1.1                          A bill for an act 
  1.2             relating to retirement; limiting the definition of 
  1.3             salary for calculating service pensions and other 
  1.4             retirement benefits for members of police and salaried 
  1.5             firefighters relief associations; amending Minnesota 
  1.6             Statutes 1994, section 423A.01, subdivision 2. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1994, section 423A.01, 
  1.9   subdivision 2, is amended to read: 
  1.10     Subd. 2.  [OPERATION OF LOCAL RELIEF ASSOCIATION UPON 
  1.11  MODIFICATION OF RETIREMENT COVERAGE FOR NEWLY HIRED POLICE 
  1.12  OFFICERS AND FIREFIGHTERS.] The following provisions shall 
  1.13  govern the operation of a local relief association upon the 
  1.14  modification of retirement coverage for newly hired police 
  1.15  officers or firefighters:  
  1.16     (1) The minimum obligation of a municipality in which the 
  1.17  retirement coverage for newly hired police officers or salaried 
  1.18  firefighters has been modified pursuant to subdivision 1 with 
  1.19  respect to the local relief association shall be determined and 
  1.20  governed in accordance with the provisions of sections 69.77, 
  1.21  356.215, and 356.216, except that the normal cost calculation 
  1.22  for the relief association shall be computed as a percentage of 
  1.23  the compensation paid to the active members of the relief 
  1.24  association.  The compensation paid to persons with retirement 
  1.25  coverage modified pursuant to subdivision 1 shall not be 
  1.26  included in any of the computations made in determining the 
  2.1   obligation of the municipality with respect to the local relief 
  2.2   association. 
  2.3      (2) The contribution rate of members of the local relief 
  2.4   association shall be governed by section 69.77, unless a special 
  2.5   law establishing a greater member contribution rate is 
  2.6   applicable whereupon it shall continue to govern.  The member 
  2.7   contribution rate of persons with retirement coverage modified 
  2.8   pursuant to subdivision 1 shall be governed by section 353.65. 
  2.9      (3) Unless otherwise provided for by law, when every active 
  2.10  member of the local relief association retires or terminates 
  2.11  from active duty, the local relief association shall cease to 
  2.12  exist as a legal entity and the assets of the special fund of 
  2.13  the relief association shall be transferred to a trust fund to 
  2.14  be established by the appropriate municipality for the purpose 
  2.15  of paying service pensions and retirement benefits to recipient 
  2.16  beneficiaries.  Recipient beneficiaries who are competent to act 
  2.17  on their own behalf shall be entitled to select the prescribed 
  2.18  number of trustees of the trust fund as provided in this clause, 
  2.19  subject to the approval of the governing body of the 
  2.20  municipality.  If there are at least five recipient 
  2.21  beneficiaries, the trust fund shall be managed by a board of 
  2.22  trustees composed of five persons selected by the recipient 
  2.23  beneficiaries of the fund.  When there are fewer than five 
  2.24  recipient beneficiaries, the number of trustees selected by the 
  2.25  recipient beneficiaries shall be equal to the number of the 
  2.26  remaining recipient beneficiaries.  The governing body of the 
  2.27  municipality shall select the additional trustees.  The term of 
  2.28  the elected members of the board of trustees shall be indefinite 
  2.29  and shall continue until a vacancy occurs in one of the board of 
  2.30  trustee member positions.  Board of trustee members shall not be 
  2.31  compensated for their services, but shall be reimbursed for any 
  2.32  expenses actually and necessarily incurred as a result of the 
  2.33  performance of their duties in their capacity as board of 
  2.34  trustee members.  The municipality shall perform whatever 
  2.35  services are necessary to administer the trust fund.  When all 
  2.36  obligations of the trust fund are paid, the balance of the 
  3.1   assets remaining in the trust fund shall revert to the 
  3.2   municipality for expenditure for law enforcement or firefighting 
  3.3   purposes, whichever is applicable. 
  3.4      (4) The financial requirements of the trust fund and the 
  3.5   minimum obligation of the municipality with respect to the trust 
  3.6   fund shall be determined in accordance with sections 69.77, 
  3.7   356.215, and 356.216 until the unfunded accrued liability of the 
  3.8   trust fund is fully amortized in accordance with section 69.77, 
  3.9   subdivision 2b.  The municipality shall provide in its annual 
  3.10  budget for at least the aggregate amount of service pensions, 
  3.11  disability benefits, survivorship benefits, and refunds which 
  3.12  are projected as payable for the following calendar year, as 
  3.13  determined by the board of trustees of the trust fund, less the 
  3.14  amount of assets in the trust fund as of the end of the most 
  3.15  current calendar year for which figures are available, valued 
  3.16  pursuant to section 356.20, subdivision 4, clause (1)(a), if the 
  3.17  difference between those two figures is a positive number. 
  3.18     (5) In calculating the amount of service pensions and other 
  3.19  retirement benefits payable from the local relief association 
  3.20  and in calculating the amount of any automatic postretirement 
  3.21  increases in those service pensions and retirement benefits 
  3.22  based on the salary paid or payable to active members or 
  3.23  escalated in any fashion, the salary for use as the base for the 
  3.24  service pension or retirement benefit calculation and the 
  3.25  postretirement increase calculation for the local relief 
  3.26  association shall be the salary for the applicable position as 
  3.27  specified in the articles of incorporation or bylaws of the 
  3.28  relief association as of the date immediately prior to the 
  3.29  effective date of the modification of retirement coverage for 
  3.30  newly hired personnel pursuant to subdivision 1, as the 
  3.31  applicable salary is reset by the municipality periodically, 
  3.32  irrespective of whether retirement coverage for persons holding 
  3.33  the applicable position used in calculations is provided by the 
  3.34  relief association or by the public employees police and fire 
  3.35  fund.  For purposes of this paragraph, salary does not include 
  3.36  shift differential, overtime, and sick leave pay.  If for a 
  4.1   local salaried firefighters relief association, the specified 
  4.2   position no longer exists because of a reorganization of the 
  4.3   fire department as a volunteer fire department, the percentage 
  4.4   increase in the salary of the position of a top grade patrol 
  4.5   officer in the police department of the municipality must be the 
  4.6   basis for service pension and retirement benefit postretirement 
  4.7   increase calculations. 
  4.8      (6) If the modification of retirement coverage implemented 
  4.9   pursuant to subdivision 1 is applicable to a local police relief 
  4.10  association, the police state aid received by the municipality 
  4.11  shall be disbursed pursuant to section 69.031, subdivision 5, 
  4.12  clause (2)(c).  If the modification of retirement coverage 
  4.13  implemented pursuant to subdivision 1 is applicable to a local 
  4.14  firefighters' relief association, the fire state aid received by 
  4.15  the applicable municipality other than a city of the first class 
  4.16  with a population of more than 300,000 shall be disbursed as the 
  4.17  municipality at its option may elect.  The municipality may 
  4.18  elect:  (a) to transmit the total fire state aid to the 
  4.19  treasurer of the local relief association for immediate deposit 
  4.20  in the special fund of the relief association; or (b) to apply 
  4.21  the total fire state aid toward the employer contribution of the 
  4.22  municipality to the public employees police and fire fund 
  4.23  pursuant to section 353.65, subdivision 3; or (c) to allocate 
  4.24  the total fire state aid proportionately between the special 
  4.25  fund of the local relief association and employer contribution 
  4.26  of the municipality to the public employees police and fire fund 
  4.27  on the basis of the respective number of active full-time 
  4.28  salaried firefighters receiving retirement coverage from each. 
  4.29     For a city of the first class with a population of more 
  4.30  than 300,000, in addition, the city may elect to allot the 
  4.31  appropriate portion of the total fire state aid to apply toward 
  4.32  the employer contribution of the city to the public employees 
  4.33  police and fire fund based on the covered salary of firefighters 
  4.34  covered by the fund each payroll period and to transmit the 
  4.35  balance to the firefighters relief association.