1.1                          A bill for an act 
  1.2             relating to retirement; adding governor's appointees 
  1.3             to the pension commission; changing responsibilities 
  1.4             of the pension commission; adding pension policy 
  1.5             review responsibilities to the department of finance 
  1.6             and the department of employee relations; adding 
  1.7             actuarial audit responsibilities to the office of the 
  1.8             legislative auditor; amending Minnesota Statutes 1994, 
  1.9             sections 3.85, subdivisions 1, 3, 7, and 11; 6.72, 
  1.10            subdivision 1; 11A.18, subdivisions 9 and 11; 16A.055, 
  1.11            subdivision 5; 16A.11, subdivision 1, and by adding a 
  1.12            subdivision; 69.051, subdivision 4; 69.77, subdivision 
  1.13            2h; 69.773, subdivision 2; 352.01, subdivision 12; 
  1.14            352.03, subdivision 6; 352.04, subdivision 3; 352.91, 
  1.15            subdivision 4; 352.92, subdivision 2; 352B.02, 
  1.16            subdivisions 1c and 1e; 353.03, subdivision 3a; 
  1.17            353.271, subdivision 2; 353A.02, subdivision 8; 
  1.18            353A.04, subdivision 7; 353A.05, subdivision 1; 
  1.19            353A.06; 353A.07, subdivision 6; 353A.09, subdivision 
  1.20            2; 353B.14; 353C.05, subdivision 3; 354.06, 
  1.21            subdivision 2a; 354.42, subdivision 5; 354A.011, 
  1.22            subdivision 3a; 354A.021, subdivision 7; 354A.12, 
  1.23            subdivisions 2b, 3c, and 4; 354A.28, subdivision 9; 
  1.24            354A.41, subdivision 2; 356.20, subdivisions 3 and 4; 
  1.25            356.215, subdivisions 1, 2, 3, 4, 6, and 7; 356.217; 
  1.26            356.218, subdivisions 1 and 3; 356.22, subdivision 1; 
  1.27            356.23; 356.88; 422A.01, subdivision 6; 422A.04, 
  1.28            subdivision 3; 422A.06, subdivisions 2 and 8; 
  1.29            422A.101, subdivisions 1, 1a, 2, 2a, and 3; 422A.15, 
  1.30            subdivisions 2 and 3; 422A.23, subdivision 6; 423A.03; 
  1.31            423A.07; 423A.17; 423A.171; 423A.18; 423A.19, 
  1.32            subdivision 4; 423B.15, subdivisions 2 and 5; and 
  1.33            490.124, subdivision 11; Minnesota Statutes 1995 
  1.34            Supplement, sections 3.85, subdivision 12; 354.05, 
  1.35            subdivision 7; and 354A.27, subdivision 6; proposing 
  1.36            coding for new law in Minnesota Statutes, chapter 3. 
  1.37  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.38     Section 1.  Minnesota Statutes 1994, section 3.85, 
  1.39  subdivision 1, is amended to read: 
  1.40     Subdivision 1.  [CREATION.] The ~~legislative~~ commission on 
  1.41  pensions and retirement is created to study and investigate 
  2.1   public retirement systems. 
  2.2      Sec. 2.  Minnesota Statutes 1994, section 3.85, subdivision 
  2.3   3, is amended to read: 
  2.4      Subd. 3.  [MEMBERSHIP.] The commission consists of five 
  2.5   members of the senate appointed by the subcommittee on 
  2.6   committees of the committee on rules and administration ~~and~~, 
  2.7   five members of the house of representatives appointed by the 
  2.8   speaker, and five members appointed by the governor.  Members 
  2.9   shall be appointed at the commencement of each regular session 
  2.10  of the legislature for a two-year term beginning January 16 of 
  2.11  the first year of the regular session.  Vacancies that occur 
  2.12  while the legislature is in session shall be filled like regular 
  2.13  appointments.  If the legislature is not in session, senate 
  2.14  vacancies shall be filled by the last subcommittee on committees 
  2.15  of the senate committee on rules and administration or other 
  2.16  appointing authority designated by the senate rules, and house 
  2.17  vacancies shall be filled by the last speaker of the house, or 
  2.18  if the speaker is not available, by the last chair of the house 
  2.19  rules committee. 
  2.20     Sec. 3.  Minnesota Statutes 1994, section 3.85, subdivision 
  2.21  7, is amended to read: 
  2.22     Subd. 7.  [LEGISLATIVE BILLS FURNISHED.] The secretary of 
  2.23  the senate and the chief clerk of the house shall provide the 
  2.24  commission, the commissioner of employee relations, and the 
  2.25  commissioner of finance with a copy of each bill introduced in 
  2.26  the legislature concerning retirement and pensions. 
  2.27     Sec. 4.  Minnesota Statutes 1994, section 3.85, subdivision 
  2.28  11, is amended to read: 
  2.29     Subd. 11.  [VALUATIONS AND REPORTS TO LEGISLATURE.] ~~(a) The~~ 
  2.30  ~~commission shall contract with an established actuarial~~ 
  2.31  ~~consulting firm to conduct annual actuarial valuations for the~~ 
  2.32  ~~retirement plans named in paragraph (b).  The contract must~~ 
  2.33  ~~include provisions for performing cost analyses of proposals for~~ 
  2.34  ~~changes in benefit and funding policies.~~  
  2.35     ~~(b) The contract for actuarial valuation must include the~~ 
  2.36  ~~following retirement plans:~~  
  3.1      ~~(1) the teachers retirement plan, teachers retirement~~ 
  3.2   ~~association;~~ 
  3.3      ~~(2) the general state employees retirement plan, Minnesota~~ 
  3.4   ~~state retirement system;~~ 
  3.5      ~~(3) the correctional employees retirement plan, Minnesota~~ 
  3.6   ~~state retirement system;~~ 
  3.7      ~~(4) the state patrol retirement plan, Minnesota state~~ 
  3.8   ~~retirement system;~~ 
  3.9      ~~(5) the judges retirement plan, Minnesota state retirement~~ 
  3.10  ~~system;~~ 
  3.11     ~~(6) the Minneapolis employees retirement plan, Minneapolis~~ 
  3.12  ~~employees retirement fund;~~ 
  3.13     ~~(7) the public employees retirement plan, public employees~~ 
  3.14  ~~retirement association;~~ 
  3.15     ~~(8) the public employees police and fire plan, public~~ 
  3.16  ~~employees retirement association;~~ 
  3.17     ~~(9) the Duluth teachers retirement plan, Duluth teachers~~ 
  3.18  ~~retirement fund association;~~ 
  3.19     ~~(10) the Minneapolis teachers retirement plan, Minneapolis~~ 
  3.20  ~~teachers retirement fund association;~~ 
  3.21     ~~(11) the St. Paul teachers retirement plan, St. Paul~~ 
  3.22  ~~teachers retirement fund association;~~ 
  3.23     ~~(12) the legislators retirement plan, Minnesota state~~ 
  3.24  ~~retirement system;~~ 
  3.25     ~~(13) the elective state officers retirement plan, Minnesota~~ 
  3.26  ~~state retirement system; and~~ 
  3.27     ~~(14) the public employees local government correctional~~ 
  3.28  ~~service retirement plan, public employees retirement~~ 
  3.29  ~~association, if there are any participants in that plan.~~  
  3.30     ~~(c) The contract must specify completion of annual~~ 
  3.31  ~~actuarial valuation calculations on a fiscal year basis with~~ 
  3.32  ~~their contents as specified in section 356.215, and the~~ 
  3.33  ~~standards for actuarial work adopted by the commission.~~  
  3.34     ~~The contract must specify completion of annual experience~~ 
  3.35  ~~data collection and processing and a quadrennial published~~ 
  3.36  ~~experience study for the plans listed in paragraph (b), clauses~~ 
  4.1   ~~(1), (2), and (7), as provided for in the standards for~~ 
  4.2   ~~actuarial work adopted by the commission.  The experience data~~ 
  4.3   ~~collection, processing, and analysis must evaluate the following:~~
  4.4      ~~(1) individual salary progression;~~ 
  4.5      ~~(2) rate of return on investments based on current asset~~ 
  4.6   ~~value;~~ 
  4.7      ~~(3) payroll growth;~~ 
  4.8      ~~(4) mortality;~~ 
  4.9      ~~(5) retirement age;~~ 
  4.10     ~~(6) withdrawal; and~~ 
  4.11     ~~(7) disablement.~~  
  4.12     ~~(d)~~ (a) The actuary retained by the commission shall 
  4.13  annually prepare a report to the legislature, including the 
  4.14  commentary on ~~the~~ actuarial valuation calculations ~~for the plans~~ 
  4.15  ~~named in paragraph (b)~~ prepared by the funds and summarizing the 
  4.16  results of the actuarial valuation calculations.  The 
  4.17  commission-retained actuary shall include with the report ~~the~~ 
  4.18  ~~actuary's~~ recommendations concerning the appropriateness of the 
  4.19  support rates to achieve proper funding of the retirement funds 
  4.20  by the required funding dates.  The commission-retained actuary 
  4.21  shall~~, as part of the~~ review quadrennial published 
  4.22  experience ~~study, include~~ studies and make recommendations to 
  4.23  the legislature on the appropriateness of the actuarial 
  4.24  valuation assumptions required for evaluation in the study.  
  4.25     ~~(e)~~ (b) If the actuarial gain and loss analysis in the 
  4.26  actuarial valuation calculations indicates a persistent pattern 
  4.27  of sizable gains or losses, ~~as directed by the commission,~~ the 
  4.28  actuary ~~retained by the commission~~ shall recommend that the 
  4.29  actuary retained by the fund prepare a special experience 
  4.30  study ~~for a plan listed in paragraph (b), clause (3), (4), (5),~~ 
  4.31  ~~(6), (8), (9), (10), (11), (12), (13), or (14),~~ in the manner 
  4.32  provided for in the standards for actuarial work adopted by the 
  4.33  commission. 
  4.34     ~~(f)~~ (c) The term of the contract between the commission and 
  4.35  the actuary retained by the commission is two years, plus not to 
  4.36  exceed two one-year extensions before competitive bidding.  The 
  5.1   contract is subject to competitive bidding procedures as 
  5.2   specified by the commission. 
  5.3      Sec. 5.  Minnesota Statutes 1995 Supplement, section 3.85, 
  5.4   subdivision 12, is amended to read: 
  5.5      Subd. 12.  [ALLOCATION OF ACTUARIAL COST.] ~~(a) The~~ 
  5.6   ~~commission shall assess each retirement plan specified in~~ 
  5.7   ~~subdivision 11, paragraph (b), the compensation paid to the~~ 
  5.8   ~~actuary retained by the commission for the actuarial valuation~~ 
  5.9   ~~calculations and quadrennial experience studies.  The assessment~~ 
  5.10  ~~is 100 percent of the amount of contract compensation for the~~ 
  5.11  ~~actuarial consulting firm retained by the commission for~~ 
  5.12  ~~actuarial valuation calculations, including the public employees~~ 
  5.13  ~~police and fire plan consolidation accounts of the public~~ 
  5.14  ~~employees retirement association, annual experience data~~ 
  5.15  ~~collection and processing, and quadrennial experience studies.~~  
  5.16     ~~The portion of the total assessment payable by each~~ 
  5.17  ~~retirement system or pension plan must be determined as follows:~~ 
  5.18     ~~(1) Each pension plan specified in subdivision 11,~~ 
  5.19  ~~paragraph (b), clauses (1) to (14), must pay the following~~ 
  5.20  ~~indexed amount based on its total active, deferred, inactive,~~ 
  5.21  ~~and benefit recipient membership:~~ 
  5.22         ~~up to 2,000 members, inclusive~~         ~~$2.55 per member~~ 
  5.23         ~~2,001 through 10,000 members~~           ~~$1.13 per member~~ 
  5.24         ~~over 10,000 members~~                    ~~$0.11 per member~~  
  5.25     ~~The amount specified is applicable for the assessment of~~ 
  5.26  ~~the July 1, 1991, to June 30, 1992, fiscal year actuarial~~ 
  5.27  ~~compensation amounts.  For the July 1, 1992, to June 30, 1993,~~ 
  5.28  ~~fiscal year and subsequent fiscal year actuarial compensation~~ 
  5.29  ~~amounts, the amount specified must be increased at the same~~ 
  5.30  ~~percentage increase rate as the implicit price deflator for~~ 
  5.31  ~~state and local government purchases of goods and services for~~ 
  5.32  ~~the 12-month period ending with the first quarter of the~~ 
  5.33  ~~calendar year following the completion date for the actuarial~~ 
  5.34  ~~valuation calculations, as published by the federal Department~~ 
  5.35  ~~of Commerce, and rounded upward to the nearest full cent.~~ 
  5.36     ~~(2) The total per-member portion of the allocation must be~~ 
  6.1   ~~determined, and that total per-member amount must be subtracted~~ 
  6.2   ~~from the total amount for allocation.  Of the remainder dollar~~ 
  6.3   ~~amount, the following per-retirement system and per-pension plan~~ 
  6.4   ~~charges must be determined and the charges must be paid by the~~ 
  6.5   ~~system or plan:~~ 
  6.6      ~~(i) 37.87 percent is the total additional per-retirement~~ 
  6.7   ~~system charge, of which one-seventh must be paid by each~~ 
  6.8   ~~retirement system specified in subdivision 11, paragraph (b),~~ 
  6.9   ~~clauses (1), (2), (6), (7), (9), (10), and (11).~~ 
  6.10     ~~(ii) 62.13 percent is the total additional per-pension plan~~ 
  6.11  ~~charge, of which one-thirteenth must be paid by each pension~~ 
  6.12  ~~plan specified in subdivision 11, paragraph (b), clauses (1) to~~ 
  6.13  ~~(13), if there are not any participants in the plan specified in~~ 
  6.14  ~~subdivision 11, paragraph (b), clause (14), or of which~~ 
  6.15  ~~one-fourteenth must be paid by each pension plan specified in~~ 
  6.16  ~~subdivision 11, paragraph (b), clauses (1) to (14), if there are~~ 
  6.17  ~~participants in the plan specified in subdivision 11, paragraph~~ 
  6.18  ~~(b), clause (14).~~ 
  6.19     ~~(b) The assessment must be made following the completion of~~ 
  6.20  ~~the actuarial valuation calculations and the experience~~ 
  6.21  ~~analysis.  The amount of the assessment is appropriated from the~~ 
  6.22  ~~retirement fund applicable to the retirement plan.  Receipts~~ 
  6.23  ~~from assessments must be deposited in the state treasury and~~ 
  6.24  ~~credited to the general fund.~~ 
  6.25     (a) The commission may assess a retirement plan the 
  6.26  compensation paid to the actuary retained by the commission in a 
  6.27  manner that reflects the amount of time devoted by the actuary 
  6.28  to issues related to the specific plan.  The total assessment 
  6.29  for all plans is 100 percent of the amount of contract 
  6.30  compensation for the actuarial consulting firm.  
  6.31     (b) The assessment must be made following the completion of 
  6.32  the actuaries work on issues for a plan.  The amount of the 
  6.33  assessment is appropriated from the retirement fund applicable 
  6.34  to the retirement plan.  Receipts from assessments must be 
  6.35  deposited in the state treasury and credited to the general fund.
  6.36     Sec. 6.  [3.9721] [DUTIES RELATED TO PENSION AND RETIREMENT 
  7.1   FUNDING; LIABILITY ASSESSMENT.] 
  7.2      Subdivision 1.  [VALUATIONS AND REPORTS TO LEGISLATURE.] (a)
  7.3   The legislative auditor shall contract with an established 
  7.4   actuarial consulting firm to periodically conduct audits of the 
  7.5   actuarial valuations, experience studies, and estimates of 
  7.6   proposed law liabilities, costs, and actuarial equivalents 
  7.7   submitted by the retirement plans named in paragraph (b). 
  7.8      (b) Included retirement plans are the: 
  7.9      (1) teachers retirement plan, teachers retirement 
  7.10  association; 
  7.11     (2) general state employees retirement plan, Minnesota 
  7.12  state retirement system; 
  7.13     (3) correctional employees retirement plan, Minnesota state 
  7.14  retirement system; 
  7.15     (4) state patrol retirement plan, Minnesota state 
  7.16  retirement system; 
  7.17     (5) judges retirement plan, Minnesota state retirement 
  7.18  system; 
  7.19     (6) Minneapolis employees retirement plan, Minneapolis 
  7.20  employees retirement fund; 
  7.21     (7) public employees retirement plan, public employees 
  7.22  retirement association; 
  7.23     (8) public employees police and fire plan, public employees 
  7.24  retirement association; 
  7.25     (9) Duluth teachers retirement plan, Duluth teachers 
  7.26  retirement fund association; 
  7.27     (10) Minneapolis teachers retirement plan, Minneapolis 
  7.28  teachers retirement fund association; 
  7.29     (11) St. Paul teachers retirement plan, St. Paul teachers 
  7.30  retirement fund association; 
  7.31     (12) legislators retirement plan, Minnesota state 
  7.32  retirement system; 
  7.33     (13) elective state officers retirement plan, Minnesota 
  7.34  state retirement system; and 
  7.35     (14) public employees local government correctional service 
  7.36  retirement plan, public employees retirement association, if 
  8.1   there are any participants in that plan. 
  8.2      (c) The retirement plans listed in paragraph (b) have 
  8.3   responsibility for annually completing actuarial valuation 
  8.4   calculations on a fiscal year basis with their contents as 
  8.5   specified in section 356.215 and the standards for actuarial 
  8.6   work adopted by the commission on pensions and retirement.  
  8.7      (d) The retirement plans listed in paragraph (b) also have 
  8.8   responsibility for annual experience data collection and 
  8.9   processing a quadrennial published experience study, as provided 
  8.10  for in the standards for actuarial work adopted by the 
  8.11  commission on pensions and retirement.  The experience data 
  8.12  collection, processing, and analysis must evaluate the following:
  8.13     (1) individual salary progression; 
  8.14     (2) rate of return on investments based on current asset 
  8.15  value; 
  8.16     (3) payroll growth; 
  8.17     (4) mortality; 
  8.18     (5) retirement age; 
  8.19     (6) withdrawal; and 
  8.20     (7) disablement. 
  8.21     Subd. 3.  [ALLOCATION OF ACTUARIAL COST.] (a) The 
  8.22  commission shall assess a retirement plan specified in 
  8.23  subdivision 2, paragraph (b), the compensation paid to the 
  8.24  actuary retained by the commission for the actuarial audits in a 
  8.25  manner that reflects the amount of time devoted by the actuary 
  8.26  to issues related to the specific plan.  The total assessment 
  8.27  for all plans is 100 percent of the amount of contract 
  8.28  compensation for the actuarial consulting firm for actuarial 
  8.29  audits.  
  8.30     (b) The assessment must be made following the completion of 
  8.31  the actuaries work on issues for a plan.  The amount of the 
  8.32  assessment is appropriated to the legislative auditor from the 
  8.33  retirement fund applicable to the retirement plan. 
  8.34     Sec. 7.  Minnesota Statutes 1994, section 6.72, subdivision 
  8.35  1, is amended to read: 
  8.36     Subdivision 1.  [REPORTING REQUIREMENTS.] Commencing 
  9.1   November 15, 1981 and every two years thereafter, the state 
  9.2   auditor shall report to the legislature on the general financial 
  9.3   condition of the various volunteer firefighters' relief 
  9.4   associations in the state as of December 31 of the year 
  9.5   preceding the filing of the report.  Two copies of the report 
  9.6   shall be filed with the ~~executive director of the legislative~~ 
  9.7   commission on pensions and retirement and ten copies of the 
  9.8   report shall be filed with the director of the legislative 
  9.9   reference library.  
  9.10     Sec. 8.  Minnesota Statutes 1994, section 11A.18, 
  9.11  subdivision 9, is amended to read: 
  9.12     Subd. 9.  [CALCULATION OF POSTRETIREMENT ADJUSTMENT.] (a) 
  9.13  Annually, following June 30, the state board shall use the 
  9.14  procedures in paragraphs (b), (c), and (d) to determine whether 
  9.15  a postretirement adjustment is payable and to determine the 
  9.16  amount of any postretirement adjustment. 
  9.17     (b) If the Consumer Price Index for urban wage earners and 
  9.18  clerical workers all items index published by the Bureau of 
  9.19  Labor Statistics of the United States Department of Labor 
  9.20  increases from June 30 of the preceding year to June 30 of the 
  9.21  current year, the state board shall certify the percentage 
  9.22  increase.  The amount certified may not exceed the lesser of the 
  9.23  difference between the preretirement interest assumption and 
  9.24  postretirement interest assumption in section 356.215, 
  9.25  subdivision 4d, paragraph (a), or 3.5 percent. 
  9.26     (c) In addition to any percentage increase certified under 
  9.27  paragraph (b), the board shall use the following procedures to 
  9.28  determine if a postretirement adjustment is payable under this 
  9.29  paragraph: 
  9.30     (1) The state board shall determine the market value of the 
  9.31  fund on June 30 of that year; 
  9.32     (2) The amount of reserves required for the annuity or 
  9.33  benefit payable to an annuitant and benefit recipient of the 
  9.34  participating public pension plans or funds shall be determined 
  9.35  by the ~~commission-retained~~ actuary as of the current June 30.  
  9.36  An annuitant or benefit recipient who has been receiving an 
 10.1   annuity or benefit for at least 12 full months as of the current 
 10.2   June 30 is eligible to receive a full postretirement 
 10.3   adjustment.  An annuitant or benefit recipient who has been 
 10.4   receiving an annuity or benefit for at least one full month, but 
 10.5   less than 12 full months as of the current June 30, is eligible 
 10.6   to receive a partial postretirement adjustment.  Each fund shall 
 10.7   report separately the amount of the reserves for those 
 10.8   annuitants and benefit recipients who are eligible to receive a 
 10.9   full postretirement benefit adjustment.  This amount is known as 
 10.10  "eligible reserves."  Each fund shall also report separately the 
 10.11  amount of the reserves for those annuitants and benefit 
 10.12  recipients who are not eligible to receive a postretirement 
 10.13  adjustment.  This amount is known as "noneligible reserves."  
 10.14  For an annuitant or benefit recipient who is eligible to receive 
 10.15  a partial postretirement adjustment, each fund shall report 
 10.16  separately as additional "eligible reserves" an amount that 
 10.17  bears the same ratio to the total reserves required for the 
 10.18  annuitant or benefit recipient as the number of full months of 
 10.19  annuity or benefit receipt as of the current June 30 bears to 12 
 10.20  full months.  The remainder of the annuitant's or benefit 
 10.21  recipient's reserves shall be separately reported as additional 
 10.22  "noneligible reserves."  The amount of "eligible" and 
 10.23  "noneligible" required reserves shall be certified to the board 
 10.24  by the ~~commission-retained~~ actuary as soon as is practical 
 10.25  following the current June 30; 
 10.26     (3) The state board shall determine the percentage increase 
 10.27  certified under paragraph (b) multiplied by the eligible 
 10.28  required reserves, as adjusted for mortality gains and losses 
 10.29  under subdivision 11, determined under clause (2); 
 10.30     (4) The state board shall add the amount of reserves 
 10.31  required for the annuities or benefits payable to annuitants and 
 10.32  benefit recipients of the participating public pension plans or 
 10.33  funds as of the current June 30 to the amount determined under 
 10.34  clause (3); 
 10.35     (5) The state board shall subtract the amount determined 
 10.36  under clause (4) from the market value of the fund determined 
 11.1   under clause (1); 
 11.2      (6) The state board shall adjust the amount determined 
 11.3   under clause (5) by the cumulative current balance determined 
 11.4   pursuant to clause (8) and any negative balance carried forward 
 11.5   under clause (9); 
 11.6      (7) A positive amount resulting from the calculations in 
 11.7   clauses (1) to (6) is the excess market value.  A negative 
 11.8   amount is the negative balance; 
 11.9      (8) The state board shall allocate one-fifth of the excess 
 11.10  market value or one-fifth of the negative balance to each of 
 11.11  five consecutive years, beginning with the fiscal year ending 
 11.12  the current June 30; and 
 11.13     (9) To calculate the postretirement adjustment under this 
 11.14  paragraph based on investment performance for a fiscal year, the 
 11.15  state board shall add together all excess market value allocated 
 11.16  to that year and subtract from the sum all negative balances 
 11.17  allocated to that year.  If this calculation results in a 
 11.18  negative number, the entire negative balance must be carried 
 11.19  forward and allocated to the next year.  If the resulting amount 
 11.20  is positive, a postretirement adjustment is payable under this 
 11.21  paragraph.  The board shall express a positive amount as a 
 11.22  percentage of the total eligible required reserves certified to 
 11.23  the board under clause (2).  
 11.24     (d) The state board shall determine the amount of any 
 11.25  postretirement adjustment which is payable using the following 
 11.26  procedure: 
 11.27     (1) The total "eligible" required reserves as of the first 
 11.28  of January next following the end of the fiscal year for the 
 11.29  annuitants and benefit recipients eligible to receive a full or 
 11.30  partial postretirement adjustment as determined by clause (2) 
 11.31  shall be certified to the state board by the ~~commission-retained~~ 
 11.32  actuary.  The total "eligible" required reserves shall be 
 11.33  determined by the ~~commission-retained~~ actuary on the assumption 
 11.34  that all annuitants and benefit recipients eligible to receive a 
 11.35  full or partial postretirement adjustment will be alive on the 
 11.36  January 1 in question; and 
 12.1      (2) The state board shall add the percentage certified 
 12.2   under paragraph (b) to any positive percentage calculated under 
 12.3   paragraph (c).  The board shall not subtract from the percentage 
 12.4   certified under paragraph (b) any negative amount calculated 
 12.5   under paragraph (c).  The sum of these percentages shall be 
 12.6   carried to five decimal places and shall be certified to each 
 12.7   participating public pension fund or plan as the full 
 12.8   postretirement adjustment percentage.  
 12.9      (e) A retirement annuity payable in the event of retirement 
 12.10  before becoming eligible for social security benefits as 
 12.11  provided in section 352.116, subdivision 3; 353.29, subdivision 
 12.12  6; or 354.35 must be treated as the sum of a period certain 
 12.13  retirement annuity and a life retirement annuity for the 
 12.14  purposes of any postretirement adjustment.  The period certain 
 12.15  retirement annuity plus the life retirement annuity shall be the 
 12.16  annuity amount payable until age 62 or 65, whichever applies.  A 
 12.17  postretirement adjustment granted on the period certain 
 12.18  retirement annuity must terminate when the period certain 
 12.19  retirement annuity terminates. 
 12.20     Sec. 9.  Minnesota Statutes 1994, section 11A.18, 
 12.21  subdivision 11, is amended to read: 
 12.22     Subd. 11.  [ADJUSTMENT FOR MORTALITY GAINS AND LOSSES.] As 
 12.23  of June 30 annually, the ~~commission-retained~~ actuary shall 
 12.24  calculate the amount of required reserves representing any 
 12.25  mortality gains and any mortality losses incurred by each 
 12.26  participating public pension fund or plan during the fiscal year 
 12.27  and report the results of those calculations to the applicable 
 12.28  participating public pension fund or plan.  The actuary shall 
 12.29  report separately the amount of the reserves for annuitants and 
 12.30  benefit recipients who are eligible for a postretirement benefit 
 12.31  adjustment and the amount of reserves for annuitants and benefit 
 12.32  recipients who are not eligible for a postretirement benefit 
 12.33  adjustment.  If the net amount of required reserves represents a 
 12.34  mortality gain, the participating public pension fund or plan 
 12.35  shall certify that amount to the state board, which shall sell 
 12.36  sufficient securities or transfer sufficient available cash to 
 13.1   equal the amount of money certified.  If the amount of required 
 13.2   reserves represents a mortality loss, the participating public 
 13.3   pension fund or plan shall transfer to the state board an amount 
 13.4   equal to the amount of the net mortality loss.  The amount of 
 13.5   the transfers shall be determined before any postretirement 
 13.6   benefit adjustments have been made.  All transfers resulting 
 13.7   from mortality adjustments shall be completed annually by 
 13.8   December 31 for the preceding June 30.  Interest shall be 
 13.9   charged or credited on any transfers after December 31 based 
 13.10  upon the preretirement interest assumption for the participating 
 13.11  plan or fund as specified in section 356.215, subdivision 4d, 
 13.12  stated as a monthly rate.  Book values of the assets of the fund 
 13.13  for the purposes of subdivision 9 shall be determined only after 
 13.14  all adjustments for mortality gains and losses for the fiscal 
 13.15  year have been made.  
 13.16     Sec. 10.  Minnesota Statutes 1994, section 16A.055, 
 13.17  subdivision 5, is amended to read: 
 13.18     Subd. 5.  [RETIREMENT FUND REPORTING.] The commissioner may 
 13.19  not require a public retirement fund to use ~~financial~~ a method 
 13.20  of finance or actuarial reporting practices or 
 13.21  procedures ~~different from those required by section~~ that do not 
 13.22  provide the information required by section 356.20 or 356.215. 
 13.23  However, the commissioner of finance may require a public 
 13.24  retirement fund to report additional information related to the 
 13.25  long-term liabilities or financing of the fund.  
 13.26     Sec. 11.  Minnesota Statutes 1994, section 16A.11, 
 13.27  subdivision 1, is amended to read: 
 13.28     Subdivision 1.  [WHEN.] The governor shall submit a 
 13.29  ~~three-part~~ four-part budget to the legislature.  Parts one and 
 13.30  two, the budget message and detailed operating budget, must be 
 13.31  submitted by the fourth Tuesday in January in each odd-numbered 
 13.32  year.  Part three, the detailed recommendations as to capital 
 13.33  expenditure, must be submitted as follows:  agency capital 
 13.34  budget requests by June 15 of each odd-numbered year; 
 13.35  preliminary governor's recommendations by September 1 of each 
 13.36  odd-numbered year; and final recommendations by February 1 of 
 14.1   each even-numbered year.  Part four, the detailed 
 14.2   recommendations as to pension and retirement policy for all 
 14.3   public employee pension and retirement programs in the state 
 14.4   must be submitted as follows:  retirement plan proposals by June 
 14.5   15 of each odd-numbered year; preliminary department of employee 
 14.6   relations and department of finance recommendations by September 
 14.7   1 of each odd-numbered year; and final recommendations by 
 14.8   February 1 of each even-numbered year.  
 14.9      Sec. 12.  Minnesota Statutes 1994, section 16A.11, is 
 14.10  amended by adding a subdivision to read: 
 14.11     Subd. 3c.  [PART FOUR:  DETAILED PENSIONS AND RETIREMENT 
 14.12  PROPOSALS REVIEW.] The detailed pensions and retirement proposal 
 14.13  review must include an evaluation of pension and retirement 
 14.14  proposals.  Prior to conducting the evaluation, the commissioner 
 14.15  of finance in cooperation with the commissioner of employee 
 14.16  relations shall establish criteria for evaluating the proposals. 
 14.17     Sec. 13.  Minnesota Statutes 1994, section 69.051, 
 14.18  subdivision 4, is amended to read: 
 14.19     Subd. 4.  [NOTIFICATION BY COMMISSIONER AND STATE AUDITOR.] 
 14.20  The state auditor in performing an audit or examination shall 
 14.21  notify the ~~legislative commission on pensions and~~ 
 14.22  ~~retirement~~ attorney general if the audit or examination reveals 
 14.23  malfeasance, misfeasance, or nonfeasance in office. 
 14.24     The commissioner shall notify the ~~legislative commission on~~ 
 14.25  ~~pensions and retirement~~ attorney general if the state auditor 
 14.26  has not filed the required financial compliance reports by July 
 14.27  1. 
 14.28     Sec. 14.  Minnesota Statutes 1994, section 69.77, 
 14.29  subdivision 2h, is amended to read: 
 14.30     Subd. 2h.  [ACTUARIAL VALUATION REQUIRED.] The association 
 14.31  shall obtain an actuarial valuation showing the condition of the 
 14.32  special fund of the relief association pursuant to sections 
 14.33  356.215 and 356.216 and any applicable standards for actuarial 
 14.34  work established by the ~~legislative~~ commission on pensions and 
 14.35  retirement as of December 31 of every year.  A copy of the 
 14.36  actuarial valuation shall be filed with the director of the 
 15.1   legislative reference library, the governing body of the 
 15.2   municipality in which the association is organized, the 
 15.3   ~~executive director of the legislative~~ commission on pensions and 
 15.4   retirement, and the state auditor, not later than July 1 of the 
 15.5   following year. 
 15.6      Sec. 15.  Minnesota Statutes 1994, section 69.773, 
 15.7   subdivision 2, is amended to read: 
 15.8      Subd. 2.  [DETERMINATION OF ACTUARIAL CONDITION AND FUNDING 
 15.9   COSTS.] A relief association to which this section applies shall 
 15.10  obtain an actuarial valuation showing the condition of the 
 15.11  special fund of the relief association as of December 31, 1978, 
 15.12  and at least as of December 31 every four years thereafter.  The 
 15.13  valuation shall be prepared in accordance with the provisions of 
 15.14  sections 356.215, subdivision 4d, and 356.216 and any applicable 
 15.15  standards for actuarial work established by the ~~legislative~~ 
 15.16  commission on pensions and retirement, except that the figure 
 15.17  for normal cost shall be expressed as a level dollar amount, and 
 15.18  the amortization contribution shall be the level dollar amount 
 15.19  calculated to amortize any current unfunded accrued liability by 
 15.20  at least the date of full funding specified in subdivision 4, 
 15.21  clause (b).  Each valuation shall be filed with the governing 
 15.22  body of the municipality in which the relief association is 
 15.23  located and with the state auditor, not later than July 1 of the 
 15.24  year next following the date as of which the actuarial valuation 
 15.25  is prepared.  Any relief association which is operating under a 
 15.26  special law which requires that actuarial valuations be obtained 
 15.27  at least every four years and be prepared in accordance with 
 15.28  applicable actuarial standards set forth in statute may continue 
 15.29  to have actuarial valuations made according to the time schedule 
 15.30  set forth in the special legislation subject to the provisions 
 15.31  of subdivision 3.  
 15.32     Sec. 16.  Minnesota Statutes 1994, section 352.01, 
 15.33  subdivision 12, is amended to read: 
 15.34     Subd. 12.  [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 
 15.35  means the condition of one annuity or benefit having an equal 
 15.36  actuarial present value as another annuity or benefit, 
 16.1   determined as of a given date at a specified age with each 
 16.2   actuarial present value based on the appropriate mortality table 
 16.3   adopted by the board of directors based on the experience of the 
 16.4   fund as recommended by the actuary retained by the ~~legislative~~ 
 16.5   commission on pensions and retirement and using the applicable 
 16.6   preretirement or postretirement interest rate assumption 
 16.7   specified in section 356.215, subdivision 4d. 
 16.8      Sec. 17.  Minnesota Statutes 1994, section 352.03, 
 16.9   subdivision 6, is amended to read: 
 16.10     Subd. 6.  [DUTIES AND POWERS OF EXECUTIVE DIRECTOR.] The 
 16.11  management of the system is vested in the director, who is the 
 16.12  executive and administrative head of the system.  The director 
 16.13  shall be advisor to the board on matters pertaining to the 
 16.14  system and shall also act as the secretary of the board.  The 
 16.15  director shall: 
 16.16     (1) attend meetings of the board; 
 16.17     (2) prepare and recommend to the board appropriate rules to 
 16.18  carry out this chapter; 
 16.19     (3) establish and maintain an adequate system of records 
 16.20  and accounts following recognized accounting principles and 
 16.21  controls; 
 16.22     (4) designate an assistant director with the approval of 
 16.23  the board; 
 16.24     (5) appoint any employees, both permanent and temporary, 
 16.25  that are necessary to carry out the provisions of this chapter; 
 16.26     (6) organize the work of the system as the director deems 
 16.27  necessary to fulfill the functions of the system, and define the 
 16.28  duties of its employees and delegate to them any powers or 
 16.29  duties, subject to the control of the director and under 
 16.30  conditions the director may prescribe.  Appointments to exercise 
 16.31  delegated power must be by written order and shall be filed with 
 16.32  the secretary of state; 
 16.33     (7) with the advice and consent of the board, contract for 
 16.34  the services of an approved actuary, professional management 
 16.35  services, and any other consulting services as necessary and fix 
 16.36  the compensation for those services.  The contracts are not 
 17.1   subject to competitive bidding under chapter 16B.  Any approved 
 17.2   actuary retained by the executive director shall function as the 
 17.3   actuarial advisor of the board and the executive director~~, and~~ 
 17.4   ~~may perform actuarial valuations and experience studies to~~ 
 17.5   ~~supplement those performed by the actuary retained by the~~ 
 17.6   ~~legislative commission on pensions and retirement~~.  Any 
 17.7   ~~supplemental~~ actuarial valuations or experience studies shall be 
 17.8   filed with the ~~executive director of the legislative~~ commission 
 17.9   on pensions and retirement.  Professional management services 
 17.10  may not be contracted for more often than once in six years.  
 17.11  Copies of professional management survey reports must be 
 17.12  transmitted to the secretary of the senate, the chief clerk of 
 17.13  the house of representatives, and the legislative reference 
 17.14  library as provided by section 3.195, to the ~~executive director~~ 
 17.15  ~~of the~~ commission and to the legislative auditor at the time as 
 17.16  reports are furnished to the board.  Only management firms 
 17.17  experienced in conducting management surveys of federal, state, 
 17.18  or local public retirement systems are qualified to contract 
 17.19  with the director; 
 17.20     (8) with the advice and consent of the board provide 
 17.21  in-service training for the employees of the system; 
 17.22     (9) make refunds of accumulated contributions to former 
 17.23  state employees and to the designated beneficiary, surviving 
 17.24  spouse, legal representative, or next of kin of deceased state 
 17.25  employees or deceased former state employees, as provided in 
 17.26  this chapter; 
 17.27     (10) determine the amount of the annuities and disability 
 17.28  benefits of employees covered by the system and authorize 
 17.29  payment of the annuities and benefits beginning as of the dates 
 17.30  on which the annuities and benefits begin to accrue, in 
 17.31  accordance with the provisions of this chapter; 
 17.32     (11) pay annuities, refunds, survivor benefits, salaries, 
 17.33  and necessary operating expenses of the system; 
 17.34     (12) certify funds available for investment to the state 
 17.35  board of investment; 
 17.36     (13) with the advice and approval of the board request the 
 18.1   state board of investment to sell securities when the director 
 18.2   determines that funds are needed for the system; 
 18.3      (14) prepare and submit to the board and the legislature an 
 18.4   annual financial report covering the operation of the system, as 
 18.5   required by section 356.20; 
 18.6      (15) prepare and submit biennial and annual budgets to the 
 18.7   board and with the approval of the board submit the budgets to 
 18.8   the department of finance; and 
 18.9      (16) with the approval of the board, perform other duties 
 18.10  required to administer the retirement and other provisions of 
 18.11  this chapter and to do its business. 
 18.12     Sec. 18.  Minnesota Statutes 1994, section 352.04, 
 18.13  subdivision 3, is amended to read: 
 18.14     Subd. 3.  [EMPLOYER CONTRIBUTION.] (a) The employer 
 18.15  contribution to the fund must be equal to 4.2 percent of salary. 
 18.16     (b) By January 1 of each year, the board of directors shall 
 18.17  report to the ~~legislative~~ commission on pensions and retirement, 
 18.18  the chair of the committee on appropriations of the house of 
 18.19  representatives, and the chair of the committee on finance of 
 18.20  the senate on the amount raised by the employer and employee 
 18.21  contribution rates in effect and whether the total amount is 
 18.22  less than, the same as, or more than the actuarial requirement 
 18.23  determined under section 356.215. 
 18.24     ~~(c) If the legislative commission on pensions and~~ 
 18.25  ~~retirement, based on the most recent valuation performed by its~~ 
 18.26  ~~actuary, determines that the total amount raised by the employer~~ 
 18.27  ~~and employee contributions under subdivision 2 and paragraph (b)~~ 
 18.28  ~~is less than the actuarial requirements determined under section~~ 
 18.29  ~~356.215, the employer and employee rates must be increased by~~ 
 18.30  ~~equal amounts as necessary to meet the actuarial requirements.~~  
 18.31  ~~The employee rate may not exceed 4.15 percent of salary and the~~ 
 18.32  ~~employer rate may not exceed 4.29 percent of salary.  The~~ 
 18.33  ~~increases are effective on the next January 1 following the~~ 
 18.34  ~~determination by the commission.  The executive director of the~~ 
 18.35  ~~Minnesota state retirement system shall notify employing units~~ 
 18.36  ~~of any increases under this paragraph.~~ 
 19.1      Sec. 19.  Minnesota Statutes 1994, section 352.91, 
 19.2   subdivision 4, is amended to read: 
 19.3      Subd. 4.  Upon the recommendation of the commissioner of 
 19.4   corrections or the commissioner of human services, whichever is 
 19.5   the appropriate employing authority, with the approval of the 
 19.6   legislative advisory committee and with notification to and 
 19.7   receipt of comments from the ~~legislative~~ commission on pensions 
 19.8   and retirement, the commissioner of employee relations may 
 19.9   certify additional civil service classifications at state 
 19.10  correctional or security hospital facilities to the executive 
 19.11  director of the Minnesota state retirement system as positions 
 19.12  rendering covered correctional service.  The commissioner of 
 19.13  corrections and the commissioner of human services must 
 19.14  establish, in writing, a set of criteria upon which to base a 
 19.15  recommendation for certifying additional civil service 
 19.16  classifications as rendering covered correctional service. 
 19.17     Sec. 20.  Minnesota Statutes 1994, section 352.92, 
 19.18  subdivision 2, is amended to read: 
 19.19     Subd. 2.  [EMPLOYER CONTRIBUTIONS.] (a) In lieu of employer 
 19.20  contributions payable under section 352.04, subdivision 3, the 
 19.21  employer shall contribute for covered correctional employees an 
 19.22  amount equal to 6.27 percent of salary.  
 19.23     (b) By January 1 of each year, the board of directors shall 
 19.24  report to the legislative auditor, the commission on pensions 
 19.25  and retirement, the chair of the committee on appropriations of 
 19.26  the house of representatives, and the chair of the committee on 
 19.27  finance of the senate on the amount raised by the employer and 
 19.28  employee contribution rates in effect and whether the total 
 19.29  amount is less than, the same as, or more than the actuarial 
 19.30  requirement determined under section 356.215. 
 19.31     Sec. 21.  Minnesota Statutes 1994, section 352B.02, 
 19.32  subdivision 1c, is amended to read: 
 19.33     Subd. 1c.  [EMPLOYER CONTRIBUTIONS.] (a) In addition to 
 19.34  member contributions, department heads shall pay a sum equal to 
 19.35  14.88 percent of the salary upon which deductions were made, 
 19.36  which shall constitute the employer contribution to the fund.  
 20.1   Department contributions must be paid out of money appropriated 
 20.2   to departments for this purpose. 
 20.3      (b) By January 1 of each year, the board of directors shall 
 20.4   report to the ~~legislative~~ commission on pensions and retirement, 
 20.5   the legislative auditor, the chair of the committee on 
 20.6   appropriations of the house of representatives, and the chair of 
 20.7   the committee on finance of the senate on the amount raised by 
 20.8   the employer and employee contribution rates in effect and 
 20.9   whether the total amount is less than, the same as, or more than 
 20.10  the actuarial requirement determined under section 356.215. 
 20.11     Sec. 22.  Minnesota Statutes 1994, section 352B.02, 
 20.12  subdivision 1e, is amended to read: 
 20.13     Subd. 1e.  [AUDIT; ACTUARIAL VALUATION.] The legislative 
 20.14  auditor shall audit the fund.  ~~Any actuarial valuation of the~~ 
 20.15  ~~fund required under section 356.215 shall be prepared by the~~ 
 20.16  ~~actuary retained by the legislative commission on pensions and~~ 
 20.17  ~~retirement.~~  Any approved actuary retained by the executive 
 20.18  director under section 352.03, subdivision 6, may perform 
 20.19  actuarial valuations and experience studies ~~to supplement those~~ 
 20.20  ~~performed by the commission-retained actuary~~.  Any supplemental 
 20.21  actuarial valuation or experience studies shall be filed with 
 20.22  the ~~executive director of the~~ legislative auditor and the 
 20.23  commission on pensions and retirement.  
 20.24     Sec. 23.  Minnesota Statutes 1994, section 353.03, 
 20.25  subdivision 3a, is amended to read: 
 20.26     Subd. 3a.  [EXECUTIVE DIRECTOR.] (a)  [APPOINTMENT.] The 
 20.27  board shall appoint, with the advice and consent of the senate, 
 20.28  an executive director on the basis of education, experience in 
 20.29  the retirement field, and leadership ability.  The executive 
 20.30  director shall have had at least five years' experience in an 
 20.31  executive level management position, which has included 
 20.32  responsibility for pensions, deferred compensation, or employee 
 20.33  benefits.  The executive director serves at the pleasure of the 
 20.34  board.  The salary of the executive director is as provided by 
 20.35  section 15A.081, subdivision 1. 
 20.36     (b)  [DUTIES.] The management of the association is vested 
 21.1   in the executive director who shall be the executive and 
 21.2   administrative head of the association.  The executive director 
 21.3   shall act as adviser to the board on all matters pertaining to 
 21.4   the association and shall also act as the secretary of the 
 21.5   board.  The executive director shall: 
 21.6      (1) attend all meetings of the board; 
 21.7      (2) prepare and recommend to the board appropriate rules to 
 21.8   carry out the provisions of this chapter; 
 21.9      (3) establish and maintain an adequate system of records 
 21.10  and accounts following recognized accounting principles and 
 21.11  controls; 
 21.12     (4) designate, with the approval of the board, up to two 
 21.13  persons who shall serve in the unclassified service and whose 
 21.14  salary is set in accordance with section 43A.18, subdivision 3, 
 21.15  appoint a confidential secretary in the unclassified service, 
 21.16  and appoint employees to carry out this chapter, who are subject 
 21.17  to chapters 43A and 179A in the same manner as are executive 
 21.18  branch employees; 
 21.19     (5) organize the work of the association as the director 
 21.20  deems necessary to fulfill the functions of the association, and 
 21.21  define the duties of its employees and delegate to them any 
 21.22  powers or duties, subject to the control of, and under such 
 21.23  conditions as, the executive director may prescribe; 
 21.24     (6) with the approval of the board, contract for the 
 21.25  services of an approved actuary, professional management 
 21.26  services, and any other consulting services as necessary to 
 21.27  fulfill the purposes of this chapter.  All contracts are subject 
 21.28  to chapter 16B.  The commissioner of administration shall not 
 21.29  approve, and the association shall not enter into, any contract 
 21.30  to provide lobbying services or legislative advocacy of any 
 21.31  kind.  Any approved actuary retained by the executive director 
 21.32  shall function as the actuarial advisor of the board and the 
 21.33  executive director and may perform actuarial valuations and 
 21.34  experience studies ~~to supplement those performed by the actuary~~ 
 21.35  ~~retained by the legislative commission on pensions and~~ 
 21.36  ~~retirement~~.  Any ~~supplemental~~ actuarial valuations or experience 
 22.1   studies shall be filed with the ~~executive director of the~~ 
 22.2   legislative auditor and the commission on pensions and 
 22.3   retirement.  Copies of professional management survey reports 
 22.4   shall be transmitted to the secretary of the senate, the chief 
 22.5   clerk of the house of representatives, and the legislative 
 22.6   reference library as provided by section 3.195, to the ~~executive~~ 
 22.7   ~~director of the~~ commission on pensions and retirement and to the 
 22.8   legislative auditor at the same time as reports are furnished to 
 22.9   the board.  Only management firms experienced in conducting 
 22.10  management surveys of federal, state, or local public retirement 
 22.11  systems shall be qualified to contract with the director 
 22.12  hereunder; 
 22.13     (7) with the approval of the board provide in-service 
 22.14  training for the employees of the association; 
 22.15     (8) make refunds of accumulated contributions to former 
 22.16  members and to the designated beneficiary, surviving spouse, 
 22.17  legal representative or next of kin of deceased members or 
 22.18  deceased former members, as provided in this chapter; 
 22.19     (9) determine the amount of the annuities and disability 
 22.20  benefits of members covered by the association and authorize 
 22.21  payment of the annuities and benefits beginning as of the dates 
 22.22  on which the annuities and benefits begin to accrue, in 
 22.23  accordance with the provisions of this chapter; 
 22.24     (10) pay annuities, refunds, survivor benefits, salaries, 
 22.25  and necessary operating expenses of the association; 
 22.26     (11) prepare and submit to the board and the legislature an 
 22.27  annual financial report covering the operation of the 
 22.28  association, as required by section 356.20; 
 22.29     (12) prepare and submit biennial and annual budgets to the 
 22.30  board for its approval and submit the approved budgets to the 
 22.31  department of finance for approval by the commissioner; 
 22.32     (13) reduce all or part of the accrued interest payable 
 22.33  under section 353.27, subdivisions 12, 12a, and 12b, or 353.28, 
 22.34  subdivision 5, upon receipt of proof by the association of an 
 22.35  unreasonable processing delay or other extenuating circumstances 
 22.36  of the employing unit.  The executive director shall prescribe 
 23.1   and submit for approval by the board the conditions under which 
 23.2   such interest may be reduced; and 
 23.3      (14) with the approval of the board, perform such other 
 23.4   duties as may be required for the administration of the 
 23.5   association and the other provisions of this chapter and for the 
 23.6   transaction of its business.  
 23.7      Sec. 24.  Minnesota Statutes 1994, section 353.271, 
 23.8   subdivision 2, is amended to read: 
 23.9      Subd. 2.  [VALUATION OF ASSETS; ADJUSTMENT OF BENEFITS.] 
 23.10  (1) The required reserves for retirement annuities payable as 
 23.11  provided in this chapter other than those payable from the 
 23.12  various local relief association consolidation accounts, as 
 23.13  determined in accordance with the appropriate mortality table 
 23.14  adopted by the board of trustees based on the experience of the 
 23.15  fund as recommended by the actuary retained by the ~~legislative~~ 
 23.16  commission on pensions and retirement, and using the 
 23.17  postretirement interest assumption specified in section 356.215, 
 23.18  subdivision 4d, shall be transferred to the Minnesota 
 23.19  postretirement investment fund as of the last business day of 
 23.20  the month in which the retirement annuity begins.  
 23.21     (2) Annuity payments other than those payable from the 
 23.22  various local relief association consolidation accounts shall be 
 23.23  adjusted in accordance with the provisions of section 11A.18.  
 23.24     (3) Notwithstanding section 356.18, increases in payments 
 23.25  pursuant to this section or from the various local relief 
 23.26  association consolidation accounts, if applicable, will be made 
 23.27  automatically unless the intended recipient files written notice 
 23.28  with the executive director of the public employees retirement 
 23.29  association requesting that the increase shall not be made. 
 23.30     Sec. 25.  Minnesota Statutes 1994, section 353A.02, 
 23.31  subdivision 8, is amended to read: 
 23.32     Subd. 8.  [COMMISSION.] "Commission" means the ~~legislative~~ 
 23.33  commission on pensions and retirement established by section 
 23.34  3.85.  
 23.35     Sec. 26.  Minnesota Statutes 1994, section 353A.04, 
 23.36  subdivision 7, is amended to read: 
 24.1      Subd. 7.  [CERTIFICATION OF APPROVAL.] If a consolidation 
 24.2   action is approved, the chief administrative officer of the 
 24.3   municipality shall notify the executive director of the public 
 24.4   employees retirement association, the executive director of the 
 24.5   state board, ~~the executive director of~~ the commission, the 
 24.6   commissioner of finance, the secretary of state, and the state 
 24.7   auditor of the approval.  The notification to the state auditor 
 24.8   shall also contain a certification by the chief administrative 
 24.9   officer of the municipality and by the secretary of the relief 
 24.10  association that there was compliance with the procedures set 
 24.11  forth in this section in approving that consolidation action and 
 24.12  shall include a copy of any relevant documentation.  
 24.13     Sec. 27.  Minnesota Statutes 1994, section 353A.05, 
 24.14  subdivision 1, is amended to read: 
 24.15     Subdivision 1.  [COMMISSION ACTIONS.] Upon initiation of 
 24.16  consolidation as provided in section 353A.04, the ~~executive~~ 
 24.17  ~~director of the~~ commission shall direct the actuary retained by 
 24.18  the commission to ~~undertake~~ coordinate the preparation of the 
 24.19  actuarial calculations necessary to complete the consolidation.  
 24.20     These actuarial calculations shall include for each active 
 24.21  member, each deferred former member, each retired member, and 
 24.22  each current beneficiary the computation of the present value of 
 24.23  future benefits, the future normal costs, if any, and the 
 24.24  actuarial accrued liability on the basis of the existing relief 
 24.25  association benefit plan and on the basis of the public 
 24.26  employees police and fire fund benefit plan.  These actuarial 
 24.27  calculations shall also include for the total active, deferred, 
 24.28  retired, and benefit recipient membership the sum of the present 
 24.29  value of future benefits, the future normal costs, if any, and 
 24.30  the actuarial accrued liability on the basis of the existing 
 24.31  relief association benefit plan, on the basis of the public 
 24.32  employees police and fire fund benefit plan, and on the basis of 
 24.33  the benefit plan which produced the largest present value of 
 24.34  future benefits for each person.  The actuarial calculations 
 24.35  shall be prepared using the entry age actuarial cost method for 
 24.36  all components of the benefit plan and using the actuarial 
 25.1   assumptions applicable to the fund for the most recent actuarial 
 25.2   valuation prepared under section 356.215, except that the 
 25.3   actuarial calculations on the basis of the existing relief 
 25.4   association benefit plan shall be prepared using an interest 
 25.5   rate actuarial assumption during the postretirement period which 
 25.6   is in the same amount as the interest rate actuarial assumption 
 25.7   applicable to the preretirement period.  The actuarial 
 25.8   calculations shall include the computation of the present value 
 25.9   of the initial postretirement adjustment anticipated by the 
 25.10  executive director of the state board as payable after the 
 25.11  effective date of the consolidation from the Minnesota 
 25.12  postretirement investment fund under section 11A.18.  
 25.13     The chief administrative officer of the relief association 
 25.14  shall, upon request, provide in a timely manner to the ~~executive~~ 
 25.15  ~~director of the commission and to the actuary retained by the~~ 
 25.16  commission the most current available information or documents, 
 25.17  whichever applies, regarding the demographics of the active, 
 25.18  deferred, retired, and benefit recipient membership of the 
 25.19  relief association, the financial condition of the relief 
 25.20  association, and the existing benefit plan of the relief 
 25.21  association.  
 25.22     Upon completion of the actuarial calculations required by 
 25.23  this subdivision, the actuary retained by the commission shall 
 25.24  issue a report in the form of an appropriate summary of the 
 25.25  actuarial calculations and shall provide a copy of that report 
 25.26  to the ~~executive director of the~~ commission, the executive 
 25.27  director of the public employees retirement association, the 
 25.28  chief administrative officer of the relief association, the 
 25.29  chief administrative officer of the municipality in which the 
 25.30  relief association is located, the state auditor, and the 
 25.31  legislative auditor. 
 25.32     Sec. 28.  Minnesota Statutes 1994, section 353A.06, is 
 25.33  amended to read: 
 25.34     353A.06 [FINALIZATION OF CONSOLIDATION.] 
 25.35     Subdivision 1.  [NOTICE OF FINAL APPROVAL.] Upon final 
 25.36  approval by the governing body of the municipality, the chief 
 26.1   administrative officer of the municipality shall provide notice 
 26.2   of the local action to the chief administrative officer of the 
 26.3   relief association, the executive director of the state board, 
 26.4   the ~~executive director of the~~ commission, the legislative 
 26.5   auditor, the executive director of the public employees 
 26.6   retirement association, the commissioner of finance, the 
 26.7   secretary of state, and the state auditor.  The board of 
 26.8   trustees of the public employees retirement association, at its 
 26.9   next regularly scheduled meeting, shall set the effective date 
 26.10  for the consolidation and notify the persons under this 
 26.11  subdivision who are to receive notice from the municipality.  
 26.12     Subd. 2.  [INFORMATION REQUIRED.] Upon final approval of 
 26.13  consolidation by the municipality under section 353A.04, the 
 26.14  executive director of the public employees retirement 
 26.15  association shall request from the relief association and the 
 26.16  municipality the information necessary to allow the association 
 26.17  to complete the consolidation.  The information, at a minimum, 
 26.18  must include all data required to be provided by the ~~executive~~ 
 26.19  ~~director of the commission and the actuary retained by the~~ 
 26.20  commission under section 353A.05, subdivision 1.  The chief 
 26.21  administrative officer of the relief association and the chief 
 26.22  administrative officer of the municipality shall provide the 
 26.23  requested information in a timely manner.  The data must be 
 26.24  reported on forms or in a manner prescribed by the executive 
 26.25  director of the association.  The data must be current as of the 
 26.26  effective date of the consolidation with the association.  The 
 26.27  chief administrative officer of the municipality and the chief 
 26.28  administrative officer of the relief association shall certify 
 26.29  the accuracy of the data reported to the association.  The 
 26.30  executive director may rely on that data without undertaking any 
 26.31  affirmative duty to verify the data. 
 26.32     Sec. 29.  Minnesota Statutes 1994, section 353A.07, 
 26.33  subdivision 6, is amended to read: 
 26.34     Subd. 6.  [POSTCONSOLIDATION BYLAW AMENDMENTS.] Following 
 26.35  the effective date of consolidation, if the relief association 
 26.36  continues in the form of the general fund, the board of the 
 27.1   relief association shall adopt the appropriate amendments to its 
 27.2   bylaws and articles of incorporation to reflect its change in 
 27.3   status and operation.  The amendments shall be effective upon 
 27.4   filing the applicable amendments with the ~~executive director of~~ 
 27.5   ~~the~~ commission and with the state auditor and shall not require 
 27.6   municipal ratification as provided in section 69.77, subdivision 
 27.7   2a.  
 27.8      Sec. 30.  Minnesota Statutes 1994, section 353A.09, 
 27.9   subdivision 2, is amended to read: 
 27.10     Subd. 2.  [INITIAL ALLOCATION OF ASSETS UPON 
 27.11  CONSOLIDATION.] As soon as is practicable following the 
 27.12  effective date of consolidation, the executive director of the 
 27.13  public employees retirement association shall transfer from the 
 27.14  individual local relief association consolidation accounts to 
 27.15  the Minnesota postretirement investment fund assets of that 
 27.16  account equal to the required reserves for service pensions 
 27.17  payable to persons electing coverage by the public employees 
 27.18  police and fire fund benefit plan under section 353A.08 and any 
 27.19  potential survivor benefit payable on account of those persons 
 27.20  as determined in accordance with the appropriate mortality table 
 27.21  adopted by the board of the public employees retirement 
 27.22  association based on the experience of the consolidating relief 
 27.23  association or consolidating relief associations as recommended 
 27.24  by the actuary retained by the ~~legislative~~ commission on 
 27.25  pensions and retirement and using the applicable interest 
 27.26  assumption specified in section 356.215, subdivision 4d.  A 
 27.27  transfer may be made only from the individual account for an 
 27.28  electing person's municipality.  The executive director may not 
 27.29  transfer assets between individual local consolidation accounts, 
 27.30  nor may the executive director transfer assets from the public 
 27.31  employees retirement association to the Minnesota postretirement 
 27.32  fund or to a local consolidation account to cover liabilities of 
 27.33  an individual local consolidation account.  If there are 
 27.34  insufficient assets in a local consolidation account to provide 
 27.35  for the transfer of assets to the Minnesota postretirement 
 27.36  investment fund or to provide for benefit payments, the 
 28.1   municipality shall immediately provide the local consolidation 
 28.2   account with the assets necessary to make the transfer or 
 28.3   benefit payments. 
 28.4      Sec. 31.  Minnesota Statutes 1994, section 353B.14, is 
 28.5   amended to read: 
 28.6      353B.14 [DISPUTE OVER BENEFIT AMOUNTS OR PLAN PROVISIONS.] 
 28.7      In the event of any dispute by or on behalf of any former 
 28.8   member of a consolidating relief association after the effective 
 28.9   date of consolidation over the amount of a benefit to which the 
 28.10  person may be entitled, the proper interpretation of a provision 
 28.11  of sections 353B.01 to 353B.14, or the conformity of the 
 28.12  provisions of sections 353B.01 to 353B.14 to the provisions of 
 28.13  the benefit plan of the consolidating relief association in 
 28.14  effect immediately before the date on which the consolidation 
 28.15  process was initiated, the dispute shall be submitted in writing 
 28.16  to the ~~legislative~~ commission on pensions and retirement by the 
 28.17  person who is a party to the dispute or by the executive 
 28.18  director of the public employees retirement association.  The 
 28.19  ~~legislative~~ commission on pensions and retirement shall review 
 28.20  the dispute as part of its deliberations on proposed or pending 
 28.21  retirement legislation and shall make ~~its~~ a recommendation on 
 28.22  the resolution of the dispute, if any, to the appropriate 
 28.23  committees of the senate and house of representatives with 
 28.24  jurisdiction over public employee pension matters in the form of 
 28.25  the necessary legislation amending the provisions of sections 
 28.26  353B.01 to 353B.14, which legislation shall include 
 28.27  retroactivity of any increase in a benefit amount or any omitted 
 28.28  benefit amount to the date on which the benefit subject to 
 28.29  dispute accrued or would have accrued. 
 28.30     Sec. 32.  Minnesota Statutes 1994, section 353C.05, 
 28.31  subdivision 3, is amended to read: 
 28.32     Subd. 3.  [ADJUSTMENT IN CONTRIBUTION RATES.] Beginning 
 28.33  with the first full pay period after the most recent actuarial 
 28.34  valuation of the local government correctional service 
 28.35  retirement plan prepared by the actuary ~~retained by the~~ 
 28.36  ~~legislative commission on pensions and retirement is filed with~~ 
 29.1   ~~the executive director of the public employees retirement~~ 
 29.2   ~~association~~, the member contribution rate is a percentage that 
 29.3   equals one-half of the calculated total actuarial requirement of 
 29.4   the plan, and the employer contribution rate is the balance of 
 29.5   the calculated total actuarial requirement of the plan.  
 29.6      Sec. 33.  Minnesota Statutes 1995 Supplement, section 
 29.7   354.05, subdivision 7, is amended to read: 
 29.8      Subd. 7.  [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 
 29.9   means the condition of one annuity or benefit having an equal 
 29.10  actuarial present value as another annuity or benefit, 
 29.11  determined as of a given date with each actuarial present value 
 29.12  based on the appropriate mortality table adopted by the board of 
 29.13  trustees based on the experience of the association as 
 29.14  recommended by the actuary retained by the ~~legislative~~ 
 29.15  commission on pensions and retirement and using the applicable 
 29.16  preretirement or postretirement interest rate assumption 
 29.17  specified in section 356.215, subdivision 4d. 
 29.18     Sec. 34.  Minnesota Statutes 1994, section 354.06, 
 29.19  subdivision 2a, is amended to read: 
 29.20     Subd. 2a.  [DUTIES OF EXECUTIVE DIRECTOR.] The management 
 29.21  of the association is vested in the executive director who shall 
 29.22  be the executive and administrative head of the association.  
 29.23  The executive director shall act as advisor to the board on all 
 29.24  matters pertaining to the association and shall also act as the 
 29.25  secretary of the board.  The executive director shall: 
 29.26     (1) attend all meetings of the board; 
 29.27     (2) prepare and recommend to the board appropriate rules to 
 29.28  carry out the provisions of this chapter; 
 29.29     (3) establish and maintain an adequate system of records 
 29.30  and accounts following recognized accounting principles and 
 29.31  controls; 
 29.32     (4) designate an assistant executive director in the 
 29.33  unclassified service and two assistant executive directors in 
 29.34  the classified service with the approval of the board, and 
 29.35  appoint such employees, both permanent and temporary, as are 
 29.36  necessary to carry out the provisions of this chapter; 
 30.1      (5) organize the work of the association as the director 
 30.2   deems necessary to fulfill the functions of the association, and 
 30.3   define the duties of its employees and delegate to them any 
 30.4   powers or duties, subject to the director's control and under 
 30.5   such conditions as the director may prescribe; 
 30.6      (6) with the approval of the board, contract and set the 
 30.7   compensation for the services of an approved actuary, 
 30.8   professional management services, and any other consulting 
 30.9   services.  These contracts are not subject to the competitive 
 30.10  bidding procedure prescribed by chapter 16B.  An approved 
 30.11  actuary retained by the executive director shall function as the 
 30.12  actuarial advisor of the board and the executive director and 
 30.13  may perform actuarial valuations and experience studies ~~to~~ 
 30.14  ~~supplement those performed by the actuary retained by the~~ 
 30.15  ~~legislative commission on pensions and retirement~~.  Any 
 30.16  ~~supplemental~~ actuarial valuations or experience studies shall be 
 30.17  filed with the ~~executive director of the legislative~~ commission 
 30.18  on pensions and retirement and the legislative auditor.  Copies 
 30.19  of professional management survey reports must be transmitted to 
 30.20  the secretary of the senate, the chief clerk of the house of 
 30.21  representatives, and the legislative reference library as 
 30.22  provided by section 3.195, to the ~~executive director of the~~ 
 30.23  commission and to the legislative auditor at the same time as 
 30.24  reports are furnished to the board.  Only management firms 
 30.25  experienced in conducting management surveys of federal, state, 
 30.26  or local public retirement systems are qualified to contract 
 30.27  with the executive director; 
 30.28     (7) with the approval of the board, provide in-service 
 30.29  training for the employees of the association; 
 30.30     (8) make refunds of accumulated contributions to former 
 30.31  members and to the designated beneficiary, surviving spouse, 
 30.32  legal representative, or next of kin of deceased members or 
 30.33  deceased former members, under this chapter; 
 30.34     (9) determine the amount of the annuities and disability 
 30.35  benefits of members covered by the association and authorize 
 30.36  payment of the annuities and benefits beginning as of the dates 
 31.1   on which the annuities and benefits begin to accrue, under this 
 31.2   chapter; 
 31.3      (10) pay annuities, refunds, survivor benefits, salaries, 
 31.4   and necessary operating expenses of the association; 
 31.5      (11) prepare and submit to the board and the legislature an 
 31.6   annual financial report covering the operation of the 
 31.7   association, as required by section 356.20; 
 31.8      (12) certify funds available for investment to the state 
 31.9   board of investment; 
 31.10     (13) with the advice and approval of the board, request the 
 31.11  state board of investment to sell securities on determining that 
 31.12  funds are needed for the purposes of the association; 
 31.13     (14) prepare and submit biennial and annual budgets to the 
 31.14  board and with the approval of the board submit those budgets to 
 31.15  the department of finance; and 
 31.16     (15) with the approval of the board, perform such other 
 31.17  duties as may be required for the administration of the 
 31.18  association and the other provisions of this chapter and for the 
 31.19  transaction of its business.  The executive director may: 
 31.20     (i) reduce all or part of the accrued interest and fines 
 31.21  payable by an employing unit for reporting requirements under 
 31.22  section 354.52, based on an evaluation of any extenuating 
 31.23  circumstances of the employing unit; 
 31.24     (ii) assign association employees to conduct field audits 
 31.25  of an employing unit to ensure compliance with the provisions of 
 31.26  this chapter; and 
 31.27     (iii) recover overpayments, if not repaid to the 
 31.28  association, by suspending or reducing the payment of a 
 31.29  retirement annuity, refund, disability benefit, survivor 
 31.30  benefit, or optional annuity under this chapter until the 
 31.31  overpayment, plus interest, has been recovered. 
 31.32     Sec. 35.  Minnesota Statutes 1994, section 354.42, 
 31.33  subdivision 5, is amended to read: 
 31.34     Subd. 5.  [ADDITIONAL EMPLOYER CONTRIBUTION.] To amortize 
 31.35  the unfunded actuarial accrued liability computed under the 
 31.36  entry age actuarial cost method ~~and disclosed under the annual~~ 
 32.1   ~~actuarial valuations prepared by the commission-retained actuary~~ 
 32.2   ~~under section 356.215~~, an additional employer contribution shall 
 32.3   be made in the amount of 3.64 percent of the salary of each 
 32.4   member.  
 32.5      This contribution must be made in the manner provided in 
 32.6   section 354.52, subdivision 4. 
 32.7      By January 1 of each year, the board of directors shall 
 32.8   report to the ~~legislative~~ commission on pensions and retirement, 
 32.9   the legislative auditor, the chair of the committee on 
 32.10  appropriations of the house of representatives, and the chair of 
 32.11  the committee on finance of the senate on the amount raised by 
 32.12  the additional employer contribution rate in effect and whether 
 32.13  that amount is less than, the same as, or more than the required 
 32.14  amortization contribution determined under section 356.215. 
 32.15     Sec. 36.  Minnesota Statutes 1994, section 354A.011, 
 32.16  subdivision 3a, is amended to read: 
 32.17     Subd. 3a.  [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" 
 32.18  means the condition of one annuity or benefit having an equal 
 32.19  actuarial present value as another annuity or benefit, 
 32.20  determined as of a given date with each actuarial present value 
 32.21  based on the appropriate mortality table adopted by the 
 32.22  appropriate board of trustees based on the experience of that 
 32.23  retirement fund association as recommended by the actuary 
 32.24  retained by the ~~legislative~~ commission on pensions and 
 32.25  retirement and using the applicable preretirement or 
 32.26  postretirement interest rate assumption specified in section 
 32.27  356.215, subdivision 4d. 
 32.28     Sec. 37.  Minnesota Statutes 1994, section 354A.021, 
 32.29  subdivision 7, is amended to read: 
 32.30     Subd. 7.  [ACTUARIAL CONSULTANT.] The board of trustees or 
 32.31  directors of each teachers retirement fund association may 
 32.32  contract for the services of an approved actuary and fix the 
 32.33  reasonable compensation for those services.  Any approved 
 32.34  actuary retained by the board shall function as the actuarial 
 32.35  advisor to the board and may perform actuarial valuations and 
 32.36  experience studies ~~to supplement those performed by the actuary~~ 
 33.1   ~~retained by the legislative commission on pensions and~~ 
 33.2   ~~retirement~~.  Any ~~supplemental~~ actuarial valuations or experience 
 33.3   studies shall be filed with the ~~executive director of the~~ 
 33.4   legislative ~~commission on pensions and retirement~~ auditor, and 
 33.5   the commission on pensions and retirement. 
 33.6      Sec. 38.  Minnesota Statutes 1994, section 354A.12, 
 33.7   subdivision 2b, is amended to read: 
 33.8      Subd. 2b.  [REPORT ON CONTRIBUTION INSUFFICIENCIES.] By 
 33.9   January 1 of each year, the executive secretary or director of 
 33.10  each first class city teachers retirement fund association shall 
 33.11  report to the chair of the ~~legislative~~ commission on pensions 
 33.12  and retirement, the chair of the committee on ways and means of 
 33.13  the house of representatives, and the chair of the committee on 
 33.14  finance of the senate on the amount raised by the additional 
 33.15  employer contribution rates then in effect and the sufficiency 
 33.16  of the total statutory support when compared to the total 
 33.17  required contributions determined under section 356.215. 
 33.18     Sec. 39.  Minnesota Statutes 1994, section 354A.12, 
 33.19  subdivision 3c, is amended to read: 
 33.20     Subd. 3c.  [TERMINATION OF DIRECT STATE MATCHING AID.] (a) 
 33.21  The direct state aid under subdivision 3a to the St. Paul 
 33.22  teachers retirement association and the direct state aid under 
 33.23  subdivision 3b to the Minneapolis teachers retirement fund 
 33.24  association terminates for the respective fund at the end of the 
 33.25  fiscal year in which the accrued liability funding ratio for 
 33.26  that fund, as determined in the most recent actuarial report for 
 33.27  that fund ~~by the actuary retained by the legislative commission~~ 
 33.28  ~~on pensions and retirement~~, equals or exceeds the accrued 
 33.29  liability funding ratio for the teachers retirement association, 
 33.30  as determined in the most recent actuarial report for the 
 33.31  teachers retirement association ~~by the actuary retained by the~~ 
 33.32  ~~legislative commission on pensions and retirement~~. 
 33.33     (b) If the state aid is terminated for the St. Paul 
 33.34  teachers retirement fund association or the Minneapolis teachers 
 33.35  retirement fund association under paragraph (a), it may not 
 33.36  again be received by that fund. 
 34.1      Sec. 40.  Minnesota Statutes 1994, section 354A.12, 
 34.2   subdivision 4, is amended to read: 
 34.3      Subd. 4.  [LIMITATION ON CERTAIN ARTICLES OF INCORPORATION 
 34.4   OR BYLAW AMENDMENTS.] No amendment to the bylaws or articles of 
 34.5   incorporation of a teachers retirement fund association in a 
 34.6   city of the first class affecting benefits, contributions or 
 34.7   actuarial assumptions shall be made without approval by the 
 34.8   legislature.  Approval shall be deemed granted and the amendment 
 34.9   shall become effective only upon enactment of special or general 
 34.10  legislation detailing the substance of the amendment and upon 
 34.11  submission of the text of the proposed amendment to the articles 
 34.12  of incorporation or bylaws by the teachers retirement fund 
 34.13  association involved to the ~~legislative~~ commission on pensions 
 34.14  and retirement and the legislative auditor prior to the 
 34.15  effective date of the amendment.  Notwithstanding any provision 
 34.16  of the articles of incorporation or bylaws to the contrary, 
 34.17  amendments may be adopted at an annual meeting or at a special 
 34.18  meeting called for that purpose, without further local approval. 
 34.19     Sec. 41.  Minnesota Statutes 1995 Supplement, section 
 34.20  354A.27, subdivision 6, is amended to read: 
 34.21     Subd. 6.  [ADDITIONAL INCREASE.] (a) In addition to the 
 34.22  postretirement increases granted under subdivision 5, an 
 34.23  additional percentage increase must be computed and paid under 
 34.24  this subdivision. 
 34.25     (b) The board of trustees shall determine the number of 
 34.26  annuitants or benefit recipients who have been receiving an 
 34.27  annuity or benefit for at least 12 months as of the current June 
 34.28  30.  These recipients are entitled to receive the surplus 
 34.29  investment earnings additional postretirement increase. 
 34.30     (c) Annually, as of each June 30, the board shall determine 
 34.31  the five-year annualized rate of return attributable to the 
 34.32  assets of the Duluth teachers retirement fund association under 
 34.33  the formula or formulas specified in section 11A.04, clause (11).
 34.34     (d) The board shall determine the amount of excess 
 34.35  five-year annualized rate of return over the preretirement 
 34.36  interest assumption as specified in section 356.215. 
 35.1      (e) The additional percentage increase must be determined 
 35.2   by multiplying the quantity one minus the rate of contribution 
 35.3   deficiency, as specified in the most recent actuarial report ~~of~~ 
 35.4   ~~the actuary retained by the legislative commission on pensions~~ 
 35.5   ~~and retirement~~, times the rate of return excess as determined in 
 35.6   paragraph (d). 
 35.7      (f) The additional increase is payable to all eligible 
 35.8   annuitants or benefit recipients on the following January 1. 
 35.9      Sec. 42.  Minnesota Statutes 1994, section 354A.28, 
 35.10  subdivision 9, is amended to read: 
 35.11     Subd. 9.  [ADDITIONAL INCREASE.] (a) In addition to the 
 35.12  postretirement increases granted under subdivision 8, an 
 35.13  additional percentage increase must be computed and paid under 
 35.14  this subdivision. 
 35.15     (b) The board of trustees shall determine the number of 
 35.16  annuities or benefit recipients who have been receiving an 
 35.17  annuity or benefit for at least 12 months as of the current June 
 35.18  30.  These recipients are entitled to receive the surplus 
 35.19  investment earnings additional postretirement increase. 
 35.20     (c) Annually, on June 30, the board of trustees of the 
 35.21  teachers retirement fund association shall determine the amount 
 35.22  of reserves in the annuity reserve fund as specified in 
 35.23  subdivision 6. 
 35.24     (d) Annually, on June 30, the board of trustees of the 
 35.25  Minneapolis teachers retirement fund association shall determine 
 35.26  the five-year annualized rate of return attributable to the 
 35.27  assets in the annuity reserve fund under the formula or formulas 
 35.28  specified in section 11A.04, clause (11). 
 35.29     (e) The board of trustees shall determine the amount of 
 35.30  excess five-year annualized rate of return over the 
 35.31  preretirement interest assumption as specified in section 
 35.32  356.215. 
 35.33     (f) The additional increase must be determined by 
 35.34  multiplying the quantity one minus the rate of contribution 
 35.35  deficiency, as specified in the most recent actuarial report ~~of~~ 
 35.36  ~~the actuary retained by the legislative commission on pensions~~ 
 36.1   ~~and retirement~~, times the rate of return excess as determined in 
 36.2   paragraph (e). 
 36.3      (g) The additional increase is payable to all eligible 
 36.4   annuitants or benefit recipients on January 1 following the June 
 36.5   30 determination date under paragraphs (c) and (d). 
 36.6      Sec. 43.  Minnesota Statutes 1994, section 354A.41, 
 36.7   subdivision 2, is amended to read: 
 36.8      Subd. 2.  [ACTUARIAL VALUATIONS.] In any actuarial 
 36.9   valuation of the Minneapolis teachers retirement fund 
 36.10  association, the St. Paul teachers retirement fund association, 
 36.11  or the Duluth teachers retirement fund association under section 
 36.12  356.215 ~~prepared by the commission-retained actuary or~~ 
 36.13  ~~supplemental actuarial valuation prepared by an approved actuary~~ 
 36.14  ~~retained by the teachers retirement fund association~~, there 
 36.15  shall be included a finding of the condition of the fund showing 
 36.16  separately the basic and coordinated programs or the old law 
 36.17  coordinated and new law coordinated programs, as appropriate.  
 36.18  The finding shall include the level normal cost and the 
 36.19  applicable employee and employer contribution rates for each 
 36.20  program. 
 36.21     Sec. 44.  Minnesota Statutes 1994, section 356.20, 
 36.22  subdivision 3, is amended to read: 
 36.23     Subd. 3.  [FILING REQUIREMENT.] The financial report is a 
 36.24  public record.  A copy of the report or a synopsis of the report 
 36.25  containing the information required by this section shall be 
 36.26  distributed annually to each member of the fund and to the 
 36.27  governing body of each governmental subdivision of the state 
 36.28  which makes employers contributions thereto or in whose behalf 
 36.29  taxes are levied for the employers' contribution.  A signed copy 
 36.30  of the report shall be delivered to the ~~executive director of~~ 
 36.31  ~~the legislative~~ commission on pensions and retirement and to the 
 36.32  legislative reference library not later than six months after 
 36.33  the close of each fiscal year or one month following the 
 36.34  completion and delivery to the retirement fund of the actuarial 
 36.35  valuation report of the fund ~~by the actuary retained by the~~ 
 36.36  ~~legislative commission on pensions and retirement~~, if 
 37.1   applicable, whichever is later.  
 37.2      Sec. 45.  Minnesota Statutes 1994, section 356.20, 
 37.3   subdivision 4, is amended to read: 
 37.4      Subd. 4.  [CONTENTS OF FINANCIAL REPORT.] The financial 
 37.5   report required by this section must contain financial 
 37.6   statements and disclosures that indicate the financial 
 37.7   operations and position of the retirement plan and fund.  The 
 37.8   report must conform with generally accepted governmental 
 37.9   accounting principles, applied on a consistent basis.  The 
 37.10  report must be audited.  The report must include, as part of its 
 37.11  exhibits or footnotes, an actuarial disclosure item based on the 
 37.12  actuarial valuation calculations ~~prepared by the~~ 
 37.13  ~~commission-retained actuary or by the actuary retained by the~~ 
 37.14  ~~retirement fund or plan, if applicable,~~ according to applicable 
 37.15  actuarial requirements enumerated in section 356.215, and 
 37.16  specified in the most recent standards for actuarial work 
 37.17  adopted by the ~~legislative~~ commission on pensions and 
 37.18  retirement.  The accrued assets, the accrued liabilities, 
 37.19  including accrued reserves, and the unfunded actuarial accrued 
 37.20  liability of the fund or plan must be disclosed.  The disclosure 
 37.21  item must contain a declaration by the actuary ~~retained by the~~ 
 37.22  ~~legislative commission on pensions and retirement or the actuary~~ 
 37.23  ~~retained by the fund or plan, whichever applies,~~ preparing the 
 37.24  report specifying that the required reserves for any retirement, 
 37.25  disability, or survivor benefits provided under a benefit 
 37.26  formula are computed in accordance with the entry age actuarial 
 37.27  cost method and with the most recent applicable standards for 
 37.28  actuarial work adopted by the ~~legislative~~ commission on pensions 
 37.29  and retirement. 
 37.30     (a) Assets of the fund or plan contained in the disclosure 
 37.31  item must include the following statement of the actuarial value 
 37.32  of current assets as defined in section 356.215, subdivision 1: 
 37.33                                      Value         Value 
 37.34                                     at cost       at market
 37.35   Cash, cash equivalents, and  
 37.36     short-term securities           .........     ......... 
 38.1    Accounts receivable               .........     .........
 38.2    Accrued investment income         .........     .........  
 38.3    Fixed income investments          .........     ......... 
 38.4    Equity investments other 
 38.5      than real estate                .........     ......... 
 38.6    Real estate investments           .........     ......... 
 38.7    Equipment                         .........     ......... 
 38.8    Equity in the Minnesota 
 38.9      postretirement investment
 38.10     fund                            .........     ......... 
 38.11   Other                             .........     .........  
 38.12    
 38.13   Total assets 
 38.14     Value at cost                                 .........
 38.15     Value at market                               ......... 
 38.16     Value of current assets                       ......... 
 38.17     (b) The unfunded actuarial accrued liability of the fund or 
 38.18  plan contained in the disclosure item must include the following 
 38.19  measures of unfunded actuarial accrued liability, using the 
 38.20  value of current assets:  
 38.21     (1) unfunded actuarial accrued liability, determined by 
 38.22  subtracting the current assets and the present value of future 
 38.23  normal costs from the total current and expected future benefit 
 38.24  obligations; and 
 38.25     (2) unfunded pension benefit obligation, determined by 
 38.26  subtracting the current assets from the actuarial present value 
 38.27  of credited projected benefits. 
 38.28     If the current assets of the fund or plan exceed the 
 38.29  actuarial accrued liabilities, the excess must be disclosed and 
 38.30  indicated as a surplus. 
 38.31     (c) The pension benefit obligations schedule included in 
 38.32  the disclosure must contain the following information on the 
 38.33  benefit obligations: 
 38.34     (1) The pension benefit obligation, determined as the 
 38.35  actuarial present value of credited projected benefits on 
 38.36  account of service rendered to date, separately identified as 
 39.1   follows: 
 39.2            (i)   For annuitants 
 39.3                  Retirement annuities 
 39.4                  Disability benefits
 39.5                  Surviving spouse and child benefits
 39.6            (ii)  For former members without vested rights 
 39.7            (iii) For deferred annuitants' benefits, including 
 39.8                  any augmentation 
 39.9            (iv)  For active employees 
 39.10                 Accumulated employee contributions,
 39.11                 including allocated investment income
 39.12                 Employer-financed benefits vested
 39.13                 Employer-financed benefits nonvested
 39.14                 Total pension benefit obligation;
 39.15     (2) If there are additional benefits not appropriately 
 39.16  covered by the foregoing items of benefit obligations, a 
 39.17  separate identification of the obligation. 
 39.18     (d) Any additional statements or exhibits or more detailed 
 39.19  or subdivided itemization of a disclosure item that will enable 
 39.20  the management of the fund to portray a true interpretation of 
 39.21  the fund's financial condition must be included in the 
 39.22  additional statements or exhibits. 
 39.23     Sec. 46.  Minnesota Statutes 1994, section 356.215, 
 39.24  subdivision 1, is amended to read: 
 39.25     Subdivision 1.  [DEFINITIONS.] For the purposes of sections 
 39.26  3.85 and 356.20 to 356.23, each of the following terms have the 
 39.27  meaning given: 
 39.28     (1) "Actuarial valuation" means a set of calculations 
 39.29  prepared ~~by the actuary retained by the legislative commission~~ 
 39.30  ~~on pensions and retirement if so required under section 3.85, or~~ 
 39.31  ~~otherwise, by an approved actuary,~~ to determine the normal cost 
 39.32  and the accrued actuarial liabilities of a benefit plan, 
 39.33  according to the entry age actuarial cost method and based upon 
 39.34  stated assumptions including, but not limited to rates of 
 39.35  interest, mortality, salary increase, disability, withdrawal, 
 39.36  and retirement and to determine the payment necessary to 
 40.1   amortize over a stated period any unfunded accrued actuarial 
 40.2   liability disclosed as a result of the actuarial valuation of 
 40.3   the benefit plan. 
 40.4      (2) "Approved actuary" means a person who is regularly 
 40.5   engaged in the business of providing actuarial services and who 
 40.6   has at least 15 years of service to major public employee 
 40.7   pension or retirement funds or who is a fellow in the society of 
 40.8   actuaries.  
 40.9      (3) "Entry age actuarial cost method" means an actuarial 
 40.10  cost method under which the actuarial present value of the 
 40.11  projected benefits of each individual currently covered by the 
 40.12  benefit plan and included in the actuarial valuation is 
 40.13  allocated on a level basis over the service of the individual if 
 40.14  the benefit plan is governed by section 69.773 or over the 
 40.15  earnings of the individual if the benefit plan is governed by 
 40.16  any other law between the entry age and the assumed exit age, 
 40.17  with the portion of this actuarial present value which is 
 40.18  allocated to the valuation year to be the normal cost and the 
 40.19  portion of this actuarial present value not provided for at the 
 40.20  valuation date by the actuarial present value of future normal 
 40.21  costs to be the actuarial accrued liability, with aggregation in 
 40.22  the calculation process to be the sum of the calculated result 
 40.23  for each covered individual and with recognition given to any 
 40.24  different benefit formulas which may apply to various periods of 
 40.25  service. 
 40.26     (4) "Experience study" means a report providing experience 
 40.27  data and an actuarial analysis of the adequacy of the actuarial 
 40.28  assumptions on which actuarial valuations are based. 
 40.29     (5) "Current assets" means the value of all assets at cost, 
 40.30  including realized capital gains or losses, plus one-third of 
 40.31  any unrealized capital gains or losses. 
 40.32     (6) "Unfunded actuarial accrued liability" means the total 
 40.33  current and expected future benefit obligations, reduced by the 
 40.34  sum of current assets and the present value of future normal 
 40.35  costs. 
 40.36     (7) "Pension benefit obligation" means the actuarial 
 41.1   present value of credited projected benefits, determined as the 
 41.2   actuarial present value of benefits estimated to be payable in 
 41.3   the future as a result of employee service attributing an equal 
 41.4   benefit amount, including the effect of projected salary 
 41.5   increases and any step rate benefit accrual rate differences, to 
 41.6   each year of credited and expected future employee service. 
 41.7      Sec. 47.  Minnesota Statutes 1994, section 356.215, 
 41.8   subdivision 2, is amended to read: 
 41.9      Subd. 2.  [REQUIREMENTS.] It is the policy of the 
 41.10  legislature that it is necessary and appropriate to determine 
 41.11  annually the financial status of tax supported retirement and 
 41.12  pension plans for public employees.  To achieve this goal, the 
 41.13  ~~legislative commission on pensions and retirement shall have~~ 
 41.14  ~~prepared by the actuary retained by the commission annual~~ 
 41.15  ~~actuarial valuations of the~~ retirement plans enumerated in 
 41.16  section 3.85, subdivision 11, paragraph (b), ~~and quadrennial~~ 
 41.17  ~~experience studies of the retirement plans enumerated in section~~ 
 41.18  ~~3.85, subdivision 11, paragraph (b), clauses (1), (2), and (7).~~  
 41.19  ~~The governing or managing board or administrative officials of~~ 
 41.20  ~~each public pension and retirement fund or plan enumerated in~~ 
 41.21  ~~section 356.20, subdivision 2, clauses (9), (10), and (12),~~ 
 41.22  shall have prepared by an approved actuary annual actuarial 
 41.23  valuations of their respective funds and quadrennial experience 
 41.24  studies as provided in this section.  This requirement also 
 41.25  applies to any fund that is the successor to any organization 
 41.26  enumerated in section 356.20, subdivision 2, or to the governing 
 41.27  or managing board or administrative officials of any newly 
 41.28  formed retirement fund or association operating under the 
 41.29  control or supervision of any public employee group, 
 41.30  governmental unit, or institution receiving a portion of its 
 41.31  support through legislative appropriations, and any local police 
 41.32  or fire fund coming within the provisions of section 356.216. 
 41.33     Sec. 48.  Minnesota Statutes 1994, section 356.215, 
 41.34  subdivision 3, is amended to read: 
 41.35     Subd. 3.  [REPORTS.] The actuarial valuations required 
 41.36  annually must be made as of the beginning of each fiscal year.  
 42.1   Two copies of the valuation must be delivered to the ~~executive~~ 
 42.2   ~~director of the legislative~~ commission on pensions and 
 42.3   retirement, the legislative auditor, to the commissioner of 
 42.4   finance and to the legislative reference library, not later than 
 42.5   the first day of the sixth month occurring after the end of the 
 42.6   previous fiscal year.  Two copies of a quadrennial experience 
 42.7   study must be filed with the ~~executive director of the~~ 
 42.8   ~~legislative~~ commission on pensions and retirement, with the 
 42.9   commissioner of finance, and with the legislative reference 
 42.10  library, not later than the first day of the 11th month 
 42.11  occurring after the end of the last fiscal year of the four-year 
 42.12  period which the experience study covers.  For any actuarial 
 42.13  valuations and experience studies ~~prepared at the direction of~~ 
 42.14  ~~the legislative commission on pensions and retirement~~, two 
 42.15  copies of the document must be delivered to the governing or 
 42.16  managing board or administrative officials of the applicable 
 42.17  public pension and retirement fund or plan. 
 42.18     Sec. 49.  Minnesota Statutes 1994, section 356.215, 
 42.19  subdivision 4, is amended to read: 
 42.20     Subd. 4.  [ACTUARIAL VALUATION; CONTENTS.] The actuarial 
 42.21  valuation must be made in conformity with the requirements of 
 42.22  the definition contained in subdivision 1 and the most recent 
 42.23  standards for actuarial work adopted by the ~~legislative~~ 
 42.24  commission on pensions and retirement.  The actuarial valuation 
 42.25  must measure all aspects of the benefit plan of the fund in 
 42.26  accordance with changes in benefit plans, if any, and salaries 
 42.27  reasonably anticipated to be in force during the ensuing fiscal 
 42.28  year.  The actuarial valuation must be prepared in accordance 
 42.29  with the entry age actuarial cost method. 
 42.30     The actuarial valuation required under this section must 
 42.31  include the information required in subdivisions 4a to 4k. 
 42.32     Sec. 50.  Minnesota Statutes 1994, section 356.215, 
 42.33  subdivision 6, is amended to read: 
 42.34     Subd. 6.  [ACTUARIAL SERVICES BY APPROVED ACTUARIES.] (a) 
 42.35  The actuarial valuation or quadrennial experience study must be 
 42.36  made and any actuarial consulting services for a retirement fund 
 43.1   or plan must be provided by an approved actuary.  The actuarial 
 43.2   valuation or quadrennial experience study must include a 
 43.3   declaration that it has been prepared according to sections 
 43.4   356.20 to 356.23 and the most recent standards for actuarial 
 43.5   work adopted by the ~~legislative~~ commission on pensions and 
 43.6   retirement.  
 43.7      (b) Actuarial valuations, or experience studies ~~prepared by~~ 
 43.8   ~~an actuary retained by a retirement fund or plan~~ must be 
 43.9   submitted to the ~~legislative~~ commission on pensions and 
 43.10  retirement within ten days of the submission of the document to 
 43.11  the retirement fund or plan. 
 43.12     Sec. 51.  Minnesota Statutes 1994, section 356.215, 
 43.13  subdivision 7, is amended to read: 
 43.14     Subd. 7.  [ESTABLISHMENT OF ACTUARIAL ASSUMPTIONS.] 
 43.15  Actuarial assumptions used for actuarial valuations under this 
 43.16  section that are other than those set forth in this section may 
 43.17  be changed only with the approval of the ~~legislative~~ commission 
 43.18  on pensions and retirement.  A change in the applicable 
 43.19  actuarial assumptions may be proposed by the governing board of 
 43.20  the applicable pension fund or relief association, by the 
 43.21  actuary retained by the ~~legislative~~ commission on pensions and 
 43.22  retirement, by the actuarial advisor to a pension fund governed 
 43.23  by chapter 352, 353, 354, or 354A, or by the actuary retained by 
 43.24  a local police or firefighters relief association governed by 
 43.25  sections 69.77 or 69.771 to 69.776, if one is retained. 
 43.26     Sec. 52.  Minnesota Statutes 1994, section 356.217, is 
 43.27  amended to read: 
 43.28     356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.] 
 43.29     (a) ~~The actuary retained by the legislative commission on~~ 
 43.30  ~~pensions and retirement is not required to prepare actuarial~~ 
 43.31  ~~valuations of the public employees local government correctional~~ 
 43.32  ~~employees retirement plan unless the plan is implemented by a~~ 
 43.33  ~~county under section 353C.04.~~ 
 43.34     ~~(b)~~ The cost of any requested benefit projections by ~~the~~ 
 43.35  ~~commission-retained~~ an actuary relating to the Minnesota 
 43.36  postretirement investment fund for the state board of investment 
 44.1   is payable by the state board of investment. 
 44.2      ~~(c)~~ (b) Actuarial valuations under section 356.215, for 
 44.3   July 1, 1991, and thereafter, are not required to have an 
 44.4   individual commentary section.  The commentary section, if 
 44.5   omitted from the individual plan actuarial valuation, must be 
 44.6   included in an appropriate generalized format as part of the 
 44.7   report to the legislature under section 3.85, subdivision 11. 
 44.8      ~~(d)~~ (c) Actuarial valuations under section 356.215, for 
 44.9   July 1, 1991, and thereafter, are not required to contain 
 44.10  separate actuarial valuation results for basic and coordinated 
 44.11  programs unless each program has a membership of at least ten 
 44.12  percent of the total membership of the fund.  Actuarial 
 44.13  valuations under section 356.215, for July 1, 1991, and 
 44.14  thereafter, are not required to contain cash flow forecasts. 
 44.15     ~~(e)~~ (d) Actuarial valuations of the public employees police 
 44.16  and fire fund local consolidation accounts for July 1, 1991, and 
 44.17  thereafter, are not required to contain separate tabulations or 
 44.18  summaries of active member, service retirement, disability 
 44.19  retirement, and survivor data for each local consolidation 
 44.20  account. 
 44.21     ~~(f) The commission-retained actuary is:~~ 
 44.22     ~~(1) required to publish experience findings for plans for~~ 
 44.23  ~~which experience findings are required only on a quadrennial~~ 
 44.24  ~~basis for the four-year period ending June 30, 1992, and every~~ 
 44.25  ~~four years thereafter;~~ 
 44.26     ~~(2) not required to prepare a separate experience analysis~~ 
 44.27  ~~or publish separate experience findings for basic and~~ 
 44.28  ~~coordinated programs if separate actuarial valuation results for~~ 
 44.29  ~~the programs are not required; and~~ 
 44.30     ~~(3) not required to calculate investment rate of return~~ 
 44.31  ~~experience results on any basis other than current asset value~~ 
 44.32  ~~as defined in section 356.215, subdivision 1, clause (6).~~ 
 44.33     Sec. 53.  Minnesota Statutes 1994, section 356.218, 
 44.34  subdivision 1, is amended to read: 
 44.35     Subdivision 1.  [REPORT REQUIRED.] (a) Unless paragraph (c) 
 44.36  applies, the chief administrative officer of a public pension 
 45.1   plan with an associated pension fund or investment fund 
 45.2   specified in subdivision 2 shall annually prepare and file an 
 45.3   investment performance report meeting the contents requirements 
 45.4   of subdivision 3.  The report must be filed with or distributed 
 45.5   as specified in paragraph (b) by April 1 each year and must 
 45.6   cover the previous calendar year.  The report must be prepared 
 45.7   under the supervision or at the direction of the chief 
 45.8   administrative officer and must be signed by that officer.  The 
 45.9   investment performance report is a public record.  
 45.10     (b) A copy of the report or a synopsis of the report must 
 45.11  be distributed to each member of the pension plan and must be 
 45.12  filed with the chief administrative officer of each employing 
 45.13  unit making employer contributions to the pension plan.  A copy 
 45.14  of the report also must be filed with the ~~executive director of~~ 
 45.15  ~~the legislative~~ commission on pensions and retirement and the 
 45.16  legislative auditor. 
 45.17     (c) This section does not apply to the state board of 
 45.18  investment.  This section also does not apply to a public 
 45.19  pension plan if all assets of the pension fund or investment 
 45.20  fund attributable to the public pension plan are invested by the 
 45.21  state board of investment under chapters 11A and 356A and if the 
 45.22  executive director of the state board of investment makes public 
 45.23  in an annual report or in other documents the fiscal year 
 45.24  investment performance results of the pension fund or investment 
 45.25  fund attributable to the pension plan that substantially meet 
 45.26  the requirements of subdivision 3 for that fiscal year period.  
 45.27     Sec. 54.  Minnesota Statutes 1994, section 356.218, 
 45.28  subdivision 3, is amended to read: 
 45.29     Subd. 3.  [CONTENTS OF THE INVESTMENT PERFORMANCE REPORT.] 
 45.30  (a) The investment performance report required by this section 
 45.31  must contain the time-weighted total rate of return results for 
 45.32  each quarter and annually for each significant asset class or 
 45.33  type of investment and for the portfolio as a whole.  
 45.34     (b) The time-weighted rate of return results must be 
 45.35  computed using market values and the applicable procedure, as 
 45.36  follows: 
 46.1      (1) by the formula or formulas prescribed by the state 
 46.2   board of investment under section 11A.04, clause (11); or 
 46.3      (2) by dividing the total investment gain or loss for the 
 46.4   quarter by average assets for the quarter, if: 
 46.5      (i) the total investment gain or loss for the quarter is 
 46.6   computed by subtracting the beginning market value for the 
 46.7   quarter and the net contributions for the quarter from the 
 46.8   ending market value for the quarter; 
 46.9      (ii) the measure of average assets to be used is the 
 46.10  beginning market value for the quarter plus one-half the net 
 46.11  contributions for the quarter; and 
 46.12     (iii) the resulting quarterly returns for each significant 
 46.13  asset class and for the portfolio as a whole must be used to 
 46.14  create annual time-weighted returns according to the same 
 46.15  procedures for developing annual time-weighted returns from 
 46.16  quarterly returns, as used in the formula specified by the state 
 46.17  board of investment under section 11A.04, clause (11). 
 46.18     (c) The person performing the calculations shall certify 
 46.19  conformance to the applicable procedure.  
 46.20     (d) The investment performance report may also include any 
 46.21  additional investment performance or investment related 
 46.22  information that the chief administrative officer considers 
 46.23  necessary to provide an adequate summary of the performance of 
 46.24  the portfolio.  The additional information must be clearly 
 46.25  indicated as a supplement to the information required by this 
 46.26  subdivision.  
 46.27     (e) The ~~executive director of the legislative~~ commission on 
 46.28  pensions and retirement shall prescribe the forms on which the 
 46.29  report must be submitted and may prescribe other directions for 
 46.30  submitting the report. 
 46.31     Sec. 55.  Minnesota Statutes 1994, section 356.22, 
 46.32  subdivision 1, is amended to read: 
 46.33     Subdivision 1.  No provision in sections 356.20 to 356.23 
 46.34  shall be construed to in any way limit any of the enumerated 
 46.35  pension and retirement funds from furnishing additional 
 46.36  actuarial valuations or experience studies, or data and 
 47.1   calculations, as may be requested by the legislature or any 
 47.2   standing committee or the ~~legislative~~ commission on pensions and 
 47.3   retirement. 
 47.4      Sec. 56.  Minnesota Statutes 1994, section 356.23, is 
 47.5   amended to read: 
 47.6      356.23 [SUPPLEMENTAL VALUATIONS; ALTERNATIVE REPORTS AND 
 47.7   VALUATIONS.] 
 47.8      Subdivision 1.  [SUPPLEMENTAL ACTUARIAL VALUATIONS.] Any 
 47.9   supplemental actuarial valuations prepared on behalf of any 
 47.10  governing or managing board of any pension and retirement fund 
 47.11  enumerated in section 356.20, subdivision 2, by an approved 
 47.12  actuary, shall be prepared in accordance with the applicable 
 47.13  provisions of sections 356.20 to 356.23 and the standards 
 47.14  adopted by the ~~legislative~~ commission on pensions and 
 47.15  retirement.  Any pension and retirement fund which prepares an 
 47.16  alternative actuarial valuation under subdivision 2 shall also 
 47.17  have a supplemental actuarial valuation prepared.  
 47.18     Subd. 2.  [ALTERNATIVE REPORTS AND VALUATIONS.] In addition 
 47.19  to the financial reports and actuarial valuations required by 
 47.20  sections 356.20 to 356.23, the governing or managing board of 
 47.21  any fund concerned may submit alternative reports and valuations 
 47.22  for distribution to the legislature, any of its committees, the 
 47.23  legislative auditor, or the ~~legislative~~ commission on pensions 
 47.24  and retirement on a different basis or on different assumptions 
 47.25  than are specified in sections 356.20 to 356.23.  The 
 47.26  assumptions and basis of any alternative reports and valuations 
 47.27  shall be clearly stated in the document.  
 47.28     Sec. 57.  Minnesota Statutes 1994, section 356.88, is 
 47.29  amended to read: 
 47.30     356.88 [PUBLIC PENSION ADMINISTRATION LEGISLATION.] 
 47.31     ~~Subdivision 1.  [DUE DATES.]~~ (a) Proposed administrative 
 47.32  legislation recommended by or on behalf of the Minnesota state 
 47.33  retirement system, the public employees retirement association, 
 47.34  the teachers retirement association, the Minneapolis employees 
 47.35  retirement fund, or a first class city teachers retirement fund 
 47.36  association must be presented to the ~~legislative~~ commission on 
 48.1   pensions and retirement, the commissioners of finance and 
 48.2   employee relations, the governmental operations and reform 
 48.3   committee of the senate, and the governmental operations and 
 48.4   gaming committee of the house of representatives on or before 
 48.5   ~~October~~ August 1 of each year in order for the proposed 
 48.6   administrative legislation to be acted upon during the upcoming 
 48.7   legislative session.  The ~~executive director or the deputy~~ 
 48.8   ~~executive director of the legislative commission on pensions and~~ 
 48.9   ~~retirement~~ commissioners of finance and employee relations shall 
 48.10  provide written comments on the proposed provisions to the 
 48.11  public pension plans by ~~November~~ October 15 of each year. 
 48.12     (b) Proposed administrative legislation recommended by or 
 48.13  on behalf of a public employee pension plan or system under 
 48.14  paragraph (a) must address provisions: 
 48.15     (1) authorizing allowable service credit for leaves of 
 48.16  absence and related circumstances; 
 48.17     (2) governing offsets or deductions from the amount of 
 48.18  disability benefits; 
 48.19     (3) authorizing the purchase of allowable service credit 
 48.20  for prior uncredited periods; 
 48.21     (4) governing subsequent employment earnings by reemployed 
 48.22  annuitants; and 
 48.23     (5) authorizing retroactive effect for retirement annuity 
 48.24  or benefit applications. 
 48.25     (c) Where possible and desirable, taking into account the 
 48.26  differences among the public pension plans in existing law and 
 48.27  the unique characteristics of the individual public pension fund 
 48.28  memberships, uniform provisions relating to paragraph (b) for 
 48.29  all applicable public pension plans must be presented for 
 48.30  consideration during the legislative session.  Supporting 
 48.31  documentation setting forth the policy rationale for each set of 
 48.32  uniform provisions must accompany the proposed administrative 
 48.33  legislation. 
 48.34     ~~Subd. 2.  [SALARY STUDY ADVISORY COMMITTEE.] In an effort~~ 
 48.35  ~~to treat public employees in a fair and equitable manner and to~~ 
 48.36  ~~protect the financial integrity of the public pension plans, the~~ 
 49.1   ~~legislative commission on pensions and retirement shall~~ 
 49.2   ~~establish an advisory committee to study the definitions of~~ 
 49.3   ~~salary in chapters 353, 354, and 354A to determine the high-five~~ 
 49.4   ~~average consecutive years of salary component for the formula~~ 
 49.5   ~~used to calculate retirement annuities and disability benefits.~~ 
 49.6      ~~The advisory committee must be composed of at least three~~ 
 49.7   ~~executive directors and executive secretaries of the seven~~ 
 49.8   ~~public pension plans, and the chair, vice-chair, and executive~~ 
 49.9   ~~director of the pension commission.~~ 
 49.10     ~~The advisory committee shall report its findings and~~ 
 49.11  ~~recommendations to the pension commission by February 15, 1995.~~ 
 49.12     Sec. 58.  Minnesota Statutes 1994, section 422A.01, 
 49.13  subdivision 6, is amended to read: 
 49.14     Subd. 6.  [PRESENT VALUE.] "Present worth" or "present 
 49.15  value" means that the present amount of money if increased at 
 49.16  the applicable postretirement or preretirement interest rate 
 49.17  assumption specified in section 356.215, subdivision 4d, and 
 49.18  based on the mortality table adopted by the board of trustees 
 49.19  based on the experience of the fund as recommended by the 
 49.20  actuary retained by the ~~legislative~~ commission on pensions and 
 49.21  retirement will at retirement equal the actuarial accrued 
 49.22  liability of the annuity already earned. 
 49.23     Sec. 59.  Minnesota Statutes 1994, section 422A.04, 
 49.24  subdivision 3, is amended to read: 
 49.25     Subd. 3.  [EXPERIENCE DATA AND MORTALITY TABLES.] The board 
 49.26  shall prepare and keep any needful tables, records, and accounts 
 49.27  required for carrying out the provisions of sections 422A.01 to 
 49.28  422A.25, including data showing the mortality and disability 
 49.29  experience of the officers and employees of the service and the 
 49.30  date of withdrawal from service, and any other information that 
 49.31  may serve as a guide for future actuarial valuations and 
 49.32  adjustments in the actuarial assumptions for the retirement 
 49.33  fund.  Mortality tables shall be adopted and may be modified 
 49.34  from time to time by the board based on the experience of the 
 49.35  fund as recommended by the actuary retained by the ~~legislative~~ 
 49.36  commission on pensions and retirement as a basis of calculation 
 50.1   for retirement allowances, with any recommendation by the 
 50.2   actuary retained as a part of the permanent records of the board.
 50.3      Sec. 60.  Minnesota Statutes 1994, section 422A.06, 
 50.4   subdivision 2, is amended to read: 
 50.5      Subd. 2.  [ACTUARIAL VALUATION REQUIRED.] As of July 1 of 
 50.6   each year, an actuarial valuation of the retirement fund shall 
 50.7   be prepared by the ~~commission-retained actuary~~ board and filed 
 50.8   in conformance with the provisions and requirements of sections 
 50.9   356.215 to 356.23.  Experience studies shall be prepared at 
 50.10  those times required by statute, required by the standards for 
 50.11  actuarial work adopted by the ~~legislative~~ commission on pensions 
 50.12  and retirement or ordered by the board. 
 50.13     The board may contract for the services of an approved 
 50.14  actuary and fix the reasonable compensation for those services.  
 50.15  Any approved actuary retained by the board shall function as the 
 50.16  actuarial advisor to the board and may perform actuarial 
 50.17  valuations and experience studies ~~to supplement those performed~~ 
 50.18  ~~by the actuary retained by the legislative commission on~~ 
 50.19  ~~pensions and retirement~~.  Any ~~supplemental~~ actuarial valuations 
 50.20  or experience studies shall be filed with the ~~executive director~~ 
 50.21  ~~of the legislative~~ commission on pensions and retirement.  
 50.22     Sec. 61.  Minnesota Statutes 1994, section 422A.06, 
 50.23  subdivision 8, is amended to read: 
 50.24     Subd. 8.  [RETIREMENT BENEFIT FUND.] The retirement benefit 
 50.25  fund shall consist of amounts held for payment of retirement 
 50.26  allowances for members retired pursuant to this chapter.  Assets 
 50.27  equal to the required reserves for retirement allowances 
 50.28  pursuant to this chapter determined in accordance with the 
 50.29  appropriate mortality table adopted by the board of trustees 
 50.30  based on the experience of the fund as recommended by the 
 50.31  commission-retained actuary shall be transferred from the 
 50.32  deposit accumulation fund to the retirement benefit fund as of 
 50.33  the last business day of the month in which the retirement 
 50.34  allowance begins.  The income from investments of these assets 
 50.35  shall be allocated to this fund.  There shall be paid from this 
 50.36  fund the retirement annuities authorized by law.  A required 
 51.1   reserve calculation for the retirement benefit fund must be made 
 51.2   by the actuary ~~retained by the legislative commission on~~ 
 51.3   ~~pensions and retirement and must be certified to the retirement~~ 
 51.4   ~~board by the commission-retained actuary~~.  The retirement 
 51.5   benefit fund shall be governed by the applicable laws governing 
 51.6   the accounting and audit procedures, investment, actuarial 
 51.7   requirements, calculation and payment of postretirement benefit 
 51.8   adjustments, discharge of any deficiency in the assets of the 
 51.9   fund when compared to the actuarially determined required 
 51.10  reserves, and other applicable operations and procedures 
 51.11  regarding the Minnesota postretirement investment fund 
 51.12  established pursuant to section 11A.18, and any legal or 
 51.13  administrative interpretations of those laws of the state board 
 51.14  of investment, the legal advisor to the board of investment and 
 51.15  the executive director of the state board of investment.  If a 
 51.16  deferred yield adjustment account is established for the 
 51.17  Minnesota postretirement investment fund under section 11A.18, 
 51.18  subdivision 5, the retirement board shall also establish and 
 51.19  maintain a deferred yield adjustment account within this fund.  
 51.20     Annually, following the calculation of any postretirement 
 51.21  adjustment payable from the retirement benefit fund, the board 
 51.22  of trustees shall submit a report to the ~~executive director of~~ 
 51.23  ~~the legislative~~ commission on pensions and retirement and to the 
 51.24  commissioner of finance indicating the amount of any 
 51.25  postretirement adjustment and the underlying calculations on 
 51.26  which that postretirement adjustment amount is based, including 
 51.27  the amount of dividends, the amount of interest, and the amount 
 51.28  of net realized capital gains or losses utilized in the 
 51.29  calculations.  
 51.30     Sec. 62.  Minnesota Statutes 1994, section 422A.101, 
 51.31  subdivision 1, is amended to read: 
 51.32     Subdivision 1.  [FINANCIAL REQUIREMENTS OF FUND.] Prior to 
 51.33  July 31 annually, the retirement board, in consultation with the 
 51.34  commission-retained actuary, shall prepare an itemized statement 
 51.35  of the financial requirements of the fund for the succeeding 
 51.36  fiscal year.  A copy of the statement shall be submitted to the 
 52.1   city council, the board of estimate and taxation of the city, 
 52.2   the managing board or chief administrative officer of each city 
 52.3   owned public utility, improvement project or municipal activity 
 52.4   supported in whole or in part by revenues other than real estate 
 52.5   taxes, public corporation, or unit of metropolitan government 
 52.6   employing members of the fund, the board of special school 
 52.7   district No. 1, and the state commissioner of finance prior to 
 52.8   July 31 annually.  The statement shall be itemized and shall 
 52.9   include the following:  
 52.10     (1) an estimate of the administrative expenses of the fund 
 52.11  for the following year, including the amount necessary to 
 52.12  amortize through June 30, 2020, the annual costs that are 
 52.13  determined by the retirement board to be related to investment 
 52.14  activities of the deposit accumulation fund other than actual 
 52.15  investment transaction amounts; 
 52.16     (2) an estimate of the normal cost of the fund expressed as 
 52.17  a dollar amount, which shall be determined by applying the 
 52.18  normal cost of the fund as reported in the most recent actuarial 
 52.19  valuation ~~prepared by the commission-retained actuary~~ and 
 52.20  expressed as a percentage of covered payroll to the estimated 
 52.21  total covered payroll of all employees covered by the fund for 
 52.22  the following year; 
 52.23     (3) an estimate of the contribution required to amortize on 
 52.24  a level annual dollar basis the unfunded actuarial accrued 
 52.25  liability of the fund by June 30, 2020, using an interest rate 
 52.26  of six percent compounded annually as reported in the most 
 52.27  recent actuarial valuation, ~~prepared by the commission-retained~~ 
 52.28  ~~actuary~~ expressed as a dollar amount.  In determining the amount 
 52.29  of the unfunded actuarial accrued liability of the fund, all 
 52.30  assets other than the assets of the retirement benefit fund 
 52.31  shall be valued as current assets as defined under section 
 52.32  356.215, subdivision 1, clause (6), and the assets of the 
 52.33  retirement benefit fund shall be valued equal to the actuarially 
 52.34  determined required reserves for benefits payable from that 
 52.35  fund; 
 52.36     (4) the amount of any deficiency in the actual amount of 
 53.1   any employer contribution provided for in this section when 
 53.2   compared to the required contribution amount certified for the 
 53.3   previous year, plus interest on the amount at the rate of six 
 53.4   percent per annum. 
 53.5      Sec. 63.  Minnesota Statutes 1994, section 422A.101, 
 53.6   subdivision 1a, is amended to read: 
 53.7      Subd. 1a.  [CITY CONTRIBUTIONS.] Prior to August 31 of each 
 53.8   year, the retirement board shall prepare an itemized statement 
 53.9   of the financial requirements of the fund payable by the city 
 53.10  for the succeeding fiscal year, and a copy of the statement 
 53.11  shall be submitted to the board of estimate and taxation and to 
 53.12  the city council by September 15.  The financial requirements of 
 53.13  the fund payable by the city shall be calculated as follows: 
 53.14     (a) a regular employer contribution of an amount equal to 
 53.15  the percentage rounded to the nearest two decimal places of the 
 53.16  salaries and wages of all employees covered by the retirement 
 53.17  fund which equals the difference between the level normal cost 
 53.18  plus administrative cost as reported in the annual actuarial 
 53.19  valuation ~~prepared by the commission-retained actuary~~ and the 
 53.20  employee contributions provided for in section 422A.10 less any 
 53.21  amounts contributed toward the payment of the balance of the 
 53.22  normal cost not paid by employee contributions by any city owned 
 53.23  public utility, improvement project, other municipal activities 
 53.24  supported in whole or in part by revenues other than real estate 
 53.25  taxes, any public corporation, any employing unit of 
 53.26  metropolitan government, or by special school district No. 1 
 53.27  pursuant to subdivision 2; 
 53.28     (b) an additional employer contribution of an amount equal 
 53.29  to the percent specified in section 353.27, subdivision 3a, 
 53.30  clause (a), multiplied by the salaries and wages of all 
 53.31  employees covered by the retirement fund less any amounts 
 53.32  contributed toward amortization of the unfunded actuarial 
 53.33  accrued liability by June 30, 2020, attributable to their 
 53.34  respective covered employees by any city owned public utility, 
 53.35  improvement project, other municipal activities supported in 
 53.36  whole or in part by revenues other than real estate taxes, any 
 54.1   public corporation, any employing unit of metropolitan 
 54.2   government, or by special school district No. 1 pursuant to 
 54.3   subdivision 2; and 
 54.4      (c) a proportional share of an additional employer 
 54.5   amortization contribution of an amount equal to $3,900,000 
 54.6   annually until June 30, 2020, based upon the share of the fund's 
 54.7   unfunded actuarial accrued liability attributed to the city as 
 54.8   disclosed in the annual actuarial valuation ~~prepared by the~~ 
 54.9   ~~commission-retained actuary~~.  
 54.10     The city council shall, in addition to other taxes levied 
 54.11  by the city, annually levy a tax equal to the amount of the 
 54.12  financial requirements of the fund which are payable by the 
 54.13  city.  The tax, when levied, shall be extended upon the county 
 54.14  lists and shall be collected and enforced in the same manner as 
 54.15  other taxes levied by the city.  If the city does not levy a tax 
 54.16  sufficient to meet the requirements of this subdivision, the 
 54.17  retirement board shall submit the tax levy statement directly to 
 54.18  the county auditor, who shall levy the tax.  The tax, when 
 54.19  levied, shall be extended upon the county lists and shall be 
 54.20  collected and paid into the city treasury to the credit of the 
 54.21  retirement fund.  Any amount to the credit of the retirement 
 54.22  fund shall constitute a special fund and shall be used only for 
 54.23  the payment of obligations authorized pursuant to this chapter.  
 54.24     Sec. 64.  Minnesota Statutes 1994, section 422A.101, 
 54.25  subdivision 2, is amended to read: 
 54.26     Subd. 2.  [CONTRIBUTIONS BY OR FOR CITY-OWNED PUBLIC 
 54.27  UTILITIES, IMPROVEMENTS, OR MUNICIPAL ACTIVITIES.] Contributions 
 54.28  by or for any city-owned public utility, improvement project, 
 54.29  and other municipal activities supported in whole or in part by 
 54.30  revenues other than real estate taxes, any public corporation, 
 54.31  any employing unit of metropolitan government, special school 
 54.32  district No. 1, or Hennepin county, on account of any employee 
 54.33  covered by the fund, shall be calculated as follows: 
 54.34     (a) a regular employer contribution of an amount equal to 
 54.35  the percentage rounded to the nearest two decimal places of the 
 54.36  salaries and wages of all employees of the employing unit 
 55.1   covered by the retirement fund which equals the difference 
 55.2   between the level normal cost plus administrative cost reported 
 55.3   in the annual actuarial valuation ~~prepared by the~~ 
 55.4   ~~commission-retained actuary~~ and the employee contributions 
 55.5   provided for in section 422A.10; 
 55.6      (b) an additional employer contribution of an amount equal 
 55.7   to the percent specified in section 353.27, subdivision 3a, 
 55.8   clause (a), multiplied by the salaries and wages of all 
 55.9   employees of the employing unit covered by the retirement fund; 
 55.10     (c) a proportional share of an additional employer 
 55.11  amortization contribution of an amount equal to $3,900,000 
 55.12  annually until June 30, 2020, based upon the share of the fund's 
 55.13  unfunded actuarial accrued liability attributed to the employer 
 55.14  as disclosed in the annual actuarial valuation ~~prepared by the~~ 
 55.15  ~~commission-retained actuary~~. 
 55.16     The city council or any board or commission may, by proper 
 55.17  action, provide for the inclusion of the cost of the retirement 
 55.18  contributions for employees of any city-owned public utility or 
 55.19  for persons employed in any improvement project or other 
 55.20  municipal activity supported in whole or in part by revenues 
 55.21  other than taxes who are covered by the retirement fund in the 
 55.22  cost of operating the utility, improvement project, or municipal 
 55.23  activity.  The cost of retirement contributions for these 
 55.24  employees shall be determined by the retirement board and the 
 55.25  respective governing bodies having jurisdiction over the 
 55.26  financing of these operating costs.  
 55.27     The cost of the employer contributions on behalf of 
 55.28  employees of special school district No. 1 who are covered by 
 55.29  the retirement fund shall be the obligation of the school 
 55.30  district.  Contributions by the school district to the 
 55.31  retirement fund or any other public pension or retirement fund 
 55.32  of which its employees are members must be remitted to the fund 
 55.33  each month.  An amount due and not transmitted begins to accrue 
 55.34  interest at the rate of six percent compounded annually 15 days 
 55.35  after the date due.  The retirement board shall prepare an 
 55.36  itemized statement of the financial requirements of the fund 
 56.1   payable by the school district, which shall be submitted prior 
 56.2   to September 15.  Contributions by the school district shall be 
 56.3   made at times designated by the retirement board.  The school 
 56.4   district may levy for its contribution to the retirement fund 
 56.5   only to the extent permitted pursuant to section 124.916, 
 56.6   subdivision 3.  
 56.7      The cost of the employer contributions on behalf of 
 56.8   elective officers or other employees of Hennepin county who are 
 56.9   covered by the retirement fund pursuant to section 422A.09, 
 56.10  subdivision 3, clause (2), 422A.22, subdivision 2, or 488A.115, 
 56.11  or Laws 1973, chapter 380, section 3, Laws 1975, chapter 402, 
 56.12  section 2, or any other applicable law shall be the obligation 
 56.13  of Hennepin county.  The retirement board shall prepare an 
 56.14  itemized statement of the financial requirements of the fund 
 56.15  payable by Hennepin county, which shall be submitted prior to 
 56.16  September 15.  Contributions by Hennepin county shall be made at 
 56.17  times designated by the retirement board.  Hennepin county may 
 56.18  levy for its contribution to the retirement fund. 
 56.19     Sec. 65.  Minnesota Statutes 1994, section 422A.101, 
 56.20  subdivision 2a, is amended to read: 
 56.21     Subd. 2a.  [CONTRIBUTIONS BY METROPOLITAN AIRPORTS 
 56.22  COMMISSION AND METROPOLITAN COUNCIL.] The metropolitan airports 
 56.23  commission and the metropolitan council shall pay to the 
 56.24  Minneapolis employees retirement fund annually in installments 
 56.25  as specified in subdivision 3 the share of the additional 
 56.26  support rate required for full amortization of the unfunded 
 56.27  actuarial accrued liabilities by June 30, 2020, that is 
 56.28  attributable to employees of airport commission or former 
 56.29  metropolitan waste control commission who are members of the 
 56.30  fund.  The amount of the payment shall be determined as if the 
 56.31  airport commission and metropolitan council's employer 
 56.32  contributions determined under subdivision 2 had also included a 
 56.33  proportionate share of a $1,000,000 annual employer amortization 
 56.34  contribution.  The amount of this $1,000,000 annual employer 
 56.35  amortization contribution that would have been allocated to the 
 56.36  commission or council would have been based on the share of the 
 57.1   fund's unfunded actuarial accrued liability attributed to the 
 57.2   commission or council compared to the total unfunded actuarial 
 57.3   accrued liability attributed to all employers under subdivisions 
 57.4   1a and 2.  The determinations required under this subdivision 
 57.5   must be based on the most recent actuarial valuation ~~prepared by~~ 
 57.6   ~~the actuary retained by the legislative commission on pensions~~ 
 57.7   ~~and retirement~~. 
 57.8      Sec. 66.  Minnesota Statutes 1994, section 422A.101, 
 57.9   subdivision 3, is amended to read: 
 57.10     Subd. 3.  [STATE CONTRIBUTIONS.] (a) The state shall pay to 
 57.11  the Minneapolis employees retirement fund annually an amount 
 57.12  equal to the financial requirements of the Minneapolis employees 
 57.13  retirement fund reported in the actuarial valuation of the fund 
 57.14  prepared ~~by the commission-retained actuary~~ pursuant to section 
 57.15  356.215 for the most recent year but based on a target date for 
 57.16  full amortization of the unfunded actuarial accrued liabilities 
 57.17  by June 30, 2020, less the amount of employee contributions 
 57.18  required pursuant to section 422A.10, and the amount of employer 
 57.19  contributions required pursuant to subdivisions 1a, 2, and 2a.  
 57.20  Payments shall be made in four equal installments, occurring on 
 57.21  March 15, July 15, September 15, and November 15 annually.  The 
 57.22  annual state contribution under this subdivision may not exceed 
 57.23  $10,455,000 plus the cost of the annual supplemental benefit 
 57.24  determined under section 356.865. 
 57.25     (b) If the amount determined under paragraph (a) exceeds 
 57.26  the limitation on the state payment in paragraph (a), the excess 
 57.27  must be allocated to and paid to the fund by the employers 
 57.28  identified in subdivisions 1a and 2, other than units of 
 57.29  metropolitan government.  Each employer's share of the excess is 
 57.30  proportionate to the employer's share of the fund's unfunded 
 57.31  actuarial accrued liability as disclosed in the annual actuarial 
 57.32  valuation ~~prepared by the actuary retained by the legislative~~ 
 57.33  ~~commission on pensions and retirement~~ compared to the total 
 57.34  unfunded actuarial accrued liability attributed to all employers 
 57.35  identified in subdivisions 1a and 2, other than units of 
 57.36  metropolitan government.  Payments must be made in equal 
 58.1   installments as set forth in paragraph (a).  
 58.2      Sec. 67.  Minnesota Statutes 1994, section 422A.15, 
 58.3   subdivision 2, is amended to read: 
 58.4      Subd. 2.  [WITHDRAWAL OF VOLUNTARY CONTRIBUTIONS.] 
 58.5   Voluntary additions to the employee's deposits made by the 
 58.6   employee under section 422A.10 may be withdrawn by the retiring 
 58.7   employee or, with the approval of the retirement board, applied 
 58.8   to the purchase of an additional annuity computed and determined 
 58.9   under a procedure specified by the actuary retained by the 
 58.10  ~~legislative~~ commission on pensions and retirement utilizing the 
 58.11  appropriate mortality table established by the board of trustees 
 58.12  based on the experience of the fund as recommended by the 
 58.13  commission-retained actuary and using the applicable 
 58.14  postretirement interest rate assumption specified in section 
 58.15  356.215, subdivision 4d.  
 58.16     Sec. 68.  Minnesota Statutes 1994, section 422A.15, 
 58.17  subdivision 3, is amended to read: 
 58.18     Subd. 3.  [OPTIONAL DEFINED CONTRIBUTION ANNUITY.] In lieu 
 58.19  of the formula pension and annuity, a person who was a 
 58.20  contributing member on April 28, 1973, who is eligible to retire 
 58.21  and who ceases to be employed and who qualifies for retirement 
 58.22  shall have the option of electing to receive a retirement 
 58.23  allowance known as "the $2 bill and annuity."  
 58.24     If a member of the contributing class makes the election 
 58.25  provided for in this section, the member shall receive a minimum 
 58.26  pension of $2 per month for each year of service.  The pension 
 58.27  shall be the actuarial equivalent of the accumulated amounts of 
 58.28  the annual installments as may be fixed and designated by law 
 58.29  throughout the period of service of the retiring employee, not 
 58.30  to exceed 25 years, accumulated to the date of retirement at six 
 58.31  percent compound interest, and such extra credit to be provided 
 58.32  by the city as will produce the minimum pension of $2 per month 
 58.33  for each year of service.  The pension shall be in addition to 
 58.34  the annuity.  The annuity shall be in the actuarial equivalent 
 58.35  of the net accumulated contributions to the credit of the 
 58.36  retiring employee, calculated at the date of retirement.  For 
 59.1   the purposes of this chapter, the "service allowance" for 
 59.2   members of the contributing class shall consist of an "annuity" 
 59.3   and a "pension."  
 59.4      The pension provided for herein shall be the actuarial 
 59.5   equivalent of the accumulated annual installments of $2 per 
 59.6   month for each year of service.  The sum of $2 shall be computed 
 59.7   as a single life annuity and subject to the option selections 
 59.8   provided for in section 422A.17.  The pension and annuity 
 59.9   provided for in this subdivision shall be first paid from the 
 59.10  contributing member's own contributions and normal earned 
 59.11  credits, plus interest, until those credits are exhausted.  
 59.12     The retirement allowance provided under this subdivision or 
 59.13  any optional annuity form of the retirement allowance shall be 
 59.14  computed and determined under a procedure specified by the 
 59.15  commission-retained actuary utilizing the appropriate mortality 
 59.16  table established by the board of trustees based on the 
 59.17  experience of the fund as recommended by the actuary retained by 
 59.18  the ~~legislative~~ commission on pensions and retirement and using 
 59.19  the applicable postretirement interest rate assumption specified 
 59.20  in section 356.215, subdivision 4d. 
 59.21     Sec. 69.  Minnesota Statutes 1994, section 422A.23, 
 59.22  subdivision 6, is amended to read: 
 59.23     Subd. 6.  [SURVIVOR BENEFIT EMPLOYEE CONTRIBUTION.] The 
 59.24  retirement board shall create a reserve account for survivor's 
 59.25  benefits from which shall be paid on an actuarial basis all 
 59.26  survivor benefits due and payable.  At the end of each fiscal 
 59.27  year, as part of the annual actuarial valuation of the fund 
 59.28  ~~prepared by the commission-retained actuary~~, a determination of 
 59.29  the normal cost of the benefits payable from the survivor's 
 59.30  benefit account shall be made and the board shall reduce or 
 59.31  increase the employee contribution rate of one-fourth of one 
 59.32  percent if and when it is determined based on the annual 
 59.33  actuarial valuation that the member contribution rate is in 
 59.34  excess of or is less than the amount necessary to pay for 50 
 59.35  percent of the calculated normal cost of the survivor benefits 
 59.36  provided in this section. 
 60.1      Sec. 70.  Minnesota Statutes 1994, section 423A.03, is 
 60.2   amended to read: 
 60.3      423A.03 [TEMPORARY PROVISION; APPLICATION TO CERTAIN 
 60.4   MUNICIPALITIES.] 
 60.5      Any municipality in which is located a local police or 
 60.6   salaried firefighters' relief association which is governed by 
 60.7   section 69.77, and in which all newly hired police officers or 
 60.8   firefighters, whichever is applicable, after a certain date are 
 60.9   required by special law to have their retirement coverage 
 60.10  provided by the public employees police and fire fund 
 60.11  established pursuant to chapter 353, and not by the local police 
 60.12  or firefighters' relief association, may have made applicable 
 60.13  any other provisions of section 423A.01, by adopting by majority 
 60.14  vote of the governing body, a resolution implementing those 
 60.15  provisions of section 423A.01 which are not present in or which 
 60.16  are in substantial conflict with the applicable special law 
 60.17  modifying retirement coverage for new police officers or 
 60.18  firefighters, whichever is applicable, other than the date of 
 60.19  the modification in retirement coverage.  Prior to becoming 
 60.20  effective, a copy of the municipal resolution shall be filed 
 60.21  with the secretary of state, the commissioner of finance, the 
 60.22  commissioner of commerce and the ~~executive director of the~~ 
 60.23  ~~legislative~~ commission on pensions and retirement.  To be deemed 
 60.24  an implementing municipal resolution within the meaning of this 
 60.25  section, the municipal resolution shall either refer to this 
 60.26  section and the applicable subdivisions of section 423A.01 or 
 60.27  shall describe in summary form the modifications to be 
 60.28  implemented.  
 60.29     Sec. 71.  Minnesota Statutes 1994, section 423A.07, is 
 60.30  amended to read: 
 60.31     423A.07 [ADDITIONS TO BOARD.] 
 60.32     Notwithstanding any other law, each local police and 
 60.33  salaried firefighters' relief association may amend its bylaws 
 60.34  and its articles of incorporation, as necessary, to provide for 
 60.35  the inclusion of retirees on its board. 
 60.36     Upon adoption of the amendments, the relief association 
 61.1   must file a copy of the amended bylaws with the ~~executive~~ 
 61.2   ~~director of the legislative~~ commission on pensions and 
 61.3   retirement.  A relief association amending its articles of 
 61.4   incorporation must comply with any statutory requirements 
 61.5   pertaining to the filing of amended articles of incorporation. 
 61.6      Sec. 72.  Minnesota Statutes 1994, section 423A.17, is 
 61.7   amended to read: 
 61.8      423A.17 [CONTINUATION OF SURVIVING SPOUSE BENEFITS UPON 
 61.9   REMARRIAGE.] 
 61.10     (a) Notwithstanding a provision of section 69.48; 423.387, 
 61.11  subdivision 1; 423.58, subdivision 1; 423.810, subdivision 1; or 
 61.12  424.24, subdivision 1, or other law, article of incorporation, 
 61.13  or bylaw governing a local police or salaried firefighters 
 61.14  relief association to the contrary, the governing body of a 
 61.15  municipality may mandate the applicable local police or salaried 
 61.16  firefighters relief association to provide that a surviving 
 61.17  spouse benefit is payable for the life of the surviving spouse 
 61.18  and remains payable even in the event of the remarriage of the 
 61.19  surviving spouse. 
 61.20     (b) If the surviving spouse benefit change described in 
 61.21  paragraph (a) is made, the change applies to a surviving spouse 
 61.22  benefit payable on the effective date of the change and to the 
 61.23  potential surviving spouses of all active, deferred, or retired 
 61.24  members of the relief association who have that status on the 
 61.25  effective date of the change.  
 61.26     (c) In addition, if the surviving spouse benefit change 
 61.27  described in paragraph (a) is made a person who formerly was 
 61.28  receiving surviving spouse benefits from the relief association 
 61.29  and who had those benefits discontinued by virtue of the 
 61.30  remarriage is entitled, upon application, to a resumption of the 
 61.31  surviving spouse benefit, beginning with the last day of the 
 61.32  month following receipt of the application by the secretary of 
 61.33  the relief association.  Nothing in this section authorizes the 
 61.34  payment of a benefit amount to an estate. 
 61.35     (d) The change must be made by a municipal resolution 
 61.36  adopted by a majority vote of the municipality.  The resolution 
 62.1   must be filed by the secretary of the relief association with 
 62.2   the ~~executive director of the legislative~~ commission on pensions 
 62.3   and retirement, the state auditor, and the secretary of state. 
 62.4      Sec. 73.  Minnesota Statutes 1994, section 423A.171, is 
 62.5   amended to read: 
 62.6      423A.171 [BYLAW AMENDMENTS.] 
 62.7      (a) Notwithstanding a provision of section 69.48; 423.387, 
 62.8   subdivision 1; 423.58, subdivision 1; 423.810, subdivision 1; 
 62.9   423B.10; or 424.24, subdivision 1, or other law governing a 
 62.10  local police or salaried firefighters' relief association to the 
 62.11  contrary, the board of trustees of a local relief association 
 62.12  governed by section 69.77 or its successor board under chapter 
 62.13  353A or 353B, with municipal approval as provided in section 
 62.14  69.77, subdivision 2i, may amend the bylaws of the relief 
 62.15  association to provide that a surviving spouse benefit is 
 62.16  payable to a surviving spouse who married a deferred or retired 
 62.17  member after the member's retirement, provided the marriage 
 62.18  occurred at least five years before the death of the member. 
 62.19     (b) If the surviving spouse benefit change described in 
 62.20  paragraph (a) is made, the change applies to a surviving spouse 
 62.21  benefit payable on the effective date of the change and to the 
 62.22  potential surviving spouses of all deferred or retired members 
 62.23  of the relief association who have that status on the effective 
 62.24  date of the change. 
 62.25     (c) The bylaw amendment is not effective until a certified 
 62.26  copy of the amendment and the municipal approval has been filed 
 62.27  by the municipal clerk with the ~~executive director of the~~ 
 62.28  ~~legislative~~ commission on pensions and retirement, the state 
 62.29  auditor, and the secretary of state. 
 62.30     (d) Notwithstanding the provisions of section 353B.11, a 
 62.31  surviving spouse benefit change made under this section for a 
 62.32  relief association that has consolidated with the public 
 62.33  employees retirement association is effective upon approval by 
 62.34  the public employees retirement association and the municipality 
 62.35  pursuant to paragraph (c). 
 62.36     Sec. 74.  Minnesota Statutes 1994, section 423A.18, is 
 63.1   amended to read: 
 63.2      423A.18 [MEMBER CONTRIBUTION REFUND TO BENEFICIARY UPON 
 63.3   DEATH; AUTHORITY TO IMPLEMENT BENEFIT.] 
 63.4      (a) Notwithstanding any law to the contrary, for a local 
 63.5   police or salaried firefighters relief association that 
 63.6   implements the provision with municipal approval as provided in 
 63.7   paragraph (c), if an active, deferred, or retired member of the 
 63.8   relief association dies and no survivor benefit is payable, the 
 63.9   designated beneficiary of the decedent or, if none, the legal 
 63.10  representative of the estate of the decedent is entitled, upon 
 63.11  application, to a refund. 
 63.12     (b) The refund under paragraph (a) is an amount equal to 
 63.13  the member contributions to the credit of the decedent, plus 
 63.14  interest on those contributions at an annual compound rate of 
 63.15  five percent from the first day of the month following the date 
 63.16  of the contribution to the first day of the month following the 
 63.17  date of death of the decedent, reduced by the sum of any service 
 63.18  pension or disability benefit previously paid by the fund to the 
 63.19  decedent. 
 63.20     (c) The benefit under this section must be implemented by 
 63.21  an amendment to the bylaws of the relief association, with 
 63.22  municipal approval as provided in section 69.77, subdivision 
 63.23  2i.  The bylaw amendment is not effective until a certified copy 
 63.24  of the amendment and the municipal approval has been filed by 
 63.25  the municipal clerk with the ~~executive director of the~~ 
 63.26  ~~legislative~~ commission on pensions and retirement, the state 
 63.27  auditor, and the secretary of state. 
 63.28     Sec. 75.  Minnesota Statutes 1994, section 423A.19, 
 63.29  subdivision 4, is amended to read: 
 63.30     Subd. 4.  [IMPLEMENTATION.] The reduced vesting requirement 
 63.31  must be implemented by a local relief association through an 
 63.32  amendment to the bylaws of the relief association with approval 
 63.33  by the governing body of the municipality as required by section 
 63.34  69.77, subdivision 2i.  The bylaw amendment may not be effective 
 63.35  until a certified copy of it and the municipal approval has been 
 63.36  filed by the municipal clerk with the ~~executive director of the~~ 
 64.1   ~~legislative~~ commission on pensions and retirement, the state 
 64.2   auditor, and the secretary of state.  
 64.3      Sec. 76.  Minnesota Statutes 1994, section 423B.15, 
 64.4   subdivision 2, is amended to read: 
 64.5      Subd. 2.  [DETERMINATION OF EXCESS INVESTMENT INCOME.] The 
 64.6   board of trustees of the relief association shall determine by 
 64.7   May 1 of each year whether or not the fund has excess investment 
 64.8   income.  The amount of excess investment income, if any, must be 
 64.9   stated as a dollar amount and reported by the chief 
 64.10  administrative officer of the relief association to the mayor 
 64.11  and governing body of the city, the state auditor, the 
 64.12  commissioner of finance, and the ~~executive director of the~~ 
 64.13  ~~legislative~~ commission on pensions and retirement.  The dollar 
 64.14  amount of excess investment income up to one percent of the 
 64.15  assets of the fund must be applied for the purpose specified in 
 64.16  subdivision 3.  Excess investment income must not be considered 
 64.17  as income to or assets of the fund for actuarial valuations of 
 64.18  the fund for that year under sections 69.77, 356.215, and 
 64.19  356.216 and the provisions of this section except to offset the 
 64.20  annual postretirement payment.  Additional investment income is 
 64.21  any realized or unrealized investment income other than the 
 64.22  excess investment income and must be included in the actuarial 
 64.23  valuations performed under sections 69.77, 356.215, and 356.216 
 64.24  and the provisions of this section. 
 64.25     Sec. 77.  Minnesota Statutes 1994, section 423B.15, 
 64.26  subdivision 5, is amended to read: 
 64.27     Subd. 5.  [REPORT ON ANNUAL POSTRETIREMENT PAYMENT.] The 
 64.28  chief administrative officer of the relief association shall 
 64.29  prepare a report on the amount of all postretirement payments 
 64.30  made under this section and the manner in which those payments 
 64.31  were determined.  That report must be submitted to the state 
 64.32  auditor, the ~~executive director of the legislative~~ commission on 
 64.33  pensions and retirement, and the city clerk of the city. 
 64.34     Sec. 78.  Minnesota Statutes 1994, section 490.124, 
 64.35  subdivision 11, is amended to read: 
 64.36     Subd. 11.  [OPTIONAL ANNUITIES.] No survivor or death 
 65.1   benefits may be paid in connection with the death of a judge who 
 65.2   retires after December 31, 1973, except as otherwise provided in 
 65.3   sections 490.121 to 490.132.  Except as provided in subdivision 
 65.4   10, a judge may elect to receive, instead of the normal 
 65.5   retirement annuity, an optional retirement annuity in the form 
 65.6   of an annuity payable for a period certain and for life after 
 65.7   that period, a joint and survivor annuity without reinstatement 
 65.8   in the event of the designated beneficiary predeceasing the 
 65.9   retired judge, or a joint and survivor annuity with 
 65.10  reinstatement in the event of the designated beneficiary 
 65.11  predeceasing the retired judge.  An optional retirement annuity 
 65.12  must be actuarially equivalent to a single-life annuity with no 
 65.13  term certain and must be established by the board of directors 
 65.14  of the Minnesota state retirement system.  In establishing these 
 65.15  optional retirement annuity forms, the board shall obtain the 
 65.16  written recommendation of the actuary retained by the 
 65.17  ~~legislative~~ commission on pensions and retirement.  The 
 65.18  recommendations must be a part of the permanent records of the 
 65.19  board.