1.1 	A bill for an act
1.2 	relating to retirement; Minneapolis Employees
1.3 	Retirement Fund; exempting the executive director from
1.4 	the political subdivision compensation limit;
1.5 	permitting the investment of fund assets with the
1.6 	State Board of Investment; modifying certain liquidity
1.7 	requirements; amending Minnesota Statutes 2004,
1.8 	sections 43A.17, subdivision 9; 422A.05, subdivision
1.9 	2c; 422A.06, subdivisions 3, 5; 422A.101, subdivision
1.10 	3; repealing Minnesota Statutes 2004, section
1.11 	422A.101, subdivision 4.
1.12 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.13 	Section 1. Minnesota Statutes 2004, section 43A.17,
1.14 	subdivision 9, is amended to read:
1.15 		Subd. 9.Political subdivision compensation limit.  (a)
1.16 	The salary and the value of all other forms of compensation of a
1.17 	person employed by a political subdivision of this state,
1.18 	excluding a school district, or employed under section 422A.03
1.19 	may not exceed 95 percent of the salary of the governor as set
1.20 	under section 15A.082, except as provided in this subdivision.
1.21 	For purposes of this subdivision, "political subdivision of this
1.22 	state" includes a statutory or home rule charter city, county,
1.23 	town, metropolitan or regional agency, or other political
1.24 	subdivision, but does not include a hospital, clinic, or health
1.25 	maintenance organization owned by such a governmental unit.
1.26 	(b) Deferred compensation and payroll allocations to
1.27 	purchase an individual annuity contract for an employee are
1.28 	included in determining the employee's salary.  Other forms of
2.1 	compensation which shall be included to determine an employee's
2.2 	total compensation are all other direct and indirect items of
2.3 	compensation which are not specifically excluded by this
2.4 	subdivision.  Other forms of compensation which shall not be
2.5 	included in a determination of an employee's total compensation
2.6 	for the purposes of this subdivision are:
2.7 	(1) employee benefits that are also provided for the
2.8 	majority of all other full-time employees of the political
2.9 	subdivision, vacation and sick leave allowances, health and
2.10 	dental insurance, disability insurance, term life insurance, and
2.11 	pension benefits or like benefits the cost of which is borne by
2.12 	the employee or which is not subject to tax as income under the
2.13 	Internal Revenue Code of 1986;
2.14 	(2) dues paid to organizations that are of a civic,
2.15 	professional, educational, or governmental nature; and
2.16 	(3) reimbursement for actual expenses incurred by the
2.17 	employee which the governing body determines to be directly
2.18 	related to the performance of job responsibilities, including
2.19 	any relocation expenses paid during the initial year of
2.20 	employment.
2.21 	The value of other forms of compensation shall be the
2.22 	annual cost to the political subdivision for the provision of
2.23 	the compensation.
2.24 	(c) The salary of a medical doctor or doctor of osteopathy
2.25 	occupying a position that the governing body of the political
2.26 	subdivision has determined requires an M.D. or D.O. degree is
2.27 	excluded from the limitation in this subdivision.
2.28 	(d) The commissioner may increase the limitation in this
2.29 	subdivision for a position that the commissioner has determined
2.30 	requires special expertise necessitating a higher salary to
2.31 	attract or retain a qualified person.  The commissioner shall
2.32 	review each proposed increase giving due consideration to salary
2.33 	rates paid to other persons with similar responsibilities in the
2.34 	state and nation.  The commissioner may not increase the
2.35 	limitation until the commissioner has presented the proposed
2.36 	increase to the Legislative Coordinating Commission and received
3.1 	the commission's recommendation on it.  The recommendation is
3.2 	advisory only.  If the commission does not give its
3.3 	recommendation on a proposed increase within 30 days from its
3.4 	receipt of the proposal, the commission is deemed to have made
3.5 	no recommendation.

3.6 	Sec. 2. Minnesota Statutes 2004, section 422A.05,
3.7 	subdivision 2c, is amended to read:
3.8 		Subd. 2c.Minneapolis employees retirement fund
3.9 	investment authority.  (a) For investments made on or after July
3.10 	1, 1991, the board shall invest funds only in investments
3.11 	authorized by section 356A.06, subdivision 7.
3.12 	(b) However, in addition to real estate investments
3.13 	authorized under paragraph (a), the board may also make loans to
3.14 	purchasers of Minnesota situs nonfarm residential real estate
3.15 	that is owned by the Minneapolis Employees Retirement Fund.  The
3.16 	loans must be secured by mortgages or deeds of trust.
3.17 	(c) For investments made before July 1, 1991, the board
3.18 	may, but is not required to, comply with paragraph (a).
3.19 	However, with respect to these investments, the board shall act
3.20 	in accordance with subdivision 2a and chapter 356A.
3.21 	(d) The board may certify special fund assets for
3.22 	investment by the State Board of Investment under section
3.23 	11A.17.  The board may certify assets for investment by the
3.24 	State Board of Investment in fixed income pools or in a
3.25 	separately managed account at the discretion of the State Board
3.26 	of Investment as provided in section 11A.14.

3.27 	Sec. 3. Minnesota Statutes 2004, section 422A.06,
3.28 	subdivision 3, is amended to read:
3.29 		Subd. 3.Deposit accumulation fund. (a) The deposit
3.30 	accumulation fund consists of the assets held in the fund,
3.31 	including amounts contributed by or for employees, amounts
3.32 	contributed by the city, amounts contributed by municipal
3.33 	activities supported in whole or in part by revenues other than
3.34 	taxes and amounts contributed by any public corporation, amounts
3.35 	paid by the state, and by income from investments.
3.36 	(b) There must be paid from the fund the amounts required
4.1 	to be transferred to the retirement benefit fund, or the
4.2 	disability benefit fund, refunds of contributions, including the
4.3 	death-while-active refund specified in section 422A.22,
4.4 	subdivision 4, postretirement increases in retirement allowances
4.5 	granted under Laws 1965, chapter 688, or Laws 1969, chapter 859,
4.6 	and expenses of the administration of the retirement fund which
4.7 	were not charged by the retirement board against the income of
4.8 	the retirement benefit fund from investments as the cost of
4.9 	handling the investments of the retirement benefit fund.
4.10 	(c) To the extent the deposit accumulation fund has
4.11 	insufficient assets to transfer the total value of the required
4.12 	reserves for retirement annuities to either the disability
4.13 	benefit fund or the retirement benefit fund as required, the
4.14 	executive director must determine an interest charge for the
4.15 	period the transfer that remains unpaid at an annual rate equal
4.16 	to five percent plus the amount of the annual Consumer Price
4.17 	Index for urban wage earners and clerical workers as calculated
4.18 	by the Bureau of Labor Statistics of the United States
4.19 	Department of Labor as of the previous June 30, and the interest
4.20 	must be reflected in the books of the Minneapolis Employees
4.21 	Retirement Fund and assessed against the deposit accumulation
4.22 	fund based on the average quarterly balance outstanding.  Any
4.23 	subsequent transfers from the deposit accumulation fund to the
4.24 	disability benefit fund or to the retirement fund must first be
4.25 	applied to interest and then to the principal amount of transfer
4.26 	outstanding.

4.27 	Sec. 4. Minnesota Statutes 2004, section 422A.06,
4.28 	subdivision 5, is amended to read:
4.29 		Subd. 5.Transfer of reserves to retirement benefit fund;
4.30 	adjustments of annuities and benefits.  (a) Assets equal to the
4.31 	required reserves for retirement annuities as determined in
4.32 	accordance with the appropriate mortality table adopted by the
4.33 	board of trustees based on the experience of the fund as
4.34 	recommended by the commission-retained actuary and using the
4.35 	postretirement interest assumption specified in section 356.215,
4.36 	subdivision 8, shall be transferred to the disability benefit
5.1 	fund as provided in subdivision 7, or the retirement benefit
5.2 	fund, except for any amounts payable from the survivor benefit
5.3 	fund, as of date of retirement.
5.4 	(b) To the extent the deposit accumulation fund has
5.5 	insufficient assets to transfer the total value of the required
5.6 	reserves for retirement annuities to either the disability
5.7 	benefit fund or the retirement benefit fund as required, the
5.8 	executive director must determine an interest charge for the
5.9 	period the transfer that remains unpaid at an annual rate equal
5.10 	to five percent plus the amount of the annual Consumer Price
5.11 	Index for urban wage earners and clerical workers as calculated
5.12 	by the Bureau of Labor Statistics of the United States
5.13 	Department of Labor as of the previous June 30, and the interest
5.14 	must be reflected in the books of the Minneapolis Employees
5.15 	Retirement Fund and assessed against the deposit accumulation
5.16 	fund based on the average quarterly balance outstanding.  Any
5.17 	subsequent transfers from the deposit accumulation fund to the
5.18 	disability benefit fund or to the retirement fund must first be
5.19 	applied to interest and then to the principal amount of transfer
5.20 	outstanding.
5.21 	(b) (c) Annuity payments shall be adjusted in accordance
5.22 	with this chapter, except that no minimum retirement payments
5.23 	described in this chapter shall include any amounts payable from
5.24 	the survivors' benefit fund or disability benefit fund and
5.25 	supplemented benefits specifically financed by statute.
5.26 	(c) (d) Increases in annuity payments pursuant to this
5.27 	section shall be made automatically unless written notice on a
5.28 	form prescribed by the board is filed with the retirement board
5.29 	requesting that the increase not be made.
5.30 	(d) (e) Any additional annuity which began to accrue on
5.31 	July 1, 1973, or which began to accrue on January 1, 1974,
5.32 	pursuant to Laws 1973, chapter 770, section 1, shall be
5.33 	considered as part of the base amount to be used in determining
5.34 	any postretirement adjustments payable pursuant to the
5.35 	provisions of subdivision 8.

5.36 	Sec. 5. Minnesota Statutes 2004, section 422A.101,
6.1 	subdivision 3, is amended to read:
6.2 		Subd. 3.State contributions.  (a) Subject to the
6.3 	limitation set forth in paragraph (c), the state shall pay to
6.4 	the Minneapolis Employees Retirement Fund annually an amount
6.5 	equal to the amount calculated under paragraph (b).
6.6 	(b) The payment amount is an amount equal to the financial
6.7 	requirements of the Minneapolis Employees Retirement Fund
6.8 	reported in the actuarial valuation of the fund prepared by the
6.9 	commission-retained actuary pursuant to section 356.215 for the
6.10 	most recent year but based on a target date for full
6.11 	amortization of the unfunded actuarial accrued liabilities by
6.12 	June 30, 2020, less the amount of employee contributions
6.13 	required pursuant to section 422A.10, and the amount of employer
6.14 	contributions required pursuant to subdivisions 1a, 2, and 2a.
6.15 	Payments shall be made September 15 annually.
6.16 	(c) The annual state contribution under this subdivision
6.17 	may not exceed $9,000,000, plus the cost of the annual
6.18 	supplemental benefit determined under section 356.43.
6.19 	(d) If the amount determined under paragraph (b) exceeds
6.20 	$11,910,000 $9,000,000, the excess must be allocated to and paid
6.21 	to the fund by the employers identified in subdivisions 1a and
6.22 	2, other than units of metropolitan government.  Each employer's
6.23 	share of the excess is proportionate to the employer's share of
6.24 	the fund's unfunded actuarial accrued liability as disclosed in
6.25 	the annual actuarial valuation prepared by the actuary
6.26 	retained by the Legislative Commission on Pensions and
6.27 	Retirement under section 356.214compared to the total unfunded
6.28 	actuarial accrued liability attributed to all employers
6.29 	identified in subdivisions 1a and 2, other than units of
6.30 	metropolitan government.  Payments must be made in equal
6.31 	installments as set forth in paragraph (b).

6.32 	Sec. 6. REPEALER.
 6.33 	Minnesota Statutes 2004, section 422A.101, subdivision 4,
6.34 	is repealed.

6.35 	Sec. 7. EFFECTIVE DATE.
 6.36 	Sections 1 to 6 are effective July 1, 2005.