.2 percent in calendar year 2014; and 10.8 percent in calendar year 2015 and thereafter.

 

 

before January 1, 2018

10.8 percent

 

from January 1, 2018, through December 31, 2018

11.3 percent

 

from January 1, 2019, and thereafter

11.8 percent

 

(b) For members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, the employee contribution is an amount equal to eight percent of the monthly unit value under section 353.01, subdivision 10a, multiplied by 80 and expressed as a biweekly amount for each member. The employee contribution made by a member with at least 25 years of service credit as an active member of the former Minneapolis Firefighters Relief Association must be deposited in the postretirement health care savings account established under section 352.98.

 

(c) For members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employee contribution is an amount equal to eight percent of the monthly unit value under section 353.01, subdivision 10b, multiplied by 80 and expressed as a biweekly amount for each member. The employee contribution made by a member with at least 25 years of service credit as an active member of the former Minneapolis Police Relief Association must be deposited in the postretirement health care savings account established under section 352.98.


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(d) Contributions under this section must be made by deduction from salary in the manner provided in subdivision 4. Where any portion of a member's salary is paid from other than public funds, the member's employee contribution is based on the total salary received from all sources.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 10. Minnesota Statutes 2016, section 353.65, subdivision 3, is amended to read:

 

Subd. 3. Employer contribution. (a) With respect to members other than members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, or for members other than members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employer contribution is an amount equal to the following percentage of the total salary of each member, as follows: 14.4 percent before calendar year 2014; 15.3 percent in calendar year 2014; and 16.2 percent in calendar year 2015 and thereafter.

 

 

before January 1, 2018

16.2 percent

 

from January 1, 2018, through December 31, 2018

16.95 percent

 

from January 1, 2019, and thereafter

17.7 percent

 

(b) With respect to members who were active members of the former Minneapolis Firefighters Relief Association on December 29, 2011, the employer contribution is an amount equal to the amount of the member contributions under subdivision 2, paragraph (b).

 

(c) With respect to members who were active members of the former Minneapolis Police Relief Association on December 29, 2011, the employer contribution is an amount equal to the amount of the member contributions under subdivision 2, paragraph (c).

 

(d) Contributions under this subdivision must be made from funds available to the employing subdivision by the means and in the manner provided in section 353.28.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 11. Minnesota Statutes 2016, section 354.42, subdivision 2, is amended to read:

 

Subd. 2. Employee contribution. (a) The employee contribution to the fund is the following percentage of the member's salary:

 

 

Period

Basic Program

Coordinated Program

 

 

from July 1, 2013, until June 30, 2014

10.5 percent

7 percent

 

after June 30, 2014 from July 1, 2014, through June 30, 2017

 

11 percent

 

7.5 percent

 

from July 1, 2017, through June 30, 2018

11.19 percent

7.69 percent

 

from July 1, 2018, through June 30, 2019

11.38 percent

7.88 percent

 

from July 1, 2019, through June 30, 2020

11.56 percent

8.06 percent

 

after June 30, 2020

11.75 percent

8.25 percent

 

(b) When an employee contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid for each employer unit with the first payroll cycle reported.


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(c) After June 30, 2015, if a contribution rate revision is required under subdivisions 4a, 4b, and 4c, the employee contributions under paragraphs (a) and (b) must be adjusted accordingly.

 

(d) This contribution must be made by deduction from salary. Where any portion of a member's salary is paid from other than public funds, the member's employee contribution must be based on the entire salary received.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 12. Minnesota Statutes 2016, section 354.42, subdivision 3, is amended to read:

 

Subd. 3. Employer. (a) The regular employer contribution to the fund by Special School District No. 1, Minneapolis, is an amount equal to the applicable following percentage of salary of each coordinated member and the applicable percentage of salary of each basic member specified in paragraph (c).

 

The additional employer contribution to the fund by Special School District No. 1, Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a coordinated member or who is a basic member.

 

(b) The regular employer contribution to the fund by Independent School District No. 709, Duluth, is an amount equal to the applicable percentage of salary of each old law or new law coordinated member specified for the coordinated program in paragraph (c).

 

(c) The employer contribution to the fund for every other employer is an amount equal to the applicable following percentage of the salary of each coordinated member and the applicable following percentage of the salary of each basic member:

 

 

Period

Coordinated Member

 

Basic Member

 

 

from July 1, 2013, until June 30, 2014

 

7 percent

 

11 percent

 

after June 30, 2014 from July 1, 2014, through June 30, 2017

 

7.5 percent

 

 

11.5 percent

 

from July 1, 2017, through June 30, 2018

 

7.75 percent

 

11.75 percent

 

from July 1, 2018, through June 30, 2019

 

8.0 percent

 

12 percent

 

from July 1, 2019, through June 30, 2020

 

8.25 percent

 

12.25 percent

 

after June 30, 2020

 

8.5 percent

 

12.5 percent

 

(d) When an employer contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid for each employer unit with the first payroll cycle reported.

 

(e) After June 30, 2015, if a contribution rate revision is made under subdivisions 4a, 4b, and 4c, the employer contributions under paragraphs (a), (b), and (c) must be adjusted accordingly.

 

EFFECTIVE DATE. This section is effective the day following final enactment.

 

Sec. 13. Minnesota Statutes 2016, section 354A.12, subdivision 1, is amended to read:

 

Subdivision 1. Employee contributions. (a) The contribution required to be paid by each member of the St. Paul Teachers Retirement Fund Association is the percentage of total salary specified below for the applicable association and program:


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Program

Percentage of Total Salary

 

St. Paul Teachers Retirement Fund Association

 

 

 

basic program after June 30, 2014

9 percent

 

basic program after June 30, 2015

9.5 percent

 

basic program after June 30, 2016

10 percent

 

basic program after June 30, 2021

10.25 percent

 

coordinated program after June 30, 2014

6.5 percent

 

coordinated program after June 30, 2015

7 percent

 

coordinated program after June 30, 2016

7.5 percent

 

coordinated program after June 30, 2021

7.75 percent

 

(b) Contributions must be made by deduction from salary and must be remitted directly to the St. Paul Teachers Retirement Fund Association at least once each month.

 

(c) When an employee contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid by the employer with the first payroll cycle reported.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 14. Minnesota Statutes 2016, section 354A.12, subdivision 2a, is amended to read:

 

Subd. 2a. Employer regular and additional contributions. (a) The employing units shall make the following employer contributions to the teachers retirement fund association:

 

(1) for any each coordinated member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make a regular employer contribution to the retirement fund association in an amount equal to the designated percentage of the salary of the coordinated member as provided below:

 

 

after June 30, 2014

5.5 percent

 

after June 30, 2015

6 percent

 

after June 30, 2016

6.25 percent

 

after June 30, 2017

6.5 7 percent

 

after June 30, 2018

7.75 percent

 

after June 30, 2019

8.25 percent

 

after June 30, 2020

9 percent

 

(2) for any each basic member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make a regular employer contribution to the respective retirement fund in an amount according to the schedule below:

 

 

after June 30, 2014

9 percent of salary

 

after June 30, 2015

9.5 percent of salary

 

after June 30, 2016

9.75 percent of salary

 

after June 30, 2017

10 10.5 percent of salary

 

after June 30, 2018

11.25 percent of salary

 

after June 30, 2019

11.75 percent of salary

 

after June 30, 2020

12.5 percent of salary


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(3) for a each basic member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to 3.64 percent of the salary of the basic member;

 

(4) for a each coordinated member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to 3.84 percent of the coordinated member's salary.

 

(b) The regular and additional employer contributions must be remitted directly to the St. Paul Teachers Retirement Fund Association at least once each month. Delinquent amounts are payable with interest under the procedure in subdivision 1a.

 

(c) Payments of regular and additional employer contributions for school district or technical college employees who are paid from normal operating funds must be made from the appropriate fund of the district or technical college.

 

(d) When an employer contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid by the employer with the first payroll cycle reported.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

ARTICLE 8

DIRECT STATE AID

 

Section 1. Minnesota Statutes 2016, section 353.65, is amended by adding a subdivision to read:

 

Subd. 3b. Direct state aid. The state shall pay $4,500,000 on October 1, 2017, and October 1, 2018, to the public employees police and fire retirement plan. By October 1 of each year after 2018, the state shall pay to the public employees police and fire retirement plan $9,000,000. The commissioner of management and budget shall pay the aid specified in this subdivision. The amount required is appropriated annually from the general fund to the commissioner of management and budget.

 

Sec. 2. Minnesota Statutes 2016, section 354A.12, subdivision 3a, is amended to read:

 

Subd. 3a. Direct state aid to first class city teachers retirement fund associations. (a) The state shall pay $2,827,000 to the St. Paul Teachers Retirement Fund Association.

 

(b) In addition to other amounts specified in this subdivision, the state shall pay $7,000,000 as state aid to the St. Paul Teachers Retirement Fund Association.

 

(c) In addition to the amounts specified in paragraphs (a) and (b), the state shall pay $5,000,000 as state aid to the St. Paul Teachers Retirement Fund Association.

 

(c) (d) The aid under this subdivision is payable October 1 annually. The commissioner of management and budget shall pay the aid specified in this subdivision. The amount required is appropriated annually from the general fund to the commissioner of management and budget.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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ARTICLE 9

MINNESOTA STATE RETIREMENT SYSTEM

ADMINISTRATIVE PROVISIONS

 

Section 1. Minnesota Statutes 2016, section 3A.03, subdivision 2, is amended to read:

 

Subd. 2. Refund. (a) A former member who has made contributions under subdivision 1 and who is no longer a member of the legislature is entitled to receive, upon written application to the executive director on a form prescribed by the executive director, a refund from the general fund of all contributions credited to the member's account with interest computed as provided in section 352.22, subdivision 2.

 

(b) The refund of contributions as provided in paragraph (a) terminates all rights of a former member of the legislature and the survivors of the former member under this chapter.

 

(c) If the former member of the legislature again becomes a member of the legislature after having taken a refund as provided in paragraph (a), the member is a member of the unclassified employees retirement program of the Minnesota State Retirement System.

 

(d) However, the member may reinstate the rights and credit for service previously forfeited under this chapter if the member repays all refunds taken, plus interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually from the date on which the refund was taken to the date on which the refund is repaid. Repayment must be made as provided in section 352.23, paragraph (d).

 

(e) No person may be required to apply for or to accept a refund.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 3A.03, subdivision 3, is amended to read:

 

Subd. 3. Legislators retirement fund. (a) The legislators retirement fund, a special retirement fund, is created within the state treasury. The legislators retirement fund must be credited with any investment proceeds on the assets of the retirement fund.

 

(b) The payment of annuities under section 3A.115, paragraph (b), is appropriated from the legislators retirement fund.

 

(c) The legislators retirement fund may receive transfers of general fund proceeds.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 16A.14, subdivision 2a, is amended to read:

 

Subd. 2a. Exceptions. The allotment and encumbrance system does not apply to:

 

(1) appropriations for the courts or the legislature;

 

(2) payment of unemployment benefits.; and

 

(3) transactions within the defined contribution funds administered by the Minnesota State Retirement System.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 4. Minnesota Statutes 2016, section 352.01, subdivision 2a, is amended to read:

 

Subd. 2a. Included employees. (a) "State employee" includes:

 

(1) employees of the Minnesota Historical Society;

 

(2) employees of the State Horticultural Society;

 

(3) employees of the Minnesota Crop Improvement Association;

 

(4) employees of the adjutant general whose salaries are paid from federal funds and who are not covered by any federal civilian employees retirement system;

 

(5) employees of the Minnesota State Colleges and Universities who are employed under the university or college activities program;

 

(6) currently contributing employees covered by the system who are temporarily employed by the legislature during a legislative session or any currently contributing employee employed for any special service as defined in subdivision 2b, clause (6);

 

(7) employees of the legislature who are appointed without a limit on the duration of their employment;

 

(8) trainees who are employed on a full-time established training program performing the duties of the classified position for which they will be eligible to receive immediate appointment at the completion of the training period;

 

(9) employees of the Minnesota Safety Council;

 

(10) any employees who are on authorized leave of absence from the Transit Operating Division of the former Metropolitan Transit Commission and who are employed by the labor organization which is the exclusive bargaining agent representing employees of the Transit Operating Division;

 

(11) employees of the Metropolitan Council, Metropolitan Parks and Open Space Commission, Metropolitan Sports Facilities Commission, or Metropolitan Mosquito Control Commission unless excluded under subdivision 2b or are covered by another public pension fund or plan under section 473.415, subdivision 3;

 

(12) judges of the Tax Court;

 

(13) personnel who were employed on June 30, 1992, by the University of Minnesota in the management, operation, or maintenance of its heating plant facilities, whose employment transfers to an employer assuming operation of the heating plant facilities, so long as the person is employed at the University of Minnesota heating plant by that employer or by its successor organization;

 

(14) personnel who are employed as seasonal employees in the classified or unclassified service;

 

(15) persons who are employed by the Department of Commerce as a peace officer in the Commerce Fraud Bureau under section 45.0135 who have attained the mandatory retirement age specified in section 43A.34, subdivision 4;

 

(16) employees of the University of Minnesota unless excluded under subdivision 2b, clause (3);


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(17) employees of the Middle Management Association whose employment began after July 1, 2007, and to whom section 352.029 does not apply;

 

(18) employees of the Minnesota Government Engineers Council to whom section 352.029 does not apply;

 

(19) employees of the Minnesota Sports Facilities Authority;

 

(20) employees of the Minnesota Association of Professional Employees;

 

(21) employees of the Minnesota State Retirement System;

 

(22) employees of the State Agricultural Society;

 

(23) employees of the Gillette Children's Hospital Board who were employed in the state unclassified service at the former Gillette Children's Hospital on March 28, 1974; and

 

(24) if approved for coverage by the Board of Directors of Conservation Corps Minnesota, employees of Conservation Corps Minnesota so employed on June 30, 2003.; and

 

(25) employees of the Perpich Center for Arts Education who are covered by the general state employees retirement plan of the Minnesota State Retirement System as of July 1, 2016.

 

(b) Employees specified in paragraph (a), clause (13), are included employees under paragraph (a) if employer and employee contributions are made in a timely manner in the amounts required by section 352.04. Employee contributions must be deducted from salary. Employer contributions are the sole obligation of the employer assuming operation of the University of Minnesota heating plant facilities or any successor organizations to that employer.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. Minnesota Statutes 2016, section 352.03, subdivision 5, is amended to read:

 

Subd. 5. Executive director;, deputy director, and assistant director. (a) The board shall appoint an executive director, in this chapter called the director, of the system must be appointed by the board on the basis of fitness education, experience in the retirement field, and leadership ability to manage and lead system staff, and ability to assist the board in setting a vision for the system. The director must have had at least five years' experience on the administrative staff of a major retirement system in either an executive level management position or in a position with responsibility for the governance, management, or administration of a retirement plan.

 

(b) The executive director, deputy director, and assistant director must be in the unclassified service but appointees may be selected from civil service lists if desired. Notwithstanding any law to the contrary, the board must set the salary of the executive director. The salary of the executive director must not exceed the limit for a position listed in section 15A.0815, subdivision 2. The salary of the deputy director and assistant director must be set in accordance with section 43A.18, subdivision 3.

 

EFFECTIVE DATE. This section is effective the day following final enactment.

 

Sec. 6. Minnesota Statutes 2016, section 352.03, subdivision 6, is amended to read:

 

Subd. 6. Duties and powers of executive director. The management of the system is vested in the director, who is the executive and administrative head of the system. The director may appoint a deputy director and an assistant director with the approval of the board. The director shall be advisor to the board on matters pertaining to the system and shall also act as the secretary of the board. The director shall:


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(1) attend meetings of the board;

 

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

 

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

 

(4) designate an assistant director with the approval of the board;

 

(5) (4) appoint any employees, both permanent and temporary, that are necessary to carry out the provisions of this chapter;

 

(6) (5) organize the work of the system as the director deems necessary to fulfill the functions of the system, and define the duties of its employees and delegate to them any powers or duties, subject to the control of the director and under conditions the director may prescribe. Appointments to exercise delegated power must be by written order and shall be filed with the secretary of state;

 

(7) (6) with the advice and consent of the board, contract for the services of an approved actuary, professional management services, and any other consulting services as necessary and fix the compensation for those services. The contracts are not subject to competitive bidding under chapter 16C. 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. Professional management services may not be contracted for more often than once in six years. Copies of professional management survey reports must 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 time as reports are furnished to the board. Only management firms experienced in conducting management surveys of federal, state, or local public retirement systems are qualified to contract with the director;

 

(8) (7) with the advice and consent of the board provide in-service training for the employees of the system;

 

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

 

(10) (9) determine the amount of the annuities and disability benefits of employees covered by the system 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;

 

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

 

(12) (11) certify funds available for investment to the State Board of Investment;

 

(13) (12) with the advice and approval of the board request the State Board of Investment to sell securities when the director determines that funds are needed for the system;

 

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


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(15) (14) prepare and submit biennial and annual budgets to the board and with the approval of the board submit the budgets to the Department of Management and Budget; and

 

(16) (15) with the approval of the board, perform other duties required to administer the retirement and other provisions of this chapter and to do its business.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 7. Minnesota Statutes 2016, section 352.113, subdivision 4, is amended to read:

 

Subd. 4. Medical or psychological examinations; authorization for payment of benefit. (a) Any physician, psychologist, chiropractor, or physician assistant, or nurse practitioner providing any service specified in this section must be licensed.

 

(b) An applicant shall provide a detailed report signed by a physician, and at least one additional report signed by a physician, chiropractor, psychologist, or chiropractor, physician assistant, or nurse practitioner with evidence to support an application for total and permanent disability. The reports must include an expert opinion regarding whether the employee is permanently and totally disabled within the meaning of section 352.01, subdivision 17, and that the disability arose before the employee was placed on any paid or unpaid leave of absence or terminated public service.

 

(c) If there is medical evidence that supports the expectation that at some point the person applying for the disability benefit will no longer be disabled, the decision granting the disability benefit may provide for a termination date upon which the total and permanent disability can be expected to no longer exist. When a termination date is part of the decision granting benefits, prior to the benefit termination the executive director shall review any evidence provided by the disabled employee to show that the disabling condition for which benefits were initially granted continues. If the benefits cease, the disabled employee may follow the appeal procedures described in section 356.96 or may reapply for disability benefits using the process described in this subdivision.

 

(d) Any claim to disability must be supported by a report from the employer indicating that there is no available work that the employee can perform with the disabling condition and that all reasonable accommodations have been considered. Upon request of the executive director, an employer shall provide evidence of the steps the employer has taken to attempt to provide reasonable accommodations and continued employment to the claimant.

 

(e) The director shall also obtain written certification from the employer stating whether the employment has ceased or whether the employee is on sick leave of absence because of a disability that will prevent further service to the employer and that the employee is not entitled to compensation from the employer.

 

(f) The medical adviser shall consider the reports of the physicians, physician assistants, psychologists, and chiropractors physician, psychologist, chiropractor, physician assistant, or nurse practitioner and any other evidence supplied by the employee or other interested parties. If the medical adviser finds the employee totally and permanently disabled, the adviser shall make appropriate recommendation to the director in writing together with the date from which the employee has been totally disabled. The director shall then determine if the disability occurred within 18 months of filing the application, while still in the employment of the state, and the propriety of authorizing payment of a disability benefit as provided in this section and constitutes a total and permanent disability as defined in section 352.01, subdivision 17.

 

(g) A terminated employee may apply for a disability benefit within 18 months of termination as long as the disability occurred while in the employment of the state. The fact that an employee is placed on leave of absence without compensation because of disability does not bar that employee from receiving a disability benefit.


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(h) Upon appeal, the board of directors may extend the disability benefit application deadline in paragraph (g) by an additional 18 months if the terminated employee is determined by the board of directors to have a cognitive impairment that made it unlikely that the terminated employee understood that there was an application deadline or that the terminated employee was able to meet the application deadline.

 

(h) (i) Unless the payment of a disability benefit has terminated because the employee is no longer totally disabled, or because the employee has reached normal retirement age as provided in this section, the disability benefit must cease with the last payment received by the disabled employee or which had accrued during the lifetime of the employee unless there is a spouse surviving. In that event, the surviving spouse is entitled to the disability benefit for the calendar month in which the disabled employee died.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 8. Minnesota Statutes 2016, section 352.113, subdivision 14, is amended to read:

 

Subd. 14. Disabilitant earnings reports. Disability benefit recipients must report all earnings from reemployment and income from workers' compensation to the system annually by May 15 in a format prescribed by the executive director. The executive director may waive the earnings report requirement for any disabled employee who is not required to undergo regular medical or psychological examinations under subdivision 6. If the form is not submitted by June 15, benefits must be suspended effective July 1. If the form deemed acceptable by the executive director is received after the June 15 deadline, benefits shall be reinstated retroactive to July 1.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 9. Minnesota Statutes 2016, section 352.23, is amended to read:

 

352.23 TERMINATION OF RIGHTS; REPAYMENT OF REFUND.

 

(a) When any employee accepts a refund as provided in section 352.22, all existing allowable service credits and all rights and benefits to which the employee was entitled before accepting the refund terminate.

 

(b) Terminated service credits and rights must not again be restored until the former employee acquires at least six months of allowable service credit after taking the last refund. In that event, the employee may repay and repays all refunds previously taken from the retirement fund with interest as provided in paragraph (d).

 

(c) Repayment of refunds entitles the employee only to credit for service covered by (1) salary deductions; (2) payments previously made in lieu of salary deductions as permitted under law in effect when the payment in lieu of deductions was made; (3) payments made to obtain credit for service as permitted by laws in effect when payment was made; and (4) allowable service previously credited while receiving temporary workers' compensation as provided in section 352.01, subdivision 11, paragraph (a), clause (3).

 

(d) Payments under this section for repayment of refunds are to be paid with interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually from the date the refund was taken until the date the refund is repaid. They Repayment may be paid in a lump sum or by payroll deduction in the manner provided in section 352.04. Payment may be made in partial payments consistent with section 356.44 during employment or in a lump sum up to six months after termination from service.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 10. Minnesota Statutes 2016, section 352B.11, subdivision 4, is amended to read:

 

Subd. 4. Reentry into state service. When a former member, who has become separated from state service that entitled the member to membership and has received a refund of retirement payments, reenters the state service in a position that entitles the member to membership, that member shall receive credit for the period of prior allowable state service if the member repays into the fund the amount of the refund, plus interest on it at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually, at any time before subsequent retirement. Repayment may be made in installments or in a lump sum. Repayment must be made as provided in section 352.23, paragraph (d).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 11. Minnesota Statutes 2016, section 352D.02, subdivision 1, is amended to read:

 

Subdivision 1. Coverage. (a) Employees enumerated in paragraph (c), clauses (2), (3), (4), (6) to (14), and (16) to (18), if they are in the unclassified service of the state or Metropolitan Council and are eligible for coverage under the general state employees retirement plan under chapter 352, are participants in the unclassified program under this chapter unless the employee gives notice to the executive director of the Minnesota State Retirement System within one year following the commencement of employment in the unclassified service that the employee desires coverage under the general state employees retirement plan. For the purposes of this chapter, an employee who does not file notice with the executive director is deemed to have exercised the option to participate in the unclassified program.

 

(b) Persons referenced in paragraph (c), clause (5), are participants in the unclassified program under this chapter unless the person was eligible to elect different coverage under section 3A.07 and elected retirement coverage by the applicable alternative retirement plan. Persons referenced in paragraph (c), clause (15), are participants in the unclassified program under this chapter for judicial employment in excess of the service credit limit in section 490.121, subdivision 22.

 

(c) Enumerated employees and referenced persons are:

 

(1) the governor, the lieutenant governor, the secretary of state, the state auditor, and the attorney general;

 

(2) an employee in the Office of the Governor, Lieutenant Governor, Secretary of State, State Auditor, Attorney General;

 

(3) an employee of the State Board of Investment;

 

(4) the head of a department, division, or agency created by statute in the unclassified service, an acting department head subsequently appointed to the position, or an employee enumerated in section 15A.0815 or 15A.083, subdivision 4;

 

(5) a member of the legislature;

 

(6) an unclassified employee of the legislature or a commission or agency of the legislature who is appointed without a limit on the duration of the employment or a temporary legislative employee having shares in the supplemental retirement fund as a result of former employment covered by this chapter, whether or not eligible for coverage under the Minnesota State Retirement System;


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(7) a person who is employed in a position established under section 43A.08, subdivision 1, clause (3), or in a position authorized under a statute creating or establishing a department or agency of the state, which is at the deputy or assistant head of department or agency or director level;

 

(8) the regional administrator, or executive director of the Metropolitan Council, general counsel, division directors, operations managers, and other positions as designated by the council, all of which may not exceed 27 positions at the council and the chair;

 

(9) the commissioner, deputy commissioner, and not to exceed nine positions of the Minnesota Office of Higher Education in the unclassified service, as designated by the Minnesota Office of Higher Education before January 1, 1992, or subsequently redesignated with the approval of the board of directors of the Minnesota State Retirement System, unless the person has elected coverage by the individual retirement account plan under chapter 354B;

 

(10) the clerk of the appellate courts appointed under article VI, section 2, of the Constitution of the state of Minnesota, the state court administrator and judicial district administrators;

 

(11) the chief executive officers of correctional facilities operated by the Department of Corrections and of hospitals and nursing homes operated by the Department of Human Services;

 

(12) an employee whose principal employment is at the state ceremonial house;

 

(13) an employee of the Agricultural Utilization Research Institute;

 

(14) an employee of the State Lottery who is covered by the managerial plan established under section 43A.18, subdivision 3;

 

(15) a judge who has exceeded the service credit limit in section 490.121, subdivision 22;

 

(16) an employee of Enterprise Minnesota, Inc.;

 

(17) a person employed by the Minnesota State Colleges and Universities as faculty or in an eligible unclassified administrative position as defined in section 354B.20, subdivision 6, who was employed by the former state university or the former community college system before May 1, 1995, and elected unclassified program coverage prior to May 1, 1995; and

 

(18) a person employed by the Minnesota State Colleges and Universities who was employed in state service before July 1, 1995, who subsequently is employed in an eligible unclassified administrative position as defined in section 354B.20, subdivision 6, and who elects coverage by the unclassified program.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 12. Minnesota Statutes 2016, section 352D.02, subdivision 3, is amended to read:

 

Subd. 3. Transfer to general employees retirement plan. (a) If permitted under paragraph (b), an employee A person in the unclassified program and referred to in subdivision 1, paragraph (c), clauses (2) to (4), (6) to (14), and (16) to (18), who is credited with shares in the unclassified program and has credit for allowable service may elect to terminate participation in the unclassified program and be covered by the general state employees retirement plan. (b) An employee specified in paragraph (a) is permitted to terminate participation in the unclassified program and be covered by if the person files an election to transfer to the general state employees retirement plan if the employee with the executive director of the Minnesota State Retirement System as provided in paragraph (b) and the person's current employment or appointment:


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(1) was employed began before July 1, 2010, and the person has at least ten years of allowable service covered employment; or

 

(2) was first employed began after June 30, 2010, and the person has no more than seven years of allowable service in the unclassified program.

 

The (b) An election to transfer must be in writing, on a form provided by the executive director, and can be made no later than one month following the termination of covered employment. delivered to the executive director:

 

(1) for persons described in paragraph (a), clause (1), no later than one month following the termination of covered employment; or

 

(2) for persons described in paragraph (a), clause (2), no later than one month following the termination of employment in a position covered by the unclassified program.

 

For purposes of this chapter, an employee who does not file an election to transfer with the executive director is deemed to have exercised the option to participate in the unclassified program.

 

(c) If the transfer election is made, the executive director shall redeem the employee's total shares and credit to the employee's account in the general employees retirement plan the amount of contributions that would have been credited had the employee been covered by the general employees retirement plan during the employee's entire covered employment. The balance of money redeemed and not credited to the employee's account must be transferred to the general employees retirement plan, except that the executive director must determine:

 

(1) the employee contributions paid to the unclassified program; and

 

(2) the employee contributions that would have been paid to the general employees retirement plan for the comparable period, if the individual had been covered by that plan.

 

If clause (1) is greater than clause (2), the difference must be refunded to the employee as provided in section 352.22. If clause (2) is greater than clause (1), the difference must be paid by the employee within six months of electing general employees retirement plan coverage or before the effective date of the annuity, whichever is sooner.

 

(d) An election under paragraph (b) to transfer coverage to the general employees retirement plan is irrevocable during any period of covered employment.

 

(e) A person referenced in subdivision 1, paragraph (c), clause (1), (5), or (15), who is credited with employee shares in the unclassified program is not permitted to terminate participation in the unclassified program and be covered by the general employees retirement plan.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 13. Minnesota Statutes 2016, section 352D.05, subdivision 4, is amended to read:

 

Subd. 4. Repayment of refund. (a) A participant in the unclassified program may repay regular refunds taken under section 352.22, as provided in section 352.23.

 

(b) A participant in the unclassified program or an employee covered by the general employees retirement plan who has withdrawn the value of the total shares may repay the refund taken and thereupon restore the service credit, rights and benefits forfeited by paying into the fund the amount refunded plus interest at the rate of 8.5 percent until June 30, 2015, and eight percent thereafter compounded annually from the date that the refund was taken until the date that the refund is repaid. If the participant had withdrawn only the employee shares as permitted under prior laws, repayment must be pro rata.


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(c) Except as provided in section 356.441, the repayment of a refund under this section must be made in a lump sum Repayment must be made as provided in section 352.23, paragraph (d).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 14. Minnesota Statutes 2016, section 490.124, subdivision 12, is amended to read:

 

Subd. 12. Refund. (a) A person who ceases to be a judge is entitled to a refund in an amount that is equal to all of the member's employee contributions to the judges' retirement fund plus interest computed under section 352.22, subdivision 2.

 

(b) A refund of contributions under paragraph (a) terminates all service credits and all rights and benefits of the judge and the judge's survivors under this chapter.

 

(c) A person who becomes a judge again after taking a refund under paragraph (a) may reinstate the previously terminated allowable service credit, rights, and benefits by repaying the total amount of the previously received refund. The refund repayment must include interest on the total amount previously received at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter, compounded annually, from the date on which the refund was received until the date on which the refund is repaid. Repayment must be made as provided in section 352.23, paragraph (d).

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

ARTICLE 10

PUBLIC EMPLOYEES RETIREMENT ASSOCIATION

ADMINISTRATIVE PROVISIONS

 

Section 1. Minnesota Statutes 2016, section 353.01, subdivision 2b, is amended to read:

 

Subd. 2b. Excluded employees. (a) The following public employees are not eligible to participate as members of the association with retirement coverage by the general employees retirement plan, the local government correctional employees retirement plan under chapter 353E, or the public employees police and fire retirement plan:

 

(1) persons whose annual salary from one governmental subdivision never exceeds an amount, stipulated in writing in advance, of $5,100 if the person is not a school district employee or $3,800 if the person is a school year employee. If annual compensation from one governmental subdivision to an employee exceeds the stipulated amount in a calendar year or a school year, whichever applies, after being stipulated in advance not to exceed the applicable amount, the stipulation is no longer valid and contributions must be made on behalf of the employee under section 353.27, subdivision 12, from the first month in which the employee received salary exceeding $425 in a month;

 

(2) public officers who are elected to a governing body, city mayors, or persons who are appointed to fill a vacancy in an elective elected 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 elected position;

 

(3) election judges and persons employed solely to administer elections;

 

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


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(5) except as otherwise specified in subdivision 12a, employees who are employed solely in a temporary position as defined under subdivision 12a, and employees who resign from a nontemporary position and accept a temporary position within 30 days of that resignation in the same governmental subdivision;

 

(6) employees who are employed by reason of work emergency caused by fire, flood, storm, or similar disaster, but if the person becomes a probationary or provisional employee within the same pay period, other than on a temporary basis, the person is a "public employee" retroactively to the beginning of the pay period;

 

(7) 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, or the St. Paul Teachers Retirement Fund Association, but this exclusion 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, and 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 plan 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;

 

(8) 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, if no irrevocable election of coverage has been made under section 3121(r) of the Internal Revenue Code of 1954, as amended;

 

(9) persons who are:

 

(i) employed by a governmental subdivision who have not reached the age of 23 and who 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 at a public or charter high school;

 

(ii) employed as resident physicians, medical interns, pharmacist residents, or pharmacist interns and are serving in a degree or residency program in a public hospital or in a public clinic; or

 

(iii) students who are serving for a period not to exceed five years in an internship or a residency program that is sponsored by a governmental subdivision, including an accredited educational institution;

 

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

 

(11) except for employees of For the first three years of employment, foreign citizens who are employed by a governmental subdivision, other than Hennepin County or employees of Hennepin Healthcare System, Inc., foreign citizens who are employed by a governmental subdivision under a one or more work permit permits or under an H‑1b visa initially issued or extended for a combined period of less than three years of employment but upon extension of the employment of the visa beyond the three-year period, the foreign citizen must be reported for membership beginning on the first of the month following the extension if the monthly earnings threshold as provided under subdivision 2a, paragraph (a), is met work visas;

 

(12) 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;

 

(13) 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 general


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employees retirement plan or the public employees police and fire plan, whichever applies, on the basis of compensation received from public employment service other than service as volunteer ambulance service personnel;

 

(14) except as provided in section 353.87, volunteer firefighters, as defined in subdivision 36, engaging in activities undertaken as part of volunteer firefighter duties, but 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 general employees retirement plan or the public employees police and fire plan, whichever applies, on the basis of compensation received from public employment activities other than those as a volunteer firefighter;

 

(15) 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;

 

(16) electrical workers, plumbers, carpenters, and associated trades personnel who are 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 pension plan applicable to Carpenters Local 322 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;

 

(17) bricklayers, allied craftworkers, cement masons, glaziers, glassworkers, painters, allied tradesworkers, and plasterers who are 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;

 

(18) plumbers who are 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;

 

(19) employees who are hired after June 30, 2002, solely 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;

 

(20) 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 up to five years, 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;

 

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

 

(22) reemployed annuitants of the association during the course of that reemployment;


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(23) persons appointed to serve on a board or commission of a governmental subdivision or an instrumentality thereof;

 

(24) persons employed as full-time fixed-route bus drivers by the St. Cloud Metropolitan Transit Commission who are members of the International Brotherhood of Teamsters Local 638 and who are, by virtue of that employment, members of the International Brotherhood of Teamsters Central States pension plan; and

 

(25) electricians or pipefitters employed by the Minneapolis Park and Recreation Board, with coverage under a collective bargaining agreement by the IBEW local 292, or pipefitters local 539 pension plan, who were first employed before May 2, 2015, and who elected to be excluded under Laws 2015, chapter 68, article 11, section 5.

 

(b) Any person performing the duties of a public officer in a position defined in subdivision 2a, paragraph (a), clause (3), is not an independent contractor and is not an employee of an independent contractor.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 353.01, subdivision 10, is amended to read:

 

Subd. 10. Salary. (a) Subject to the limitations of section 356.611, "salary" means:

 

(1) the wages or periodic compensation payable to a public employee by the employing governmental subdivision before:

 

(i) employee retirement deductions that are designated as picked-up contributions under section 356.62;

 

(ii) any employee-elected deductions for deferred compensation, supplemental retirement plans, or other voluntary salary reduction programs that would have otherwise been available as a cash payment to the employee; and

 

(iii) employee deductions for contributions to a supplemental plan or to a governmental trust established under section 356.24, subdivision 1, clause (7), to save for postretirement health care expenses, unless otherwise excluded under paragraph (b);

 

(2) for a public employee who is covered by a supplemental retirement plan under section 356.24, subdivision 1, clause (8), (9), (10), or (12), the employer contributions to the applicable supplemental retirement plan when an agreement between the parties establishes that the contributions will either result in a mandatory reduction of employees' wages through payroll withholdings, or be made in lieu of an amount that would otherwise be paid as wages;

 

(3) a payment from a public employer through a grievance proceeding, settlement, or court order that is attached to a specific earnings period in which the employee's regular salary was not earned or paid to the member due to a suspension or a period of involuntary termination that is not a wrongful discharge under section 356.50; provided the amount is not less than the equivalent of the average of the hourly base salary rate in effect during the last six months of allowable service prior to the suspension or period of involuntary termination, plus any applicable increases awarded during the period that would have been paid under a collective bargaining agreement or personnel policy but for the suspension or involuntary termination, multiplied by the average number of regular hours for which the employee was compensated during the six months of allowable service prior to the suspension or period of involuntary termination, but not to exceed the compensation that the public employee would have earned if regularly employed during the applicable period;


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(4) for a member who is absent from employment due to compensation paid during an authorized leave of absence, other than an authorized medical leave of absence, as long as the compensation paid during the leave if equivalent to a pay period is not less than the lesser of:

 

(i) the product of the average hourly base salary rate in effect during the six months of allowable service, or portions thereof, prior to immediately preceding the leave, multiplied by the average number of regular hours for which the employee was compensated each pay period during the six months of allowable service prior to immediately preceding the applicable leave of absence; or

 

(ii) compensation equal to the value of the employee's total available accrued leave hours;

 

(5) for a member who is absent from employment by reason of compensation paid during an authorized medical leave of absence, other than a workers' compensation leave, as long as the compensation paid during the leave if specified in advance to be at least a pay period is not less than the lesser of:

 

(i) the product of one-half of, but no more than equal to, the earnings the member received, on which contributions were reported and allowable service credited the average hourly base salary rate in effect during the six months of allowable service immediately preceding the medical leave of absence; and or

 

(ii) compensation equal to the value of the employee's total available accrued leave hours;

 

(6) for a public employee who receives performance or merit bonus payment under a written compensation plan, policy, or collective bargaining agreement in addition to regular salary or in lieu of regular salary increases, the compensation paid to the employee for attaining or exceeding performance goals, duties, or measures during a specified period of employment.

 

(b) Salary does not mean:

 

(1) fees paid to district court reporters;

 

(2) unused annual leave, vacation, or sick leave payments, in the form of lump-sum or periodic payments;

 

(3) for the donor, payment to another person of the value of hours donated under a benevolent vacation, personal, or sick leave donation program;

 

(4) any form of severance or retirement incentive payments;

 

(5) an allowance payment or per diem payments for or reimbursement of expenses;

 

(6) lump-sum settlements not attached to a specific earnings period;

 

(7) workers' compensation payments or disability insurance payments, including payments from employer self‑insurance arrangements;

 

(8) employer-paid amounts used by an employee toward the cost of insurance coverage, flexible spending accounts, cafeteria plans, health care expense accounts, day care expenses, or any payments in lieu of any employer‑paid group insurance coverage, including the difference between single and family rates that may be paid to a member with single coverage and certain amounts determined by the executive director to be ineligible;

 

(9) employer-paid fringe benefits, including, but not limited to:


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(i) employer-paid premiums or supplemental contributions for employees for all types of insurance;

 

(ii) membership dues or fees for the use of fitness or recreational facilities;

 

(iii) incentive payments or cash awards relating to a wellness program;

 

(iv) the value of any nonmonetary benefits;

 

(v) any form of payment made in lieu of an employer-paid fringe benefit;

 

(vi) an employer-paid amount made to a deferred compensation or tax-sheltered annuity program; and

 

(vii) any amount paid by the employer as a supplement to salary, either as a lump-sum amount or a fixed or matching amount paid on a recurring basis, that is not available to the employee as cash;

 

(10) the amount equal to that which the employing governmental subdivision would otherwise pay toward single or family insurance coverage for a covered employee when, through a contract or agreement with some but not all employees, the employer:

 

(i) discontinues, or for new hires does not provide, payment toward the cost of the employee's selected insurance coverages under a group plan offered by the employer;

 

(ii) makes the employee solely responsible for all contributions toward the cost of the employee's selected insurance coverages under a group plan offered by the employer, including any amount the employer makes toward other employees' selected insurance coverages under a group plan offered by the employer; and

 

(iii) provides increased salary rates for employees who do not have any employer-paid group insurance coverages;

 

(11) except as provided in section 353.86 or 353.87, compensation of any kind paid to volunteer ambulance service personnel or volunteer firefighters, as defined in subdivision 35 or 36;

 

(12) the amount of compensation that exceeds the limitation provided in section 356.611;

 

(13) amounts paid by a federal or state grant for which the grant specifically prohibits grant proceeds from being used to make pension plan contributions, unless the contributions to the plan are made from sources other than the federal or state grant; and

 

(14) bonus pay that is not performance or merit pay under paragraph (a), clause (6).

 

(c) Amounts, other than those provided under paragraph (a), clause (3), provided to an employee by the employer through a grievance proceeding, a court order, or a legal settlement are salary only if the settlement or court order is reviewed by the executive director and the amounts are determined by the executive director to be consistent with paragraph (a) and prior determinations.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 3. Minnesota Statutes 2016, section 353.01, subdivision 47, is amended to read:

 

Subd. 47. Vesting. (a) "Vesting" means obtaining a nonforfeitable entitlement to an annuity or benefit from a retirement plan administered by the Public Employees Retirement Association by having credit for sufficient allowable service under paragraph (b), (c), or (d), whichever applies.

 

(b) For purposes of qualifying for an annuity or benefit as a basic or coordinated plan member of the general employees retirement plan of the Public Employees Retirement Association:

 

(1) a public employee who first became a member of the association before July 1, 2010, is 100 percent vested when the person has accrued credit for not less than three years of allowable service as defined under subdivision 16 in the general employees retirement plan; and

 

(2) a public employee who first becomes a member of the association after June 30, 2010, is 100 percent vested when the person has accrued credit for not less than five years of allowable service as defined under subdivision 16 in the general employees retirement plan.

 

(c) For purposes of qualifying for an annuity or benefit as a member of the local government correctional employees service retirement plan:

 

(1) a public employee who first became a member of the association before July 1, 2010, is 100 percent vested when the person has accrued credit for not less than three years of allowable service as defined under subdivision 16 in the local government correctional service retirement plan; and

 

(2) a public employee who first becomes a member of the association after June 30, 2010, is vested at the following percentages when the person has accrued credited credit for allowable service as defined under subdivision 16, as follows in the local government correctional service retirement plan, as follows:

 

(i) 50 percent after five years;

 

(ii) 60 percent after six years;

 

(iii) 70 percent after seven years;

 

(iv) 80 percent after eight years;

 

(v) 90 percent after nine years; and

 

(vi) 100 percent after ten years.

 

(d) For purposes of qualifying for an annuity or benefit as a member of the public employees police and fire retirement plan:

 

(1) a public employee who first became a member of the association before July 1, 2010, is 100 percent vested when the person has accrued credit for not less than three years of allowable service as defined under subdivision 16 in the public employees police and fire retirement plan;

 

(2) a public employee who first becomes a member of the association after June 30, 2010, and before July 1, 2014, is vested at the following percentages when the person has accrued credited allowable service as defined under subdivision 16 in the public employees police and fire retirement plan, as follows:


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(i) 50 percent after five years;

 

(ii) 60 percent after six years;

 

(iii) 70 percent after seven years;

 

(iv) 80 percent after eight years;

 

(v) 90 percent after nine years; and

 

(vi) 100 percent after ten years; and

 

(3) a public employee who first becomes a member of the association after June 30, 2014, is vested at the following percentages when the person has accrued credited credit for allowable service as defined under subdivision 16 in the public employees police and fire retirement plan, as follows:

 

(i) 50 percent after ten years;

 

(ii) 55 percent after 11 years;

 

(iii) 60 percent after 12 years;

 

(iv) 65 percent after 13 years;

 

(v) 70 percent after 14 years;

 

(vi) 75 percent after 15 years;

 

(vii) 80 percent after 16 years;

 

(viii) 85 percent after 17 years;

 

(ix) 90 percent after 18 years;

 

(x) 95 percent after 19 years; and

 

(xi) 100 percent after 20 or more years.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 4. Minnesota Statutes 2016, section 353.0162, is amended to read:

 

353.0162 REDUCED SALARY PERIODS SALARY CREDIT PURCHASE FOR PERIODS OF REDUCED SALARY.

 

(a) A member may purchase additional differential salary credit, as described in paragraph (c), for a period specified in this section paragraph (b).

 

(b) The applicable period is a period during which the member is receiving a no or reduced salary from the employer while the member is:


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(1) receiving temporary workers' compensation payments related to the member's service to the public employer;

 

(2) on an authorized leave of absence, except that if the authorized leave of absence exceeds 12 months, the period of leave for which differential salary credit may be purchased is limited to 12 months; or

 

(3) on an authorized partial paid leave of absence as a result of a budgetary or salary savings program offered or mandated by a governmental subdivision, if certified to the executive director by the governmental subdivision.

 

(c) The Differential salary amount credit is the difference between the average monthly salary received by the member during the a period of reduced salary under this section specified in paragraph (b) and the average monthly salary of the member, excluding overtime, on which contributions to the applicable plan were would have been made during the period of the last six months of covered employment occurring immediately before the period of reduced salary, applied to based on the member's normal employment period, measured in hours or otherwise, as applicable, and rate of pay.

 

(d) To receive eligible differential salary credit, the member shall pay the plan, by delivering payment to the executive director, an amount equal to:

 

(1) the applicable employee contribution rate under section 353.27, subdivision 2; 353.65, subdivision 2; or 353E.03, subdivision 1, as applicable, multiplied by the differential salary amount;

 

(2) plus an employer equivalent payment equal to the applicable employer contribution rate in section 353.27, subdivision 3; 353.65, subdivision 3; or 353E.03, subdivision 2, as applicable, multiplied by the differential salary amount;

 

(3) plus, if applicable, an equivalent employer additional amount equal to the additional employer contribution rate in section 353.27, subdivision 3a, multiplied by the differential salary amount.

 

(e) The employer, by appropriate action of its governing body and documented in its official records, may pay the employer equivalent contributions and, as applicable, the equivalent employer additional contributions on behalf of the member.

 

(f) Payment under this section must include interest on the contribution amount or amounts, whichever applies, at an 8.5 percent annual rate until June 30, 2015, and at an eight percent annual rate thereafter, prorated for applicable months from the date on which the period of reduced salary specified under this section in paragraph (b) terminates to the date on which the payment or payments are received by the executive director. Payment under this section must be completed within by the earlier earliest of:

 

(1) 30 days from after termination of public service by the employee under section 353.01, subdivision 11a, or;

 

(2) one year after the termination of the period specified in paragraph (b), as further restricted under this section.; or

 

(3) 30 days after the commencement of a disability benefit.

 

(g) The period for which additional allowable salary credit may be purchased is limited to the period during which the person receives temporary workers' compensation payments or for those business years in which the governmental subdivision offers or mandates a budget or salary savings program, as certified to the executive director by a resolution of the governing body of the governmental subdivision. For an authorized leave of absence, the period for which allowable salary credit may be purchased may not exceed 12 months of authorized leave.


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(h) To purchase (g) If the member has purchased 12 months of differential salary credit for a subsequent period of temporary workers' compensation benefits or subsequent authorized medical leave of absence, the member must return to public service and render a minimum of three months of allowable service to purchase differential salary credit for a subsequent leave of absence.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. Minnesota Statutes 2016, section 353.03, subdivision 3, is amended to read:

 

Subd. 3. Duties and powers. (a) The board shall:

 

(1) elect a president and vice-president;

 

(2) approve the staffing complement, as recommended by the executive director, necessary to administer the fund;

 

(3) 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 pleasure;

 

(4) adopt, alter, and enforce reasonable rules consistent with the laws of the state and the terms of the applicable benefit plans for the administration and management of the fund, for the payment and collection of payments from members and for the payment of withdrawals and benefits, and that are necessary in order to comply with the applicable federal Internal Revenue Service and Department of Labor requirements;

 

(5) pass upon and allow or disallow all applications for membership in the fund and allow or disallow claims for withdrawals, pensions, or benefits payable from the fund;

 

(6) authorize procedures for use of electronic signatures as defined in section 325L.02, paragraph (h), on applications and forms required by the association;

 

(7) (6) adopt an appropriate mortality table based on experience of the fund as recommended by the association actuary and approved under section 356.215, subdivision 18, with interest set at the rate specified in section 356.215, subdivision 8;

 

(8) (7) provide for the payment out of the fund of the cost of administering this chapter, of all necessary expenses for the administration of the fund and of all claims for withdrawals, pensions, or benefits allowed;

 

(9) (8) approve or disapprove all recommendations and actions of the executive director made subject to its approval or disapproval by subdivision 3a; and

 

(10) (9) approve early retirement and optional annuity factors, subject to review by the actuary retained by the Legislative Commission on Pensions and Retirement; establish the schedule for implementation of the approved factors; and notify the Legislative Commission on Pensions and Retirement of the implementation schedule.

 

(b) In 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.

 

(c) The 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 management and budget. The association shall not receive any financial benefit from the life insurance program


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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.

 

(d) The board shall establish procedures governing reimbursement of expenses to board members. These procedures must define the types of activities and expenses that qualify for reimbursement, must provide that all out‑of-state travel be authorized by the board, and must provide for the independent verification of claims for expense reimbursement. The procedures must comply with the applicable rules and policies of the Department of Management and Budget and the Department of Administration.

 

(e) The 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.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 6. Minnesota Statutes 2016, section 353.29, subdivision 4, is amended to read:

 

Subd. 4. Application for annuity. Application for a retirement annuity or optional annuity may be made by a member or by a person authorized to act acting on behalf of the member, upon proof of authority satisfactory to the executive director. Every application for retirement must be made in writing on a form or in a format prescribed by the executive director and must be substantiated by written proof of the member's age and identity. The notarized signature of a member's spouse on a retirement annuity application acknowledging the member's annuity selection meets the notice requirement to the spouse under section 356.46, subdivision 3. An application for a retirement annuity is not complete until all necessary supporting documents are received by the executive director.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 7. Minnesota Statutes 2016, section 353.29, subdivision 7, is amended to read:

 

Subd. 7. Annuities; accrual Annuity starting date. (a) Except as to elected public officials specified in paragraph (b), a retirement annuity granted under this chapter begins with on the first day of the first calendar month after the date of termination of public service or up to six months before the first of the month in which a complete application is received by the executive director under subdivision 4, whichever is later. The annuity must be paid in equal monthly installments and does not accrue, unless suspended or reduced under section 353.37. Annuity payments shall not be paid beyond the end of the month in which entitlement to the annuity has terminated.

 

(b) An annuity granted to an elective elected public official accrues may begin on the day following the expiration of the public office or expiration of the right to hold that office that qualified the elected official for membership under section 353.01, subdivision 2a or 2d, if a complete application is received by the executive director under subdivision 4 within six months of the date of termination of public service. The annuity for the month during which the expiration occurred is prorated accordingly.

 

(c) An annuity, once granted, must not be increased, decreased, or revoked except under this chapter.

 

(d) An annuity payment may be made retroactive for up to one year prior to that month in which a complete application is received by the executive director under subdivision 4.

 

(e) (d) If an annuitant dies before negotiating the check for the month in which death occurs, payment must first be made to the surviving spouse, or if none, then to the designated beneficiary, or if none, lastly to the estate.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 8. Minnesota Statutes 2016, section 353.30, subdivision 3c, is amended to read:

 

Subd. 3c. Effective date of bounce-back annuity. In the event of the death of the designated optional annuity beneficiary before the retired employee or disabilitant, the restoration of the normal single life annuity under subdivision 3a or 3b will take effect on the first of the month following the date of death of the designated optional annuity beneficiary or on the first of the month following one year six months before the date on which a certified copy satisfactory verification of the death record is received in the office of the public employees retirement association established by the executive director, whichever date is later.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 9. Minnesota Statutes 2016, section 353.32, subdivision 1, is amended to read:

 

Subdivision 1. Before retirement. If a member or former member who terminated public service dies before retirement or before receiving any retirement annuity and no other payment of any kind is or may become payable to any person, a refund is payable to the designated beneficiary or, if there be none, to the surviving spouse, or, if none, to the legal representative of the decedent's estate. The refund must be in an amount equal to accumulated deductions, less the sum of any disability or survivor benefits that have been paid by the fund, plus annual compound interest thereon at the rate specified in section 353.34, subdivision 2, and less the sum of any disability or survivor benefits, if any, that may have been paid by the fund; provided that a survivor who has a right to benefits under section 353.31 may waive such benefits in writing, except such benefits for a dependent child under the age of 18 years may only be waived under an order of the district court.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 10. Minnesota Statutes 2016, section 353.34, subdivision 2, is amended to read:

 

Subd. 2. Refund with interest. (a) Except as provided in subdivision 1, any person who ceases to be a public employee is entitled to receive a refund in an amount equal to accumulated deductions with, less the sum of any disability benefits that have been paid by the fund, plus annual compound interest to the first day of the month in which the refund is processed.

 

(b) For a person who ceases to be a public employee before July 1, 2011, the refund interest is at the rate of six percent to June 30, 2011, and at the rate of four percent after June 30, 2011. For a person who ceases to be a public employee after July 1, 2011, the refund interest is at the rate of four percent.

 

(c) If a person repays a refund and subsequently applies for another refund, the repayment amount, including interest, is added to the fiscal year balance in which the repayment was made.

 

(d) If the refund payable to a member is based on employee deductions that are determined to be invalid under section 353.27, subdivision 7, the interest payable on the invalid employee deductions is four percent.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 11. Minnesota Statutes 2016, section 353.35, subdivision 1, is amended to read:

 

Subdivision 1. Refund rights. (a) Except as provided in paragraph (b), when any former member accepts a refund, all existing service credits and all rights and benefits to which the person was entitled prior to the acceptance of the refund must terminate.


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(b) A refund under section 353.651, subdivision 3, paragraph (c), does not result in a forfeiture of salary credit for the allowable service credit covered by the refund.

 

(c) The If a person forfeits service credits, rights, and benefits under paragraph (a), the person's service credits, rights, and benefits of a former member must not shall be restored until if the person returns to active service and acquires employment covered by the association for at least six months of allowable service credit after taking the last refund and repays the refund or refunds taken and interest all amounts previously received under section 353.34, subdivisions 1 and subdivision 2, plus interest at the annual rate of 8.5 percent until June 30, 2015, and eight percent thereafter, compounded annually, from the date each amount was received to the date the amount is repaid. If the person elects to restore service credit in a particular fund from which the person has taken more than one refund, the person must repay all refunds to that fund. All refunds The repayment must be repaid made within six months of the last date of termination day of public service employment. A person may have service credits, rights, and benefits restored under this paragraph once.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 12. Minnesota Statutes 2016, section 353.37, subdivision 1, is amended to read:

 

Subdivision 1. Salary maximums. (a) The annuity of a person otherwise eligible for an annuity from the general employees retirement plan of the Public Employees Retirement Association, the public employees police and fire retirement plan, or the local government correctional employees retirement plan must be suspended under subdivision 2 or reduced under subdivision 3, whichever results in the higher annual annuity amount, if upon the person reenters public service as a nonelective person's employment as a nonelected employee of a governmental subdivision in a position not required by law to be a member of a plan administered by the Minnesota State Retirement System, the Teachers Retirement Association, or the St. Paul Teachers Retirement Fund Association, or returns to work as an employee of a labor organization that represents public employees who are association members under this chapter, and salary for the reemployment service exceeds the annual maximum earnings allowable for that age for the continued receipt of full benefit amounts monthly under the federal Old Age, Survivors and Disability Insurance Program as set by the secretary of health and human services under United States Code, title 42, section 403, in any calendar year. If the person has not yet reached the minimum age for the receipt of Social Security benefits, the maximum salary for the person is equal to the annual maximum earnings allowable for the minimum age for the receipt of Social Security benefits.

 

(b) The provisions of paragraph (a) do not apply to the members of the general employees plan of the Public Employees Retirement Association who were former members of MERF.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 13. Minnesota Statutes 2016, section 353.64, subdivision 10, is amended to read:

 

Subd. 10. Pension coverage for Hennepin Healthcare System, Inc.; paramedics and emergency medical technicians. An employee of Hennepin Healthcare System, Inc. is a member of the public employees police and fire retirement plan under sections 353.63 to 353.68 if the person is:

 

(1) certified as a paramedic or emergency medical technician by the state under section 144E.28, subdivision 4;

 

(2) employed full time by Hennepin Healthcare System Inc., as:

 

(i) a paramedic or;

 

(ii) an emergency medical technician by Hennepin County; or

 

(iii) a supervisor or manager of paramedics or emergency medical technicians; and


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(3) not eligible for coverage under the agreement signed between the state and the secretary of the federal Department of Health and Human Services making the provisions of the federal Old Age, Survivors, and Disability Insurance Act applicable to paramedics and emergency medical technicians because the person's position is excluded after that date from application under United States Code, title 42, sections 418(d)(5)(A) and 418(d)(8)(D), and section 355.07.

 

Hennepin Healthcare System, Inc. shall deduct the employee contribution from the salary of each full-time paramedic and emergency medical technician it employs as required by section 353.65, subdivision 2, shall make the employer contribution for each full-time paramedic and emergency medical technician it employs as required by section 353.65, subdivision 3, and shall meet the employer recording and reporting requirements in section 353.65, subdivision 4.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 14. Minnesota Statutes 2016, section 353F.02, subdivision 5a, is amended to read:

 

Subd. 5a. Privatized former public employer. "Privatized former public employer" means a medical facility that was formerly included in the definition of governmental subdivision under section 353.01, subdivision 6, on the day before the effective date of privatization, that is privatized and whose employees are certified for participation under this chapter.

 

EFFECTIVE DATE. This section is effective for privatizations with an effective date of privatization under section 353F.02, subdivision 3, after June 30, 2017.

 

Sec. 15. Minnesota Statutes 2016, section 353F.025, subdivision 2, is amended to read:

 

Subd. 2. Reporting privatizations. (a) If the actuarial calculations under subdivision 1, paragraph (c), indicate privatization can be approved because a net gain to the general employees retirement plan of the Public Employees Retirement Association is expected, or if paragraph (b) applies, the executive director shall, following acceptance of the actuarial calculations by the board of trustees, forward notice and supporting documentation, including a copy of the actuary's report and findings, to the chair and the executive director of the Legislative Commission on Pensions and Retirement and the chairs and the ranking minority members of the committees with jurisdiction over governmental operations in the house of representatives and senate.

 

(b) If the calculations under subdivision 1, paragraph (c), indicate a net loss, the executive director shall recommend to the board of trustees that the privatization be approved if the chief clerical officer of the applicable governmental subdivision submits a resolution from the governing body specifying that a lump sum payment will be made to the Public Employees Retirement Association equal to the net loss, plus interest. The interest must be computed using the applicable ultimate preretirement interest rate assumption under section 356.215, subdivision 8, expressed as a monthly rate, from the date of the actuarial valuation from which the actuarial accrued liability data was used to determine the net loss in the actuarial study under subdivision 1, to the date of payment, with annual compounding. Payment must be made on or after the effective date of privatization.

 

(c) The Public Employees Retirement Association must maintain a list that includes the names of all privatized former public employers in the association's comprehensive annual financial report and on the association's Web site. Annually by March 1, the association must submit to the executive director of the Legislative Commission on Pensions and Retirement the names of any privatized former public employers approved since the publication of the previous fiscal year's comprehensive annual financial report.


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Sec. 16. Minnesota Statutes 2016, section 353F.04, subdivision 2, is amended to read:

 

Subd. 2. Exceptions. The increased augmentation rates specified in subdivision 1 do not apply to a privatized former public employee:

 

(1) beginning the first of the month in which the privatized former public employee becomes covered again by a retirement plan enumerated in section 356.30, subdivision 3, if the employee accrues at least six months of credited service in any single plan enumerated in section 356.30, subdivision 3, except clause (6);

 

(2) beginning the first of the month in which the privatized former public employee becomes covered again by the general employees retirement plan of the Public Employees Retirement Association;

 

(3) beginning the first of the month after a privatized former public employee terminates service with the successor entity privatized former public employer; or

 

(4) if the person begins receipt of a retirement annuity while employed by the employer which assumed operations of or purchased the privatized former public employer.

 

EFFECTIVE DATE. This section is effective for privatizations with an effective date of privatization under section 353F.02, subdivision 3, after June 30, 2017.

 

Sec. 17. Minnesota Statutes 2016, section 353F.05, is amended to read:

 

353F.05 AUTHORIZATION FOR ADDITIONAL ALLOWABLE SERVICE FOR EARLY RETIREMENT PURPOSES.

 

(a) For the purpose of determining eligibility for early retirement benefits provided under section 353.30, subdivision 1a, of the edition of Minnesota Statutes published in the year before the year in which the privatization occurred, and notwithstanding any provision of chapter 353, to the contrary, the years of allowable service for a privatized former public employee who transfers employment on the effective date of privatization and does not apply for a refund of contributions under section 353.34, subdivision 1, of the edition of Minnesota Statutes published in the year before the year in which the privatization occurred, or any similar provision, includes service with the successor employer to the privatized former public employer following the effective date. The successor privatized former public employer shall provide any reports that the executive director of the Public Employees Retirement Association may reasonably request to permit calculation of benefits.

 

(b) To be eligible for early retirement benefits under this section, the individual must separate from service with the successor to the privatized former public employer. The privatized former public employee, or an individual authorized to act on behalf of that employee, may apply for an annuity following application procedures under section 353.29, subdivision 4.

 

EFFECTIVE DATE. This section is effective for privatizations with an effective date of privatization under section 353F.02, subdivision 3, after June 30, 2017.

 

Sec. 18. Minnesota Statutes 2016, section 353F.057, is amended to read:

 

353F.057 TERMINATION FROM SERVICE REQUIREMENT.

 

Upon termination of service from the privatized former public employer or any successor entity after the effective date of privatization, a privatized former public employee must separate from any employment relationship with the privatized former public employer or any successor entity for at least 30 days to qualify to receive a retirement annuity under this chapter.


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EFFECTIVE DATE. This section is effective for privatizations with an effective date of privatization under section 353F.02, subdivision 3, after June 30, 2017.

 

Sec. 19. Minnesota Statutes 2016, section 353F.06, is amended to read:

 

353F.06 APPLICATION OF REEMPLOYED ANNUITANT EARNINGS LIMITATIONS.

 

If a privatized former public employee satisfies the separation from service requirement in section 353F.057 and thereafter resumes employment with the privatized former public employer or any successor entity or a governmental subdivision under section 353.01, subdivision 6, the reemployed annuitant earnings limitations of section 353.37 apply.

 

EFFECTIVE DATE. This section is effective for privatizations with an effective date of privatization under section 353F.02, subdivision 3, after June 30, 2017.

 

Sec. 20. Minnesota Statutes 2016, section 353F.07, is amended to read:

 

353F.07 EFFECT ON REFUND.

 

Notwithstanding any provision of chapter 353 to the contrary, privatized former public employees may receive a refund of employee accumulated contributions plus interest as provided in section 353.34, subdivision 2, at any time after the transfer of employment to the successor employer of the privatized former public employer. If a privatized former public employee has received a refund from a pension plan listed in section 356.30, subdivision 3, the person may not repay that refund unless the person again becomes a member of one of those listed plans and complies with section 356.30, subdivision 2.

 

EFFECTIVE DATE. This section is effective for privatizations with an effective date of privatization under section 353F.02, subdivision 3, after June 30, 2017.

 

Sec. 21. [353F.09] APPLICATION TO SALES OF PRIVATIZED FORMER PUBLIC EMPLOYERS.

 

A medical facility or other employing unit shall cease to be a privatized former public employer and its employees shall cease to be considered privatized former public employees under this chapter upon the sale of the operations of the medical facility or employing unit to another employer or the sale of the medical facility or employing unit to another employer. The privatized former public employees shall be entitled to benefits accrued under this chapter to the date of the sale, but shall not accrue additional benefits after the date of the sale.

 

EFFECTIVE DATE. The section is effective for privatizations with an effective date of privatization under section 353F.02, subdivision 3, after June 30, 2017, and for sales of privatized former public employers after June 30, 2017.

 

Sec. 22. REPEALER.

 

Minnesota Statutes 2016, section 353.0161, is repealed.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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ARTICLE 11

TEACHERS RETIREMENT ASSOCIATION

ADMINISTRATIVE PROVISIONS

 

Section 1. Minnesota Statutes 2016, section 354.05, subdivision 2, is amended to read:

 

Subd. 2. Teacher. (a) "Teacher" means:

 

(1) a person who renders service as a teacher, supervisor, principal, superintendent, librarian, nurse, counselor, social worker, therapist, or psychologist in:

 

(i) a public school of the state other than in Independent School District No. 625 or in Independent School District No. 709, or in any;

 

(ii) a charter school, irrespective of the location of the school, or in any;

 

(iii) a charitable, penal, or correctional institutions institution of a governmental subdivision,; or

 

(iv) the Perpich Center for Arts Education, except that any employee of the Perpich Center for Arts Education who was covered by the Minnesota State Retirement System general state employees retirement plan as of July 1, 2016, shall continue to be covered by that plan and not by the Teachers Retirement Association;

 

(2) a person who is engaged in educational administration in connection with the state public school system, whether the position be a public office or an as employment;

 

(3) a person who renders service as a charter school director or chief administrative officer; provided, however, that if the charter school director or chief administrative officer is covered by the Public Employees Retirement Association general employees retirement plan on July 1, 2017, the charter school director or chief administrative officer shall continue to be covered by that plan and not by the Teachers Retirement Association;

 

(2) (4) an employee of the Teachers Retirement Association;

 

(3) (5) a person who renders teaching service on a part-time basis and who also renders other services for a single employing unit where the teaching service comprises at least 50 percent of the combined employment salary is a member of the association for all services with the single employing unit or, if less than 50 percent of the combined employment salary, the executive director determines all of the combined service is covered by the association; or

 

(4) (6) a person who is not covered by the plans established under chapter 352D, 354A, or 354B and who is employed by the Board of Trustees of the Minnesota State Colleges and Universities system in an unclassified position as:

 

(i) a president, vice-president, or dean;

 

(ii) a manager or a professional in an academic or an academic support program other than specified in item (i);

 

(iii) an administrative or a service support faculty position; or

 

(iv) a teacher or a research assistant.


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(b) "Teacher" does not mean:

 

(1) a person who works for a school or institution as an independent contractor as defined by the Internal Revenue Service;

 

(2) a person who renders part-time teaching service or who is a customized trainer as defined by the Minnesota State Colleges and Universities system if (i) the service is incidental to the regular nonteaching occupation of the person; and (ii) the employer stipulates annually in advance that the part-time teaching service or customized training service will not exceed 300 hours in a fiscal year and retains the stipulation in its records; and (iii) the part‑time teaching service or customized training service actually does not exceed 300 hours in a fiscal year;

 

(3) a person exempt from licensure under section 122A.30;

 

(4) (2) annuitants of the teachers retirement plan who are employed after retirement by an employing unit that participates in the teachers retirement plan during the course of that reemployment;

 

(5) (3) a person who is employed by the University of Minnesota;

 

(6) (4) a member or an officer of any general governing or managing board or body of an employing unit that participates in the teachers retirement plan; or

 

(7) (5) a person employed by Independent School District No. 625 or Independent School District No. 709 as a teacher as defined in section 354A.011, subdivision 27.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 2. Minnesota Statutes 2016, section 354.05, is amended by adding a subdivision to read:

 

Subd. 17a. Former spouse. "Former spouse" means a person who is no longer a spouse of a member due to dissolution of the marriage, legal separation, or annulment.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 3. Minnesota Statutes 2016, section 354.06, subdivision 2, is amended to read:

 

Subd. 2. President; executive director. The board shall annually elect one of its members as president. It shall elect an executive director. Notwithstanding any law to the contrary, the board must set the salary of the executive director. The salary of the executive director must not exceed the limit for a position listed in section 15A.0815, subdivision 2. The salary of the assistant executive director who shall be in the unclassified service, shall be set in accordance with section 43A.18, subdivision 3. The executive director shall serve during the pleasure of the board and be the executive officer of the board, with such duties as the board shall prescribe. The board shall employ all other clerks and employees necessary to properly administer the association. The cost and expense of administering the provisions of this chapter shall be paid by the association. The board shall appoint an executive director shall be appointed by the board on the basis of fitness education, experience in the retirement field and leadership, ability to manage and lead system staff, and ability to assist the board in setting a vision for the system. The executive director shall have had at least five years of experience on the administrative staff of a major retirement system.

 

EFFECTIVE DATE. This section is effective July 1, 2017.


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Sec. 4. Minnesota Statutes 2016, section 354.06, subdivision 2a, is amended to read:

 

Subd. 2a. Duties of executive director. 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 advisor 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, as necessary, a deputy executive director and an assistant executive director in the unclassified service, as defined in section 43A.08, whose salaries shall be set in accordance with section 43A.18, subdivision 3, and two assistant executive directors in the classified service, as defined in section 43A.07, with the approval of the board, and appoint such employees, both permanent and temporary, as are necessary to carry out the provisions of this chapter;

 

(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 director's control and under such conditions as the director may prescribe;

 

(6) with the approval of the board, contract and set the compensation for the services of an approved actuary, professional management services, and any other consulting services. These contracts are not subject to the competitive bidding procedure prescribed by chapter 16C. An 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 must 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 are qualified to contract with the executive director;

 

(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, under 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, under 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) certify funds available for investment to the State Board of Investment;


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(13) with the advice and approval of the board, request the State Board of Investment to sell securities on determining that funds are needed for the purposes of the association;

 

(14) prepare and submit biennial and annual budgets to the board and with the approval of the board submit those budgets to the Department of Management and Budget; and

 

(15) 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. The executive director may:

 

(i) reduce all or part of the accrued interest and fines payable by an employing unit for reporting requirements under section 354.52 chapter 354, based on an evaluation of any extenuating circumstances of the employing unit;

 

(ii) assign association employees to conduct field audits of an employing unit to ensure compliance with the provisions of this chapter; and

 

(iii) recover overpayments, if not repaid to the association, by suspending or reducing the payment of a retirement annuity, refund, disability benefit, survivor benefit, or optional annuity under this chapter until the overpayment, plus interest, has been recovered.

 

EFFECTIVE DATE. This section is effective July 1, 2017.

 

Sec. 5. Minnesota Statutes 2016, section 354.095, is amended to read:

 

354.095 MEDICAL LEAVE.

 

(a) Upon granting a medical leave, an employing unit must certify the leave to the association on a form specified by the executive director. A member of the association who is on an authorized medical leave of absence is entitled to receive allowable service credit, not to exceed one year five years, for the period of leave, upon making the prescribed payment to the fund under section 354.72. A member may not receive more than one year of allowable service credit during any fiscal year by making payment under this section. A member may not receive disability benefits under section 354.48 and receive allowable service credit under this section for the same period of time.

 

(b) The executive director shall reject an application for disability benefits under section 354.48 if the member is applying only because an employer-sponsored provider of private disability insurance benefits requires such an application and the member would not have applied for disability benefits in the absence of such requirement. The member shall submit a copy of the disability insurance policy that requires an application for disability benefits from the plan if the member wishes to assert that the application is only being submitted because of the disability insurance policy requirement.

 

(c) Notwithstanding the provisions of any agreement to the contrary, employee and employer contributions may not be made to receive allowable service credit under this section if the member does not retain the right to full reinstatement both during and at the end of the medical leave.

 

EFFECTIVE DATE. Paragraphs (a) and (c) are effective July 1, 2018. Paragraph (b) is effective retroactively from July 1, 2016.

 

Sec. 6. Minnesota Statutes 2016, section 354.44, subdivision 3, is amended to read:

 

Subd. 3. Application for retirement. A member or a person authorized to act on behalf of the member may make application for retirement provided the age and service requirements under subdivision 1 are satisfied on or before the member's retirement annuity accrual date under subdivision 4. The application may be made no earlier


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than 120 180 days before the termination of teaching service. The application must be made on a form prescribed b