Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 357-S.F.No. 553 
           An act relating to retirement; Minneapolis and St. 
          Paul teacher retirement fund associations; providing 
          additional funding from various sources; assessing 
          active and retired members for certain teacher 
          retirement fund associations supplemental 
          administrative expenses; modifying certain post 
          retirement adjustments; authorizing contributions by 
          the city of Minneapolis; appropriating money; 
          authorizing certain tax levies by special school 
          district No. 1; amending Minnesota Statutes 1992, 
          sections 354A.12, subdivisions 2, 2a, and by adding 
          subdivisions; and Laws 1959, chapter 462, section 3, 
          subdivision 4; proposing coding for new law in 
          Minnesota Statutes, chapter 354A; repealing Laws 1987, 
          chapter 372, article 3, section 1. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1992, section 354A.12, 
subdivision 2, is amended to read: 
    Subd. 2.  [RETIREMENT CONTRIBUTION LEVY DISALLOWED.] Except 
as provided in subdivision 3b, paragraph (d), with respect to 
special school district No. 1, notwithstanding any law to the 
contrary, levies for teachers retirement fund associations in 
cities of the first class, including levies for any employer 
social security taxes for teachers covered by the Duluth 
teachers retirement fund association or the Minneapolis teachers 
retirement fund association or the St. Paul teachers retirement 
fund association, are disallowed. 
    Sec. 2.  Minnesota Statutes 1992, section 354A.12, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 
RATES.] (a) The employing units shall make the following 
employer contributions to teachers retirement fund associations: 
    (1) for any coordinated member of a teachers retirement 
fund association in a city of the first class, the employing 
unit shall pay the employer social security taxes in accordance 
with section 355.46, subdivision 3, clause (b); 
    (2) for any coordinated member of one of the following 
teachers retirement fund associations in a city of the first 
class, the employing unit shall make a regular employer 
contribution to the respective retirement fund association in an 
amount equal to the designated percentage of the salary of the 
coordinated member as provided below: 
     Duluth teachers retirement
     fund association                        4.50 percent
     Minneapolis teachers retirement
     fund association                        4.50 percent
     St. Paul teachers retirement
     fund association                        4.50 percent;
    (3) for any basic member of one of the following teachers 
retirement fund associations in a city of the first class, the 
employing unit shall make a regular employer contribution to the 
respective retirement fund in an amount equal to the designated 
percentage of the salary of the basic member as provided below: 
     Minneapolis teachers retirement
     fund association                        8.50 percent
     St. Paul teachers retirement
     fund association                        8.00 percent
    (4) for a basic member of a teachers retirement fund 
association in a city of the first class, the employing unit 
shall make an additional employer contribution to the respective 
fund in an amount equal to the designated percentage of the 
salary of the basic member, as provided below: 
     Minneapolis teachers retirement     
     fund association                      
     July 1, 1993 - June 30, 1994        4.85 percent  
     July 1, 1994, and thereafter        3.64 percent  
     St. Paul teachers retirement   
     fund association                      
     July 1, 1993 - June 30, 1995        4.63 percent 
     July 1, 1995, and thereafter        3.64 percent 
    (5) for a coordinated member of a teachers retirement fund 
association in a city of the first class, the employing unit 
shall make an additional employer contribution to the respective 
fund in an amount equal to the applicable percentage of the 
coordinated member's salary, as provided below: 
     Duluth teachers retirement 
     fund association                    1.29 percent 
     Minneapolis teachers retirement  
     fund association  
       July 1, 1992 - June 30, 1993      0.00 percent 
       July 1, 1993, and thereafter      1.00  
       July 1, 1993 - June 30, 1994      0.50 percent 
       July 1, 1994, and thereafter      3.64 percent 
     St. Paul teachers retirement  
     fund association       
       July 1, 1992 - June 30, 1993      0.00 percent  
       July 1, 1993, and thereafter      1.00  
       July 1, 1993 - June 30, 1994      0.5 percent  
       July 1, 1994 - June 30, 1995      1.50 percent 
       July 1, 1995, and thereafter      3.64 percent  
    (b) For basic members of the Minneapolis teachers 
retirement fund association and the St. Paul teachers retirement 
fund association who retire on or after July 1, 1993, the 
employing unit shall continue to make an additional employer 
contribution to the retirement fund in an amount equal to the 
average salary of the employing unit's basic members multiplied 
by the relevant percentages in paragraph (a), clause (4). 
    (c) The regular and additional employer contributions must 
be remitted directly to the respective teachers retirement fund 
association each month. 
    (d) (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. 
    Sec. 3.  Minnesota Statutes 1992, section 354A.12, is 
amended by adding a subdivision to read: 
    Subd. 3a.  [SPECIAL DIRECT STATE AID TO ST. PAUL TEACHERS 
RETIREMENT FUND ASSOCIATION.] (a) The state shall pay to the St. 
Paul teachers retirement fund association $500,000 in fiscal 
year 1994.  In each subsequent fiscal year, the payment to the 
St. Paul teachers retirement fund association must be increased 
at the same rate as the increase in the general education 
revenue formula allowance under section 124A.22, subdivision 2, 
in subsequent fiscal years. 
    (b) The direct state aid is payable October 1 annually.  
The commissioner of finance shall pay the direct state aid.  The 
amount required under this subdivision is appropriated annually 
to the commissioner of finance. 
    Sec. 4.  Minnesota Statutes 1992, section 354A.12, is 
amended by adding a subdivision to read: 
    Subd. 3b.  [SPECIAL DIRECT STATE MATCHING AID TO THE 
MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.] (a) Special 
school district No. 1 may make an additional employer 
contribution to the Minneapolis teachers retirement fund 
association.  The city of Minneapolis may make a contribution to 
the Minneapolis teachers retirement fund association.  This 
contribution may be made by a levy of the board of estimate and 
taxation of the city of Minneapolis, and the levy, if made, is 
classified as that of a special taxing district for purposes of 
section 275.065. 
    (b) For every $1,000 contributed in equal proportion by 
special school district No. 1 and by the city of Minneapolis to 
the Minneapolis teachers retirement fund association under 
paragraph (a), the state shall pay to the Minneapolis teachers 
retirement fund association $1,000, but not to exceed $2,500,000 
in total in fiscal year 1994.  The total amount available for 
each subsequent fiscal year must be increased at the same rate 
as the increase in the general education revenue formula 
allowance under section 124A.22, subdivision 2, in subsequent 
fiscal years.  The superintendent of special school district No. 
1, the mayor of the city of Minneapolis, and the executive 
director of the Minneapolis teachers retirement fund association 
shall jointly certify to the commissioner of finance the total 
amount that has been contributed by special school district No. 
1 and by the city of Minneapolis to the Minneapolis teachers 
retirement fund association.  Any certification to the 
commissioner of education must be made quarterly.  If the total 
certifications for a fiscal year exceed the maximum annual 
direct state matching aid amount in any quarter, the amount of 
direct state matching aid payable to the Minneapolis teachers 
retirement fund association must be limited to the balance of 
the maximum annual direct state matching aid amount available.  
The amount required under this paragraph, subject to the maximum 
direct state matching aid amount, is appropriated annually to 
the commissioner of finance. 
    (c) The commissioner of finance may prescribe the form of 
the certifications required under paragraph (b). 
    Sec. 5.  Minnesota Statutes 1992, section 354A.12, is 
amended by adding a subdivision to read: 
    Subd. 3c.  [TERMINATION OF DIRECT STATE MATCHING AID.] (a) 
The direct state aid under subdivision 3a to the St. Paul 
teachers retirement association and the direct state aid under 
subdivision 3b to the Minneapolis teachers retirement fund 
association terminates for the respective fund at the end of the 
fiscal year in which the accrued liability funding ratio for 
that fund, as determined in the most recent actuarial report for 
that fund by the actuary retained by the legislative commission 
on pensions and retirement, equals or exceeds the accrued 
liability funding ratio for the teachers retirement association, 
as determined in the most recent actuarial report for the 
teachers retirement association by the actuary retained by the 
legislative commission on pensions and retirement. 
    (b) If the state aid is terminated for the St. Paul 
teachers retirement fund association or the Minneapolis teachers 
retirement fund association under paragraph (a), it may not 
again be received by that fund. 
    Sec. 6.  Minnesota Statutes 1992, section 354A.12, is 
amended by adding a subdivision to read: 
    Subd. 3d.  [SUPPLEMENTAL ADMINISTRATIVE EXPENSE 
ASSESSMENT.] (a) The active and retired membership of the 
Minneapolis teachers retirement fund association and of the St. 
Paul teachers retirement fund association is responsible for 
defraying supplemental administrative expenses other than 
investment expenses of the respective teacher retirement fund 
association. 
    (b) Investment expenses of the teachers retirement fund 
association are those expenses incurred by or on behalf of the 
retirement fund in connection with the investment of the assets 
of the retirement fund other than investment security 
transaction costs.  Other administrative expenses are all 
expenses incurred by or on behalf of the retirement fund for all 
other retirement fund functions other than the investment of 
retirement fund assets.  Investment and other administrative 
expenses must be accounted for using generally accepted 
accounting principles and in a manner consistent with the 
comprehensive annual financial report of the teachers retirement 
fund association for the immediately previous fiscal year under 
section 356.20. 
    (c) Supplemental administrative expenses other than 
investment expenses of a first class city teacher retirement 
fund association are those expenses for the fiscal year that 
exceed the amount computed by applying the most recent 
percentage of pay administrative expense amount, other than 
investment expenses, for the teachers retirement association 
governed by chapter 354 to the covered payroll of the respective 
teachers retirement fund association for the fiscal year. 
    (d) The board of trustees of each first class city teachers 
retirement fund association shall allocate the total dollar 
amount of supplemental administrative expenses other than 
investment expenses among the various active and retired 
membership groups of the teachers retirement fund association 
and shall assess the various membership groups their respective 
share of the supplemental administrative expenses other than 
investment expenses, in amounts determined by the board of 
trustees.  The supplemental administrative expense assessments 
must be paid by the membership group in a manner determined by 
the board of trustees of the respective teachers retirement 
association.  Supplemental administrative expenses payable by 
the active members of the pension plan must be picked up by the 
employer in accordance with section 356.62. 
    (e) The supplemental administrative expense assessments 
must be deposited in the applicable teachers retirement fund 
upon receipt. 
    (f) Any omitted active membership group assessments that 
remain undeducted and unpaid to the teachers retirement fund 
association for 90 days must be paid by the respective school 
district.  The school district may recover any omitted active 
membership group assessment amounts that it has previously 
paid.  The teachers retirement fund association shall deduct any 
omitted retired membership group assessment amounts from the 
benefits next payable after the discovery of the omitted amounts.
    Sec. 7.  [354A.28] [MODIFICATION IN MINNEAPOLIS TEACHERS 
RETIREMENT FUND ASSOCIATION POST RETIREMENT ADJUSTMENT.] 
    Subdivision 1.  [POST RETIREMENT ADJUSTMENT 
MODIFICATION.] Any post retirement adjustment payable from the 
Minneapolis teachers retirement fund association after June 1, 
1993, must be modified as provided in this section. 
    Subd. 2.  [ESTABLISHMENT.] The Minneapolis teachers 
retirement fund association shall establish an annuity reserve 
fund for providing an investment vehicle for the reserves for 
various retirement annuities and benefits payable by the fund. 
    Subd. 3.  [ASSETS.] The assets of the annuity reserve fund 
consist of the money representing the actuarially determined 
required reserves for various retirement annuities and benefits 
payable by the Minneapolis teachers retirement fund association. 
    Subd. 4.  [MANAGEMENT.] The Minneapolis teachers retirement 
fund association annuity reserve fund must be managed by the 
board of trustees of the Minneapolis teachers retirement fund 
association. 
    Subd. 5.  [INVESTMENT.] The assets of the annuity reserve 
fund must be invested, reinvested, and retained in the 
discretion of the board of trustees of the Minneapolis teachers 
retirement fund association in authorized investments under 
section 11A.24. 
    Subd. 6.  [ALLOCATION OF ASSETS.] No later than the last 
business day of the month in which the benefit payment begins, 
the board of trustees of the Minneapolis teachers retirement 
fund association shall determine the reserves to be allocated to 
the respective annuity reserve fund in the following manner: 
    (1) the present value of the benefit payable to the 
annuitant or benefit recipient must be determined using the 
postretirement earnings assumptions specified for the first 
class city teachers retirement funds in section 356.215, and the 
mortality table applicable to the fund; and 
    (2) the amount determined in clause (1) must be multiplied 
by the funding ratio of the teachers retirement fund association 
determined for the previous fiscal year end, and the product 
must be identified as the amount allocated to the annuity 
reserve fund. 
    Subd. 7.  [WITHDRAWAL OF MONEY.] If the executive director 
of the Minneapolis teachers retirement fund association 
concludes that money is required for the payment of retirement 
annuities or benefits, the executive director shall sell 
sufficient securities in the reserve fund or transfer available 
cash to pay benefits. 
    Subd. 8.  [CALCULATION OF POSTRETIREMENT ADJUSTMENTS.] (a) 
Annually, after June 30, the board of trustees of the 
Minneapolis teachers retirement fund association shall use the 
procedures in this subdivision and subdivision 9 to determine 
the amount of any postretirement adjustment.  The authority to 
pay the automatic two percent annual postretirement increase as 
specified in the articles and bylaws continues. 
    Subd. 9.  [ADDITIONAL INCREASE.] (a) In addition to the 
postretirement increases granted under subdivision 8, an 
additional percentage increase must be computed and paid under 
this subdivision. 
    (b) The board of trustees shall determine the number of 
annuities or benefit recipients who have been receiving an 
annuity or benefit for at least 12 months as of the current June 
30.  These recipients are entitled to receive the surplus 
investment earnings additional postretirement increase. 
    (c) Annually, on June 30, the board of trustees of the 
teachers retirement fund association shall determine the amount 
of reserves in the annuity reserve fund as specified in 
subdivision 6. 
    (d) Annually, on June 30, the board of trustees of the 
Minneapolis teachers retirement fund association shall determine 
the five-year annualized rate of return attributable to the 
assets in the annuity reserve fund under the formula or formulas 
specified in section 11A.04, clause (11). 
    (e) The board of trustees shall determine the amount of 
excess five-year annualized rate of return over the 
preretirement interest assumption as specified in section 
356.215. 
    (f) The additional increase must be determined by 
multiplying the quantity one minus the rate of contribution 
deficiency, as specified in the most recent actuarial report of 
the actuary retained by the legislative commission on pensions 
and retirement, times the rate of return excess as determined in 
paragraph (e). 
    (g) The additional increase is payable to all eligible 
annuitants or benefit recipients on January 1 following the June 
30 determination date under paragraphs (c) and (d). 
     Sec. 8.  Laws 1959, chapter 462, section 3, subdivision 4, 
is amended to read: 
    Subd. 4.  The school district shall contract with the City 
of Minneapolis for such facilities and necessary services as are 
furnished by the Civil Service Commission, and unless the Board 
of Education and city governing body each adopts a resolution 
declaring that a particular function would be most efficiently 
and effectively handled separately, the board shall may contract 
on a pro-rata cost basis with the city for such facilities and 
services as are provided by the Purchasing Department, 
comptroller, treasurer, legal department, City Planning 
Commission, and other services supplied by such city, provided, 
however, that the board may contract for other legal services 
when the interest of the school district and the city are in 
conflict in any legal matter. 
    Sec. 9.  [STUDY OF TEACHERS RETIREMENT FUND ASSOCIATIONS 
PHASE-OUT OR CONSOLIDATION OPTIONS.] 
    (a) The legislative commission on pensions and retirement 
shall study the options available for phasing-out or 
consolidating the first class city teacher retirement fund 
associations.  The commission shall report its conclusions by 
February 1, 1994, to the chairs of the committee on governmental 
operations and reform of the senate, the committee on finance of 
the senate, the committee on governmental operations and 
gambling of the house of representatives, and the committee on 
ways and means of the house of representatives.  
    (b) The legislative commission on pensions and retirement 
shall establish a technical advisory group for the study 
composed of the commission staff, the directors of the first 
class city teacher retirement funds, a representative of the 
teacher bargaining unit of the respective school districts, a 
representative of each school district, and a representative of 
the department of finance.  Each bargaining unit and school 
district shall notify the chair of the legislative commission on 
pensions and retirement of its designation of a representative. 
    (c) The executive director of the teachers retirement 
association and an employee representative to be selected by the 
board of the teachers retirement association must be members of 
the technical advisory group in paragraph (b).  The board shall 
notify the chair of the legislative commission on pensions and 
retirement of its designation of an employee representative. 
    Sec. 10.  [REPEALER.] 
    Laws 1987, chapter 372, article 3, section 1, is repealed. 
    Sec. 11.  [EFFECTIVE DATE.] 
    Sections 1 to 5, 9, and 10 are effective on July 1, 1993.  
Sections 6 and 7 are effective for the Minneapolis teachers 
retirement fund association the day following first receipt of 
contributions from special school district No. 1, the city of 
Minneapolis, and matching state contributions under section 4.  
Section 6 is effective for the St. Paul teachers retirement fund 
association on July 1, 1993.  Section 8 is effective the day 
following final enactment. 
    Presented to the governor May 20, 1993 
    Signed by the governor May 24, 1993, 5:45 p.m.