1.1                          A bill for an act 
  1.2             relating to retirement; increasing pension benefit 
  1.3             accrual rates; adjusting financing for pension plans; 
  1.4             adding supplemental financial conditions information 
  1.5             for pension funds; authorizing defined contribution 
  1.6             early retirement options; reducing appropriations; 
  1.7             modifying homestead and agricultural credit aid; 
  1.8             appropriating money; amending Minnesota Statutes 1996, 
  1.9             sections 3A.02, subdivisions 1 and 4; 3A.07; 11A.18, 
  1.10            subdivision 9; 273.1398, by adding a subdivision; 
  1.11            352.01, subdivision 25; 352.04, subdivisions 2 and 3; 
  1.12            352.115, subdivision 3; 352.72, subdivision 2; 352.92, 
  1.13            subdivisions 1 and 2; 352.93, subdivisions 2, 3, and 
  1.14            by adding a subdivision; 352.95, subdivisions 1 and 5; 
  1.15            352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 
  1.16            2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a 
  1.17            subdivision; 352C.031, subdivision 4; 352C.033; 
  1.18            353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 
  1.19            353.29, subdivision 3; 353.651, subdivision 3; 
  1.20            353.656, subdivision 1; 353.71, subdivision 2; 
  1.21            353A.08, subdivision 1; 353A.083, by adding a 
  1.22            subdivision; 353C.06, subdivisions 3, 4, and by adding 
  1.23            a subdivision; 353C.08, subdivision 1; 353C.09; 
  1.24            354.05, subdivision 38; 354.42, subdivisions 2, 3, and 
  1.25            5; 354.44, subdivision 6; 354.53, subdivision 1; 
  1.26            354.55, subdivision 11; 354A.011, subdivision 15a; 
  1.27            354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, 
  1.28            subdivisions 4 and 4a; 356.215, subdivisions 1 and 4d; 
  1.29            356.25; 356.30, subdivision 1; 356.88, by adding a 
  1.30            subdivision; 423B.01, subdivision 9; 423B.06, by 
  1.31            adding a subdivision; 423B.07; 423B.09, subdivision 1, 
  1.32            and by adding a subdivision; 423B.10, subdivision 1; 
  1.33            423B.15, subdivisions 2, 3, and 6; and 490.124, 
  1.34            subdivision 1; Laws 1965, chapter 519, section 1, as 
  1.35            amended; Laws 1989, chapter 319, article 19, section 
  1.36            7, subdivisions 1, as amended, 3, 4, as amended, and 
  1.37            7; and Laws 1993, chapter 125, article 1, section 1; 
  1.38            proposing coding for new law in Minnesota Statutes, 
  1.39            chapters 124A; 352; 352C; and 356; proposing coding 
  1.40            for new law as Minnesota Statutes, chapter 352E; 
  1.41            repealing Minnesota Statutes 1996, sections 354A.12, 
  1.42            subdivision 2b; 356.70; and 356.88, subdivision 2. 
  1.43  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.44                             ARTICLE 1
  2.1                    PENSION UNIFORMITY PROVISIONS 
  2.2      Section 1.  Minnesota Statutes 1996, section 3A.02, 
  2.3   subdivision 1, is amended to read: 
  2.4      Subdivision 1.  [QUALIFICATIONS.] (a) A former legislator 
  2.5   is entitled, upon written application to the director, to 
  2.6   receive a retirement allowance monthly, if the person: 
  2.7      (1) has served at least six full years, without regard to 
  2.8   the application of section 3A.10, subdivision 2, or has served 
  2.9   during all or part of four regular sessions as a member of the 
  2.10  legislature, which service need not be continuous; 
  2.11     (2) has attained the normal retirement age; 
  2.12     (3) has retired as a member of the legislature; and 
  2.13     (4) has made all contributions provided for in section 
  2.14  3A.03, has made payments for past service under subdivision 2, 
  2.15  or has made payments in lieu of contributions under Minnesota 
  2.16  Statutes 1992, section 3A.031, prior to July 1, 1994. 
  2.17     (b) For service rendered before the beginning of the 1979 
  2.18  legislative session, but not to exceed eight years of service, 
  2.19  the retirement allowance is an amount equal to five percent per 
  2.20  year of service of that member's average monthly salary.  For 
  2.21  service in excess of eight years rendered before the beginning 
  2.22  of the 1979 legislative session, and for service rendered after 
  2.23  the beginning of the 1979 legislative session, the retirement 
  2.24  allowance is an amount equal to 2-1/2 percent an amount per year 
  2.25  of service of that member's average monthly salary calculated by 
  2.26  the actuary to provide a benefit that is actuarially equivalent 
  2.27  for each individual to the benefit that would have been provided 
  2.28  under this chapter on January 1, 1997. 
  2.29     (c) The retirement allowance accrues beginning with the 
  2.30  first day of the month of receipt of the application, but not 
  2.31  before age 60, and for the remainder of the former legislator's 
  2.32  life, if the former legislator is not serving as a member of the 
  2.33  legislature or as a constitutional officer or commissioner as 
  2.34  defined in section 352C.021, subdivisions 2 and 3.  The annuity 
  2.35  shall does not begin to accrue prior to retirement as a 
  2.36  legislator.  No annuity payment shall must be made retroactive 
  3.1   for more than 180 days before the date the annuity application 
  3.2   is filed with the director. 
  3.3      (d) Any member who has served during all or part of four 
  3.4   regular sessions is considered to have served eight years as a 
  3.5   member of the legislature. 
  3.6      (e) The retirement allowance ceases with the last payment 
  3.7   that accrued to the retired legislator during the retired 
  3.8   legislator's lifetime, except that the surviving spouse, if any, 
  3.9   is entitled to the retirement allowance for the calendar month 
  3.10  in which the retired legislator died. 
  3.11     Sec. 2.  Minnesota Statutes 1996, section 3A.02, 
  3.12  subdivision 4, is amended to read: 
  3.13     Subd. 4.  [DEFERRED ANNUITIES AUGMENTATION.] The deferred 
  3.14  annuity of any former legislator shall must be augmented as 
  3.15  provided herein.  The required reserves applicable to the 
  3.16  deferred annuity, determined as of the date the benefit begins 
  3.17  to accrue using an appropriate mortality table and an interest 
  3.18  assumption of five six percent, shall must be augmented from the 
  3.19  first of the month following termination of service, or July 1, 
  3.20  1973, whichever is later, to the first day of the month in which 
  3.21  the annuity begins to accrue, at the rate of five percent per 
  3.22  annum compounded annually until January 1, 1981, and thereafter 
  3.23  at the rate of three percent per annum compounded annually until 
  3.24  January 1 of the year in which the former legislator attains age 
  3.25  55.  From that date to the effective date of retirement, the 
  3.26  rate is five percent compounded annually. 
  3.27     The survivor or retirement benefit to a former member or 
  3.28  survivor of a former member who terminated service before July 
  3.29  1, 1997, must be determined under the laws in effect on the date 
  3.30  of termination and must be increased to reflect the change in 
  3.31  the postretirement fund interest assumption from five percent to 
  3.32  six percent.  The benefit payable under the six percent 
  3.33  postretirement interest assumption must be actuarially 
  3.34  equivalent to the benefit payable under the five percent 
  3.35  interest assumption and must be based on tables adopted by the 
  3.36  board of directors of the Minnesota state retirement system as 
  4.1   recommended by an approved actuary and approved by the actuary 
  4.2   retained by the legislative commission on pensions and 
  4.3   retirement. 
  4.4      Sec. 3.  Minnesota Statutes 1996, section 11A.18, 
  4.5   subdivision 9, is amended to read: 
  4.6      Subd. 9.  [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 
  4.7   Annually, following June 30, the state board shall use the 
  4.8   procedures in paragraphs (b), (c), and (d) to determine whether 
  4.9   a postretirement adjustment is payable and to determine the 
  4.10  amount of any postretirement adjustment. 
  4.11     (b) If the Consumer Price Index for urban wage earners and 
  4.12  clerical workers all items index published by the Bureau of 
  4.13  Labor Statistics of the United States Department of Labor 
  4.14  increases from June 30 of the preceding year to June 30 of the 
  4.15  current year, the state board shall certify the percentage 
  4.16  increase.  The amount certified may must not exceed the lesser 
  4.17  of the difference between the preretirement interest assumption 
  4.18  and postretirement interest assumption in section 356.215, 
  4.19  subdivision 4d, paragraph (a), or 3.5 2.5 percent.  The amount 
  4.20  certified for the fund governed under chapter 422A must not 
  4.21  exceed the lesser of the difference between the preretirement 
  4.22  interest assumption and postretirement interest assumption in 
  4.23  section 356.215, subdivision 4d, paragraph (b), or 3.5 percent. 
  4.24     (c) In addition to any percentage increase certified under 
  4.25  paragraph (b), the board shall use the following procedures to 
  4.26  determine if a postretirement adjustment is payable under this 
  4.27  paragraph: 
  4.28     (1) The state board shall determine the market value of the 
  4.29  fund on June 30 of that year; 
  4.30     (2) The amount of reserves required for the annuity or 
  4.31  benefit payable to an annuitant and benefit recipient of the 
  4.32  participating public pension plans or funds shall must be 
  4.33  determined by the commission-retained actuary as of the current 
  4.34  June 30.  An annuitant or benefit recipient who has been 
  4.35  receiving an annuity or benefit for at least 12 full months as 
  4.36  of the current June 30 is eligible to receive a full 
  5.1   postretirement adjustment.  An annuitant or benefit recipient 
  5.2   who has been receiving an annuity or benefit for at least one 
  5.3   full month, but less than 12 full months as of the current June 
  5.4   30, is eligible to receive a partial postretirement adjustment.  
  5.5   Each fund shall report separately the amount of the reserves for 
  5.6   those annuitants and benefit recipients who are eligible to 
  5.7   receive a full postretirement benefit adjustment.  This amount 
  5.8   is known as "eligible reserves."  Each fund shall also report 
  5.9   separately the amount of the reserves for those annuitants and 
  5.10  benefit recipients who are not eligible to receive a 
  5.11  postretirement adjustment.  This amount is known as "noneligible 
  5.12  reserves."  For an annuitant or benefit recipient who is 
  5.13  eligible to receive a partial postretirement adjustment, each 
  5.14  fund shall report separately as additional "eligible reserves" 
  5.15  an amount that bears the same ratio to the total reserves 
  5.16  required for the annuitant or benefit recipient as the number of 
  5.17  full months of annuity or benefit receipt as of the current June 
  5.18  30 bears to 12 full months.  The remainder of the annuitant's or 
  5.19  benefit recipient's reserves shall must be separately reported 
  5.20  as additional "noneligible reserves."  The amount of "eligible" 
  5.21  and "noneligible" required reserves shall must be certified to 
  5.22  the board by the commission-retained actuary as soon as is 
  5.23  practical following the current June 30; 
  5.24     (3) The state board shall determine the percentage increase 
  5.25  certified under paragraph (b) multiplied by the eligible 
  5.26  required reserves, as adjusted for mortality gains and losses 
  5.27  under subdivision 11, determined under clause (2); 
  5.28     (4) The state board shall add the amount of reserves 
  5.29  required for the annuities or benefits payable to annuitants and 
  5.30  benefit recipients of the participating public pension plans or 
  5.31  funds as of the current June 30 to the amount determined under 
  5.32  clause (3); 
  5.33     (5) The state board shall subtract the amount determined 
  5.34  under clause (4) from the market value of the fund determined 
  5.35  under clause (1); 
  5.36     (6) The state board shall adjust the amount determined 
  6.1   under clause (5) by the cumulative current balance determined 
  6.2   pursuant to clause (8) and any negative balance carried forward 
  6.3   under clause (9); 
  6.4      (7) A positive amount resulting from the calculations in 
  6.5   clauses (1) to (6) is the excess market value.  A negative 
  6.6   amount is the negative balance; 
  6.7      (8) The state board shall allocate one-fifth of the excess 
  6.8   market value or one-fifth of the negative balance to each of 
  6.9   five consecutive years, beginning with the fiscal year ending 
  6.10  the current June 30; and 
  6.11     (9) To calculate the postretirement adjustment under this 
  6.12  paragraph based on investment performance for a fiscal year, the 
  6.13  state board shall add together all excess market value allocated 
  6.14  to that year and subtract from the sum all negative balances 
  6.15  allocated to that year.  If this calculation results in a 
  6.16  negative number, the entire negative balance must be carried 
  6.17  forward and allocated to the next year.  If the resulting amount 
  6.18  is positive, a postretirement adjustment is payable under this 
  6.19  paragraph.  The board shall express a positive amount as a 
  6.20  percentage of the total eligible required reserves certified to 
  6.21  the board under clause (2).  
  6.22     (d) The state board shall determine the amount of any 
  6.23  postretirement adjustment which is payable using the following 
  6.24  procedure: 
  6.25     (1) The total "eligible" required reserves as of the first 
  6.26  of January next following the end of the fiscal year for the 
  6.27  annuitants and benefit recipients eligible to receive a full or 
  6.28  partial postretirement adjustment as determined by clause (2) 
  6.29  shall must be certified to the state board by the 
  6.30  commission-retained actuary.  The total "eligible" required 
  6.31  reserves shall must be determined by the commission-retained 
  6.32  actuary on the assumption that all annuitants and benefit 
  6.33  recipients eligible to receive a full or partial postretirement 
  6.34  adjustment will be alive on the January 1 in question; and 
  6.35     (2) The state board shall add the percentage certified 
  6.36  under paragraph (b) to any positive percentage calculated under 
  7.1   paragraph (c).  The board shall not subtract from the percentage 
  7.2   certified under paragraph (b) any negative amount calculated 
  7.3   under paragraph (c).  The sum of these percentages shall must be 
  7.4   carried to five decimal places and shall must be certified to 
  7.5   each participating public pension fund or plan as the full 
  7.6   postretirement adjustment percentage.  
  7.7      (e) A retirement annuity payable in the event of retirement 
  7.8   before becoming eligible for social security benefits as 
  7.9   provided in section 352.116, subdivision 3; 353.29, subdivision 
  7.10  6; or 354.35 must be treated as the sum of a period certain 
  7.11  retirement annuity and a life retirement annuity for the 
  7.12  purposes of any postretirement adjustment.  The period certain 
  7.13  retirement annuity plus the life retirement annuity shall must 
  7.14  be the annuity amount payable until age 62 or 65, whichever 
  7.15  applies.  A postretirement adjustment granted on the period 
  7.16  certain retirement annuity must terminate when the period 
  7.17  certain retirement annuity terminates. 
  7.18     Sec. 4.  [124A.74] [ADJUSTMENT TO STATE AID DUE TO 1998 
  7.19  CHANGES IN EMPLOYER RETIREMENT CONTRIBUTIONS.] 
  7.20     Beginning in fiscal year 1998 and for each year thereafter, 
  7.21  the commissioner of children, families, and learning shall 
  7.22  adjust payments to school operating funds for districts other 
  7.23  than Nos. 625, 709, and special school district No. 1, by an 
  7.24  amount equal to the net value of the following calculation:  .77 
  7.25  percent of the salaries paid to members of the general plan of 
  7.26  the public employees retirement association in fiscal year 1997, 
  7.27  less 1.5 percent of the salaries paid to members of the state 
  7.28  teachers retirement association in fiscal year 1997.  For school 
  7.29  districts Nos. 625, 709, and special school district No. 1, the 
  7.30  commissioner shall increase payments to school operating funds 
  7.31  by .77 percent of the salaries paid to members of the general 
  7.32  plan of the public employees retirement association in fiscal 
  7.33  year 1997. 
  7.34     Sec. 5.  Minnesota Statutes 1996, section 273.1398, is 
  7.35  amended by adding a subdivision to read: 
  7.36     Subd. 2e.  [AID INCREASES.] Beginning with payments made to 
  8.1   cities, counties, towns, and other nonschool local government 
  8.2   units in fiscal year 1998, and continuing for each year 
  8.3   thereafter, the commissioner of revenue shall increase homestead 
  8.4   and agricultural credit aid payments by an amount equal to .77 
  8.5   percent of the salaries paid to members of the general plan of 
  8.6   the public employees retirement fund in fiscal year 1997. 
  8.7      Sec. 6.  Minnesota Statutes 1996, section 352.01, 
  8.8   subdivision 25, is amended to read: 
  8.9      Subd. 25.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
  8.10  means age 65 for a person who first became a covered employee or 
  8.11  a member of a pension fund listed in section 356.30, subdivision 
  8.12  3, before July 1, 1989.  For a person who first becomes a 
  8.13  covered employee after June 30, 1989, normal retirement age 
  8.14  means the higher of age 65 or "retirement age," as defined in 
  8.15  United States Code, title 42, section 416(l), as amended, not to 
  8.16  exceed age 66. 
  8.17     Sec. 7.  Minnesota Statutes 1996, section 352.04, 
  8.18  subdivision 2, is amended to read: 
  8.19     Subd. 2.  [EMPLOYEE CONTRIBUTIONS.] The employee 
  8.20  contribution to the fund must be equal to 4.07 4.0 percent of 
  8.21  salary.  These contributions must be made by deduction from 
  8.22  salary as provided in subdivision 4. 
  8.23     Sec. 8.  Minnesota Statutes 1996, section 352.04, 
  8.24  subdivision 3, is amended to read: 
  8.25     Subd. 3.  [EMPLOYER CONTRIBUTIONS.] (a) The employer 
  8.26  contribution to the fund must be equal to 4.2 4.0 percent of 
  8.27  salary. 
  8.28     (b) By January 1 of each year, the board of directors shall 
  8.29  report to the legislative commission on pensions and retirement, 
  8.30  the chair of the committee on appropriations of the house of 
  8.31  representatives, and the chair of the committee on finance of 
  8.32  the senate on the amount raised by the employer and employee 
  8.33  contribution rates in effect and whether the total amount is 
  8.34  less than, the same as, or more than the actuarial requirement 
  8.35  determined under section 356.215. 
  8.36     (c) If the legislative commission on pensions and 
  9.1   retirement, based on the most recent valuation performed by its 
  9.2   actuary, determines that the total amount raised by the employer 
  9.3   and employee contributions under subdivision 2 and paragraph (b) 
  9.4   is less than the actuarial requirements determined under section 
  9.5   356.215, the employer and employee rates must be increased by 
  9.6   equal amounts as necessary to meet the actuarial requirements.  
  9.7   The employee rate may not exceed 4.15 percent of salary and the 
  9.8   employer rate may not exceed 4.29 percent of salary.  The 
  9.9   increases are effective on the next January 1 following the 
  9.10  determination by the commission.  The executive director of the 
  9.11  Minnesota state retirement system shall notify employing units 
  9.12  of any increases under this paragraph. 
  9.13     Sec. 9.  Minnesota Statutes 1996, section 352.115, 
  9.14  subdivision 3, is amended to read: 
  9.15     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
  9.16  in conjunction with section 352.116, subdivision 1, applies to a 
  9.17  person who became a covered employee or a member of a pension 
  9.18  fund listed in section 356.30, subdivision 3, before July 1, 
  9.19  1989, unless paragraph (b), in conjunction with section 352.116, 
  9.20  subdivision 1a, produces a higher annuity amount, in which case 
  9.21  paragraph (b) will apply.  The employee's average salary, as 
  9.22  defined in subdivision 2, multiplied by one the percent 
  9.23  specified in section 356.19, subdivision 1, per year of 
  9.24  allowable service for the first ten years and 1.5 the percent 
  9.25  specified in section 356.19, subdivision 2, for each later year 
  9.26  of allowable service and pro rata for completed months less than 
  9.27  a full year shall determine the amount of the retirement annuity 
  9.28  to which the employee is entitled. 
  9.29     (b) This paragraph applies to a person who has become at 
  9.30  least 55 years old and first became a covered employee after 
  9.31  June 30, 1989, and to any other covered employee who has become 
  9.32  at least 55 years old and whose annuity amount, when calculated 
  9.33  under this paragraph and in conjunction with section 352.116, 
  9.34  subdivision 1a, is higher than it is when calculated under 
  9.35  paragraph (a), in conjunction with section 352.116, subdivision 
  9.36  1.  The employee's average salary, as defined in subdivision 2, 
 10.1   multiplied by 1.5 the percent specified in section 356.19, 
 10.2   subdivision 2, for each year of allowable service and pro rata 
 10.3   for months less than a full year shall determine the amount of 
 10.4   the retirement annuity to which the employee is entitled. 
 10.5      Sec. 10.  Minnesota Statutes 1996, section 352.72, 
 10.6   subdivision 2, is amended to read: 
 10.7      Subd. 2.  [COMPUTATION OF DEFERRED ANNUITY.] The deferred 
 10.8   annuity, if any, accruing under subdivision 1, or section 
 10.9   352.22, subdivision 3, must be computed as provided in section 
 10.10  352.22, subdivision 3, on the basis of allowable service before 
 10.11  termination of state service and augmented as provided herein.  
 10.12  The required reserves applicable to a deferred annuity or to an 
 10.13  annuity for which a former employee was eligible but had not 
 10.14  applied or to any deferred segment of an annuity must be 
 10.15  determined as of the date the benefit begins to accrue and 
 10.16  augmented by interest compounded annually from the first day of 
 10.17  the month following the month in which the employee ceased to be 
 10.18  a state employee, or July 1, 1971, whichever is later, to the 
 10.19  first day of the month in which the annuity begins to accrue.  
 10.20  The rates of interest used for this purpose must be five percent 
 10.21  compounded annually until January 1, 1981, and three percent 
 10.22  compounded annually thereafter until January 1 of the year 
 10.23  following the year in which the former employee attains age 55.  
 10.24  From that date to the effective date of retirement, the rate is 
 10.25  five percent compounded annually.  If a person has more than one 
 10.26  period of uninterrupted service, the required reserves related 
 10.27  to each period must be augmented by interest under this 
 10.28  subdivision.  The sum of the augmented required reserves so 
 10.29  determined is the present value of the annuity.  "Uninterrupted 
 10.30  service" for the purpose of this subdivision means periods of 
 10.31  covered employment during which the employee has not been 
 10.32  separated from state service for more than two years.  If a 
 10.33  person repays a refund, the service restored by the repayment 
 10.34  must be considered continuous with the next period of service 
 10.35  for which the employee has credit with this system.  The formula 
 10.36  percentages used for each period of uninterrupted service must 
 11.1   be those applicable to a new employee.  The mortality table and 
 11.2   interest assumption used to compute the annuity must be those in 
 11.3   effect when the employee files application for annuity.  This 
 11.4   section shall does not reduce the annuity otherwise payable 
 11.5   under this chapter. 
 11.6      The survivor or retirement benefit to a former member or 
 11.7   survivor of a former member who terminated service before July 
 11.8   1, 1997, is determined under the laws in effect on the date of 
 11.9   termination and is increased to reflect the change in the 
 11.10  postretirement fund interest assumption from five percent to six 
 11.11  percent.  The benefit payable under the six percent 
 11.12  postretirement interest assumption must be actuarially 
 11.13  equivalent to the benefit payable under the five percent 
 11.14  interest assumption and must be based on tables adopted by the 
 11.15  board as recommended by an approved actuary and approved by the 
 11.16  actuary retained by the legislative commission on pensions and 
 11.17  retirement. 
 11.18     Sec. 11.  Minnesota Statutes 1996, section 352.92, 
 11.19  subdivision 1, is amended to read: 
 11.20     Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] Beginning with 
 11.21  the first full pay period after July 1, 1984, in lieu of 
 11.22  employee contributions payable under section 352.04, subdivision 
 11.23  2, Employee contributions by of covered correctional employees 
 11.24  must be in an amount equal to 4.90 5.50 percent of salary.  
 11.25     Sec. 12.  Minnesota Statutes 1996, section 352.92, 
 11.26  subdivision 2, is amended to read: 
 11.27     Subd. 2.  [EMPLOYER CONTRIBUTIONS.] In lieu of employer 
 11.28  contributions payable under section 352.04, subdivision 3, The 
 11.29  employer shall contribute for covered correctional employees an 
 11.30  amount equal to 6.75 7.70 percent of salary.  
 11.31     Sec. 13.  Minnesota Statutes 1996, section 352.93, 
 11.32  subdivision 2, is amended to read: 
 11.33     Subd. 2.  [CALCULATING MONTHLY ANNUITY.] The monthly 
 11.34  annuity under this section must be determined by multiplying the 
 11.35  average monthly salary by the number of years, or completed 
 11.36  months, of covered correctional service by 2.5 the percent 
 12.1   specified in section 356.19, subdivision 5.  However, the 
 12.2   monthly annuity must not exceed 75 percent of the average 
 12.3   monthly salary.  
 12.4      Sec. 14.  Minnesota Statutes 1996, section 352.93, 
 12.5   subdivision 3, is amended to read: 
 12.6      Subd. 3.  [PAYMENTS; DURATION AND AMOUNT.] The annuity 
 12.7   under this section shall must begin to accrue as provided in 
 12.8   section 352.115, subdivision 8., and must be paid for an 
 12.9   additional 84 full calendar months or to the first of the month 
 12.10  following the month in which the employee attains normal 
 12.11  retirement age, whichever occurs first, except that payment must 
 12.12  not cease before the first of the month following the month in 
 12.13  which the employee becomes 62.  It must then be reduced to the 
 12.14  amount as calculated at normal retirement age under section 
 12.15  352.115, except that if this amount, when added to that portion 
 12.16  of the social security benefit based on state service the 
 12.17  employee would be eligible to receive at the time, is less than 
 12.18  the benefit payable under subdivision 2, the retired employee 
 12.19  shall receive an amount that when added to the social security 
 12.20  benefit will equal the amount payable under subdivision 2.  If 
 12.21  the employee retired prior to age 55, the reduced benefit as 
 12.22  calculated under section 352.115 must be actuarially reduced as 
 12.23  provided in subdivision 2a.  
 12.24     When an annuity is reduced under this subdivision, the 
 12.25  percentage adjustments, if any, that have been applied to the 
 12.26  original annuity under section 11A.18, before the reduction, 
 12.27  must be compounded and applied to the reduced annuity.  A former 
 12.28  correctional employee employed by the state in a position 
 12.29  covered by the regular plan or the unclassified employees 
 12.30  retirement program between the age of 58 and normal retirement 
 12.31  age shall receive a partial return of correctional contributions 
 12.32  at retirement with six percent interest based on the following 
 12.33  formula: 
 12.34  
 12.35   Employee contributions             Years and complete    
 12.36   contributed as a                   months of regular     
 13.1    correctional employee              service between     
 13.2    in excess of the                   age 58 and the    
 13.3    contributions the                  normal retirement age 
 13.4    employee would have       X        ..................... 
 13.5    contributed as a                   number of years between
 13.6    regular employee                   age 58 and normal 
 13.7                                       retirement age 
 13.8      Sec. 15.  Minnesota Statutes 1996, section 352.93, is 
 13.9   amended by adding a subdivision to read: 
 13.10     Subd. 3a.  [OPTIONAL ANNUITY.] The board may establish an 
 13.11  optional annuity to pay a higher amount from the date of 
 13.12  retirement until an employee is first eligible to draw social 
 13.13  security benefits or up to the age the employee is eligible to 
 13.14  receive unreduced social security benefits, at which time the 
 13.15  monthly benefits must be actuarially reduced to equal the single 
 13.16  life annuity under subdivision 2.  The optional annuities must 
 13.17  be approved by the actuary retained by the legislative 
 13.18  commission on pensions and retirement. 
 13.19     Sec. 16.  [352.931] [SURVIVOR BENEFITS.] 
 13.20     Subdivision 1.  [SURVIVING SPOUSE BENEFIT.] (a) If an 
 13.21  employee has credit for at least three years allowable service 
 13.22  and dies before an annuity or disability benefit has become 
 13.23  payable, notwithstanding any designation of beneficiary to the 
 13.24  contrary, the surviving spouse of the employee may elect to 
 13.25  receive, in lieu of the refund with interest, an annuity equal 
 13.26  to the joint and 100 percent survivor annuity which the employee 
 13.27  could have qualified for had the employee terminated service on 
 13.28  the date of death. 
 13.29     (b) If the employee was under age 50 and has credit for at 
 13.30  least three years of allowable service credit on the date of 
 13.31  death but did not yet qualify for retirement, the surviving 
 13.32  spouse may elect to receive a 100 percent joint and survivor 
 13.33  annuity based on the age of the employee and surviving spouse at 
 13.34  the time of death.  The annuity is payable using the early 
 13.35  retirement reduction under section 352.93, subdivision 2a, to 
 13.36  age 50, and one-half of the early retirement reduction from age 
 14.1   50 to the age payment begins.  The surviving spouse eligible for 
 14.2   surviving spouse benefits under paragraph (a) may apply for the 
 14.3   annuity at any time after the date on which the deceased 
 14.4   employee would have attained the required age for retirement 
 14.5   based on the employee's allowable service.  The surviving spouse 
 14.6   eligible for surviving spouse benefits under this paragraph may 
 14.7   apply for the annuity at any time after the employee's death.  
 14.8   Sections 352.22, subdivision 3, and 352.72, subdivision 2, apply 
 14.9   to a deferred annuity or surviving spouse benefit payable under 
 14.10  this subdivision.  The annuity must cease with the last payment 
 14.11  received by the surviving spouse in the lifetime of the 
 14.12  surviving spouse, or upon expiration of a term certain benefit 
 14.13  payment to a surviving spouse under subdivision 2.  An amount 
 14.14  equal to the excess, if any, of the accumulated contributions 
 14.15  credited to the account of the deceased employee in excess of 
 14.16  the total of the benefits paid and payable to the surviving 
 14.17  spouse must be paid to the deceased employee's last designated 
 14.18  beneficiary or, if none, as specified under section 352.12, 
 14.19  subdivision 1.  Any employee may request in writing that this 
 14.20  subdivision not apply and that payment be made only to a 
 14.21  designated beneficiary as otherwise provided by this chapter. 
 14.22     Subd. 2.  [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 
 14.23  lieu of the 100 percent optional annuity under subdivision 1, 
 14.24  the surviving spouse of a deceased employee may elect to receive 
 14.25  survivor coverage in a term certain of ten, 15, or 20 years.  
 14.26  The monthly term certain annuity must be actuarially equivalent 
 14.27  to the 100 percent optional annuity under subdivision 1.  If a 
 14.28  survivor elects a term certain annuity and dies before the 
 14.29  expiration of the specified term certain period, the commuted 
 14.30  value of the remaining annuity payments must be paid in a lump 
 14.31  sum to the survivor's estate. 
 14.32     Subd. 3.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 14.33  no surviving spouse eligible for benefits under subdivision 2, a 
 14.34  dependent child or children as defined in section 352.01, 
 14.35  subdivision 26, is eligible for monthly payments.  Payments to a 
 14.36  dependent child must be paid from the date of the employee's 
 15.1   death to the date the dependent child attains age 20 if the 
 15.2   child is under age 15.  If the child is 15 years or older on the 
 15.3   date of death, payment must be made for five years.  The payment 
 15.4   to a dependent child is an amount actuarially equivalent to the 
 15.5   value of a 100 percent optional annuity using the age of the 
 15.6   employee and age of the dependent child at the date of death in 
 15.7   lieu of the age of the surviving spouse.  If there is more than 
 15.8   one dependent child, each dependent child shall receive a 
 15.9   proportionate share of the actuarial value of the employee's 
 15.10  account. 
 15.11     Sec. 17.  Minnesota Statutes 1996, section 352.95, 
 15.12  subdivision 1, is amended to read: 
 15.13     Subdivision 1.  [JOB-RELATED DISABILITY.] A covered 
 15.14  correctional employee who becomes disabled and physically unfit 
 15.15  to perform the duties of the position as a direct result of an 
 15.16  injury, sickness, or other disability incurred in or arising out 
 15.17  of any act of duty that makes the employee physically or 
 15.18  mentally unable to perform the duties, is entitled to a 
 15.19  disability benefit based on covered correctional service only.  
 15.20  The benefit amount must equal 50 percent of the average salary 
 15.21  defined in section 352.93, plus an additional 2-1/2 percent 
 15.22  equal to that specified in section 356.19, subdivision 5, for 
 15.23  each year of covered correctional service in excess of 20 years, 
 15.24  ten months, prorated for completed months. 
 15.25     Sec. 18.  Minnesota Statutes 1996, section 352.95, 
 15.26  subdivision 5, is amended to read: 
 15.27     Subd. 5.  [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The 
 15.28  disability benefit paid to a disabled correctional employee 
 15.29  under this section shall terminate at the end of the month in 
 15.30  which the employee reaches age 62.  If the disabled correctional 
 15.31  employee is still disabled when the employee reaches age 62, the 
 15.32  employee shall be deemed to be a retired employee.  If the 
 15.33  employee had elected an optional annuity under subdivision 1a, 
 15.34  the employee shall receive an annuity in accordance with the 
 15.35  terms of the optional annuity previously elected.  If the 
 15.36  employee had not elected an optional annuity under subdivision 
 16.1   1a, the employee may within 90 days of attaining age 65 or 
 16.2   reaching the five-year anniversary of the effective date of the 
 16.3   disability benefit, whichever is later, either elect to receive 
 16.4   a normal retirement annuity computed in the manner provided in 
 16.5   section 352.115 352.93 or elect to receive an optional annuity 
 16.6   as provided in section 352.116, subdivision 3, based on the same 
 16.7   length of service as used in the calculation of the disability 
 16.8   benefit.  Election of an optional annuity must be made within 90 
 16.9   days before attaining age 65 or reaching the five-year 
 16.10  anniversary of the effective date of the disability benefit, 
 16.11  whichever is later.  The reduction for retirement before normal 
 16.12  retirement age as provided in section 352.116, subdivision 1 or 
 16.13  1a, does not apply.  The savings clause provision of section 
 16.14  352.93, subdivision 3, applies.  If an optional annuity is 
 16.15  elected, the optional annuity shall begin to accrue on the first 
 16.16  of the month following the month in which the employee reaches 
 16.17  age 65 or the five-year anniversary of the effective date of the 
 16.18  disability benefit, whichever is later. 
 16.19     Sec. 19.  Minnesota Statutes 1996, section 352B.02, 
 16.20  subdivision 1a, is amended to read: 
 16.21     Subd. 1a.  [MEMBER CONTRIBUTIONS.] Each member shall pay a 
 16.22  sum equal to 8.92 8.40 percent of the member's salary, which 
 16.23  shall constitute the member contribution to the fund.  
 16.24     Sec. 20.  Minnesota Statutes 1996, section 352B.02, 
 16.25  subdivision 1c, is amended to read: 
 16.26     Subd. 1c.  [EMPLOYER CONTRIBUTIONS.] (a) In addition to 
 16.27  member contributions, department heads shall pay a sum equal to 
 16.28  14.88 12.60 percent of the salary upon which deductions were 
 16.29  made, which shall constitute the employer contribution to the 
 16.30  fund.  Department contributions must be paid out of money 
 16.31  appropriated to departments for this purpose. 
 16.32     (b) By January 1 of each year, the board of directors shall 
 16.33  report to the legislative commission on pensions and retirement, 
 16.34  the chair of the committee on appropriations of the house of 
 16.35  representatives, and the chair of the committee on finance of 
 16.36  the senate on the amount raised by the employer and employee 
 17.1   contribution rates in effect and whether the total amount is 
 17.2   less than, the same as, or more than the actuarial requirement 
 17.3   determined under section 356.215. 
 17.4      Sec. 21.  Minnesota Statutes 1996, section 352B.08, 
 17.5   subdivision 2, is amended to read: 
 17.6      Subd. 2.  [NORMAL RETIREMENT ANNUITY.] The annuity must be 
 17.7   paid in monthly installments.  The annuity shall be equal to the 
 17.8   amount determined by multiplying the average monthly salary of 
 17.9   the member by 2.65 the percent specified in section 356.19, 
 17.10  subdivision 6, for each year and pro rata for completed months 
 17.11  of service.  
 17.12     Sec. 22.  Minnesota Statutes 1996, section 352B.08, 
 17.13  subdivision 2a, is amended to read: 
 17.14     Subd. 2a.  [EARLY RETIREMENT.] Any member who has become at 
 17.15  least 50 years old, or former member if service ended after June 
 17.16  30, 1989, and who has at least three years of allowable service 
 17.17  is entitled upon application to a reduced retirement annuity 
 17.18  equal to the annuity calculated under subdivision 2, reduced so 
 17.19  that the reduced annuity is the actuarial equivalent of the 
 17.20  annuity that would be payable if the member deferred receipt of 
 17.21  the annuity from the day the annuity begins to accrue to age 
 17.22  55 by two-tenths of one percent for each month that the member 
 17.23  is under age 55 at the time of retirement. 
 17.24     Sec. 23.  Minnesota Statutes 1996, section 352B.10, 
 17.25  subdivision 1, is amended to read: 
 17.26     Subdivision 1.  [INJURIES, PAYMENT AMOUNTS.] Any member who 
 17.27  becomes disabled and physically or mentally unfit to perform 
 17.28  duties as a direct result of an injury, sickness, or other 
 17.29  disability incurred in or arising out of any act of duty, shall 
 17.30  receive disability benefits while disabled.  The benefits must 
 17.31  be paid in monthly installments equal to the member's average 
 17.32  monthly salary multiplied by 53 60 percent, plus an additional 
 17.33  2.65 percent equal to that specified in section 356.19, 
 17.34  subdivision 6, for each year and pro rata for completed months 
 17.35  of service in excess of 20 years, if any. 
 17.36     Sec. 24.  Minnesota Statutes 1996, section 352B.30, is 
 18.1   amended by adding a subdivision to read: 
 18.2      Subd. 4.  [POSTRETIREMENT FUND INTEREST CHANGES.] The 
 18.3   survivor or retirement benefit to a former member or survivor of 
 18.4   a former member who terminated service before July 1, 1997, must 
 18.5   be determined under the laws in effect on the date of 
 18.6   termination and must be increased to reflect the change in the 
 18.7   postretirement fund interest assumption from five percent to six 
 18.8   percent.  The benefit payable under the six percent 
 18.9   postretirement interest assumption must be actuarially 
 18.10  equivalent to the benefit payable under the five percent 
 18.11  interest assumption and must be based on tables adopted by the 
 18.12  board as recommended by an approved actuary and approved by the 
 18.13  actuary retained by the legislative commission on pensions and 
 18.14  retirement. 
 18.15     Sec. 25.  Minnesota Statutes 1996, section 352C.031, 
 18.16  subdivision 4, is amended to read: 
 18.17     Subd. 4.  [RETIREMENT ALLOWANCE FORMULA.] The average 
 18.18  salary multiplied by 2-1/2 percent for each year of allowable 
 18.19  service and pro rata for completed months less than a full year 
 18.20  shall determine The amount of the normal retirement allowance. 
 18.21  must be the product of: 
 18.22     (1) the number of years of allowable service with pro rata 
 18.23  service awarded for completed months less than a full year; and 
 18.24     (2) an amount calculated by the actuary to provide a 
 18.25  benefit that is actuarially equivalent for each individual to 
 18.26  the benefit that would have been provided under the provisions 
 18.27  of Minnesota Statutes in effect as of January 1, 1997. 
 18.28     Sec. 26.  Minnesota Statutes 1996, section 352C.033, is 
 18.29  amended to read: 
 18.30     352C.033 [DEFERRED ANNUITIES AUGMENTATION.] 
 18.31     The deferred retirement allowance for any former 
 18.32  constitutional officer shall must be augmented as provided in 
 18.33  this section.  The required reserves applicable to the deferred 
 18.34  retirement allowance, determined as of the date the retirement 
 18.35  allowance begins to accrue using the appropriate mortality table 
 18.36  and an interest assumption of five six percent, shall be 
 19.1   augmented from the first of the month following termination of 
 19.2   service as a constitutional officer, or January 1, 1979, 
 19.3   whichever is later, to the first day of the month in which the 
 19.4   annuity begins to accrue, at the rate of five percent per annum 
 19.5   compounded annually until January 1, 1981, and thereafter at the 
 19.6   rate of three percent per annum compounded annually until 
 19.7   January 1 of the year in which the former constitutional officer 
 19.8   attains age 55.  From that date to the effective date of 
 19.9   retirement, the rate is five percent compounded annually. 
 19.10     The survivor or retirement benefit to a former member or 
 19.11  survivor of a former member who terminated service before July 
 19.12  1, 1997, must be determined under the laws in effect on the date 
 19.13  of termination and must be increased to reflect the change in 
 19.14  the postretirement fund interest assumption from five percent to 
 19.15  six percent.  The benefit payable under the six percent 
 19.16  postretirement interest assumption must be actuarially 
 19.17  equivalent to the benefit payable under the five percent 
 19.18  interest assumption and must be based on tables adopted by the 
 19.19  board as recommended by an approved actuary and approved by the 
 19.20  actuary retained by the legislative commission on pensions and 
 19.21  retirement. 
 19.22     Sec. 27.  Minnesota Statutes 1996, section 353.01, 
 19.23  subdivision 37, is amended to read: 
 19.24     Subd. 37.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 19.25  means age 65 for a person who first became a public employee or 
 19.26  a member of a pension fund listed in section 356.30, subdivision 
 19.27  3, before July 1, 1989.  For a person who first becomes a public 
 19.28  employee after June 30, 1989, "normal retirement age" means the 
 19.29  higher of age 65 or "retirement age," as defined in United 
 19.30  States Code, title 42, section 416(l), as amended, not to exceed 
 19.31  age 66. 
 19.32     Sec. 28.  Minnesota Statutes 1996, section 353.27, 
 19.33  subdivision 2, is amended to read: 
 19.34     Subd. 2.  [EMPLOYEE CONTRIBUTION.] The employee 
 19.35  contribution shall be an amount (a) for a "basic member" equal 
 19.36  to 8.23 8.75 percent of total salary; and (b) for a "coordinated 
 20.1   member" equal to 4.23 4.75 percent of total salary.  These 
 20.2   contributions shall must be made by deduction from salary in the 
 20.3   manner provided in subdivision 4.  Where any portion of a 
 20.4   member's salary is paid from other than public funds, such 
 20.5   member's employee contribution shall must be based on the total 
 20.6   salary received from all sources. 
 20.7      Sec. 29.  Minnesota Statutes 1996, section 353.27, 
 20.8   subdivision 3a, is amended to read: 
 20.9      Subd. 3a.  [ADDITIONAL EMPLOYER CONTRIBUTION.] An 
 20.10  additional employer contribution shall must be made equal to (a) 
 20.11  2-1/2 2.75 percent of the total salary of each "basic member"; 
 20.12  and (b) one-quarter of one .50 percent of the total salary of 
 20.13  each "coordinated member."  These contributions shall must be 
 20.14  made from funds available to the employing subdivision by the 
 20.15  means and in the manner provided in section 353.28.  This 
 20.16  subdivision is repealed if the plan is fully funded. 
 20.17     Sec. 30.  Minnesota Statutes 1996, section 353.29, 
 20.18  subdivision 3, is amended to read: 
 20.19     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, 
 20.20  in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 
 20.21  1c, applies to any member who first became a public employee or 
 20.22  a member of a pension fund listed in section 356.30, subdivision 
 20.23  3, before July 1, 1989, unless paragraph (b), in conjunction 
 20.24  with section 353.30, subdivision 5, produces a higher annuity 
 20.25  amount, in which case paragraph (b) will apply.  The average 
 20.26  salary as defined in subdivision 2, multiplied by two the 
 20.27  percent specified in section 356.19, subdivision 3, for each 
 20.28  year of allowable service for the first ten years and thereafter 
 20.29  by 2.5 the percent specified in section 356.19, subdivision 4, 
 20.30  per year of allowable service and completed months less than a 
 20.31  full year for the "basic member," and one the percent specified 
 20.32  in section 356.19, subdivision 1, for each year of allowable 
 20.33  service for the first ten years and thereafter by 1.5 the 
 20.34  percent specified in section 356.19, subdivision 2, per year of 
 20.35  allowable service and completed months less than a full year for 
 20.36  the "coordinated member," shall determine the amount of the 
 21.1   "normal" retirement annuity. 
 21.2      (b) This paragraph applies to a member who has become at 
 21.3   least 55 years old and first became a public employee after June 
 21.4   30, 1989, and to any other member whose annuity amount, when 
 21.5   calculated under this paragraph and in conjunction with section 
 21.6   353.30, subdivision 5, is higher than it is when calculated 
 21.7   under paragraph (a), in conjunction with section 353.30, 
 21.8   subdivisions 1, 1a, 1b, and 1c.  The average salary, as defined 
 21.9   in subdivision 2, multiplied by 2.5 the percent specified in 
 21.10  section 356.19, subdivision 4, for each year of allowable 
 21.11  service and completed months less than a full year for a basic 
 21.12  member and 1.5 the percent specified in section 356.19, 
 21.13  subdivision 2, per year of allowable service and completed 
 21.14  months less than a full year for a coordinated member, shall 
 21.15  determine the amount of the normal retirement annuity. 
 21.16     Sec. 31.  Minnesota Statutes 1996, section 353.651, 
 21.17  subdivision 3, is amended to read: 
 21.18     Subd. 3.  [RETIREMENT ANNUITY FORMULA.] The average salary 
 21.19  as defined in subdivision 2, multiplied by 2.65 the percent 
 21.20  specified in section 356.19, subdivision 6, per year of 
 21.21  allowable service determines the amount of the normal retirement 
 21.22  annuity.  If the member has earned allowable service for 
 21.23  performing services other than those of a police officer or 
 21.24  firefighter, the annuity representing such service is computed 
 21.25  under sections 353.29 and 353.30. 
 21.26     Sec. 32.  Minnesota Statutes 1996, section 353.656, 
 21.27  subdivision 1, is amended to read: 
 21.28     Subdivision 1.  [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] 
 21.29  A member of the police and fire fund who becomes disabled and 
 21.30  physically unfit to perform duties as a police officer or 
 21.31  firefighter subsequent to June 30, 1973, as a direct result of 
 21.32  an injury, sickness, or other disability incurred in or arising 
 21.33  out of any act of duty, which has or is expected to render the 
 21.34  member physically or mentally unable to perform duties as a 
 21.35  police officer or firefighter for a period of at least one year, 
 21.36  shall receive disability benefits during the period of such 
 22.1   disability.  The benefits must be in an amount equal to 53 60 
 22.2   percent of the "average salary" under subdivision 3, plus an 
 22.3   additional 2.65 percent specified in section 356.19, subdivision 
 22.4   6, of said average salary for each year of service in excess of 
 22.5   20 years.  Should disability under this subdivision occur before 
 22.6   the member has at least five years of allowable service credit 
 22.7   in the police and fire fund, the disability benefit must be 
 22.8   computed on the "average salary" from which deductions were made 
 22.9   for contribution to the police and fire fund. 
 22.10     Sec. 33.  Minnesota Statutes 1996, section 353.71, 
 22.11  subdivision 2, is amended to read: 
 22.12     Subd. 2.  [DEFERRED ANNUITY COMPUTATION; AUGMENTATION.] The 
 22.13  deferred annuity, if any, accruing under subdivision 1, or 
 22.14  sections 353.34, subdivision 3, and 353.68, subdivision 4, shall 
 22.15  must be computed in the manner provided in said sections, on the 
 22.16  basis of allowable service prior to termination of public 
 22.17  service and augmented as provided herein.  The required reserves 
 22.18  applicable to a deferred annuity, or to an annuity for which a 
 22.19  former member was eligible but had not applied, or to any 
 22.20  deferred segment of an annuity shall be determined as of the 
 22.21  date the annuity begins to accrue and shall be augmented from 
 22.22  the first day of the month following the month in which the 
 22.23  former member ceased to be a public employee, or July 1, 1971, 
 22.24  whichever is later, to the first day of the month in which the 
 22.25  annuity begins to accrue, at the rate of five percent per annum 
 22.26  compounded annually until January 1, 1981, and at the rate of 
 22.27  three percent thereafter until January 1 of the year following 
 22.28  the year in which the former member attains age 55.  From that 
 22.29  date to the effective date of retirement, the rate is five 
 22.30  percent per annum compounded annually.  If a person has more 
 22.31  than one period of uninterrupted service, the required reserves 
 22.32  related to each period shall be augmented by interest pursuant 
 22.33  to this subdivision.  The sum of the augmented required reserves 
 22.34  so determined shall be the present value of the annuity.  
 22.35  Uninterrupted service for the purpose of this subdivision shall 
 22.36  mean periods of covered employment during which the employee has 
 23.1   not been separated from public service for more than two years.  
 23.2   If a person repays a refund, the service restored thereby shall 
 23.3   be considered as continuous with the next period of service for 
 23.4   which the employee has credit with this association. The formula 
 23.5   percentages used for each period of uninterrupted service shall 
 23.6   be those as would be applicable to a new employee.  This section 
 23.7   shall not reduce the annuity otherwise payable under this 
 23.8   chapter.  This subdivision shall apply to deferred annuitants of 
 23.9   record on July 1, 1971, and to employees who thereafter become 
 23.10  deferred annuitants; it shall also apply from July 1, 1971, to 
 23.11  former members who make application for an annuity after July 1, 
 23.12  1973. 
 23.13     The survivor or retirement benefit to a former member or 
 23.14  survivor of a former member who terminated service before July 
 23.15  1, 1997, is determined under the laws in effect on the date of 
 23.16  termination and is increased to reflect the change in the 
 23.17  postretirement fund interest assumption from five percent to six 
 23.18  percent.  The benefit payable under the six percent 
 23.19  postretirement interest assumption must be actuarially 
 23.20  equivalent to the benefit payable under the five percent 
 23.21  interest assumption and must be based on tables adopted by the 
 23.22  board as recommended by an approved actuary and approved by the 
 23.23  actuary retained by the legislative commission on pensions and 
 23.24  retirement. 
 23.25     Sec. 34.  Minnesota Statutes 1996, section 353A.08, 
 23.26  subdivision 1, is amended to read: 
 23.27     Subdivision 1.  [ELECTION OF COVERAGE BY CURRENT RETIREES.] 
 23.28  A person who is receiving a service pension, disability benefit, 
 23.29  or survivorship survivor benefit is eligible to elect benefit 
 23.30  coverage provided under the relevant provisions of the public 
 23.31  employees police and fire fund benefit plan or to retain benefit 
 23.32  coverage provided under the relief association benefit plan in 
 23.33  effect on the effective date of the consolidation.  The relevant 
 23.34  provisions of the public employees police and fire fund benefit 
 23.35  plan for the person electing that benefit coverage are limited 
 23.36  to participation in the Minnesota postretirement investment fund 
 24.1   for any future postretirement adjustments based on the amount of 
 24.2   the benefit or pension payable on December 31, if December 31 is 
 24.3   the effective date of consolidation, or on the December 1 
 24.4   following the effective date of the consolidation, if other than 
 24.5   December 31.  The survivorship survivor benefit payable on 
 24.6   behalf of any service pension or disability benefit recipient 
 24.7   who elects benefit coverage under the public employees police 
 24.8   and fire fund benefit plan must be calculated under the relief 
 24.9   association benefit plan and is subject to participation in the 
 24.10  Minnesota postretirement investment fund for any future 
 24.11  postretirement adjustments based on the amount of the 
 24.12  survivorship survivor benefit payable.  
 24.13     A survivor benefit calculated under the relief association 
 24.14  benefit plan which is first payable after June 30, 1997, to the 
 24.15  surviving spouse of a retired member of a consolidation account 
 24.16  who, before July 1, 1997, chose to participate in the Minnesota 
 24.17  postretirement investment fund as provided under this 
 24.18  subdivision must be increased on the effective date of the 
 24.19  survivor benefit to reflect the change in the postretirement 
 24.20  fund interest assumption from five percent to six percent.  The 
 24.21  benefit payable under the six percent postretirement interest 
 24.22  assumption must be actuarially equivalent to the benefit payable 
 24.23  under the five percent interest assumption and must be based on 
 24.24  tables adopted by the board as recommended by an approved 
 24.25  actuary and approved by the actuary retained by the legislative 
 24.26  commission on pensions and retirement. 
 24.27     By electing the public employees police and fire fund 
 24.28  benefit plan, a current service pension or disability benefit 
 24.29  recipient who, as of the first January 1 occurring after the 
 24.30  effective date of consolidation, has been receiving the pension 
 24.31  or benefit for at least seven months, or any survivor benefit 
 24.32  recipient who, as of the first January 1 occurring after the 
 24.33  effective date of consolidation, has been receiving the benefit 
 24.34  on the person's own behalf or in combination with a prior 
 24.35  applicable service pension or disability benefit for at least 
 24.36  seven months is eligible to receive a partial adjustment payable 
 25.1   from the Minnesota postretirement investment fund under section 
 25.2   11A.18, subdivision 9. 
 25.3      The election by any pension or benefit recipient must be 
 25.4   made on or before the deadline established by the board of the 
 25.5   public employees retirement association in a manner that 
 25.6   recognizes the number of persons eligible to make the election 
 25.7   and the anticipated time required to conduct any required 
 25.8   benefit counseling.  
 25.9      Sec. 35.  Minnesota Statutes 1996, section 353A.083, is 
 25.10  amended by adding a subdivision to read: 
 25.11     Subd. 3.  [PRE-1997 CONSOLIDATIONS.] (a) For any 
 25.12  consolidation account in effect on July 1, 1997, for which the 
 25.13  city has approved the July 1, 1993, police and fire benefit 
 25.14  provisions, the formula multiplier for calculating retirement 
 25.15  and survivor annuities that apply to consolidation account 
 25.16  members who have elected or elect the benefit plan coverage 
 25.17  under the provisions of the public employees police and fire 
 25.18  fund is 2.9 percent per year of allowable service. 
 25.19     The disability benefit payable for these consolidated 
 25.20  members who elected or elect the benefit plan coverage under the 
 25.21  provisions of the public employees police and fire fund: 
 25.22     (1) who become disabled in the line of duty, as defined 
 25.23  under section 353.656, subdivision 1, is an amount equal to 58 
 25.24  percent of the "average salary" under section 353.651, 
 25.25  subdivision 2, plus an additional 2.9 percent of said average 
 25.26  salary for each year of service in excess of 20 years; or 
 25.27     (2) who become disabled because of sickness or injury 
 25.28  occurring while not on duty, as defined under section 353.656, 
 25.29  subdivision 3, is an amount equal to 43.5 percent of the 
 25.30  "average salary" under section 353.651, subdivision 2, plus an 
 25.31  additional 2.9 percent of said average salary for each year of 
 25.32  service in excess of 15 years. 
 25.33     (b) If the consolidated plan's city has not approved the 
 25.34  July 1, 1993, police and fire plan benefit provisions, the 
 25.35  formula multiplier for calculating retirement and survivor 
 25.36  annuities that apply to consolidation account members who have 
 26.1   elected or elect the benefit plan coverage under the provisions 
 26.2   of the public employees police and fire fund is 2.74 percent per 
 26.3   year of allowable service. 
 26.4      The disability benefit payable for consolidated members who 
 26.5   elected or elect the benefit plan coverage under the provisions 
 26.6   of the public employees police and fire fund: 
 26.7      (1) who become disabled in the line of duty, as defined 
 26.8   under section 353.656, subdivision 1, is an amount equal to 
 26.9   54.80 percent of the "average salary" under section 353.651, 
 26.10  subdivision 2, plus an additional 2.74 percent of said average 
 26.11  salary for each year of service in excess of 20 years; or 
 26.12     (2) who become disabled because of sickness or injury 
 26.13  occurring while not on duty, as defined under section 353.656, 
 26.14  subdivision 3, is an amount equal to 41.10 percent of the 
 26.15  "average salary" under section 353.651, subdivision 2, plus an 
 26.16  additional 2.74 percent of said average salary for each year of 
 26.17  service in excess of 15 years. 
 26.18     (c) The applicable benefit plan coverage defined in 
 26.19  paragraph (a) or (b) applies unless the applicable municipality 
 26.20  approves the extension of the post June 30, 1997, public 
 26.21  employees police and fire fund benefit plan to the consolidation 
 26.22  account.  
 26.23     Sec. 36.  Minnesota Statutes 1996, section 353C.06, 
 26.24  subdivision 3, is amended to read: 
 26.25     Subd. 3.  [ANNUITY AMOUNT.] The average salary as defined 
 26.26  in subdivision 2, multiplied by two percent for each year of 
 26.27  allowable service for the first ten years and 2.5 percent for 
 26.28  each additional year of allowable service the percent specified 
 26.29  in section 356.19, subdivision 5, and pro rata for completed 
 26.30  months less than a full year, determines the amount of the 
 26.31  normal annuity.  If a person has earned allowable service in the 
 26.32  public employees retirement association or the public employees 
 26.33  police and fire fund prior to participation under this chapter, 
 26.34  the annuity representing such service must be computed in 
 26.35  accordance with the formula under sections 353.29 and 353.30 or 
 26.36  353.651, whichever applies. 
 27.1      Sec. 37.  Minnesota Statutes 1996, section 353C.06, is 
 27.2   amended by adding a subdivision to read: 
 27.3      Subd. 3a.  [OPTIONAL ANNUITY.] The board may establish an 
 27.4   optional annuity to pay a higher amount from the date of 
 27.5   retirement until an employee is eligible to draw social security 
 27.6   benefits, at which time the monthly benefits must be actuarially 
 27.7   reduced to equal the single life annuity under subdivision 3.  
 27.8   The optional annuities must be approved by the actuary retained 
 27.9   by the legislative commission on pensions and retirement. 
 27.10     Sec. 38.  Minnesota Statutes 1996, section 353C.06, 
 27.11  subdivision 4, is amended to read: 
 27.12     Subd. 4.  [ACCRUAL AND DURATION.] The annuity under this 
 27.13  section begins to accrue as provided in section 353.29, 
 27.14  subdivision 7.  The annuity is payable for the life of the 
 27.15  recipient, or in accordance with the terms of any optional 
 27.16  annuity form selected., and is payable for 84 full calendar 
 27.17  months or to the first of the month following the month in which 
 27.18  the employee attains the normal retirement age, whichever occurs 
 27.19  first.  After a recipient has received the annuity calculated 
 27.20  under this formula for 84 full calendar months or to the first 
 27.21  of the month following the month in which the employee attains 
 27.22  the normal retirement age, whichever occurs first, the benefit 
 27.23  must be recomputed in accordance with the coordinated formula in 
 27.24  sections 353.29 and 353.30, except that if this amount, when 
 27.25  added to the social security benefit based on public service the 
 27.26  employee is eligible to receive at that time, is less than the 
 27.27  benefit payable under subdivision 3, the retired employee is 
 27.28  entitled to receive an amount payable under subdivision 3, less 
 27.29  any amount payable from social security based on public service 
 27.30  used in the benefit calculation.  When an annuity is reduced 
 27.31  under this subdivision, any percentage of adjustments that have 
 27.32  been applied to the original annuity under section 11A.18, 
 27.33  before the reduction, must be compounded and applied to the 
 27.34  reduced annuity. 
 27.35     Sec. 39.  Minnesota Statutes 1996, section 353C.08, 
 27.36  subdivision 1, is amended to read: 
 28.1      Subdivision 1.  [DUTY DISABILITY QUALIFICATION 
 28.2   REQUIREMENTS.] A local government correctional employee who 
 28.3   becomes disabled and physically unfit to perform the duties of 
 28.4   the position as a direct result of an injury, sickness, or other 
 28.5   disability incurred in or arising out of any act of duty that 
 28.6   renders the employee physically or mentally unable to perform 
 28.7   the employee's duties, is entitled to a disability benefit based 
 28.8   on covered service only in an amount equal to 45 50 percent of 
 28.9   the average salary defined in section 353C.06, subdivision 2, 
 28.10  plus an additional 2.5 percent specified in section 356.19, 
 28.11  subdivision 5, for each year of covered service in excess of 20 
 28.12  years, ten months.  
 28.13     Sec. 40.  Minnesota Statutes 1996, section 353C.09, is 
 28.14  amended to read: 
 28.15     353C.09 [SURVIVING SPOUSE OPTIONAL ANNUITY.] 
 28.16     Subdivision 1.  [ELIGIBILITY.] (a) If a member or former 
 28.17  member of the local government correctional service retirement 
 28.18  plan has attained the age of at least 50 years and has credit 
 28.19  for not less than three years of allowable service, or who has 
 28.20  credit for not less than 30 years of allowable service, 
 28.21  regardless of age attained, dies before the annuity or 
 28.22  disability benefit has become payable, notwithstanding any 
 28.23  designation of beneficiary to the contrary, the surviving spouse 
 28.24  may elect to receive, in lieu of a refund with interest provided 
 28.25  in section 353.32, subdivision 1, an annuity equal to the 100 
 28.26  percent joint and survivor annuity for which the member could 
 28.27  have qualified had the member terminated service on the date of 
 28.28  death.  The surviving spouse may apply for the annuity at any 
 28.29  time after the date on which the deceased employee would have 
 28.30  attained the required age for retirement based on the employee's 
 28.31  allowable service.  The annuity must be computed on the formulas 
 28.32  under sections 353.29, subdivisions 2 and 3, and 353.30, 
 28.33  subdivisions 1, 1a, 1b, and 1c section 353C.06, subdivision 3. 
 28.34     (b) If the employee was under age 55 and had credit for at 
 28.35  least three years of allowable service credit on the date of 
 28.36  death but did not yet qualify for retirement, the surviving 
 29.1   spouse may elect to receive a 100 percent joint and survivor 
 29.2   annuity based on the age of the employee and surviving spouse at 
 29.3   the time of death.  The annuity is payable using an actuarial 
 29.4   equivalent reduction to age 50 and one-half of the actuarial 
 29.5   equivalent reduction from age 50 to the age payment begins.  The 
 29.6   surviving spouse eligible for a surviving spouse benefit under 
 29.7   paragraph (a) may apply for the annuity at any time after the 
 29.8   date on which the deceased employee would have attained the 
 29.9   required age for retirement based on the employee's allowable 
 29.10  service.  The surviving spouse eligible for surviving spouse 
 29.11  benefits under this paragraph may apply for the annuity at any 
 29.12  time after the employee's death.  
 29.13     (c) Sections 353.34, subdivision 3, and 353.71, subdivision 
 29.14  2, apply to a deferred annuity payable under this subdivision.  
 29.15  No payment may accrue beyond the end of the month in which 
 29.16  entitlement to the annuity has terminated.  An amount equal to 
 29.17  any excess of the accumulated contributions that were credited 
 29.18  to the account of the deceased employee over and above the total 
 29.19  of the annuities paid and payable to the surviving spouse must 
 29.20  be paid to the deceased member's last designated beneficiary or, 
 29.21  if none, to the legal representative of the estate of the 
 29.22  deceased member.  A member may specify in writing that this 
 29.23  subdivision does not apply and that payment must be made only to 
 29.24  the designated beneficiary, as otherwise provided by this 
 29.25  chapter. 
 29.26     Subd. 2.  [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In 
 29.27  lieu of the 100 percent optional annuity under subdivision 1, 
 29.28  the surviving spouse of a deceased employee may elect to receive 
 29.29  survivor coverage in a term certain of ten, 15, or 20 years.  
 29.30  The monthly term certain annuity must be actuarially equivalent 
 29.31  to the 100 percent optional annuity under subdivision 1.  If a 
 29.32  survivor elects a term certain annuity and dies before the 
 29.33  expiration of the specified term certain period, the commuted 
 29.34  value of the remaining annuity payments must be paid in a lump 
 29.35  sum to the survivor's estate. 
 29.36     Subd. 3.  [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is 
 30.1   no surviving spouse eligible for benefits under subdivision 2, a 
 30.2   dependent child or children as defined in section 353.01, 
 30.3   subdivision 15, is eligible for monthly payments.  Payments to a 
 30.4   dependent child must be paid from the date of the employee's 
 30.5   death to the date the dependent child attains age 20 if the 
 30.6   child is under age 15.  If the child is 15 years or older on the 
 30.7   date of death, payment must be made for five years.  The payment 
 30.8   to a dependent child is an amount actuarially equivalent to the 
 30.9   value of a 100 percent optional annuity using the age of the 
 30.10  employee and age of the dependent child at the date of death in 
 30.11  lieu of the age of the surviving spouse.  If there is more than 
 30.12  one dependent child, each dependent child shall receive a 
 30.13  proportionate share of the actuarial value of the employee's 
 30.14  account. 
 30.15     Sec. 41.  Minnesota Statutes 1996, section 354.05, 
 30.16  subdivision 38, is amended to read: 
 30.17     Subd. 38.  [NORMAL RETIREMENT AGE.] "Normal retirement age" 
 30.18  means age 65 for a person who first became a member of the 
 30.19  association or a member of a pension fund listed in section 
 30.20  356.30, subdivision 3, before July 1, 1989.  For a person who 
 30.21  first becomes a member of the association after June 30, 1989, 
 30.22  normal retirement age means the higher of age 65 or "retirement 
 30.23  age," as defined in United States Code, title 42, section 
 30.24  416(l), as amended, not to exceed age 66. 
 30.25     Sec. 42.  Minnesota Statutes 1996, section 354.42, 
 30.26  subdivision 2, is amended to read: 
 30.27     Subd. 2.  [EMPLOYEE.] The employee contribution to the fund 
 30.28  shall be is an amount equal to 6.5 5.0 percent of the salary of 
 30.29  every coordinated member and 10.5 9.0 percent of the salary of 
 30.30  every basic member.  This contribution shall must be made by 
 30.31  deduction from salary.  Where any portion of a member's salary 
 30.32  is paid from other than public funds, such the member's employee 
 30.33  contribution shall must be based on the entire salary received.  
 30.34     Sec. 43.  Minnesota Statutes 1996, section 354.42, 
 30.35  subdivision 3, is amended to read: 
 30.36     Subd. 3.  [EMPLOYER.] The employer contribution to the fund 
 31.1   shall be is an amount equal to 4-1/2 5.0 percent of the salary 
 31.2   of each coordinated member and 8-1/2 9.0 percent of the salary 
 31.3   of each basic member.  
 31.4      Sec. 44.  Minnesota Statutes 1996, section 354.42, 
 31.5   subdivision 5, is amended to read: 
 31.6      Subd. 5.  [ADDITIONAL EMPLOYER CONTRIBUTION.] To amortize 
 31.7   the unfunded actuarial accrued liability computed under the 
 31.8   entry age actuarial cost method and disclosed under the annual 
 31.9   actuarial valuations prepared by the commission-retained actuary 
 31.10  under section 356.215, an additional employer contribution shall 
 31.11  must be made in the amount of 3.64 1.64 percent of the salary of 
 31.12  each member.  
 31.13     This contribution must be made in the manner provided in 
 31.14  section 354.52, subdivision 4.  This subdivision is repealed if 
 31.15  the fund is fully funded. 
 31.16     By January 1 of each year, the board of directors shall 
 31.17  report to the legislative commission on pensions and retirement, 
 31.18  the chair of the committee on appropriations of the house of 
 31.19  representatives, and the chair of the committee on finance of 
 31.20  the senate on the amount raised by the additional employer 
 31.21  contribution rate in effect and whether that amount is less 
 31.22  than, the same as, or more than the required amortization 
 31.23  contribution determined under section 356.215. 
 31.24     Sec. 45.  Minnesota Statutes 1996, section 354.44, 
 31.25  subdivision 6, is amended to read: 
 31.26     Subd. 6.  [COMPUTATION OF FORMULA PROGRAM RETIREMENT 
 31.27  ANNUITY.] (1) The formula retirement annuity hereunder shall 
 31.28  must be computed in accordance with the applicable provisions of 
 31.29  the formulas stated in clause (2) or (4) on the basis of each 
 31.30  member's average salary for the period of the member's formula 
 31.31  service credit.  
 31.32     For all years of formula service credit, "average salary," 
 31.33  for the purpose of determining the member's retirement annuity, 
 31.34  means the average salary upon which contributions were made and 
 31.35  upon which payments were made to increase the salary limitation 
 31.36  provided in Minnesota Statutes 1971, section 354.511, for the 
 32.1   highest five successive years of formula service credit 
 32.2   provided, however, that such "average salary" shall not include 
 32.3   any more than the equivalent of 60 monthly salary payments.  
 32.4   Average salary must be based upon all years of formula service 
 32.5   credit if this service credit is less than five years. 
 32.6      (2) This clause, in conjunction with clause (3), applies to 
 32.7   a person who first became a member of the association or a 
 32.8   member of a pension fund listed in section 356.30, subdivision 
 32.9   3, before July 1, 1989, unless clause (4), in conjunction with 
 32.10  clause (5), produces a higher annuity amount, in which case 
 32.11  clause (4) applies.  The average salary as defined in clause 
 32.12  (1), multiplied by the following percentages per year of formula 
 32.13  service credit shall determine the amount of the annuity to 
 32.14  which the member qualifying therefor is entitled: 
 32.15                         Coordinated Member   Basic Member
 32.16  Each year of service     1.13 the           2.13 the
 32.17   during first ten        percent            percent
 32.18                           specified in       specified in
 32.19                           section 356.19,    section 356.19,
 32.20                           subdivision 1,     subdivision 3,
 32.21                           per year           per year
 32.22  Each year of service     1.63 the           2.63 the
 32.23   thereafter              percent            percent
 32.24                           specified in       specified in
 32.25                           section 356.19,    section 356.19,
 32.26                           subdivision 2,     subdivision 4,
 32.27                           per year           per year
 32.28     (3)(i) This clause applies only to a person who first 
 32.29  became a member of the association or a member of a pension fund 
 32.30  listed in section 356.30, subdivision 3, before July 1, 1989, 
 32.31  and whose annuity is higher when calculated under clause (2), in 
 32.32  conjunction with this clause than when calculated under clause 
 32.33  (4), in conjunction with clause (5). 
 32.34     (ii) Where any member retires prior to normal retirement 
 32.35  age under a formula annuity, the member shall be paid a 
 32.36  retirement annuity in an amount equal to the normal annuity 
 33.1   provided in clause (2) reduced by one-quarter of one percent for 
 33.2   each month that the member is under normal retirement age at the 
 33.3   time of retirement except that for any member who has 30 or more 
 33.4   years of allowable service credit, the reduction shall be 
 33.5   applied only for each month that the member is under age 62. 
 33.6      (iii) Any member whose attained age plus credited allowable 
 33.7   service totals 90 years is entitled, upon application, to a 
 33.8   retirement annuity in an amount equal to the normal annuity 
 33.9   provided in clause (2), without any reduction by reason of early 
 33.10  retirement. 
 33.11     (4) This clause applies to a member who has become at least 
 33.12  55 years old and first became a member of the association after 
 33.13  June 30, 1989, and to any other member who has become at least 
 33.14  55 years old and whose annuity amount when calculated under this 
 33.15  clause and in conjunction with clause (5), is higher than it is 
 33.16  when calculated under clause (2), in conjunction with clause (3).
 33.17  The average salary, as defined in clause (1) multiplied by 2.63 
 33.18  the percent specified by section 356.19, subdivision 4, for each 
 33.19  year of service for a basic member and by 1.63 the 
 33.20  percent specified in section 356.19, subdivision 2, for each 
 33.21  year of service for a coordinated member shall determine the 
 33.22  amount of the retirement annuity to which the member is entitled.
 33.23     (5) This clause applies to a person who has become at least 
 33.24  55 years old and first becomes a member of the association after 
 33.25  June 30, 1989, and to any other member who has become at least 
 33.26  55 years old and whose annuity is higher when calculated under 
 33.27  clause (4) in conjunction with this clause than when calculated 
 33.28  under clause (2), in conjunction with clause (3).  An employee 
 33.29  who retires under the formula annuity before the normal 
 33.30  retirement age shall be paid the normal annuity provided in 
 33.31  clause (4) reduced so that the reduced annuity is the actuarial 
 33.32  equivalent of the annuity that would be payable to the employee 
 33.33  if the employee deferred receipt of the annuity and the annuity 
 33.34  amount were augmented at an annual rate of three percent 
 33.35  compounded annually from the day the annuity begins to accrue 
 33.36  until the normal retirement age. 
 34.1      Sec. 46.  Minnesota Statutes 1996, section 354.53, 
 34.2   subdivision 1, is amended to read: 
 34.3      Subdivision 1.  [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any 
 34.4   employee given a leave of absence to enter military service and 
 34.5   who returns to teaching service upon discharge from military 
 34.6   service as provided in section 192.262, shall may obtain credit 
 34.7   for the period of military service but shall not receive credit 
 34.8   for any voluntary extension of military service at the instance 
 34.9   of the member beyond the initial period of enlistment, induction 
 34.10  or call to active duty.  The member shall obtain credit by 
 34.11  paying into the fund an employee contribution based upon 
 34.12  the salary of the member at the date of return from military 
 34.13  service.  The amount of this contribution shall be as follows: 
 34.14  </s>
 34.15         <s>Period          Basic Member     Coordinated Member
 34.16       July 1, 1973       8 percent          4 percent
 34.17          thru
 34.18       June 30, 1979
 34.19       July 1, 1979
 34.20          and             8.5 percent        4.5 percent
 34.21       thereafter
 34.22     The contributions specified in this subdivision shall be 
 34.23  contribution rates in effect at the time military service was 
 34.24  performed multiplied by the salary of the member at the date of 
 34.25  return from military service and the number of years of military 
 34.26  service together with interest thereon at an annual rate of 8.5 
 34.27  percent compounded annually from the time the military service 
 34.28  was rendered to the first date of payment.  The employer 
 34.29  contribution and additional contribution provided in section 
 34.30  354.42 shall must be paid by the employer unit in the manner 
 34.31  provided in section 354.52, subdivision 4. 
 34.32     Sec. 47.  Minnesota Statutes 1996, section 354.55, 
 34.33  subdivision 11, is amended to read: 
 34.34     Subd. 11.  [DEFERRED ANNUITY; AUGMENTATION.] Any person 
 34.35  covered under section 354.44, subdivision 6, who ceases to 
 34.36  render teaching service, may leave the person's accumulated 
 35.1   deductions in the fund for the purpose of receiving a deferred 
 35.2   annuity at retirement.  Eligibility for an annuity under this 
 35.3   subdivision shall be is governed pursuant to section 354.44, 
 35.4   subdivision 1, or 354.60. 
 35.5      The amount of the deferred retirement annuity shall be is 
 35.6   determined by section 354.44, subdivision 6, and augmented as 
 35.7   provided in this subdivision.  The required reserves related to 
 35.8   that portion of the annuity which had accrued when the member 
 35.9   ceased to render teaching service shall must be augmented by 
 35.10  interest compounded annually from the first day of the month 
 35.11  following the month during which the member ceased to render 
 35.12  teaching service to the effective date of retirement.  There 
 35.13  shall be no augmentation if this period is less than three 
 35.14  months or if this period commences prior to July 1, 1971.  The 
 35.15  rates of interest used for this purpose shall must be five 
 35.16  percent compounded annually commencing July 1, 1971, until 
 35.17  January 1, 1981, and three percent compounded annually 
 35.18  thereafter until January 1 of the year following the year in 
 35.19  which the former member attains age 55.  From that date to the 
 35.20  effective date of retirement, the rate is five percent 
 35.21  compounded annually.  If a person has more than one period of 
 35.22  uninterrupted service, a separate average salary determined 
 35.23  under section 354.44, subdivision 6, must be used for each 
 35.24  period and the required reserves related to each period shall 
 35.25  must be augmented by interest pursuant to this subdivision.  The 
 35.26  sum of the augmented required reserves so determined shall be 
 35.27  the basis for purchasing the deferred annuity.  If a person 
 35.28  repays a refund, the service restored by the repayment must be 
 35.29  considered as continuous with the next period of service for 
 35.30  which the person has credit with this fund.  If a person does 
 35.31  not render teaching service in any one fiscal year or more 
 35.32  consecutive fiscal years and then resumes teaching service, the 
 35.33  formula percentages used from the date of the resumption of 
 35.34  teaching service shall must be those applicable to new members.  
 35.35  The mortality table and interest assumption used to compute the 
 35.36  annuity shall must be the applicable mortality table established 
 36.1   by the board under section 354.07, subdivision 1, and the 
 36.2   interest rate assumption under section 356.215 in effect when 
 36.3   the member retires.  A period of uninterrupted service for the 
 36.4   purposes of this subdivision means a period of covered teaching 
 36.5   service during which the member has not been separated from 
 36.6   active service for more than one fiscal year. 
 36.7      In no case shall the annuity payable under this subdivision 
 36.8   be less than the amount of annuity payable pursuant to section 
 36.9   354.44, subdivision 6. 
 36.10     The requirements and provisions for retirement before 
 36.11  normal retirement age contained in section 354.44, subdivision 
 36.12  6, clause (3) or (5), shall also apply to an employee fulfilling 
 36.13  the requirements with a combination of service as provided in 
 36.14  section 354.60. 
 36.15     The augmentation provided by this subdivision applies to 
 36.16  the benefit provided in section 354.46, subdivision 2. 
 36.17     The augmentation provided by this subdivision shall not 
 36.18  apply to any period in which a person is on an approved leave of 
 36.19  absence from an employer unit covered by the provisions of this 
 36.20  chapter.  
 36.21     The survivor or retirement benefit to a member or survivor 
 36.22  of a member who terminated service before July 1, 1997, is 
 36.23  determined under the laws in effect on the date of termination 
 36.24  and is increased to reflect the change in the postretirement 
 36.25  fund interest assumption from five percent to six percent.  The 
 36.26  benefit payable under the six percent postretirement interest 
 36.27  assumption must be actuarially equivalent to the benefit payable 
 36.28  under the five percent interest assumption, and must be based on 
 36.29  tables adopted by the board as recommended by an approved 
 36.30  actuary and approved by the actuary retained by the legislative 
 36.31  commission on pensions and retirement. 
 36.32     Sec. 48.  [356.151] [EXPERIENCE STUDY.] 
 36.33     (a) A quadrennial experience study, if required, must 
 36.34  contain an actuarial analysis of the experience of the fund and 
 36.35  a comparison of the experience with the actuarial assumptions on 
 36.36  which the most recent actuarial valuation of the retirement fund 
 37.1   was based. 
 37.2      (b) The actuary retained by each of the public pension 
 37.3   funds named under section 356.30, subdivision 3, must use the 
 37.4   quadrennial experience study to project the pension benefit 
 37.5   obligation by year to the year 2020 assuming continuous entry 
 37.6   and exit of members from the fund that is consistent with those 
 37.7   findings examining employee turnover and entry characteristics.  
 37.8   The actuary shall develop assumptions about new entrants to the 
 37.9   fund in consultation with the state demographer and state 
 37.10  economist and must estimate the level percent of payroll 
 37.11  contribution required to fully fund the projected pension 
 37.12  benefit obligation by the amortization target date. 
 37.13     Sec. 49.  [356.19] [RETIREMENT BENEFIT FORMULA 
 37.14  PERCENTAGES.] 
 37.15     Subdivision 1.  [COORDINATED PLAN MEMBERS.] 1.2 percent. 
 37.16     Subd. 2.  [COORDINATED PLAN MEMBERS.] 1.7 percent. 
 37.17     Subd. 3.  [BASIC PLAN MEMBERS.] 2.2 percent. 
 37.18     Subd. 4.  [BASIC PLAN MEMBERS.] 2.7 percent. 
 37.19     Subd. 5.  [CORRECTIONAL PLAN MEMBERS.] 2.4 percent. 
 37.20     Subd. 6.  [STATE TROOPERS PLAN AND POLICE/FIRE PLAN 
 37.21  MEMBERS.] 3.0 percent. 
 37.22     Subd. 7.  [JUDGES PLAN.] 2.7 percent. 
 37.23     Subd. 8.  [JUDGES PLAN.] 3.2 percent. 
 37.24     Sec. 50.  Minnesota Statutes 1996, section 356.215, 
 37.25  subdivision 1, is amended to read: 
 37.26     Subdivision 1.  [DEFINITIONS.] For the purposes of sections 
 37.27  3.85 and 356.20 to 356.23, each of the following terms have the 
 37.28  meaning given: 
 37.29     (1) "Actuarial valuation" means a set of calculations 
 37.30  prepared by the actuary retained by the legislative commission 
 37.31  on pensions and retirement if so required under section 3.85, or 
 37.32  otherwise, by an approved actuary, to determine the normal cost 
 37.33  and the accrued actuarial liabilities of a benefit plan, 
 37.34  according to the entry age actuarial cost method and based upon 
 37.35  stated assumptions including, but not limited to rates of 
 37.36  interest, mortality, salary increase, disability, withdrawal, 
 38.1   and retirement and to determine the payment necessary to 
 38.2   amortize over a stated period any unfunded accrued actuarial 
 38.3   liability disclosed as a result of the actuarial valuation of 
 38.4   the benefit plan. 
 38.5      (2) "Approved actuary" means a person who is regularly 
 38.6   engaged in the business of providing actuarial services and who 
 38.7   has at least 15 years of service to major public employee 
 38.8   pension or retirement funds or who is a fellow in the society of 
 38.9   actuaries.  
 38.10     (3) "Entry age actuarial cost method" means an actuarial 
 38.11  cost method under which the actuarial present value of the 
 38.12  projected benefits of each individual currently covered by the 
 38.13  benefit plan and included in the actuarial valuation is 
 38.14  allocated on a level basis over the service of the individual if 
 38.15  the benefit plan is governed by section 69.773 or over the 
 38.16  earnings of the individual if the benefit plan is governed by 
 38.17  any other law between the entry age and the assumed exit age, 
 38.18  with the portion of this actuarial present value which is 
 38.19  allocated to the valuation year to be the normal cost and the 
 38.20  portion of this actuarial present value not provided for at the 
 38.21  valuation date by the actuarial present value of future normal 
 38.22  costs to be the actuarial accrued liability, with aggregation in 
 38.23  the calculation process to be the sum of the calculated result 
 38.24  for each covered individual and with recognition given to any 
 38.25  different benefit formulas which may apply to various periods of 
 38.26  service. 
 38.27     (4) "Experience study" means a report providing experience 
 38.28  data and an actuarial analysis of the adequacy of the actuarial 
 38.29  assumptions on which actuarial valuations are based. 
 38.30     (5) "Current assets" means the value of all assets at cost, 
 38.31  including realized capital gains or losses, plus one-third of 
 38.32  any unrealized capital gains or losses except for funds governed 
 38.33  by chapter 354A, in which case current assets means the value of 
 38.34  all assets at cost, including realized capital gains and losses, 
 38.35  plus or minus, whichever applies, the average value of total 
 38.36  unrealized capital gains or losses for the most recent 
 39.1   three-year period ending with the end of the plan year 
 39.2   immediately preceding the actuarial valuation report 
 39.3   transmission date. 
 39.4      (6) "Unfunded actuarial accrued liability" means the total 
 39.5   current and expected future benefit obligations, reduced by the 
 39.6   sum of current assets and the present value of future normal 
 39.7   costs. 
 39.8      (7) "Pension benefit obligation" means the actuarial 
 39.9   present value of credited projected benefits, determined as the 
 39.10  actuarial present value of benefits estimated to be payable in 
 39.11  the future as a result of employee service attributing an equal 
 39.12  benefit amount, including the effect of projected salary 
 39.13  increases and any step rate benefit accrual rate differences, to 
 39.14  each year of credited and expected future employee service. 
 39.15     Sec. 51.  Minnesota Statutes 1996, section 356.215, 
 39.16  subdivision 4d, is amended to read: 
 39.17     Subd. 4d.  [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds 
 39.18  governed by chapters 352B, 353C, and by sections 352.90 through 
 39.19  352.951 and 353.63 through 353.68, the actuarial valuation must 
 39.20  use a preretirement interest assumption of 8.5 percent, a 
 39.21  postretirement interest assumption of five six percent, and a 
 39.22  future salary increase assumption of 6.5 percent. 
 39.23     (b) For funds governed by chapter 354A, the actuarial 
 39.24  valuation must use preretirement and postretirement assumptions 
 39.25  of 8.5 percent and a graded rate future salary increase 
 39.26  assumption of 6.5 percent established using the provisions in 
 39.27  subdivision 7, but the actuarial valuation must reflect the 
 39.28  payment of postretirement adjustments to retirees, based on the 
 39.29  methods specified in the bylaws of the fund as approved by the 
 39.30  legislature.  For a fund governed by chapter 422A, the actuarial 
 39.31  valuation shall use a preretirement interest assumption of six 
 39.32  percent, a postretirement interest assumption of five percent, 
 39.33  and an assumption that in each future year the salary on which a 
 39.34  retirement or other benefit is based is 1.04 multiplied by the 
 39.35  salary for the preceding year.  
 39.36     (c) For all other funds not specified in paragraph (a), 
 40.1   (b), (d), or (e), the actuarial valuation must use a 
 40.2   preretirement interest assumption of five percent, a 
 40.3   postretirement interest assumption of five percent, and a future 
 40.4   salary increase assumption of 3.5 percent. 
 40.5      (d) For funds governed by chapters 3A, 352C, and 490, the 
 40.6   actuarial valuation must use a preretirement interest assumption 
 40.7   of 8.5 percent, a postretirement interest assumption of five six 
 40.8   percent, and a future salary increase assumption of 6.5 percent 
 40.9   in each future year in which the salary amount payable is not 
 40.10  determinable from section 3.099, 15A.081, subdivision 6, or 
 40.11  15A.083, subdivision 1, whichever applies, or from applicable 
 40.12  compensation council recommendations under section 15A.082. 
 40.13     (e) For funds governed by sections 352.01 through 352.86, 
 40.14  353.01 through 353.46, and chapter 354, the actuarial valuation 
 40.15  must use a preretirement interest assumption of 8.5, a 
 40.16  postretirement interest assumption of five six percent, and a 
 40.17  graded rate future salary increase assumption as follows: 
 40.18          General state   General public   
 40.19            employees       employees         Teachers  
 40.20           retirement      retirement        retirement 
 40.21   Age        plan            plan              plan 
 40.22   16        7.2500%         8.71%              7.25%
 40.23   17        7.2500          8.71               7.25 
 40.24   18        7.2500          8.70               7.25 
 40.25   19        7.2500          8.70               7.25 
 40.26   20        7.2500          7.70               7.25 
 40.27   21        7.1454          7.70               7.25 
 40.28   22        7.1094          7.70               7.25 
 40.29   23        7.0725          7.70               7.20 
 40.30   24        7.0363          7.70               7.15 
 40.31   25        7.0000          7.60               7.10 
 40.32   26        7.0000          7.51               7.05 
 40.33   27        7.0000          7.39               7.00 
 40.34   28        7.0000          7.30               7.00 
 40.35   29        7.0000          7.20               7.00 
 40.36   30        7.0000          7.20               7.00 
 41.1    31        7.0000          7.10               7.00 
 41.2    32        7.0000          7.10               7.00 
 41.3    33        7.0000          7.00               7.00 
 41.4    34        7.0000          7.00               7.00 
 41.5    35        7.0000          6.90               7.00 
 41.6    36        6.9019          6.80               7.00 
 41.7    37        6.8074          6.70               7.00 
 41.8    38        6.7125          6.60               6.90 
 41.9    39        6.6054          6.50               6.80 
 41.10   40        6.5000          6.40               6.70 
 41.11   41        6.3540          6.30               6.60 
 41.12   42        6.2087          6.30               6.50 
 41.13   43        6.0622          6.30               6.35 
 41.14   44        5.9048          6.20               6.20 
 41.15   45        5.7500          6.20               6.05 
 41.16   46        5.6940          6.09               5.90 
 41.17   47        5.6375          6.00               5.75 
 41.18   48        5.5822          5.90               5.70 
 41.19   49        5.5405          5.80               5.65 
 41.20   50        5.5000          5.70               5.60 
 41.21   51        5.4384          5.70               5.55 
 41.22   52        5.3776          5.70               5.50 
 41.23   53        5.3167          5.70               5.45 
 41.24   54        5.2826          5.70               5.40 
 41.25   55        5.2500          5.70               5.35 
 41.26   56        5.2500          5.70               5.30 
 41.27   57        5.2500          5.70               5.25 
 41.28   58        5.2500          5.70               5.25 
 41.29   59        5.2500          5.70               5.25 
 41.30   60        5.2500          5.00               5.25 
 41.31   61        5.2500          5.00               5.25 
 41.32   62        5.2500          5.00               5.25 
 41.33   63        5.2500          5.00               5.25 
 41.34   64        5.2500          5.00               5.25 
 41.35   65        5.2500          5.00               5.25 
 41.36   66        5.2500          5.00               5.25 
 42.1    67        5.2500          5.00               5.25 
 42.2    68        5.2500          5.00               5.25 
 42.3    69        5.2500          5.00               5.25 
 42.4    70        5.2500          5.00               5.25 
 42.5      Sec. 52.  Minnesota Statutes 1996, section 356.25, is 
 42.6   amended to read: 
 42.7      356.25 [LOCAL GOVERNMENTAL PENSION FUND PROHIBITIONS; 
 42.8   EXCLUSIONS.] 
 42.9      Subdivision 1.  [PROHIBITIONS; EXCLUSIONS.] Notwithstanding 
 42.10  any other provision of law or charter, no city, county, public 
 42.11  agency or instrumentality, or other political subdivision shall, 
 42.12  after August 1, 1975, establish for any of its employees any 
 42.13  local pension plan or fund financed in whole or in part from 
 42.14  public funds, other than a volunteer firefighter's relief 
 42.15  association established pursuant to chapter 424A and governed by 
 42.16  sections 69.771 to 69.776. 
 42.17     Subd. 2.  [SUPPLEMENTAL DEFINED CONTRIBUTION PLAN 
 42.18  LIMITATIONS.] Notwithstanding subdivision 1, a city, county, 
 42.19  public agency or instrumentality, or other political subdivision 
 42.20  may purchase, from a licensed annuity company for an employee 
 42.21  who is at least 55 years old, a supplemental defined 
 42.22  contribution annuity for early retirement if the employee is 
 42.23  part of a work unit within the employing entity that is 
 42.24  reorganizing services, reducing the number of employees on a 
 42.25  planned long-term basis, or changing the delivery of a service 
 42.26  to achieve greater efficiencies and effectiveness.  The offer by 
 42.27  the employer to purchase a supplemental annuity must not extend 
 42.28  beyond one year or be made to employees who do not retire within 
 42.29  the year.  Provision of the supplemental annuity under this 
 42.30  subdivision shall be annually reported to either the legislative 
 42.31  auditor or the state auditor, depending on which one has audit 
 42.32  responsibilities for the entity.  If the applicable auditor 
 42.33  finds that the employer has expended public funds for the 
 42.34  purchase of the supplemental annuity but has not reorganized 
 42.35  services, reduced the number of staff on a long-term basis, or 
 42.36  changed the delivery of services to achieve greater efficiency 
 43.1   and effectiveness, the auditor shall issue a finding that the 
 43.2   provision has been misused.  An employer for which such a 
 43.3   finding has been issued must not offer annuities under this 
 43.4   subdivision for a period of five years after the finding is 
 43.5   issued. 
 43.6      Sec. 53.  Minnesota Statutes 1996, section 356.30, 
 43.7   subdivision 1, is amended to read: 
 43.8      Subdivision 1.  [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) 
 43.9   Notwithstanding any provisions to the contrary of the laws 
 43.10  governing the funds enumerated in subdivision 3, a person who 
 43.11  has met the qualifications of clause (2) may elect to receive a 
 43.12  retirement annuity from each fund in which the person has at 
 43.13  least six months allowable service, based on the allowable 
 43.14  service in each fund, subject to the provisions of clause (3).  
 43.15     (2) A person may receive upon retirement a retirement 
 43.16  annuity from each fund in which the person has at least six 
 43.17  months allowable service, and augmentation of a deferred annuity 
 43.18  calculated under the laws governing each public pension plan or 
 43.19  fund named in subdivision 3, from the date the person terminated 
 43.20  all public service if: 
 43.21     (a) the person has allowable service totaling an amount 
 43.22  that allows the person to receive an annuity in any two or more 
 43.23  of the enumerated funds; and 
 43.24     (b) the person has not begun to receive an annuity from any 
 43.25  enumerated fund or the person has made application for benefits 
 43.26  from all funds and the effective dates of the retirement annuity 
 43.27  with each fund under which the person chooses to receive an 
 43.28  annuity are within a one-year period.  
 43.29     (3) The retirement annuity from each fund must be based 
 43.30  upon the allowable service in each fund, except that:  
 43.31     (a) The laws governing annuities must be the law in effect 
 43.32  on the date of termination from the last period of public 
 43.33  service under a covered fund with which the person earned a 
 43.34  minimum of one-half year of allowable service credit during that 
 43.35  employment.  
 43.36     (b) The "average salary" on which the annuity from each 
 44.1   covered fund in which the employee has credit in a formula plan 
 44.2   shall be based on the employee's highest five successive years 
 44.3   of covered salary during the entire service in covered funds.  
 44.4      (c) The formula percentages to be used by each fund must be 
 44.5   those percentages prescribed by each fund's formula as continued 
 44.6   for the respective years of allowable service from one fund to 
 44.7   the next, recognizing all previous allowable service with the 
 44.8   other covered funds.  
 44.9      (d) Allowable service in all the funds must be combined in 
 44.10  determining eligibility for and the application of each fund's 
 44.11  provisions in respect to actuarial reduction in the annuity 
 44.12  amount for retirement prior to normal retirement.  
 44.13     (e) The annuity amount payable for any allowable service 
 44.14  under a nonformula plan of a covered fund must not be affected 
 44.15  but such service and covered salary must be used in the above 
 44.16  calculation.  
 44.17     (f) This section shall not apply to any person whose final 
 44.18  termination from the last public service under a covered fund is 
 44.19  prior to May 1, 1975.  
 44.20     (g) For the purpose of computing annuities under this 
 44.21  section the formula percentages used by any covered fund, except 
 44.22  the basic program of the teachers retirement association, the 
 44.23  public employees police and fire fund, and the state patrol 
 44.24  retirement fund, must not exceed 2-1/2 the percent specified in 
 44.25  section 356.19, subdivision 4, per year of service for any year 
 44.26  of service or fraction thereof.  The formula percentage used by 
 44.27  the public employees police and fire fund and the state patrol 
 44.28  retirement fund must not exceed 2.65 the percent specified in 
 44.29  section 356.19, subdivision 6, per year of service for any year 
 44.30  of service or fraction thereof.  The formula percentage used by 
 44.31  the teachers retirement association must not exceed 2.63 percent 
 44.32  per year of basic program service for any year of basic program 
 44.33  service or fraction thereof. 
 44.34     (h) Any period of time for which a person has credit in 
 44.35  more than one of the covered funds must be used only once for 
 44.36  the purpose of determining total allowable service.  
 45.1      (i) If the period of duplicated service credit is more than 
 45.2   six months, or the person has credit for more than six months 
 45.3   with each of the funds, each fund shall apply its formula to a 
 45.4   prorated service credit for the period of duplicated service 
 45.5   based on a fraction of the salary on which deductions were paid 
 45.6   to that fund for the period divided by the total salary on which 
 45.7   deductions were paid to all funds for the period.  
 45.8      (j) If the period of duplicated service credit is less than 
 45.9   six months, or when added to other service credit with that fund 
 45.10  is less than six months, the service credit must be ignored and 
 45.11  a refund of contributions made to the person in accord with that 
 45.12  fund's refund provisions.  
 45.13     Sec. 54.  Minnesota Statutes 1996, section 356.88, is 
 45.14  amended by adding a subdivision to read: 
 45.15     Subd. 3.  [FORMULA PERCENTAGE INCREASES.] After January 1, 
 45.16  1998, increases in the formula percentages used to calculate 
 45.17  retirement benefits must apply only to service credited after 
 45.18  the effective date of the formula percentage increase. 
 45.19     Sec. 55.  Minnesota Statutes 1996, section 490.124, 
 45.20  subdivision 1, is amended to read: 
 45.21     Subdivision 1.  [BASIC RETIREMENT ANNUITY.] Except as 
 45.22  qualified hereinafter from and after mandatory retirement date, 
 45.23  normal retirement date, early retirement date, or one year from 
 45.24  the disability retirement date, as the case may be, a retirement 
 45.25  annuity shall be payable to a retiring judge from the judges' 
 45.26  retirement fund in an amount equal to:  (1) 2-1/2 the percent of 
 45.27  specified in section 356.19, subdivision 7, multiplied by the 
 45.28  judge's final average compensation multiplied by the number of 
 45.29  years and fractions of years of allowable service rendered prior 
 45.30  to July 1, 1980; plus (2) three the percent of specified in 
 45.31  section 356.19, subdivision 8, multiplied by the judge's final 
 45.32  average compensation multiplied by the number of years and 
 45.33  fractions of years of allowable service rendered after June 30, 
 45.34  1980; provided that the annuity shall must not exceed 65 70 
 45.35  percent of the judge's annual salary for the 12 months 
 45.36  immediately preceding retirement.  
 46.1      Sec. 56.  [APPROPRIATION; DEPARTMENT OF CORRECTIONS.] 
 46.2      For fiscal year 1998, $936,360 from the general fund is 
 46.3   added to the base funding for the department of corrections. 
 46.4      Sec. 57.  [APPROPRIATION REDUCTION; MINNESOTA STATE 
 46.5   COLLEGES AND UNIVERSITIES.] 
 46.6      For fiscal year 1998, the commissioner of finance shall 
 46.7   reduce the base appropriation for the Minnesota state colleges 
 46.8   and universities by an amount equal to nine-tenths of one 
 46.9   percent of the salaries of employees covered by either the 
 46.10  coordinated or basic retirement plans of the statewide teachers 
 46.11  retirement association. 
 46.12     Sec. 58.  [APPROPRIATION REDUCTION.] 
 46.13     For fiscal year 1998, the commissioner of finance shall 
 46.14  reduce the base appropriations by an amount equal to 12/100 of 
 46.15  one percent of the general fund supported salaries of employees 
 46.16  who are members of the general plan of the Minnesota state 
 46.17  retirement system. 
 46.18     Sec. 59.  [APPROPRIATION REDUCTION; STATE AGENCIES.] 
 46.19     For fiscal year 1998, the commissioner of finance shall 
 46.20  reduce the base appropriations of state agencies by an amount 
 46.21  equal to two-tenths of one percent of the general fund supported 
 46.22  salaries of employees who are members of the general plan of the 
 46.23  Minnesota state retirement system. 
 46.24     Sec. 60.  [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.] 
 46.25     (a) A monthly survivor, disability, or retirement benefit 
 46.26  payable under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 
 46.27  352D, 353, 353A, 353C, 354, and 490 on June 30, 1997, is 
 46.28  permanently increased effective July 1, 1997, to reflect the 
 46.29  change in the postretirement fund interest assumption from five 
 46.30  percent to six percent.  The benefit payable under the six 
 46.31  percent postretirement interest assumption must be actuarially 
 46.32  equivalent to the benefit payable under the five percent 
 46.33  interest assumption and must be based on tables adopted by the 
 46.34  applicable board as recommended by an approved actuary and 
 46.35  approved by the actuary retained by the legislative commission 
 46.36  on pensions and retirement. 
 47.1      (b) A member of the teachers retirement association who 
 47.2   terminates service after June 30, 1997, and whose effective date 
 47.3   of retirement occurs during the period of July 2, 1997 to July 
 47.4   2, 2002, must receive a percentage of the increase specified in 
 47.5   paragraph (a) based on the member's age at retirement as 
 47.6   specified below: 
 47.7          Retirement period        Percentage of paragraph (a)
 47.8     July 2, 1997 to July 1, 1998          50 percent
 47.9     July 2, 1998 to July 1, 1999          40 percent
 47.10    July 2, 1999 to July 1, 2000          30 percent
 47.11    July 2, 2000 to July 1, 2001          20 percent
 47.12    July 2, 2001 to July 1, 2002          10 percent
 47.13     Sec. 61.  [REPEALER.] 
 47.14     Minnesota Statutes 1996, sections 356.70; and 356.88, 
 47.15  subdivision 2, are repealed. 
 47.16     Sec. 62.  [EFFECTIVE DATES.] 
 47.17     Sections 28 and 29 are effective the first full pay period 
 47.18  after December 31, 1997.  Sections 7, 8, 11, 12, 19, and 20 are 
 47.19  effective the first full pay period after June 30, 1997.  
 47.20  Sections 42, 43, and 44 are effective for all salary paid July 
 47.21  1, 1997, or later.  Sections 1 to 6, 9, 10, 13 to 18, 21 to 27, 
 47.22  30 to 41, and 45 to 61 are effective July 1, 1997. 
 47.23                             ARTICLE 2
 47.24              LEGISLATORS AND CONSTITUTIONAL OFFICERS
 47.25     Section 1.  Minnesota Statutes 1996, section 3A.07, is 
 47.26  amended to read: 
 47.27     3A.07 [APPLICATION.] 
 47.28     This chapter applies to members of the legislature in 
 47.29  service upon July 1, 1965, or thereafter, who otherwise meet the 
 47.30  requirements of this chapter, except that members elected for 
 47.31  the first time after June 30, 1997, are covered by the elected 
 47.32  officers plan in chapter 352E.  
 47.33     Sec. 2.  [352C.011] [APPLICABILITY.] 
 47.34     This chapter applies only to constitutional officers first 
 47.35  elected before July 1, 1997, to a constitutional office.  
 47.36  Constitutional officers elected for the first time to a 
 48.1   constitutional office after June 30, 1997, are covered by the 
 48.2   elected officers plan under chapter 352E. 
 48.3      Sec. 3.  [352E.051] [ESTABLISHMENT.] 
 48.4      A retirement program for legislators and constitutional 
 48.5   officers to be known as the elected officers plan is established 
 48.6   in the Minnesota state retirement system. 
 48.7      Sec. 4.  [352E.052] [DEFINITIONS.] 
 48.8      Subdivision 1.  [TERMS.] As used in this chapter, unless 
 48.9   the language, context, or subject matter indicates otherwise, 
 48.10  the terms in this section have the meanings given them. 
 48.11     Subd. 2.  [COVERED EMPLOYMENT.] "Covered employment" means 
 48.12  employment covered by this chapter. 
 48.13     Subd. 3.  [ELECTED OFFICERS PLAN.] "Elected officers plan" 
 48.14  means the retirement program established by this chapter for 
 48.15  legislators and constitutional officers who were elected for the 
 48.16  first time to their positions after June 30, 1997. 
 48.17     Subd. 4.  [EMPLOYEE SHARES.] "Employee shares" means shares 
 48.18  in the supplemental fund purchased with the elected officer's 
 48.19  contributions. 
 48.20     Subd. 5.  [EMPLOYER SHARES.] "Employer shares" means shares 
 48.21  in the supplemental fund purchased with the employer's 
 48.22  contributions. 
 48.23     Subd. 6.  [SUPPLEMENTAL FUND.] "Supplemental fund" means 
 48.24  the fund established and governed by section 11A.17. 
 48.25     Subd. 7.  [TOTAL SHARES.] "Total shares" means all the 
 48.26  employee shares and employer shares credited to a participant.  
 48.27  Where applicable, the term contributions shall mean shares. 
 48.28     Subd. 8.  [VALUE.] "Value" means cash value at the end of 
 48.29  the month following receipt of an application.  If no 
 48.30  application is required, value means the cash value at the end 
 48.31  of the month in which the event necessitating the transfer 
 48.32  occurs. 
 48.33     Sec. 5.  [352E.053] [COVERAGE.] 
 48.34     First-time constitutional officers elected to any 
 48.35  constitutional office and first-time legislators elected after 
 48.36  June 30, 1997, are eligible for coverage under the elected 
 49.1   officers plan. 
 49.2      Sec. 6.  [352E.054] [INVESTMENT OPTIONS.] 
 49.3      Subdivision 1.  [PURCHASE OF SHARES.] (a) An employee may 
 49.4   elect to purchase shares in one or a combination of the income 
 49.5   share account, growth share account, international share 
 49.6   account, money market account, bond market account, fixed 
 49.7   interest account, or common stock index account established in 
 49.8   section 11A.17.  The employee may elect to participate in one or 
 49.9   more of the investment accounts in the fund by specifying, on a 
 49.10  form provided by the executive director, the percentage of the 
 49.11  employee's contributions provided in subdivision 2 to be used to 
 49.12  purchase shares in each of the accounts. 
 49.13     (b) A participant may indicate in writing on forms provided 
 49.14  by the Minnesota state retirement system a choice of options for 
 49.15  subsequent purchases of shares.  Until a different written 
 49.16  indication is made by the participant, the executive director 
 49.17  shall purchase shares in the supplemental fund as selected by 
 49.18  the participant.  If no initial option is chosen, 100 percent 
 49.19  income shares must be purchased for a participant. 
 49.20     (c) A participant or former participant may also change the 
 49.21  investment options selected for all or a portion of the 
 49.22  participant's shares previously purchased in accounts. 
 49.23     Subd. 2.  [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] The money 
 49.24  used to purchase shares under this section shall be the employee 
 49.25  and employer contributions provided in this subdivision. 
 49.26     (a) The employee contribution shall be five percent of 
 49.27  salary. 
 49.28     (b) The employer contribution must be an amount equal to 
 49.29  five percent of salary. 
 49.30     These contributions must be made by deduction from salary 
 49.31  in the manner provided in section 352.04, subdivisions 4, 5, and 
 49.32  6. 
 49.33     Sec. 7.  [352E.055] [WITHDRAWAL OPTIONS.] 
 49.34     Subdivision 1.  [PAYMENT AFTER TERMINATION.] No withdrawal 
 49.35  of shares shall be permitted prior to termination of covered 
 49.36  employment. 
 50.1      Subd. 2.  [WITHDRAWAL OPTIONS.] After termination of 
 50.2   covered employment or any time thereafter, a participant is 
 50.3   entitled, upon application, to withdraw the cash value of the 
 50.4   participant's total shares or leave such shares on deposit with 
 50.5   the supplemental retirement fund.  Shares not withdrawn remain 
 50.6   on deposit with the supplemental retirement fund until the 
 50.7   former participant becomes at least 55 years old, and applies 
 50.8   for an annuity under section 352E.06, subdivision 1. 
 50.9      Sec. 8.  [352E.06] [ANNUITIES.] 
 50.10     Subdivision 1.  [ANNUITY PURCHASE.] When a participant 
 50.11  attains at least age 55, is retired from covered service, and 
 50.12  applies for a retirement annuity, the cash value of the 
 50.13  participant's shares must be transferred to the Minnesota 
 50.14  postretirement investment fund and used to provide an annuity 
 50.15  for the retired employee based upon the participant's age when 
 50.16  the benefit begins to accrue according to the reserve basis used 
 50.17  by the state employees retirement fund in determining pensions 
 50.18  and reserves. 
 50.19     Subd. 2.  [LUMP SUM PLUS ANNUITY OPTION.] A participant has 
 50.20  the option in an application for an annuity to apply for and 
 50.21  receive the value of one-half of the total shares and thereafter 
 50.22  receive an annuity, as provided in subdivision 1, based on the 
 50.23  value of one-half of the total shares. 
 50.24     Subd. 3.  [ANNUITY ACCRUED.] An annuity herein begins to 
 50.25  accrue the first day of the first full month after an 
 50.26  application is received or after termination of state service, 
 50.27  whichever is later. 
 50.28     Sec. 9.  [352E.07] [DISABILITY BENEFITS.] 
 50.29     Subdivision 1.  [PAYMENT OPTION.] A participant who becomes 
 50.30  totally and permanently disabled has the option to receive: 
 50.31     (1) the value of the participant's total shares; 
 50.32     (2) the value of one-half of the total shares and an 
 50.33  annuity based on the value of one-half of the total shares; or 
 50.34     (3) an annuity based on the value of the participant's 
 50.35  total shares. 
 50.36     Subd. 2.  [ACCRUAL.] The annuity payable under this section 
 51.1   begins to accrue the first day of the month following the day of 
 51.2   disability and is based on the participant's age when the 
 51.3   annuity begins to accrue.  The shares must be valued as of the 
 51.4   end of the month following authorization of payments. 
 51.5      Subd. 3.  [PAYMENT IN ADDITION TO WORKERS' 
 51.6   COMPENSATION.] The benefits payable under this section must not 
 51.7   be reduced by amounts received or receivable under applicable 
 51.8   workers' compensation laws. 
 51.9      Subd. 4.  [REPAYMENT PROHIBITION.] A participant who 
 51.10  returns to covered service after receiving benefits under this 
 51.11  section shall not be required or allowed to repay such benefits. 
 51.12     Sec. 10.  [352E.08] [DEATH BENEFITS.] 
 51.13     Subdivision 1.  [SURVIVOR BENEFITS.] If a participant dies 
 51.14  leaving a spouse and there is no named beneficiary who survives 
 51.15  to receive payment or the spouse is named beneficiary, the 
 51.16  spouse may receive: 
 51.17     (1) the value of the participant's total shares; 
 51.18     (2) the value of one-half of the total shares, and 
 51.19  beginning at age 55 or thereafter, receive an annuity based on 
 51.20  the value of one-half of the total shares, provided that if the 
 51.21  spouse dies before receiving any annuity payments the value of 
 51.22  said shares shall be paid to the spouse's children in equal 
 51.23  shares, but if no such children survive, then to the parents of 
 51.24  the spouse in equal shares, but if no such children or parents 
 51.25  survive, then to the estate of the spouse; or 
 51.26     (3) beginning at age 55 or thereafter, an annuity based on 
 51.27  the value of the total shares, provided that if the spouse dies 
 51.28  before receiving any annuity payments the value of said shares 
 51.29  shall be paid to the spouse's children in equal shares, but if 
 51.30  no such children survive, then to the parents of the spouse in 
 51.31  equal shares, but if no such children or parent survive, then to 
 51.32  the estate of the spouse; and further provided, if said spouse 
 51.33  dies after receiving annuity payments but before receiving 
 51.34  payments equal to the value of the employee shares, the value of 
 51.35  the employee shares remaining shall be paid to the spouse's 
 51.36  children in equal shares, but if no such children survive, then 
 52.1   to the parents of the spouse in equal shares, but if no such 
 52.2   children or parents survive, then to the estate of the spouse. 
 52.3      Subd. 2.  [PAYMENT WITHOUT BENEFICIARY DESIGNATION.] If a 
 52.4   participant dies and has named a beneficiary, the value of the 
 52.5   total shares must be paid to such beneficiary, but if such 
 52.6   beneficiary dies before receiving payment, or if no beneficiary 
 52.7   has been named and there is no spouse, the value of said shares 
 52.8   must be paid to the children of the participant in equal shares, 
 52.9   but if no such children survive then in equal shares to the 
 52.10  parents of the participant, but if no such children or parents 
 52.11  survive, then to the estate of the participant. 
 52.12     Sec. 11.  [352E.09] [ADMINISTRATION.] 
 52.13     Subdivision 1.  [FIDUCIARY RESPONSIBILITY.] The elected 
 52.14  officers plan and the provisions of this chapter must be 
 52.15  administered by the Minnesota state retirement system.  
 52.16  Fiduciary activities of the elected officers plan must be 
 52.17  undertaken in a manner consistent with chapter 356A. 
 52.18     Subd. 2.  [REDEMPTION OR PURCHASE OF SHARES.] Whenever 
 52.19  redemption or purchases from the supplemental retirement fund 
 52.20  are required to be made, the executive director shall make them. 
 52.21     Subd. 3.  [PROSPECTUS.] The executive director shall 
 52.22  annually distribute the prospectus prepared by the supplemental 
 52.23  fund to each participant in covered employment. 
 52.24     Subd. 4.  [APPLICATION.] Whenever benefits or withdrawals 
 52.25  are authorized or required to be paid, payment must be made only 
 52.26  after receipt of an application signed by the person or 
 52.27  representative authorized to receive the benefit or withdrawal.  
 52.28  Such application must be made only on forms authorized by the 
 52.29  executive director.  
 52.30     Subd. 5.  [DISBURSEMENT OF ACCOUNT.] If the beneficiary, 
 52.31  surviving spouse, or estate has not made application for 
 52.32  benefits within ten years after the date of death of a 
 52.33  participant, the value of the shares must be appropriated to the 
 52.34  regular fund according to section 352.12, subdivision 12.  If a 
 52.35  former participant fails to make a claim for benefits within 
 52.36  five years after termination of covered service or by age 70, 
 53.1   whichever is later, the value of the shares are appropriated to 
 53.2   the general employees retirement fund according to section 
 53.3   352.22, subdivision 8. 
 53.4      Subd. 6.  [ADMINISTRATIVE FEES.] Up to four-tenths of one 
 53.5   percent of salary must be deducted from the employee 
 53.6   contributions and up to four-tenths of one percent salary must 
 53.7   be deducted from the employer contributions, as authorized by 
 53.8   section 352E.054, subdivision 2, to pay the administrative 
 53.9   expenses of the elected state officers plan. 
 53.10     Sec. 12.  [EFFECTIVE DATE.] 
 53.11     Sections 1 to 11 are effective July 1, 1997. 
 53.12                             ARTICLE 3
 53.13             FIRST CLASS CITY TEACHER RETIREMENT FUNDS
 53.14     Section 1.  Minnesota Statutes 1996, section 354A.011, 
 53.15  subdivision 15a, is amended to read: 
 53.16     Subd. 15a.  [NORMAL RETIREMENT AGE.] "Normal retirement 
 53.17  age" means age 65 for a person who first became a member of the 
 53.18  coordinated program of the Minneapolis or St. Paul teachers 
 53.19  retirement fund association or the new law coordinated program 
 53.20  of the Duluth teachers retirement fund association or a member 
 53.21  of a pension fund listed in section 356.30, subdivision 3, 
 53.22  before July 1, 1989.  For a person who first became a member of 
 53.23  the coordinated program of the Minneapolis or St. Paul teachers 
 53.24  retirement fund association or the new law coordinated program 
 53.25  of the Duluth teachers retirement fund association after June 
 53.26  30, 1989, normal retirement age means the higher of age 65 or 
 53.27  retirement age, as defined in United States Code, title 42, 
 53.28  section 416(l), as amended, not to exceed age 66.  For a person 
 53.29  who is a member of the basic program of the Minneapolis or St. 
 53.30  Paul teachers retirement fund association or the old law 
 53.31  coordinated program of the Duluth teachers retirement fund 
 53.32  association, normal retirement age means the age at which a 
 53.33  teacher becomes eligible for a normal retirement annuity 
 53.34  computed upon meeting the age and service requirements specified 
 53.35  in the applicable provisions of the articles of incorporation or 
 53.36  bylaws of the respective teachers retirement fund association. 
 54.1      Sec. 2.  Minnesota Statutes 1996, section 354A.12, 
 54.2   subdivision 1, is amended to read: 
 54.3      Subdivision 1.  [EMPLOYEE CONTRIBUTIONS.] The contribution 
 54.4   required to be paid by each member of a teachers retirement fund 
 54.5   association shall not be less than the percentage of total 
 54.6   salary specified below for the applicable association and 
 54.7   program: 
 54.8        Association and Program              Percentage of
 54.9                                             Total Salary
 54.10  Duluth teachers retirement
 54.11    association
 54.12            old law and new law
 54.13            coordinated programs              5.5 percent
 54.14  Minneapolis teachers retirement
 54.15    association
 54.16            basic program                     8.5 percent
 54.17            coordinated program               4.5 5.5 percent
 54.18  St. Paul teachers retirement
 54.19    association
 54.20            basic program                     8 percent
 54.21            coordinated program               4.5 5.5 percent
 54.22     Contributions shall be made by deduction from salary and 
 54.23  must be remitted directly to the respective teachers retirement 
 54.24  fund association at least once each month. 
 54.25     Sec. 3.  Minnesota Statutes 1996, section 354A.12, 
 54.26  subdivision 2a, is amended to read: 
 54.27     Subd. 2a.  [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION 
 54.28  RATES.] (a) The employing units shall make the following 
 54.29  employer contributions to teachers retirement fund associations: 
 54.30     (1) for any coordinated member of a teachers retirement 
 54.31  fund association in a city of the first class, the employing 
 54.32  unit shall pay the employer social security taxes in accordance 
 54.33  with section 355.46, subdivision 3, clause (b); 
 54.34     (2) for any coordinated member of one of the following 
 54.35  teachers retirement fund associations in a city of the first 
 54.36  class, the employing unit shall make a regular employer 
 55.1   contribution to the respective retirement fund association in an 
 55.2   amount equal to the designated percentage of the salary of the 
 55.3   coordinated member as provided below: 
 55.4        Duluth teachers retirement
 55.5        fund association                        4.50 percent
 55.6        Minneapolis teachers retirement
 55.7        fund association                        4.50 percent
 55.8        St. Paul teachers retirement
 55.9        fund association                        4.50 percent;
 55.10     (3) for any basic member of one of the following teachers 
 55.11  retirement fund associations in a city of the first class, the 
 55.12  employing unit shall make a regular employer contribution to the 
 55.13  respective retirement fund in an amount equal to the designated 
 55.14  percentage of the salary of the basic member as provided below: 
 55.15       Minneapolis teachers retirement
 55.16       fund association                        8.50 percent
 55.17       St. Paul teachers retirement
 55.18       fund association                        8.00 percent
 55.19     (4) for a basic member of a teachers retirement fund 
 55.20  association in a city of the first class, the employing unit 
 55.21  shall make an additional employer contribution to the respective 
 55.22  fund in an amount equal to the designated percentage of the 
 55.23  salary of the basic member, as provided below: 
 55.24       Minneapolis teachers retirement 
 55.25       fund association 
 55.26         July 1, 1993 - June 30, 1994          4.85 percent 
 55.27         July 1, 1994, and thereafter          3.64 percent
 55.28       St. Paul teachers retirement 
 55.29       fund association 
 55.30         July 1, 1993 - June 30, 1995          4.63 percent 
 55.31         July 1, 1995, and thereafter          3.64 percent
 55.32     (5) for a coordinated member of a teachers retirement fund 
 55.33  association in a city of the first class, the employing unit 
 55.34  shall make an additional employer contribution to the respective 
 55.35  fund in an amount equal to the applicable percentage of the 
 55.36  coordinated member's salary, as provided below: 
 56.1        Duluth teachers retirement
 56.2        fund association                        1.29 percent 
 56.3        Minneapolis teachers retirement
 56.4        fund association
 56.5          July 1, 1993 - June 30, 1994          0.50 percent 
 56.6          July 1, 1994, and thereafter          3.64 percent
 56.7        St. Paul teachers retirement 
 56.8        fund association 
 56.9          July 1, 1993 - June 30, 1994          0.50 percent 
 56.10         July 1, 1994 - June 30, 1995          1.50 percent 
 56.11         July 1, 1995 1997, and thereafter     3.64
 56.12                                               3.84 percent
 56.13     (b) The regular and additional employer contributions must 
 56.14  be remitted directly to the respective teachers retirement fund 
 56.15  association at least once each month.  Delinquent amounts are 
 56.16  payable with interest under the procedure in subdivision 1a. 
 56.17     (c) Payments of regular and additional employer 
 56.18  contributions for school district or technical college employees 
 56.19  who are paid from normal operating funds must be made from the 
 56.20  appropriate fund of the district or technical college. 
 56.21     Sec. 4.  Minnesota Statutes 1996, section 354A.12, 
 56.22  subdivision 3a, is amended to read: 
 56.23     Subd. 3a.  [SPECIAL DIRECT STATE AID TO ST. PAUL FIRST 
 56.24  CLASS CITY TEACHERS RETIREMENT FUND ASSOCIATION ASSOCIATIONS.] 
 56.25  (a) In fiscal year 1998, the state shall pay $2,827,000 to the 
 56.26  St. Paul teachers retirement fund association $500,000 in fiscal 
 56.27  year 1994, $12,008,000 to the Minneapolis teachers retirement 
 56.28  fund association, and $486,000 to the Duluth teachers retirement 
 56.29  fund association.  In each subsequent fiscal year, the payment 
 56.30  these payments to the St. Paul first class city teachers 
 56.31  retirement fund association associations must be increased 
 56.32  changed at the same rate as the increase change in the general 
 56.33  education revenue formula allowance under section 124A.22, 
 56.34  subdivision 2, in subsequent fiscal years. 
 56.35     (b) The direct state aid is aids under this subdivision are 
 56.36  payable October 1 annually.  The commissioner of finance shall 
 57.1   pay the direct state aid.  The amount required under this 
 57.2   subdivision is appropriated annually from the general fund to 
 57.3   the commissioner of finance. 
 57.4      Sec. 5.  Minnesota Statutes 1996, section 354A.12, 
 57.5   subdivision 3c, is amended to read: 
 57.6      Subd. 3c.  [TERMINATION OF SUPPLEMENTAL CONTRIBUTIONS AND 
 57.7   DIRECT MATCHING AND STATE AID.] (a) The supplemental 
 57.8   contributions payable to the Minneapolis teachers retirement 
 57.9   fund association by special school district No. 1 and the city 
 57.10  of Minneapolis under section 423A.02, subdivision 3, or to the 
 57.11  St. Paul teachers retirement fund association by independent 
 57.12  school district No. 625 under section 423A.02, subdivision 3, or 
 57.13  the direct state aid aids under subdivision 3a to the St. Paul 
 57.14  first class city teachers retirement association associations, 
 57.15  and the direct matching and state aid under subdivision 3b to 
 57.16  the Minneapolis teachers retirement fund association terminates 
 57.17  for the respective fund at the end of the fiscal year in which 
 57.18  the accrued liability funding ratio for that fund, as determined 
 57.19  in the most recent actuarial report for that fund by the actuary 
 57.20  retained by the legislative commission on pensions and 
 57.21  retirement, equals or exceeds the accrued liability funding 
 57.22  ratio for the teachers retirement association, as determined in 
 57.23  the most recent actuarial report for the teachers retirement 
 57.24  association by the actuary retained by the legislative 
 57.25  commission on pensions and retirement. 
 57.26     (b) If the state direct matching, state supplemental, or 
 57.27  state aid is terminated for the St. Paul a first class city 
 57.28  teachers retirement fund association or the Minneapolis teachers 
 57.29  retirement fund association under paragraph (a), it may not 
 57.30  again be received by that fund. 
 57.31     (c) If either the Minneapolis teachers retirement fund 
 57.32  association, or the St. Paul teachers retirement fund 
 57.33  association, or the Duluth teachers retirement fund association 
 57.34  remain funded at less than the funding ratio applicable to the 
 57.35  teachers retirement association when the provisions of paragraph 
 57.36  (b) become effective, then any state aid not distributed to that 
 58.1   association must be immediately transferred to the other 
 58.2   association associations. 
 58.3      Sec. 6.  Minnesota Statutes 1996, section 354A.31, 
 58.4   subdivision 4, is amended to read: 
 58.5      Subd. 4.  [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT 
 58.6   ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision 
 58.7   applies to the coordinated programs of the Minneapolis teachers 
 58.8   retirement fund association and the St. Paul teachers retirement 
 58.9   fund association.  
 58.10     (b) The normal coordinated retirement annuity shall be an 
 58.11  amount equal to a retiring coordinated member's average salary 
 58.12  multiplied by the retirement annuity formula percentage.  
 58.13  Average salary for purposes of this section shall mean an amount 
 58.14  equal to the average salary upon which contributions were made 
 58.15  for the highest five successive years of service credit, but 
 58.16  which shall not in any event include any more than the 
 58.17  equivalent of 60 monthly salary payments.  Average salary must 
 58.18  be based upon all years of service credit if this service credit 
 58.19  is less than five years. 
 58.20     (c) This paragraph, in conjunction with subdivision 6, 
 58.21  applies to a person who first became a member or a member in a 
 58.22  pension fund listed in section 356.30, subdivision 3, before 
 58.23  July 1, 1989, unless paragraph (d), in conjunction with 
 58.24  subdivision 7, produces a higher annuity amount, in which case 
 58.25  paragraph (d) will apply.  The retirement annuity formula 
 58.26  percentage for purposes of this paragraph is one the percent 
 58.27  specified in section 356.19, subdivision 1, per year for each 
 58.28  year of coordinated service for the first ten years and 1.5 the 
 58.29  percent specified in section 356.19, subdivision 2, for each 
 58.30  year of coordinated service thereafter.  
 58.31     (d) This paragraph applies to a person who has become at 
 58.32  least 55 years old and who first becomes a member after June 30, 
 58.33  1989, and to any other member who has become at least 55 years 
 58.34  old and whose annuity amount, when calculated under this 
 58.35  paragraph and in conjunction with subdivision 7 is higher than 
 58.36  it is when calculated under paragraph (c), in conjunction with 
 59.1   the provisions of subdivision 6.  The retirement annuity formula 
 59.2   percentage for purposes of this paragraph is 1.5 the percent 
 59.3   specified in section 356.19, subdivision 2, for each year of 
 59.4   coordinated service.  
 59.5      Sec. 7.  Minnesota Statutes 1996, section 354A.31, 
 59.6   subdivision 4a, is amended to read: 
 59.7      Subd. 4a.  [COMPUTATION OF THE NORMAL COORDINATED 
 59.8   RETIREMENT ANNUITY; DULUTH FUND.] (a) This subdivision applies 
 59.9   to the new law coordinated program of the Duluth teachers 
 59.10  retirement fund association. 
 59.11     (b) The normal coordinated retirement annuity is an amount 
 59.12  equal to a retiring coordinated member's average salary 
 59.13  multiplied by the retirement annuity formula percentage.  
 59.14  Average salary for purposes of this section means an amount 
 59.15  equal to the average salary upon which contributions were made 
 59.16  for the highest five successive years of service credit, but may 
 59.17  not in any event include any more than the equivalent of 60 
 59.18  monthly salary payments.  Average salary must be based upon all 
 59.19  years of service credit if this service credit is less than five 
 59.20  years. 
 59.21     (c) This paragraph, in conjunction with subdivision 6, 
 59.22  applies to a person who first became a member or a member in a 
 59.23  pension fund listed in section 356.30, subdivision 3, before 
 59.24  July 1, 1989, unless paragraph (d), in conjunction with 
 59.25  subdivision 7, produces a higher annuity amount, in which case 
 59.26  paragraph (d) applies.  The retirement annuity formula 
 59.27  percentage for purposes of this paragraph is 1.13 the percent 
 59.28  specified in section 356.19, subdivision 1, per year for each 
 59.29  year of coordinated service for the first ten years and 1.63 the 
 59.30  percent specified in section 356.19, subdivision 2, for each 
 59.31  subsequent year of coordinated service. 
 59.32     (d) This paragraph applies to a person who is at least 55 
 59.33  years old and who first becomes a member after June 30, 1989, 
 59.34  and to any other member who is at least 55 years old and whose 
 59.35  annuity amount, when calculated under this paragraph and in 
 59.36  conjunction with subdivision 7, is higher than it is when 
 60.1   calculated under paragraph (c) in conjunction with subdivision 
 60.2   6.  The retirement annuity formula percentage for purposes of 
 60.3   this paragraph is 1.63 the percent specified in section 356.19, 
 60.4   subdivision 2, for each year of coordinated service. 
 60.5      Sec. 8.  [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION 
 60.6   POSTRETIREMENT ADJUSTMENT.] 
 60.7      Subdivision 1.  [ARTICLES OF INCORPORATION AND 
 60.8   BYLAWS.] Permission is granted for the St. Paul teachers 
 60.9   retirement fund association under Minnesota Statutes, section 
 60.10  354A.12, subdivision 4, to amend its articles of incorporation 
 60.11  and bylaws to provide postretirement adjustments under this 
 60.12  section. 
 60.13     Subd. 2.  [POSTRETIREMENT ADJUSTMENT.] (a) The 
 60.14  postretirement adjustment described in the articles and bylaws 
 60.15  of the St. Paul teachers retirement fund must be determined by 
 60.16  the board annually after June 30 using the procedures under this 
 60.17  section. 
 60.18     (b) Each eligible person who has been receiving an annuity 
 60.19  or benefit under the articles of incorporation or the bylaws for 
 60.20  at least 12 months as of the end of the fiscal year shall 
 60.21  receive a postretirement adjustment of 2.0 percent that is 
 60.22  payable each January 1. 
 60.23     Subd. 3.  [ADDITIONAL INVESTMENT PERCENTAGE 
 60.24  ADJUSTMENT.] (a) An excess investment earnings percentage 
 60.25  adjustment must be computed and paid under this subdivision to 
 60.26  those annuitants and eligible benefit recipients who have been 
 60.27  receiving an annuity or benefit for at least 12 months as 
 60.28  determined each June 30 by the board of trustees. 
 60.29     (b) The board shall also determine the five-year annualized 
 60.30  rate of return attributable to the assets of the St. Paul 
 60.31  teachers retirement fund association under the formula specified 
 60.32  in Minnesota Statutes, section 11A.04, clause (11), and the 
 60.33  amount of the excess five-year annualized rate of return over 
 60.34  the preretirement interest assumption specified in Minnesota 
 60.35  Statutes, section 356.215. 
 60.36     (c) The excess investment percentage adjustment must be 
 61.1   determined by multiplying the quantity one minus the rate of 
 61.2   contribution deficiency, as specified in the most recent 
 61.3   actuarial report of the actuary retained by the legislative 
 61.4   commission on pensions and retirement, by the rate of return 
 61.5   excess as determined in paragraph (b). 
 61.6      (d) The excess investment percentage adjustment is payable 
 61.7   to all annuitants and benefit recipients on the following 
 61.8   January 1. 
 61.9      Subd. 4.  [EFFECT ON ANNUITY.] The adjustments calculated 
 61.10  under subdivisions 2 and 3 must be included in all annuities or 
 61.11  benefits paid to the recipient after the adjustments take effect.
 61.12     Subd. 5.  [LUMP SUM POSTRETIREMENT ADJUSTMENT 
 61.13  TRANSITION.] This subdivision applies to all annuitants and 
 61.14  beneficiaries of the association who received a lump sum 
 61.15  postretirement adjustment before the calculation of the first 
 61.16  postretirement adjustment under subdivisions 2 and 3.  Before 
 61.17  the calculation of the first postretirement adjustment under 
 61.18  subdivisions 2 and 3, the annual retirement annuity must be 
 61.19  increased by the amount of the lump sum postretirement 
 61.20  adjustment described in the association bylaws and paid to the 
 61.21  annuitant or beneficiary in 1997 before the effective date of 
 61.22  this section or if the annuitant or beneficiary was not eligible 
 61.23  for a lump sum postretirement adjustment, then the annual 
 61.24  benefit paid to that annuitant or benefit recipient must be 
 61.25  increased by the cumulative percentage increase in the Consumer 
 61.26  Price Index for urban wage earners and clerical workers All 
 61.27  Items Index published by the United States Department of Labor, 
 61.28  Bureau of Labor Statistics from the date of retirement of the 
 61.29  person whose service is the basis of the benefit to June 30, 
 61.30  1997. 
 61.31     Sec. 9.  [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO 
 61.32  INCREASE FORMULAS.] 
 61.33     In accordance with Minnesota Statutes, section 354A.12, 
 61.34  subdivision 4, approval is granted for the Duluth teachers 
 61.35  retirement fund association to amend its articles of 
 61.36  incorporation or bylaws by increasing the formula percentage 
 62.1   used in computing annuities for old law coordinated program 
 62.2   members in the Duluth teachers retirement fund association to 
 62.3   1.45 percent for each year of credited service. 
 62.4      Sec. 10.  [REPEALER.] 
 62.5      Minnesota Statutes 1996, section 354A.12, subdivision 2b, 
 62.6   is repealed. 
 62.7      Sec. 11.  [EFFECTIVE DATES.] 
 62.8      Sections 2 and 3 are effective for all salary paid on or 
 62.9   after July 1, 1997.  Sections 1 and 4 to 10 are effective July 
 62.10  1, 1997. 
 62.11                             ARTICLE 4
 62.12                MINNEAPOLIS POLICE AND FIREFIGHTERS
 62.13     Section 1.  Minnesota Statutes 1996, section 423B.01, 
 62.14  subdivision 9, is amended to read: 
 62.15     Subd. 9.  [EXCESS INVESTMENT INCOME.] "Excess investment 
 62.16  income" means the amount, if any, by which the average time 
 62.17  weighted total rate of return earned by the fund in the most 
 62.18  recent prior five fiscal years year has exceeded the actual 
 62.19  average annual percentage increase in the current monthly salary 
 62.20  of a first grade patrol officer in the most recent prior five 
 62.21  fiscal years year plus two percent, and must be expressed as a 
 62.22  dollar amount and may not exceed one percent of the total assets 
 62.23  of the fund, except when the fund has actuarial assets of 
 62.24  greater than 102 percent of its actuarial accrued liabilities in 
 62.25  which case the amount must not exceed 1-1/2 percent of the total 
 62.26  assets of the fund, and does not exist unless the yearly average 
 62.27  percentage increase of the time weighted total rate of return of 
 62.28  the fund for the previous five years exceeds by two percent the 
 62.29  yearly average percentage increase in monthly salary of a first 
 62.30  grade patrol officer during the previous five calendar years. 
 62.31     Sec. 2.  Minnesota Statutes 1996, section 423B.06, is 
 62.32  amended by adding a subdivision to read: 
 62.33     Subd. 5.  [TAX LEVY.] If in any year after the fund has 
 62.34  actuarial assets greater than 102 percent of the actuarial 
 62.35  accrued liabilities of the fund and subsequently the actuarial 
 62.36  assets are less than 100 percent of the actuarial accrued 
 63.1   liabilities, the city of Minneapolis is not required to levy a 
 63.2   property tax to fund any deficit unless the fund has two 
 63.3   successive years when the actuarial assets are less than 100 
 63.4   percent of the actuarial accrued liabilities. 
 63.5      Sec. 3.  Minnesota Statutes 1996, section 423B.07, is 
 63.6   amended to read: 
 63.7      423B.07 [AUTHORIZED FUND DISBURSEMENTS.] 
 63.8      The police pension fund may be used only for the payment of:
 63.9      (1) service, disability, or dependency pensions; 
 63.10     (2) notwithstanding a contrary provision of section 69.80, 
 63.11  the salary of the secretary of the association in an amount not 
 63.12  to exceed 30 percent of the base salary of a first grade patrol 
 63.13  officer, the salary of the president of the association in an 
 63.14  amount not to exceed ten percent of the base salary of a first 
 63.15  grade patrol officer, and the salaries of the other elected 
 63.16  members of the board of trustees in an amount not to exceed 
 63.17  three units; 
 63.18     (3) expenses of officers and employees of the association 
 63.19  in connection with the protection of the fund; 
 63.20     (4) expenses of operating and maintaining the association; 
 63.21     (5) support for hospital and medical insurance for 
 63.22  pensioners who have completed 20 years or more of service or 
 63.23  permanent disabilitants and surviving spouses of deceased active 
 63.24  members, disabilitants, or service pensioners who have completed 
 63.25  20 years or more of service in an amount equal to one unit per 
 63.26  month, to be added to the pension otherwise provided; 
 63.27     (6) health and welfare benefits of one unit per month in 
 63.28  addition to other benefits for members who retired after July 1, 
 63.29  1980, and have completed 20 years or more of service or for 
 63.30  members who are permanent disabilitants; and 
 63.31     (7) other expenses authorized by section 69.80, or other 
 63.32  applicable law. 
 63.33     Sec. 4.  Minnesota Statutes 1996, section 423B.09, 
 63.34  subdivision 1, is amended to read: 
 63.35     Subdivision 1.  [MINNEAPOLIS POLICE; PERSONS ENTITLED TO 
 63.36  RECEIVE PENSIONS.] The association shall grant pensions payable 
 64.1   from the police pension fund in monthly installments to persons 
 64.2   entitled to pensions in the manner and for the following 
 64.3   purposes. 
 64.4      (a) An active member or a deferred pensioner who has 
 64.5   performed duty as a member of the police department of the city 
 64.6   for five years or more, upon written application after retiring 
 64.7   from duty and reaching at least age 50, is entitled to be paid 
 64.8   monthly for life a service pension equal to eight units.  For 
 64.9   full years of service beyond five years, the service pension 
 64.10  increases by 1.6 units for each full year, to a maximum of 40 
 64.11  units.  When the fund has actuarial assets of greater than 90 
 64.12  percent of actuarial accrued liabilities, active members, 
 64.13  deferred members, and service pensioners are entitled to a 
 64.14  service pension according to the following schedule: 
 64.15                 5 years           8.0 units
 64.16                 6 years           9.6 units
 64.17                 7 years          11.2 units
 64.18                 8 years          12.8 units
 64.19                 9 years          14.4 units
 64.20                10 years          16.0 units
 64.21                11 years          17.6 units
 64.22                12 years          19.2 units
 64.23                13 years          20.8 units
 64.24                14 years          22.4 units
 64.25                15 years          24.0 units
 64.26                16 years          25.6 units
 64.27                17 years          27.2 units
 64.28                18 years          28.8 units
 64.29                19 years          30.4 units
 64.30                20 years          34.0 units
 64.31                21 years          35.6 units
 64.32                22 years          37.2 units
 64.33                23 years          38.8 units
 64.34                24 years          40.4 units
 64.35                25 years          42.0 units
 64.36     Fractional years of service may not be used in computing 
 65.1   pensions. 
 65.2      (b) An active member who after five years' service but less 
 65.3   than 20 years' service with the police department of the city, 
 65.4   becomes superannuated so as to be permanently unable to perform 
 65.5   the person's assigned duties, is entitled to be paid monthly for 
 65.6   life a superannuation pension equal to two units for five years 
 65.7   of service and an additional two units for each full year of 
 65.8   service over five years and less than 20 years. 
 65.9      (c) An active member who is not eligible for a service 
 65.10  pension and who, while a member of the police department of the 
 65.11  city, becomes diseased or sustains an injury while in the 
 65.12  service that permanently unfits the member for the performance 
 65.13  of police duties is entitled to be paid monthly for life a 
 65.14  pension equal to 32 units while so disabled. 
 65.15     Sec. 5.  Minnesota Statutes 1996, section 423B.09, is 
 65.16  amended by adding a subdivision to read: 
 65.17     Subd. 6.  [OPTIONAL ANNUITIES.] A member who is retired on 
 65.18  the effective date of this subdivision may elect an optional 
 65.19  retirement annuity within 60 days of the effective date instead 
 65.20  of the normal retirement annuity.  A member who retires after 
 65.21  the effective date of this subdivision may elect an optional 
 65.22  retirement annuity prior to the receipt of any benefits.  The 
 65.23  optional retirement annuity may be a joint and survivor annuity 
 65.24  without reinstatement in the event of the designated beneficiary 
 65.25  predeceasing the member or a joint and survivor annuity with 
 65.26  reinstatement in the event of the designated beneficiary 
 65.27  predeceasing the member.  An optional retirement annuity must be 
 65.28  actuarially equivalent to the normal single life annuity, as 
 65.29  projected using the actuarial assumption in sections 356.215 and 
 65.30  356.216, and established by the board with written 
 65.31  recommendation of the actuary retained by the legislative 
 65.32  commission on pensions and retirement.  Once selected, the 
 65.33  optional annuity is irrevocable and subject to all other pension 
 65.34  benefits. 
 65.35     Sec. 6.  Minnesota Statutes 1996, section 423B.10, 
 65.36  subdivision 1, is amended to read: 
 66.1      Subdivision 1.  [ENTITLEMENT; BENEFIT AMOUNT.] (a) The 
 66.2   surviving spouse of a deceased service pensioner, disability 
 66.3   pensioner, deferred pensioner, superannuation pensioner, or 
 66.4   active member, who was the legally married spouse of the 
 66.5   decedent, residing with the decedent, and who was married while 
 66.6   or before the time the decedent was on the payroll of the police 
 66.7   department, and who, if the deceased member was a service or 
 66.8   deferred pensioner, was legally married to the member for a 
 66.9   period of at least one year before retirement from the police 
 66.10  department, is entitled to a surviving spouse benefit.  The 
 66.11  surviving spouse benefit is equal to 21 units per month if the 
 66.12  person is the surviving spouse of a deceased active member or 
 66.13  disabilitant.  The surviving spouse benefit is equal to six 
 66.14  units per month, plus an additional one unit for each year of 
 66.15  service to the credit of the decedent in excess of five years, 
 66.16  to a maximum of 21 units per month, if the person is the 
 66.17  surviving spouse of a deceased service pensioner, deferred 
 66.18  pensioner, or superannuation pensioner.  The surviving spouse 
 66.19  benefit is payable for the life of the surviving spouse. 
 66.20     (b) A surviving child of a deceased service pensioner, 
 66.21  disability pensioner, deferred pensioner, superannuation 
 66.22  pensioner, or active member, who was living while the decedent 
 66.23  was an active member of the police department or was born within 
 66.24  nine months after the decedent terminated active service in the 
 66.25  police department, is entitled to a surviving child benefit.  
 66.26  The surviving child benefit is equal to eight units per month if 
 66.27  the person is the surviving child of a deceased active member or 
 66.28  disabilitant.  The surviving child benefit is equal to two units 
 66.29  per month, plus an additional four-tenths of one unit per month 
 66.30  for each year of service to the credit of the decedent in excess 
 66.31  of five years, to a maximum of eight units, if the person is the 
 66.32  surviving child of a deceased service pensioner, deferred 
 66.33  pensioner, or superannuation pensioner.  The surviving child 
 66.34  benefit is payable until the person attains age 18, or, if in 
 66.35  full-time attendance during the normal school year, in a school 
 66.36  approved by the board of directors, until the person receives a 
 67.1   bachelor's degree or attains the age of 22 years, whichever 
 67.2   occurs first.  In the event of the death of both parents leaving 
 67.3   a surviving child or children entitled to a surviving child 
 67.4   benefit as determined in this paragraph, the surviving child is, 
 67.5   or the surviving children are, entitled to a surviving child 
 67.6   benefit in such sums as determined by the board of directors to 
 67.7   be necessary for the care and education of such surviving child 
 67.8   or children, but not to exceed the family maximum benefit per 
 67.9   month, to the children of any one family.  
 67.10     (c) The surviving spouse and surviving child benefits are 
 67.11  subject to a family maximum benefit.  The family maximum benefit 
 67.12  is 40 units per month. 
 67.13     (d) A surviving spouse who is otherwise not qualified may 
 67.14  receive a benefit if the surviving spouse was married to the 
 67.15  decedent for a period of five years and was residing with the 
 67.16  decedent at the time of death.  The surviving spouse benefit is 
 67.17  the same as that provided in paragraph (a), except that if the 
 67.18  surviving spouse is younger than the decedent, the surviving 
 67.19  spouse benefit must be actuarially reduced to provide a benefit 
 67.20  equivalent to the average surviving spouse benefit paid by the 
 67.21  fund notwithstanding the 21 unit pension established under 
 67.22  paragraph (a). 
 67.23     Sec. 7.  Minnesota Statutes 1996, section 423B.15, 
 67.24  subdivision 2, is amended to read: 
 67.25     Subd. 2.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
 67.26  board of trustees of the relief association shall determine by 
 67.27  May 1 of each year whether or not the fund has excess investment 
 67.28  income.  The amount of excess investment income, if any, must be 
 67.29  stated as a dollar amount and reported by the chief 
 67.30  administrative officer of the relief association to the mayor 
 67.31  and governing body of the city, the state auditor, the 
 67.32  commissioner of finance, and the executive director of the 
 67.33  legislative commission on pensions and retirement.  The dollar 
 67.34  amount of excess investment income up to one percent of the 
 67.35  assets of the fund, except when the fund has actuarial assets of 
 67.36  greater than 102 percent of its actuarial accrued liabilities in 
 68.1   which case the amount may not exceed 1-1/2 percent of the assets 
 68.2   of the fund, must be applied for the purpose specified in 
 68.3   subdivision 3.  Excess investment income must not be considered 
 68.4   as income to or assets of the fund for actuarial valuations of 
 68.5   the fund for that year under sections 69.77, 356.215, and 
 68.6   356.216 and the provisions of this section except to offset the 
 68.7   annual postretirement payment.  Additional investment income is 
 68.8   any realized or unrealized investment income other than the 
 68.9   excess investment income and must be included in the actuarial 
 68.10  valuations performed under sections 69.77, 356.215, and 356.216 
 68.11  and the provisions of this section. 
 68.12     Sec. 8.  Minnesota Statutes 1996, section 423B.15, 
 68.13  subdivision 3, is amended to read: 
 68.14     Subd. 3.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
 68.15  amount determined under subdivision 2 must be applied in 
 68.16  accordance with this subdivision.  When the fund has less than 
 68.17  102 percent of its total actuarial liabilities, the relief 
 68.18  association shall apply the first one-half of excess investment 
 68.19  income to the payment of an annual postretirement payment as 
 68.20  specified in this subdivision. and the second one-half of excess 
 68.21  investment income up to one-half of one percent of the assets of 
 68.22  the fund must be applied to reduce the state amortization state 
 68.23  aid or supplementary amortization state aid payments otherwise 
 68.24  due to the relief association under section 423A.02 for the 
 68.25  current calendar year.  When the fund is less than 102 percent 
 68.26  funded and other conditions are met, the relief association 
 68.27  shall pay an annual postretirement payment to all eligible 
 68.28  members in an amount not to exceed one-half of one percent of 
 68.29  the assets of the fund.  When the fund has actuarial assets of 
 68.30  greater than 102 percent of its actuarial accrued liabilities, 
 68.31  the relief association shall pay an annual postretirement 
 68.32  payment to all eligible members in an amount not to exceed 1-1/2 
 68.33  percent of the assets of the fund.  Payment of the annual 
 68.34  postretirement payment must be in a lump sum amount on June 1 
 68.35  following the determination date in any year.  Payment of the 
 68.36  annual postretirement payment may be made only if the average 
 69.1   time weighted total rate of return for the most recent prior 
 69.2   five years exceeds by two percent the actual average percentage 
 69.3   increase in the current monthly salary of a top grade patrol 
 69.4   officer in the most recent prior five fiscal years year and the 
 69.5   yearly average percentage increase of the time weighted total 
 69.6   rate of return of the fund for the previous five years exceeds 
 69.7   by two percent the yearly average percentage increase in monthly 
 69.8   salary of a top grade patrol officer of the previous five 
 69.9   years.  The total amount of all payments to members may not 
 69.10  exceed the amount determined under this subdivision.  Payment to 
 69.11  each eligible member must be calculated by dividing the total 
 69.12  number of pension units to which eligible members are entitled 
 69.13  into the excess investment income available for distribution to 
 69.14  members, and then multiplying that result by the number of units 
 69.15  to which each eligible member is entitled to determine each 
 69.16  eligible member's annual postretirement payment.  When the fund 
 69.17  has actuarial assets of less than 102 percent of its actuarial 
 69.18  accrued liabilities, payment to each eligible member may not 
 69.19  exceed an amount equal to the total monthly benefit that the 
 69.20  eligible member was entitled to in the prior year under the 
 69.21  terms of the benefit plan of the relief association or each 
 69.22  eligible member's proportionate share of the excess investment 
 69.23  income, whichever is less.  When the fund has actuarial assets 
 69.24  of greater than 102 percent of its actuarial accrued 
 69.25  liabilities, payment to each eligible member must not exceed the 
 69.26  member's proportionate share of 1-1/2 percent of the assets of 
 69.27  the fund. 
 69.28     A person who received a pension or benefit for the entire 
 69.29  12 months before the determination date is eligible for a full 
 69.30  annual postretirement payment.  A person who received a pension 
 69.31  or benefit for less than 12 months before the determination date 
 69.32  is eligible for a prorated annual postretirement payment. 
 69.33     Sec. 9.  Minnesota Statutes 1996, section 423B.15, 
 69.34  subdivision 6, is amended to read: 
 69.35     Subd. 6.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
 69.36  No provision of or payment made under this section may be 
 70.1   interpreted or relied upon by any member of the relief 
 70.2   association to guarantee or entitle a member to annual 
 70.3   postretirement payments for a period when no excess investment 
 70.4   income is earned by the fund.  If the fund has actuarial assets 
 70.5   of less than 102 percent of its actuarial accrued liabilities, 
 70.6   the distribution of assets under this section must not exceed 
 70.7   one-half of one percent. 
 70.8      Sec. 10.  Laws 1965, chapter 519, section 1, as amended by 
 70.9   Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, 
 70.10  section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 
 70.11  164, section 2; Laws 1992, chapter 454, section 2; and Laws 
 70.12  1994, chapter 591, article 1, section 1, is amended to read: 
 70.13     Section 1.  [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF 
 70.14  ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding 
 70.15  the provisions of Minnesota Statutes 1965, Section 69.48, to the 
 70.16  contrary, when a service pensioner, disability pensioner, or 
 70.17  deferred pensioner, or an active member of a relief association 
 70.18  dies, leaving: 
 70.19     (1) A surviving spouse who was a legally married spouse, 
 70.20  residing with the decedent, and who was married while or prior 
 70.21  to the time the decedent was on the payroll of the fire 
 70.22  department in the case of a deceased active member; and who, in 
 70.23  case the deceased member was a service or deferred pensioner was 
 70.24  legally married to the member at least five years before death; 
 70.25  or 
 70.26     (2) A child or children who were living while the deceased 
 70.27  was on the payroll of the fire department, or born within nine 
 70.28  months after the decedent was withdrawn from the payroll of the 
 70.29  fire department, the surviving spouse and the child or children 
 70.30  shall be entitled to a pension or pensions, as follows: 
 70.31     (a) To the surviving spouse, a pension of not less than 17 
 70.32  units, and not to exceed the total of 22 units per month, as the 
 70.33  bylaws of the association provide, for life; provided, that if 
 70.34  the spouse shall remarry then the pension shall cease and 
 70.35  terminate as of the date of remarriage; provided, further, if 
 70.36  the remarriage terminates for any reason, the surviving spouse 
 71.1   shall again be entitled to a pension as the bylaws of the 
 71.2   association provide; 
 71.3      (b) To the child or children, if their other parent is 
 71.4   living, a pension of not to exceed eight units per month for 
 71.5   each child up to the time each child reaches the age of not less 
 71.6   than 16 years and not to exceed an age of 18 years; provided, 
 71.7   however, upon approval by the board of trustees, such a child 
 71.8   who is a full-time student, upon proof of compliance with the 
 71.9   provisions of this act, may be entitled to such pension so long 
 71.10  as the child is a full-time student and has not reached 22 years 
 71.11  of age, all in conformity with the bylaws of the association; 
 71.12  provided, further, the total pensions hereunder for the 
 71.13  surviving spouse and children of the deceased member shall not 
 71.14  exceed the sum of 41 units per month; 
 71.15     (c) A child or children of a deceased member after the 
 71.16  death of their other parent, or in the event their other parent 
 71.17  predeceases the member, be entitled to receive a pension or 
 71.18  pensions in such amount as the board of trustees of the 
 71.19  association shall deem necessary to properly support the child 
 71.20  or children until they reach the age of not less than 16 and not 
 71.21  more than 18 years; provided, however, upon approval by the 
 71.22  board of trustees, such a child who is a full-time student, upon 
 71.23  proof of compliance with the provisions of this act, may be 
 71.24  entitled to such pension so long as the child is a full-time 
 71.25  student and has not reached 22 years of age, as the bylaws of 
 71.26  the association may provide; but the total amount of the pension 
 71.27  or pensions hereunder for any child or children shall not exceed 
 71.28  the sum of 41 units per month; 
 71.29     (d) For the purposes of this act, a full-time student is 
 71.30  defined as an individual who is in full-time attendance as a 
 71.31  student at an educational institution.  Whether or not the 
 71.32  student was in full-time attendance would be determined by the 
 71.33  board of trustees of the association in the light of the 
 71.34  standards and practices of the school involved.  Specifically 
 71.35  excluded is a person who is paid by the person's employer while 
 71.36  attending school at the request of the person's employer.  
 72.1   Benefits may continue during any period of four calendar months 
 72.2   or less in any 12 month period in which a person does not attend 
 72.3   school if the person shows to the satisfaction of the board of 
 72.4   trustees that the person intends to continue in full-time school 
 72.5   attendance immediately after the end of the period.  An 
 72.6   educational institution is defined so as to permit the payment 
 72.7   of benefits to students taking vocational or academic courses in 
 72.8   all approved, accredited or licensed schools, colleges, and 
 72.9   universities.  The board of trustees shall make the final 
 72.10  determination of eligibility for benefits if any question arises 
 72.11  concerning the approved status of the educational institution 
 72.12  which the student attends or proposes to attend; 
 72.13     (e) In the event that a child who is receiving a pension as 
 72.14  provided above shall marry before the age of 22 years, the 
 72.15  pension shall cease as of the date of the marriage.; and 
 72.16     (f) A surviving spouse of a deceased service pensioner, 
 72.17  disability pensioner, deferred pensioner, or service pensioner 
 72.18  who is otherwise not qualified may receive a benefit if the 
 72.19  surviving spouse was legally married to the decedent for a 
 72.20  period of five years and was residing with the decedent at the 
 72.21  time of death.  The surviving spouse benefit is the same as that 
 72.22  provided under paragraph (a), except that if the surviving 
 72.23  spouse is younger than the decedent, the surviving spouse 
 72.24  benefit must be actuarially reduced to provide a benefit 
 72.25  equivalent to the average surviving spouse benefit paid by the 
 72.26  fund notwithstanding the 17 unit minimum established under 
 72.27  paragraph (a). 
 72.28     Sec. 11.  Laws 1989, chapter 319, article 19, section 7, 
 72.29  subdivision 1, as amended by Laws 1992, chapter 471, article 2, 
 72.30  section 5, is amended to read: 
 72.31     Subdivision 1.  [DEFINITIONS.] For the purposes of this 
 72.32  section, each of the terms in this subdivision have the meanings 
 72.33  given them in paragraphs (a) to (h). 
 72.34     (a) "Annual postretirement payment" means the payment of a 
 72.35  lump sum postretirement benefit to an eligible member on June 1 
 72.36  following the determination date in any year. 
 73.1      (b) "City" means the city of Minneapolis. 
 73.2      (c) "Determination date" means December 31 of each year. 
 73.3      (d) "Eligible member" means a person, including a service 
 73.4   pensioner, a disability pensioner, a survivor, or dependent of a 
 73.5   deceased active member, service pensioner, or disability 
 73.6   pensioner, who received a pension or benefit from the relief 
 73.7   association during the 12 months before the determination date.  
 73.8   A person who received a pension or benefit for the entire 12 
 73.9   months before the determination date is eligible for a full 
 73.10  annual postretirement payment.  A person who received a pension 
 73.11  or benefit for less than 12 months before the determination date 
 73.12  is eligible for a prorated annual postretirement payment. 
 73.13     (e) "Excess investment income" means the amount by which 
 73.14  the time weighted total rate of return earned by the fund in the 
 73.15  most recent fiscal year has exceeded the actual percentage 
 73.16  increase in the current monthly salary of a top grade 
 73.17  firefighter in the most recent fiscal year plus two percent.  
 73.18  The excess investment income must be expressed as a dollar 
 73.19  amount and may not exceed one percent of the total assets of the 
 73.20  fund, except when the fund has actuarial assets of greater than 
 73.21  102 percent of its actuarial accrued liabilities in which case 
 73.22  the amount must not exceed 1-1/2 percent of the assets of the 
 73.23  funds, and does not exist unless the yearly average percentage 
 73.24  increase of the time weighted total rate of return of the fund 
 73.25  for the previous five years exceeds by two percent the yearly 
 73.26  average percentage increase in monthly salary of a top grade 
 73.27  firefighter during the previous five calendar years. 
 73.28     (f) "Fund" means the Minneapolis fire department relief 
 73.29  association. 
 73.30     (g) "Relief association" means the Minneapolis fire 
 73.31  department relief association.  
 73.32     (h) "Time weighted total rate of return" means the 
 73.33  percentage amount determined by using the formula or formulas 
 73.34  established by the state board of investment under Minnesota 
 73.35  Statutes, section 11A.04, clause (11), and in effect on January 
 73.36  1, 1987. 
 74.1      Sec. 12.  Laws 1989, chapter 319, article 19, section 7, 
 74.2   subdivision 3, is amended to read: 
 74.3      Subd. 3.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
 74.4   board of trustees of the relief association shall determine by 
 74.5   May 1 of each year whether or not the relief association has 
 74.6   excess investment income.  The amount of excess investment 
 74.7   income, if any, must be stated as a dollar amount and reported 
 74.8   by the chief administrative officer of the relief association to 
 74.9   the mayor and governing body of the city, the state auditor, the 
 74.10  commissioner of finance, and the executive director of the 
 74.11  legislative commission on pensions and retirement.  The dollar 
 74.12  amount of excess investment income up to one percent of the 
 74.13  assets of the fund, except if the fund has assets of greater 
 74.14  than 102 percent of its actuarial accrued liabilities, must be 
 74.15  applied for the purpose specified in subdivision 4.  Excess 
 74.16  investment income must not be considered as income to or assets 
 74.17  of the fund for actuarial valuations of the fund for that year 
 74.18  under sections 69.77, 356.215, and 356.216 and the provisions of 
 74.19  this section except to offset the annual postretirement 
 74.20  payment.  Additional investment income is any realized or 
 74.21  unrealized investment income other than the excess investment 
 74.22  income and must be included in the actuarial valuations 
 74.23  performed under sections 69.77, 356.215, and 356.216 and the 
 74.24  provisions of this section. 
 74.25     Sec. 13.  Laws 1989, chapter 319, article 19, section 7, 
 74.26  subdivision 4, as amended by Laws 1990, chapter 570, article 12, 
 74.27  section 63, as amended by Laws 1992, chapter 472, article 2, 
 74.28  section 6, is amended to read: 
 74.29     Subd. 4.  [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The 
 74.30  amount determined under subdivision 3 must be applied in 
 74.31  accordance with this subdivision.  When the fund has actuarial 
 74.32  assets of less than 102 percent of its actuarial accrued 
 74.33  liabilities, the relief association shall apply the first 
 74.34  one-half of one percent of assets which constitute excess 
 74.35  investment income to the payment of an annual postretirement 
 74.36  payment as specified in this subdivision. and the second 
 75.1   one-half of one percent of assets which constitute excess 
 75.2   investment income shall be applied to reduce the state 
 75.3   amortization state aid or supplementary amortization state aid 
 75.4   payments otherwise due to the relief association under section 
 75.5   423A.02 for the current calendar year.  When the fund has 
 75.6   actuarial assets of less than 102 percent of its actuarial 
 75.7   accrued liabilities, the relief association shall pay an annual 
 75.8   postretirement payment to all eligible members in an amount not 
 75.9   to exceed one-half of one percent of the assets of the fund.  
 75.10  Payment of the annual postretirement payment must be in a lump 
 75.11  sum amount on June 1 following the determination date in any 
 75.12  year.  When the fund has actuarial assets greater than 102 
 75.13  percent of its actuarial accrued liabilities, the relief 
 75.14  association shall pay an annual postretirement payment to all 
 75.15  eligible members in an amount not to exceed 1-1/2 percent of the 
 75.16  assets of the fund.  Payment of the annual postretirement 
 75.17  payment may be made only if the time weighted total rate of 
 75.18  return exceeds by two percent the actual percentage increase in 
 75.19  the current monthly salary of a top grade firefighter in the 
 75.20  most recent fiscal year and the yearly average percentage 
 75.21  increase of the time weighted total rate of return of the fund 
 75.22  for the previous five years exceeds by two percent the yearly 
 75.23  average percentage increase in monthly salary of a top grade 
 75.24  firefighter of the previous five years.  The total amount of all 
 75.25  payments to members may not exceed the amount determined under 
 75.26  subdivision 3.  Payment to each eligible member must be 
 75.27  calculated by dividing the total number of pension units to 
 75.28  which eligible members are entitled into the excess investment 
 75.29  income available for distribution to members, and then 
 75.30  multiplying that result by the number of units to which each 
 75.31  eligible member is entitled to determine each eligible member's 
 75.32  annual postretirement payment.  When the fund has actuarial 
 75.33  assets of less than 102 percent of its actuarial accrued 
 75.34  liabilities, payment to each eligible member may not exceed an 
 75.35  amount equal to the total monthly benefit that the eligible 
 75.36  member was entitled to in the prior year under the terms of the 
 76.1   benefit plan of the relief association or each eligible member's 
 76.2   proportionate share of the excess investment income, whichever 
 76.3   is less.  When the fund has actuarial assets of greater than 102 
 76.4   percent of its actuarial accrued liabilities, payment to each 
 76.5   eligible member may not exceed the member's proportionate share 
 76.6   of 1-1/2 percent of assets of the fund. 
 76.7      Sec. 14.  Laws 1989, chapter 319, article 19, section 7, 
 76.8   subdivision 7, is amended to read: 
 76.9      Subd. 7.  [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] 
 76.10  No provision of or payment made under this section may be 
 76.11  interpreted or relied upon by any member of the relief 
 76.12  association to guarantee or entitle a member to annual 
 76.13  postretirement payments for a period when no excess investment 
 76.14  income is earned by the fund.  If the fund has actuarial assets 
 76.15  of less than 102 percent of its actuarial accrued liabilities, a 
 76.16  distribution of the fund assets must not exceed one-half of one 
 76.17  percent. 
 76.18     Sec. 15.  Laws 1993, chapter 125, article 1, section 1, is 
 76.19  amended to read: 
 76.20     Section 1.  [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.] 
 76.21     Notwithstanding the provisions of Minnesota Statutes, 
 76.22  section 69.45, Laws 1971, chapter 542, section 1, and Laws 1980, 
 76.23  chapter 607, article XV, section 9, to the contrary, the service 
 76.24  pensions payable by the Minneapolis fire department relief 
 76.25  association for members terminating active service as a 
 76.26  Minneapolis firefighter after June 1, 1993, must be computed as 
 76.27  follows: 
 76.28              length of                   service 
 76.29          credited service            pension payable
 76.30              10 years                  16.0 units
 76.31              11 years                  17.6 units
 76.32              12 years                  19.2 units
 76.33              13 years                  20.8 units
 76.34              14 years                  22.4 units
 76.35              15 years                  24.0 units
 76.36              16 years                  25.6 units
 77.1               17 years                  27.2 units
 77.2               18 years                  28.8 units
 77.3               19 years                  30.4 units
 77.4               20 years                  33.0 units
 77.5               21 years                  34.6 units
 77.6               22 years                  36.2 units
 77.7               23 years                  37.8 units
 77.8               24 years                  39.4 units
 77.9               25 years                  41.0 units
 77.10     When the fund has actuarial assets of greater than 90 
 77.11  percent of actuarial accrued liabilities, the following schedule 
 77.12  applies to all active members and retired service pensioners who 
 77.13  otherwise met the then existing requirements to receive a 
 77.14  benefit: 
 77.15              length of                   service 
 77.16          credited service            pension payable
 77.17               5 years                   8.0 units
 77.18               6 years                   9.6 units
 77.19               7 years                  11.2 units
 77.20               8 years                  12.8 units
 77.21               9 years                  14.4 units
 77.22              10 years                  16.0 units
 77.23              11 years                  17.6 units
 77.24              12 years                  19.2 units
 77.25              13 years                  20.8 units
 77.26              14 years                  22.4 units
 77.27              15 years                  24.0 units
 77.28              16 years                  25.6 units
 77.29              17 years                  27.2 units
 77.30              18 years                  28.8 units
 77.31              19 years                  30.4 units
 77.32              20 years                  33.0 33.5 units
 77.33              21 years                  34.6 35.1 units
 77.34              22 years                  36.2 37.7 units
 77.35              23 years                  37.8 38.3 units
 77.36              24 years                  39.4 39.9 units
 78.1               25 years                  41.0 41.5 units
 78.2      When the fund has actuarial assets of greater than 92.5 
 78.3   percent of actuarial accrued liabilities, the following schedule 
 78.4   applies to all active members and retired service pensioners who 
 78.5   otherwise met the then existing requirements to receive a 
 78.6   benefit: 
 78.7               length of                   service 
 78.8           credited service            pension payable
 78.9                5 years                   8.0 units
 78.10               6 years                   9.6 units
 78.11               7 years                  11.2 units
 78.12               8 years                  12.8 units
 78.13               9 years                  14.4 units
 78.14              10 years                  16.0 units
 78.15              11 years                  17.6 units
 78.16              12 years                  19.2 units
 78.17              13 years                  20.8 units
 78.18              14 years                  22.4 units
 78.19              15 years                  24.0 units
 78.20              16 years                  25.6 units
 78.21              17 years                  27.2 units
 78.22              18 years                  28.8 units
 78.23              19 years                  30.4 units
 78.24              20 years                  34.0 units
 78.25              21 years                  35.6 units
 78.26              22 years                  37.2 units
 78.27              23 years                  38.8 units
 78.28              24 years                  40.4 units
 78.29              25 years                  42.0 units
 78.30     Sec. 16.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; 
 78.31  OPTIONAL ANNUITIES.] 
 78.32     A member of the Minneapolis fire department relief 
 78.33  association who is retired on the effective date of this section 
 78.34  may elect an optional retirement annuity within 60 days of the 
 78.35  effective date instead of the normal retirement annuity.  A 
 78.36  member who retires after the effective date of this section may 
 79.1   elect an optional retirement annuity prior to the receipt of any 
 79.2   benefits.  The optional retirement annuity may be a joint and 
 79.3   survivor annuity without reinstatement in the event of the 
 79.4   designated beneficiary predeceasing the member or a joint and 
 79.5   survivor annuity with reinstatement in the event of the 
 79.6   designated beneficiary predeceasing the member.  An optional 
 79.7   retirement annuity must be actuarially equivalent to the normal 
 79.8   single life annuity, as projected using the actuarial assumption 
 79.9   in Minnesota Statutes, sections 356.215 and 356.216, and 
 79.10  established by the board with written recommendation of the 
 79.11  actuary retained by the legislative commission on pensions and 
 79.12  retirement.  Once selected, the optional annuity is irrevocable 
 79.13  and subject to all other pension benefits. 
 79.14     Sec. 17.  [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION 
 79.15  TAX LEVY.] 
 79.16     If in any year after the Minneapolis fire department relief 
 79.17  association has actuarial assets greater than 102 percent of the 
 79.18  actuarial accrued liabilities of the fund and subsequently the 
 79.19  actuarial assets are less than 100 percent of the actuarial 
 79.20  accrued liabilities, the city of Minneapolis is not required to 
 79.21  levy a property tax to fund any deficit unless the fund has two 
 79.22  successive years when the actuarial assets are less than 100 
 79.23  percent of the actuarial accrued liabilities. 
 79.24     Sec. 18.  [EFFECTIVE DATE.] 
 79.25     Unless otherwise stated, the sections of this article are 
 79.26  effective on the day after compliance by the governing body of 
 79.27  the city of Minneapolis with Minnesota Statutes, section 
 79.28  645.021, subdivision 2.  Section 3 is effective when the 
 79.29  provisions of section 4 take effect.  Sections 6 and 10 are 
 79.30  effective retroactive to July 1, 1996.