1.1 	A bill for an act
1.2 	relating to retirement; modifying relief association
1.3 	financial requirements; amending provisions relating
1.4 	to the Minneapolis Police Relief Association; amending
1.5 	Minnesota Statutes 2004, sections 69.77, subdivision
1.6 	4; 356.216; 423B.01, subdivision 12; 423B.09,
1.7 	subdivision 1, by adding a subdivision; 423B.10,
1.8 	subdivision 1; 423B.15, subdivision 3; proposing
1.9 	coding for new law in Minnesota Statutes, chapter 423B.
1.10 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.11 	Section 1. Minnesota Statutes 2004, section 69.77,
1.12 	subdivision 4, is amended to read:
1.13 		Subd. 4.Relief association financial requirements;
1.14 	minimum municipal obligation.  (a) The officers of the relief
1.15 	association shall determine the financial requirements of the
1.16 	relief association and minimum obligation of the municipality
1.17 	for the following calendar year in accordance with the
1.18 	requirements of this subdivision.  The financial requirements of
1.19 	the relief association and the minimum obligation of the
1.20 	municipality must be determined on or before the submission date
1.21 	established by the municipality under subdivision 5.
1.22 	(b) The financial requirements of the relief association
1.23 	for the following calendar year must be based on the most recent
1.24 	actuarial valuation or survey of the special fund of the
1.25 	association if more than one fund is maintained by the
1.26 	association, or of the association, if only one fund is
1.27 	maintained, prepared in accordance with sections 356.215,
2.1 	subdivisions 4 to 15, and 356.216, as required under subdivision
2.2 	10.  If an actuarial estimate is prepared by the actuary of the
2.3 	relief association as part of obtaining a modification of the
2.4 	benefit plan of the relief association and the modification is
2.5 	implemented, the actuarial estimate must be used in calculating
2.6 	the subsequent financial requirements of the relief association.
2.7 	(c) If the relief association has an unfunded actuarial
2.8 	accrued liability as reported in the most recent actuarial
2.9 	valuation or survey, the total of the amounts calculated under
2.10 	clauses (1), (2), and (3), constitute the financial requirements
2.11 	of the relief association for the following year.  If the relief
2.12 	association does not have an unfunded actuarial accrued
2.13 	liability as reported in the most recent actuarial valuation or
2.14 	survey, the amount calculated under clauses (1) and (2)
2.15 	constitute the financial requirements of the relief association
2.16 	for the following year.  The financial requirement elements are:
2.17 	(1) the normal level cost requirement for the following
2.18 	year, expressed as a dollar amount, which must be determined by
2.19 	applying the normal level cost of the relief association as
2.20 	reported in the actuarial valuation or survey and expressed as a
2.21 	percentage of covered payroll to the estimated covered payroll
2.22 	of the active membership of the relief association, including
2.23 	any projected change in the active membership, for the following
2.24 	year;
2.25 	(2) for the Bloomington Fire Department Relief Association,
2.26 	the Fairmont Police Relief Association, and the Virginia Fire
2.27 	Department Relief Association, to the dollar amount of normal
2.28 	cost determined under clause (1) must be added an amount equal
2.29 	to the dollar amount of the administrative expenses of the
2.30 	special fund of the association if more than one fund is
2.31 	maintained by the association, or of the association if only one
2.32 	fund is maintained, for the most recent year, multiplied by the
2.33 	factor of 1.035.  The administrative expenses are those
2.34 	authorized under section 69.80.  No amount of administrative
2.35 	expenses under this clause are to be included in the financial
2.36 	requirements of the Minneapolis Firefighters Relief Association
3.1 	or the Minneapolis Police Relief Association; and
3.2 	(3) to the dollar amount of normal cost and expenses
3.3 	determined under clauses (1) and (2) must be added an amount
3.4 	equal to the level annual dollar amount which is sufficient to
3.5 	amortize the unfunded actuarial accrued liability by December
3.6 	31, 2010, for the Bloomington Fire Department Relief
3.7 	Association, the Fairmont Police Relief Association, the
3.8 	Minneapolis Firefighters Relief Association, and the Virginia
3.9 	Fire Department Relief Association, and by December 31, 2020,
3.10 	for the Minneapolis Police Relief Association,as determined
3.11 	from the actuarial valuation or survey of the fund, using an
3.12 	interest assumption set at the applicable rate specified in
3.13 	section 356.215, subdivision 8.  The amortization date specified
3.14 	in this clause applies to all local police or salaried
3.15 	firefighters' relief associations and that date supersedes any
3.16 	amortization date specified in any applicable special law.
3.17 	(d) The minimum obligation of the municipality is an amount
3.18 	equal to the financial requirements of the relief association
3.19 	reduced by the estimated amount of member contributions from
3.20 	covered salary anticipated for the following calendar year and
3.21 	the estimated amounts anticipated for the following calendar
3.22 	year from the applicable state aid program established under
3.23 	sections 69.011 to 69.051 receivable by the relief association
3.24 	after any allocation made under section 69.031, subdivision 5,
3.25 	paragraph (b), clause (2), or 423A.01, subdivision 2, clause
3.26 	(6), from the local police and salaried firefighters' relief
3.27 	association amortization aid program established under section
3.28 	423A.02, subdivision 1, from the supplementary amortization
3.29 	state-aid program established under section 423A.02, subdivision
3.30 	1a, and from the additional amortization state aid under section
3.31 	423A.02, subdivision 1b.

3.32 	Sec. 2. Minnesota Statutes 2004, section 356.216, is
3.33 	amended to read:
3.34 	356.216 CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE
3.35 	AND FIRE FUNDS.
3.36 	(a) The provisions of section 356.215 that govern the
4.1 	contents of actuarial valuations must apply to any local police
4.2 	or fire pension fund or relief association required to make an
4.3 	actuarial report under this section, except as follows:
4.4 	(1) in calculating normal cost and other requirements, if
4.5 	required to be expressed as a level percentage of covered
4.6 	payroll, the salaries used in computing covered payroll must be
4.7 	the maximum rate of salary on which retirement and survivorship
4.8 	credits and amounts of benefits are determined and from which
4.9 	any member contributions are calculated and deducted;
4.10 	(2) in lieu of the amortization date specified in section
4.11 	356.215, subdivision 11, the appropriate amortization target
4.12 	date specified in section 69.77, subdivision 4, or 69.773,
4.13 	subdivision 4, clause (c), must be used in calculating any
4.14 	required amortization contribution except that the amortization
4.15 	date for the Minneapolis Police Relief Association is December
4.16 	31, 2020;
4.17 	(3) in addition to the tabulation of active members and
4.18 	annuitants provided for in section 356.215, subdivision 13, the
4.19 	member contributions for active members for the calendar year
4.20 	and the prospective annual retirement annuities under the
4.21 	benefit plan for active members must be reported;
4.22 	(4) actuarial valuations required under section 69.773,
4.23 	subdivision 2, must be made at least every four years and
4.24 	actuarial valuations required under section 69.77 shall be made
4.25 	annually;
4.26 	(5) the actuarial balance sheet showing accrued assets
4.27 	valued at market value if the actuarial valuation is required to
4.28 	be prepared at least every four years or valued as current
4.29 	assets under section 356.215, subdivision 1, clause (6), or
4.30 	paragraph (b), whichever applies, if the actuarial valuation is
4.31 	required to be prepared annually, actuarial accrued liabilities,
4.32 	and the unfunded actuarial accrued liability must include the
4.33 	following required reserves:
4.34 	(i) For active members
4.35 	      1.  Retirement benefits
4.36 	      2.  Disability benefits
5.1 	      3.  Refund liability due to death or withdrawal
5.2 	      4.  Survivors' benefits
5.3 	         (ii) For deferred annuitants' benefits
5.4 	         (iii) For former members without vested rights
5.5 	         (iv) For annuitants
5.6 	      1.  Retirement annuities
5.7 	      2.  Disability annuities
5.8 	      3.  Surviving spouses' annuities
5.9 	      4.  Surviving children's annuities
5.10 	In addition to those required reserves, separate items must
5.11 	be shown for additional benefits, if any, which may not be
5.12 	appropriately included in the reserves listed above; and
5.13 	(6) actuarial valuations are due by the first day of the
5.14 	seventh month after the end of the fiscal year which the
5.15 	actuarial valuation covers.
5.16 	(b) For the Minneapolis Firefighters Relief Association or
5.17 	the Minneapolis Police Relief Association, the following
5.18 	provisions additionally apply:
5.19 	(1) in calculating the actuarial balance sheet, unfunded
5.20 	actuarial accrued liability, and amortization contribution of
5.21 	the relief association, "current assets" means the value of all
5.22 	assets at cost, including realized capital gains and losses,
5.23 	plus or minus, whichever applies, the average value of total
5.24 	unrealized capital gains or losses for the most recent
5.25 	three-year period ending with the end of the plan year
5.26 	immediately preceding the actuarial valuation report
5.27 	transmission date; and
5.28 	(2) in calculating the applicable portions of the actuarial
5.29 	valuation, an annual preretirement interest assumption of six
5.30 	percent, an annual postretirement interest assumption of six
5.31 	percent, and an annual salary increase assumption of four
5.32 	percent must be used.

5.33 	Sec. 3. Minnesota Statutes 2004, section 423B.01,
5.34 	subdivision 12, is amended to read:
5.35 		Subd. 12.Excess investment income.  "Excess investment
5.36 	income" means the amount, if any, by which the average time
6.1 	weighted total rate of return earned by the fund in the most
6.2 	recent prior five two fiscal years has exceeded the actual
6.3 	average percentage increase in the current monthly salary of a
6.4 	first grade patrol officer in the most recent prior five two 
6.5 	fiscal years plus two percent, and must be expressed as a dollar
6.6 	amount.  The amount may not exceed one percent of the total
6.7 	assets of the fund, except when the actuarial value of assets of
6.8 	the fund according to the most recent annual actuarial valuation
6.9 	prepared in accordance with sections 356.215 and 356.216 is
6.10 	greater than 102 percent of its actuarial accrued liabilities,
6.11 	in which case the amount must not exceed 1-1/2 percent of the
6.12 	total assets of the fund, and does not exist unless the yearly
6.13 	average percentage increase of the time weighted total rate of
6.14 	return of the fund for the previous five two years exceeds by
6.15 	two percent the yearly average percentage increase in monthly
6.16 	salary of a first grade patrol officer during the previous five 
6.17 	two calendar years.

6.18 	Sec. 4. Minnesota Statutes 2004, section 423B.09,
6.19 	subdivision 1, is amended to read:
6.20 		Subdivision 1.Minneapolis police; persons entitled to
6.21 	receive pensions.  The association shall grant pensions payable
6.22 	from the police pension fund in monthly installments to persons
6.23 	entitled to pensions in the manner and for the following
6.24 	purposes.
6.25 	(a) When the actuarial value of assets of the fund
6.26 	according to the most recent annual actuarial valuation
6.27 	performed in accordance with sections 356.215 and 356.216 is
6.28 	less than 90 percent of the actuarial accrued liabilities, an
6.29 	active member or a deferred pensioner who has performed duty as
6.30 	a member of the police department of the city for five years or
6.31 	more, upon written application after retiring from duty and
6.32 	reaching at least age 50, is entitled to be paid monthly for
6.33 	life a service pension equal to eight units.  For full years of
6.34 	service beyond five years, the service pension increases by 1.6
6.35 	units for each full year, to a maximum of 40 units.  When the
6.36 	actuarial value of assets of the fund according to the most
7.1 	recent annual actuarial valuation prepared in accordance with
7.2 	sections 356.215 and 356.216 is greater than 90 percent of
7.3 	actuarial accrued liabilities,Active members, deferred members,
7.4 	and service pensioners are entitled to a service pension
7.5 	according to the following schedule:
7.6 	5 years           8.0 units
7.7 	               6 years           9.6 units
7.8 	               7 years          11.2 units
7.9 	               8 years          12.8 units
7.10 	               9 years          14.4 units
7.11 	              10 years          16.0 units
7.12 	              11 years          17.6 units
7.13 	              12 years          19.2 units
7.14 	              13 years          20.8 units
7.15 	              14 years          22.4 units
7.16 	              15 years          24.0 units
7.17 	              16 years          25.6 units
7.18 	              17 years          27.2 units
7.19 	              18 years          28.8 units
7.20 	              19 years          30.4 units
7.21 	              20 years 34.0 35.0 units
7.22 	              21 years 35.6 36.6 units
7.23 	              22 years 37.2 38.2 units
7.24 	              23 years 38.8 39.8 units
7.25 	              24 years 40.4 41.4 units
7.26 	              25 years 42.0 43.0 units
7.27 	Fractional years of service may not be used in computing
7.28 	pensions.
7.29 	(b) An active member who after five years' service but less
7.30 	than 20 years' service with the police department of the city,
7.31 	becomes superannuated so as to be permanently unable to perform
7.32 	the person's assigned duties, is entitled to be paid monthly for
7.33 	life a superannuation pension equal to four units for five years
7.34 	of service and an additional two units for each full year of
7.35 	service over five years and less than 20 years.
7.36 	(c) An active member who is not eligible for a service
8.1 	pension and who, while a member of the police department of the
8.2 	city, becomes diseased or sustains an injury while in the
8.3 	service that permanently unfits the member for the performance
8.4 	of police duties is entitled to be paid monthly for life a
8.5 	pension equal to 34 units while so disabled.

8.6 	Sec. 5. Minnesota Statutes 2004, section 423B.09, is
8.7 	amended by adding a subdivision to read:
8.8 		Subd. 7.Additional unit. The additional unit provided
8.9 	to members by subdivision 1 must also be provided to members who
8.10 	selected a joint annuity option under subdivision 6 and must be
8.11 	in an amount that is actuarially equivalent to the service
8.12 	pension and the automatic survivor coverage for that additional
8.13 	unit.

8.14 	Sec. 6. Minnesota Statutes 2004, section 423B.10,
8.15 	subdivision 1, is amended to read:
8.16 		Subdivision 1.Entitlement; benefit amount.  (a) The
8.17 	surviving spouse of a deceased service pensioner, disability
8.18 	pensioner, deferred pensioner, superannuation pensioner, or
8.19 	active member, who was the legally married spouse of the
8.20 	decedent, residing with the decedent, and who was married while
8.21 	or before the time the decedent was on the payroll of the police
8.22 	department, and who, if the deceased member was a service or
8.23 	deferred pensioner, was legally married to the member for a
8.24 	period of at least one year before retirement from the police
8.25 	department, is entitled to a surviving spouse benefit.  The
8.26 	surviving spouse benefit is equal to 22 23 units per month if
8.27 	the person is the surviving spouse of a deceased active member
8.28 	or disabilitant.  The surviving spouse benefit is equal to six
8.29 	units per month, plus an additional one unit for each year of
8.30 	service to the credit of the decedent in excess of five years,
8.31 	to a maximum of 22 23 units per month, if the person is the
8.32 	surviving spouse of a deceased service pensioner, deferred
8.33 	pensioner, or superannuation pensioner.  The surviving spouse
8.34 	benefit is payable for the life of the surviving spouse.
8.35 	(b) A surviving child of a deceased service pensioner,
8.36 	disability pensioner, deferred pensioner, superannuation
9.1 	pensioner, or active member, who was living while the decedent
9.2 	was an active member of the police department or was born within
9.3 	nine months after the decedent terminated active service in the
9.4 	police department, is entitled to a surviving child benefit.
9.5 	The surviving child benefit is equal to eight units per month if
9.6 	the person is the surviving child of a deceased active member or
9.7 	disabilitant.  The surviving child benefit is equal to two units
9.8 	per month, plus an additional four-tenths of one unit per month
9.9 	for each year of service to the credit of the decedent in excess
9.10 	of five years, to a maximum of eight units, if the person is the
9.11 	surviving child of a deceased service pensioner, deferred
9.12 	pensioner, or superannuation pensioner.  The surviving child
9.13 	benefit is payable until the person attains age 18, or, if in
9.14 	full-time attendance during the normal school year, in a school
9.15 	approved by the board of directors, until the person receives a
9.16 	bachelor's degree or attains the age of 22 years, whichever
9.17 	occurs first.  In the event of the death of both parents leaving
9.18 	a surviving child or children entitled to a surviving child
9.19 	benefit as determined in this paragraph, the surviving child is,
9.20 	or the surviving children are, entitled to a surviving child
9.21 	benefit in such sums as determined by the board of directors to
9.22 	be necessary for the care and education of such surviving child
9.23 	or children, but not to exceed the family maximum benefit per
9.24 	month, to the children of any one family.
9.25 	(c) The surviving spouse and surviving child benefits are
9.26 	subject to a family maximum benefit.  The family maximum benefit
9.27 	is 41 units per month.
9.28 	(d) A surviving spouse who is otherwise not qualified may
9.29 	receive a benefit if the surviving spouse was married to the
9.30 	decedent for a period of five years and was residing with the
9.31 	decedent at the time of death.  The surviving spouse benefit is
9.32 	the same as that provided in paragraph (a), except that if the
9.33 	surviving spouse is younger than the decedent, the surviving
9.34 	spouse benefit must be actuarially equivalent to a surviving
9.35 	spouse benefit that would have been paid to the member's spouse
9.36 	had the member been married to a person of the same age or a
10.1 	greater age than the member's age before retirement.

10.2 	Sec. 7. Minnesota Statutes 2004, section 423B.15,
10.3 	subdivision 3, is amended to read:
10.4 		Subd. 3.Amount of annual postretirement payment.  The
10.5 	amount determined under subdivision 2 must be applied in
10.6 	accordance with this subdivision.  When the actuarial value of
10.7 	assets of the fund according to the most recent annual actuarial
10.8 	valuation prepared in accordance with sections 356.215 and
10.9 	356.216 is less than 102 percent of its total actuarial
10.10 	liabilities, the relief association shall apply the first
10.11 	one-half of excess investment income to the payment of an annual
10.12 	postretirement payment as specified in this subdivision and the
10.13 	second one-half of excess investment income up to one-half of
10.14 	one percent of the assets of the fund must be applied to reduce
10.15 	the state amortization state aid or supplementary amortization
10.16 	state aid payments otherwise due to the relief association under
10.17 	section 423A.02 for the current calendar year.  When the
10.18 	actuarial value of assets of the fund according to the most
10.19 	recent annual actuarial valuation prepared in accordance with
10.20 	sections 356.215 and 356.216 is less than 102 percent funded and
10.21 	other conditions are met, the relief association shall pay an
10.22 	annual postretirement payment to all eligible members in an
10.23 	amount not to exceed one-half of one percent of the assets of
10.24 	the fund.  When the actuarial value of assets of the fund
10.25 	according to the most recent annual actuarial valuation prepared
10.26 	in accordance with sections 356.215 and 356.216 is greater than
10.27 	102 percent of its actuarial accrued liabilities, the relief
10.28 	association shall pay an annual postretirement payment to all
10.29 	eligible members in an amount not to exceed 1-1/2 percent of the
10.30 	assets of the fund.  Payment of the annual postretirement
10.31 	payment must be in a lump sum amount on June 1 following the
10.32 	determination date in any year.  Payment of the annual
10.33 	postretirement payment may be made only if the average time
10.34 	weighted total rate of return for the most recent prior five two 
10.35 	years exceeds by two percent the actual average percentage
10.36 	increase in the current monthly salary of a top grade patrol
11.1 	officer in the most recent prior five two fiscal years.  The
11.2 	total amount of all payments to members may not exceed the
11.3 	amount determined under this subdivision.  Payment to each
11.4 	eligible member must be calculated by dividing the total number
11.5 	of pension units to which eligible members are entitled into the
11.6 	excess investment income available for distribution to members,
11.7 	and then multiplying that result by the number of units to which
11.8 	each eligible member is entitled to determine each eligible
11.9 	member's annual postretirement payment.  When the actuarial
11.10 	value of assets of the fund according to the most recent annual
11.11 	actuarial valuation prepared in accordance with sections 356.215
11.12 	and 356.216 is less than 102 percent of its actuarial accrued
11.13 	liabilities, payment to each eligible member may not exceed an
11.14 	amount equal to the total monthly benefit that the eligible
11.15 	member was entitled to in the prior year under the terms of the
11.16 	benefit plan of the relief association or each eligible member's
11.17 	proportionate share of the excess investment income, whichever
11.18 	is less.  When the actuarial value of assets of the fund
11.19 	according to the most recent annual actuarial valuation prepared
11.20 	in accordance with sections 356.215 and 356.216 is greater than
11.21 	102 percent of its actuarial accrued liabilities, payment to
11.22 	each eligible member must not exceed the member's proportionate
11.23 	share of 1-1/2 percent of the assets of the fund.
11.24 	A person who received a pension or benefit for the entire
11.25 	12 months before the determination date is eligible for a full
11.26 	annual postretirement payment.  A person who received a pension
11.27 	or benefit for less than 12 months before the determination date
11.28 	is eligible for a prorated annual postretirement payment.

11.29 	Sec. 8. [423B.23] GUARANTEED PENSION PROVISION.
11.30 	Once a pension benefit is properly paid in accordance with
11.31 	this law to any member, the dollar amount of that pension
11.32 	benefit shall not be reduced.

11.33 	Sec. 9. LOCAL APPROVAL; NONSEVERABILITY.
 11.34 	Sections 1 to 8 are not severable and are effective on the
11.35 	day after the date of the approval by the city council of the
11.36 	city of Minneapolis and the timely completion by the chief
12.1 	clerical officer of the city of Minneapolis of compliance with
12.2 	Minnesota Statutes, section 645.021, subdivisions 2 and 3.