1.1                          A bill for an act 
  1.2             relating to retirement; providing for an additional 
  1.3             postretirement asset distribution for the Minneapolis 
  1.4             police relief association; amending Minnesota Statutes 
  1.5             1998, section 423B.01; proposing coding for new law in 
  1.6             Minnesota Statutes, chapter 423B. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1998, section 423B.01, is 
  1.9   amended to read: 
  1.10     423B.01 [MINNEAPOLIS POLICE RELIEF ASSOCIATION; 
  1.11  DEFINITIONS.] 
  1.12     Subdivision 1.  [TERMS.] For purposes of sections 423B.01 
  1.13  to 423B.18, unless the context clearly indicates otherwise, each 
  1.14  of the terms defined in this section has the indicated meaning. 
  1.15     Subd. 2.  [ACTIVE MEMBER.] "Active member" means a person 
  1.16  who was hired and duly appointed by the city of Minneapolis 
  1.17  before May 1, 1959, as a police stenographer, police clerk, 
  1.18  police telephone operator, police radio operator, or police 
  1.19  mechanic or before June 15, 1980, as a police officer, police 
  1.20  matron, or assistant police matron, who is regularly entered on 
  1.21  the payroll of the police department, and who serves on active 
  1.22  duty. 
  1.23     Subd. 3.  [ACTIVE MEMBER PERCENTAGE.] The "active member 
  1.24  percentage" is the total number of units accrued by active 
  1.25  members of the association divided by the sum of the total 
  1.26  number of units to which eligible members are entitled and 
  2.1   active members of the association have accrued. 
  2.2      Subd. 4.  [AGE.] "Age" means a person's age at the person's 
  2.3   latest birthday. 
  2.4      Subd. 4 5.  [ANNUAL POSTRETIREMENT PAYMENT.] "Annual 
  2.5   postretirement payment" means the payment of a lump sum 
  2.6   postretirement benefit under section 423B.15 to an eligible 
  2.7   member on June 1 following the determination date in any year. 
  2.8      Subd. 5 6.  [ASSOCIATION.] "Association" means the 
  2.9   Minneapolis police relief association. 
  2.10     Subd. 7.  [CITY.] "City" means the city of Minneapolis. 
  2.11     Subd. 8.  [DETERMINATION DATE.] "Determination date" means 
  2.12  December 31 of each year. 
  2.13     Subd. 6 9.  [DISABILITY.] "Disability" means a physical or 
  2.14  mental incapacity of an active member to perform the duties of 
  2.15  the person's position in the service of the police department. 
  2.16     Subd. 7 10.  [DISCHARGE.] "Discharge" means a complete 
  2.17  separation from service in the police department. 
  2.18     Subd. 8 11.  [ELIGIBLE MEMBER.] "Eligible member" means a 
  2.19  person, including a service pensioner, a disability pensioner, a 
  2.20  survivor, or dependent of a deceased active member, service 
  2.21  pensioner, or disability pensioner, who received a pension or 
  2.22  benefit from the relief association during the 12 months before 
  2.23  the determination date. 
  2.24     Subd. 9 12.  [EXCESS INVESTMENT INCOME.] "Excess investment 
  2.25  income" means the amount, if any, by which the average time 
  2.26  weighted total rate of return earned by the fund in the most 
  2.27  recent prior five fiscal years has exceeded the actual average 
  2.28  percentage increase in the current monthly salary of a first 
  2.29  grade patrol officer in the most recent prior five fiscal years 
  2.30  plus two percent, and must be expressed as a dollar amount.  The 
  2.31  amount may not exceed one percent of the total assets of the 
  2.32  fund, except when the actuarial value of assets of the fund 
  2.33  according to the most recent annual actuarial valuation prepared 
  2.34  in accordance with sections 356.215 and 356.216 is greater than 
  2.35  102 percent of its actuarial accrued liabilities, in which case 
  2.36  the amount must not exceed 1-1/2 percent of the total assets of 
  3.1   the fund, and does not exist unless the yearly average 
  3.2   percentage increase of the time weighted total rate of return of 
  3.3   the fund for the previous five years exceeds by two percent the 
  3.4   yearly average percentage increase in monthly salary of a first 
  3.5   grade patrol officer during the previous five calendar years. 
  3.6      Subd. 10 13.  [FUND.] "Fund" means the special fund of the 
  3.7   relief association. 
  3.8      Subd. 14.  [NET EXCESS ASSET AMOUNT PAYMENT.] "Net excess 
  3.9   asset amount payment" means the payment of an additional 
  3.10  postretirement payment under section 2 to an eligible member on 
  3.11  June 1 following the determination date in the given year. 
  3.12     Subd. 15.  [NET TOTAL EXCESS ASSET AMOUNT.] "Net total 
  3.13  excess asset amount" is the total excess asset amount stated in 
  3.14  dollars and multiplied by the quantity one minus the active 
  3.15  member percentage. 
  3.16     Subd. 11 16.  [RETIRED MEMBER.] "Retired member" means a 
  3.17  former active member who has terminated active service in the 
  3.18  police department and who is entitled to receive a pension or 
  3.19  benefit under sections 423B.01 to 423B.18, as amended, or any 
  3.20  predecessor law. 
  3.21     Subd. 12 17.  [SURVIVING SPOUSE MEMBER.] "Surviving spouse 
  3.22  member" means the person who was the legally married spouse of 
  3.23  the member, who was residing with the decedent, and who was 
  3.24  married while or before the time the decedent was an active 
  3.25  member and was on the payroll of the police department, and who, 
  3.26  in case the deceased member was a pensioner or deferred 
  3.27  pensioner, was legally married to the member at least one year 
  3.28  before the decedent's termination of active service with the 
  3.29  police department.  The term does not include the surviving 
  3.30  spouse who has deserted a member or who has not been dependent 
  3.31  upon the member for support, nor does it include the surviving 
  3.32  common law spouse of a member. 
  3.33     Subd. 13 18.  [TIME WEIGHTED TOTAL RATE OF RETURN.] "Time 
  3.34  weighted total rate of return" means the percentage amount 
  3.35  determined by using the formula or formulas established by the 
  3.36  state board of investment under section 11A.04, clause (11), and 
  4.1   in effect on January 1, 1987. 
  4.2      Subd. 19.  [TOTAL EXCESS ASSET AMOUNT.] (a) "Total excess 
  4.3   asset amount" means the difference, if positive, expressed in 
  4.4   dollars, between the fund's market value of assets after any 
  4.5   deductions required by section 423B.15, subdivision 2, and 110 
  4.6   percent of the actuarial accrued liabilities based on the 
  4.7   actuarial valuation indicated in paragraph (b). 
  4.8      (b) The total excess asset amount in paragraph (a) exists 
  4.9   if the actuarial liability funding ratio, according to the most 
  4.10  recent annual actuarial valuation for the fund prepared in 
  4.11  accordance with sections 69.77, 356.215, and 356.216, with 
  4.12  adjustments required by section 423B.15, subdivision 2, equals 
  4.13  or exceeds 110 percent. 
  4.14     Subd. 14 20.  [UNIT.] "Unit" means one-eightieth of the 
  4.15  current monthly salary of a first grade patrol officer. 
  4.16     Subd. 15 21.  [ACTUARIAL EQUIVALENT.] "Actuarial 
  4.17  equivalent" or "actuarially equivalent" means the condition of 
  4.18  one annuity or benefit having an equal actuarial present value 
  4.19  as another annuity or benefit, determined as of a given date at 
  4.20  a specified age with each actuarial present value based on the 
  4.21  appropriate mortality table adopted by the board of directors 
  4.22  based on the experience of the fund and approved by the actuary 
  4.23  retained by the legislative commission on pensions and 
  4.24  retirement and using the applicable preretirement or 
  4.25  postretirement interest rate assumptions specified in section 
  4.26  356.216. 
  4.27     Sec. 2.  [423B.151] [EXCESS ASSET AMOUNT PAYMENT.] 
  4.28     Subdivision 1.  [DETERMINATION OF NET TOTAL EXCESS AMOUNT.] 
  4.29  The board of the association shall determine by May 1 of each 
  4.30  year whether the fund has a total excess asset amount for that 
  4.31  year.  If a total excess asset amount exists for the given year, 
  4.32  the net total excess asset amount shall be determined.  The 
  4.33  total excess asset amount and net total excess asset amount 
  4.34  shall be reported to the chief administrative officer of the 
  4.35  association, the mayor and governing body of the city, the state 
  4.36  auditor, the commissioner of finance, and the executive director 
  5.1   of the legislative commission on pensions and retirement.  The 
  5.2   portion of the net excess asset amount which is distributed 
  5.3   under this section must not be considered as income to or assets 
  5.4   of the fund for actuarial valuations of the fund for that year 
  5.5   under sections 69.77, 356.215, 356.216, and this act, except to 
  5.6   offset the amount distributed. 
  5.7      Subd. 2.  [TOTAL AVAILABLE FOR PAYMENT.] Twenty percent of 
  5.8   the net total excess asset amount determined under subdivision 1 
  5.9   is available for excess asset amount payments under subdivision 
  5.10  3. 
  5.11     Subd. 3.  [NET EXCESS ASSET AMOUNT PAYMENTS.] Except as 
  5.12  limited under subdivision 4, the net excess asset amount payment 
  5.13  to an eligible member is equal to the amount determined under 
  5.14  subdivision 2 multiplied by the units applicable to the eligible 
  5.15  member and divided by the total units of all eligible members. 
  5.16     Subd. 4.  [ENTITLEMENT; PRIORITY.] A person who is an 
  5.17  eligible member for the entire 12 months before the 
  5.18  determination date is eligible for a full excess asset amount 
  5.19  payment under subdivision 2.  A person who is an eligible member 
  5.20  for less than 12 months before the determination date is 
  5.21  eligible for a prorated excess asset amount payment.  If an 
  5.22  eligible member dies after the determination date and before the 
  5.23  excess asset amount payment commences, the association must pay 
  5.24  the eligible member's excess asset amount payment to the 
  5.25  eligible member's surviving spouse, if no surviving spouse, to 
  5.26  the member's estate. 
  5.27     Subd. 5.  [PAYMENT METHOD.] The excess asset amount 
  5.28  payments determined under this section commence on June 1 
  5.29  following the determination date.  These amounts may be paid as 
  5.30  a lump sum, disbursed to the eligible members in 12 equal 
  5.31  monthly installments, or any other manner which the board shall 
  5.32  determine. 
  5.33     Subd. 6.  [NO GUARANTEE OF ANNUAL RESIDUAL INVESTMENT 
  5.34  PAYMENT.] No provision of this act may be interpreted or relied 
  5.35  upon by any member of the association to guarantee or entitle a 
  5.36  member to a net excess asset amount payment relating to any year 
  6.1   in which there is no net total excess asset amount. 
  6.2      Sec. 3.  [423B.19] [CITY OF MINNEAPOLIS; NORMAL COST 
  6.3   CONTRIBUTION ADJUSTMENT.] 
  6.4      Notwithstanding section 69.77, 356.215, 356.216, or any 
  6.5   other law to the contrary, the required city contributions 
  6.6   toward the association's normal cost, as determined by the 
  6.7   actuary, are reduced below that otherwise payable by the full 
  6.8   amount of active member contributions required by law to be 
  6.9   directed to the association's health insurance escrow account 
  6.10  rather than to the special fund. 
  6.11     Sec. 4.  [423B.20] [SUSPENSION OF NORMAL COST 
  6.12  CONTRIBUTIONS.] 
  6.13     Notwithstanding the provisions of section 69.77 or any 
  6.14  other law to the contrary, if a total excess asset amount 
  6.15  exists, as defined in section 1, subdivision 19, the city is not 
  6.16  required to make a contribution to the fund for the normal cost 
  6.17  of active members. 
  6.18     Sec. 5.  [423B.21] [CHANGE IN AMORTIZATION PERIOD.] 
  6.19     Subdivision 1.  [AMORTIZATION TREATMENT.] Notwithstanding 
  6.20  section 69.77, subdivision 2b; 356.215; 356.216; or any other 
  6.21  law to the contrary, if the actuarial report for the association 
  6.22  indicates an unfunded actuarial accrued liability, the unfunded 
  6.23  obligation is to be amortized on a level dollar basis by 
  6.24  December 31 of the year occurring 15 years later.  If subsequent 
  6.25  actuarial valuations determine a net actuarial experience loss 
  6.26  incurred during the year which ended as of the day before the 
  6.27  most recent actuarial valuation date, any unfunded liability due 
  6.28  to that loss is to be amortized on a level dollar basis by 
  6.29  December 31 of the year occurring 15 years later. 
  6.30     Subd. 2.  [LIMITATION.] Notwithstanding subdivision 1, the 
  6.31  amortization period may not exceed the average life expectancy 
  6.32  of the remaining members. 
  6.33     Sec. 6.  [EFFECTIVE DATE.] 
  6.34     Sections 1 to 5 are effective upon approval by the 
  6.35  Minneapolis city council and compliance with Minnesota Statutes, 
  6.36  section 645.021, subdivision 3.  Section 3 applies retroactively 
  7.1   to contributions beginning after July 1, 1990.