1.1                          A bill for an act 
  1.2             relating to retirement; modifying the definition of 
  1.3             "average salary" for certain plans; amending Minnesota 
  1.4             Statutes 1998, sections 352.115, subdivision 2; 
  1.5             352.12, subdivision 2a; 352.93, subdivision 1; and 
  1.6             352B.01, subdivision 11. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1998, section 352.115, 
  1.9   subdivision 2, is amended to read: 
  1.10     Subd. 2.  [AVERAGE SALARY.] The retirement annuity 
  1.11  hereunder payable at normal retirement age or thereafter must be 
  1.12  computed in accordance with the applicable provisions of the 
  1.13  formula stated in subdivision 3, on the basis of the employee's 
  1.14  average salary for the period of allowable service.  This 
  1.15  retirement annuity is known as the "normal" retirement annuity.  
  1.16     For each year of allowable service, "average salary" of an 
  1.17  employee in determining a retirement annuity means the average 
  1.18  of the highest five three successive years of salary upon which 
  1.19  the employee has made contributions to the retirement fund by 
  1.20  payroll deductions.  Average salary must be based upon all 
  1.21  allowable service if this service is less than five three years. 
  1.22     "Average salary" does not include the payment of accrued 
  1.23  unused annual leave or overtime paid at time of final separation 
  1.24  from state service if paid in a lump sum nor does it include the 
  1.25  reduced salary, if any, paid during the period the employee is 
  1.26  entitled to workers' compensation benefit payments for temporary 
  2.1   disability. 
  2.2      Sec. 2.  Minnesota Statutes 1998, section 352.12, 
  2.3   subdivision 2a, is amended to read: 
  2.4      Subd. 2a.  [SURVIVING SPOUSE COVERAGE TERM CERTAIN.] In 
  2.5   lieu of the 100 percent optional annuity under subdivision 2, or 
  2.6   refund under subdivision 1, the surviving spouse of a deceased 
  2.7   employee or former employee may elect to receive survivor 
  2.8   coverage in a term certain of five, ten, 15, or 20 years, but 
  2.9   monthly payments must not exceed 75 percent of the average 
  2.10  high-five high-three monthly salary of the deceased employee or 
  2.11  former employee.  The monthly term certain annuity must be 
  2.12  actuarially equivalent to the 100 percent optional annuity under 
  2.13  subdivision 2. 
  2.14     If a survivor elects a term certain annuity and dies before 
  2.15  the expiration of the specified term certain period, the 
  2.16  commuted value of the remaining annuity payments must be paid in 
  2.17  a lump sum to the survivor's estate. 
  2.18     Sec. 3.  Minnesota Statutes 1998, section 352.93, 
  2.19  subdivision 1, is amended to read: 
  2.20     Subdivision 1.  [BASIS OF ANNUITY; WHEN TO APPLY.] After 
  2.21  separation from state service, an employee covered under section 
  2.22  352.91 who has reached age 55 years and has credit for at least 
  2.23  three years of covered correctional service and regular 
  2.24  Minnesota state retirement system service is entitled upon 
  2.25  application to a retirement annuity under this section based 
  2.26  only on covered correctional employees' service.  Application 
  2.27  may be made no earlier than 60 days before the date the employee 
  2.28  is eligible to retire by reason of both age and service 
  2.29  requirements.  
  2.30     In this section, "average salary" means the average of the 
  2.31  monthly salary during the employee's highest five three 
  2.32  successive years of salary as an employee covered by the 
  2.33  Minnesota state retirement system.  Average salary must be based 
  2.34  upon all allowable service if this service is less than five 
  2.35  three years. 
  2.36     Sec. 4.  Minnesota Statutes 1998, section 352B.01, 
  3.1   subdivision 11, is amended to read: 
  3.2      Subd. 11.  [AVERAGE MONTHLY SALARY.] "Average monthly 
  3.3   salary" means the average of the highest monthly salaries for 
  3.4   five three years of service as a member.  Average monthly salary 
  3.5   must be based upon all allowable service if this service is less 
  3.6   than five three years.  It does not include any amounts of 
  3.7   severance pay or any reduced salary paid during the period the 
  3.8   person is entitled to workers' compensation benefit payments for 
  3.9   temporary disability.  A member on leave of absence receiving 
  3.10  temporary workers' compensation payments and a reduced salary or 
  3.11  no salary from the employer who is entitled to allowable service 
  3.12  credit for the period of absence may make payment to the fund 
  3.13  for the difference between salary received, if any, and the 
  3.14  salary the member would normally receive if not on leave of 
  3.15  absence during the period.  The member shall pay an amount equal 
  3.16  to the member and employer contribution rate under section 
  3.17  352B.02, subdivisions 1b and 1c, on the differential salary 
  3.18  amount for the period of the leave of absence.  The employing 
  3.19  department, at its option, may pay the employer amount on behalf 
  3.20  of the member.  Payment made under this subdivision must include 
  3.21  interest at the rate of 8.5 percent per year, and must be 
  3.22  completed within one year of the return from the leave of 
  3.23  absence. 
  3.24     Sec. 5.  [EFFECTIVE DATE.] 
  3.25     Sections 1 to 4 are effective July 1, 2000.