Journal of the House - 109th Day - Thursday, May 18, 2006

The motion did not prevail.

There being no objection, the order of business reverted to Reports of Standing Committees.

REPORTS OF STANDING COMMITTEES

Paulsen from the Committee on Rules and Legislative Administration to which was referred:

S. F. No. 367, A bill for an act relating to education; requiring notice when a school or district uses certain pools for competitive high school diving; amending Minnesota Statutes 2004, section 123B.492.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"ARTICLE 1

HEALTH CARE COST-CONTAINMENT

Section 1. [62J.62] ELECTRONIC BILLING ASSISTANCE.

The commissioner of human services shall, out of existing resources, encourage and assist providers to adopt and use electronic billing for state programs, including but not limited to the provision of training.

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Sec. 2. [62M.071] PRIOR AUTHORIZATION.

Health plan companies, in cooperation with health care providers, shall review prior authorization procedures administered by utilization review organizations and health plan companies to ensure the cost-effective use of prior authorization and minimization of provider, clinic, and central office administrative burden.

Sec. 3. [62M.072] USE OF EVIDENCE-BASED STANDARDS.

If no independently developed evidence-based standards exist for a particular treatment, testing, or imaging procedure, then an insurer or utilization review organization shall not deny coverage of the treatment, testing, or imaging based solely on the grounds that the treatment, testing, or imaging does not meet an evidence-based standard. This section does not prohibit an insurer or utilization review organization from denying coverage for services that are investigational, experimental, or not medically necessary.

Sec. 4. [144.0506] AGENCY WEB SITES.

Subdivision 1. Information to be posted. The commissioner of health may post the following information on agency Web sites, including minnesotahealthinfo.com:

(1) healthy lifestyle and preventive health care information, organized by sex and age, with procedures and treatments categorized by level of effectiveness and reliability of the supporting evidence on effectiveness;

(2) health plan company administrative efficiency report cards;

(3) health care provider charges for common procedures, based on information available under section 62J.052;

(4) evidence-based medicine guidelines and related information for use as resources by health care professionals, and summaries of the guidelines and related information for use by patients and consumers;

(5) resources and Web links related to improving efficiency in medical clinics and health care professional practices; and

(6) lists of nonprofit and charitable entities that accept donations of used medical equipment and supplies, such as crutches and walkers.

Subd. 2. Other Internet resources. The commissioner of health, in implementing subdivision 1, shall include relevant Web links and materials from private sector and other government sources in order to avoid duplication and reduce state administrative costs.

Subd. 3. Cooperation with commissioner of commerce. The commissioner of health shall consult and work in cooperation with the commissioner of commerce when posting on the Web site information collected from health plan companies regulated by the commissioner of commerce.

Sec. 5. [147.37] INFORMATION PROVISION; PHARMACEUTICAL ASSISTANCE PROGRAMS.

The board shall encourage licensees to make available to patients information on free and discounted prescription drug programs offered by pharmaceutical manufacturers when the information is provided to the licensees at no cost.

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Sec. 6. Minnesota Statutes 2004, section 148.06, subdivision 1, is amended to read:

Subdivision 1. License required; qualifications. No person shall practice chiropractic in this state without first being licensed by the State Board of Chiropractic Examiners. The applicant shall have earned at least one-half of all academic credits required for awarding of a baccalaureate degree from the University of Minnesota, or other university, college, or community college of equal standing, in subject matter determined by the board, and taken a four-year resident course of at least eight months each in a school or college of chiropractic or in a chiropractic program that is accredited by the Council on Chiropractic Education, holds a recognition agreement with the Council on Chiropractic Education, or is accredited by an agency approved by the United States Office of Education or their successors as of January 1, 1988. The board may issue licenses to practice chiropractic without compliance with prechiropractic or academic requirements listed above if in the opinion of the board the applicant has the qualifications equivalent to those required of other applicants, the applicant satisfactorily passes written and practical examinations as required by the Board of Chiropractic Examiners, and the applicant is a graduate of a college of chiropractic with a ~~reciprocal~~ recognition agreement with the Council on Chiropractic Education ~~as of January 1, 1988~~. The board may recommend a two-year prechiropractic course of instruction to any university, college, or community college which in its judgment would satisfy the academic prerequisite for licensure as established by this section.

An examination for a license shall be in writing and shall include testing in:

(a) The basic sciences including but not limited to anatomy, physiology, bacteriology, pathology, hygiene, and chemistry as related to the human body or mind;

(b) The clinical sciences including but not limited to the science and art of chiropractic, chiropractic physiotherapy, diagnosis, roentgenology, and nutrition; and

The board may consider a valid certificate of examination from the National Board of Chiropractic Examiners as evidence of compliance with the examination requirements of this subdivision. The applicant shall be required to give practical demonstration in vertebral palpation, neurology, adjusting and any other subject that the board may deem advisable. A license, countersigned by the members of the board and authenticated by the seal thereof, shall be granted to each applicant who correctly answers 75 percent of the questions propounded in each of the subjects required by this subdivision and meets the standards of practical demonstration established by the board. Each application shall be accompanied by a fee set by the board. The fee shall not be returned but the applicant may, within one year, apply for examination without the payment of an additional fee. The board may grant a license to an applicant who holds a valid license to practice chiropractic issued by the appropriate licensing board of another state, provided the applicant meets the other requirements of this section and satisfactorily passes a practical examination approved by the board. The burden of proof is on the applicant to demonstrate these qualifications or satisfaction of these requirements.

Sec. 7. [148.108] FEES.

Subdivision 1. Fees. In addition to the fees established in Minnesota Rules, chapter 2500, the board is authorized to charge the fees in this section.

Subd. 2. Annual renewal of inactive acupuncture registration. The annual renewal of inactive acupuncture registration fee is $25.

Subd. 3. Acupuncture reinstatement. The acupuncture reinstatement fee is $50.

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Sec. 8. Minnesota Statutes 2004, section 151.214, subdivision 1, is amended to read:

Subdivision 1. Explanation of pharmacy benefits. A pharmacist licensed under this chapter must provide to a patient, for each prescription dispensed where part or all of the cost of the prescription is being paid or reimbursed by an employer-sponsored plan or health plan company, or its contracted pharmacy benefit manager, the patient's co-payment amount and the pharmacy's own usual and customary price of the prescription or the amount the pharmacy will be paid for the prescription drug by the patient's employer-sponsored plan or health plan company, or its contracted pharmacy benefit manager.

Sec. 9. Minnesota Statutes 2005 Supplement, section 214.071, is amended to read:

214.071 HEALTH BOARDS; DIRECTORY OF LICENSEES.

By July 1, 2009, each ~~health~~ health-related licensing board ~~under chapters 147, 148, 148B, and 150A~~, as defined in section 214.01, subdivision 2, shall establish a directory of licensees that includes biographical data for each licensee.

EFFECTIVE DATE. This section is effective July 1, 2007.

Sec. 10. [214.121] PRICE DISCLOSURE REMINDER.

Each health-related licensing board shall at least annually inform and remind its licensees of the price disclosure requirements of section 62J.052 or 151.214, as applicable, through the board's regular means of communicating with its licensees.

Sec. 11. [256B.043] COST CONTAINMENT EFFORTS.

Subdivision 1. Alternative and complementary health care. The commissioner of human services, through the medical director and in consultation with the health services policy committee established under section 256B.0625, subdivision 3c, as part of the commissioner's ongoing duties, shall consider the potential for improving quality and obtaining cost savings through greater use of alternative and complementary treatment methods and clinical practice; shall incorporate these methods into the medical assistance, MinnesotaCare, and general assistance medical care programs; and shall make related legislative recommendations as appropriate. The commissioner shall post the recommendations required under this subdivision on agency Web sites according to chapter 144.0506, subdivision 1.

Subd. 2. Access to care. (a) The commissioners of human services and health, as part of their ongoing duties, shall consider the adequacy of the current system of community health clinics and centers both statewide and in urban areas with significant disparities in health status and access to services across racial and ethnic groups, including:

(1) methods to provide 24-hour availability of care through the clinics and centers;

(2) methods to expand the availability of care through the clinics and centers;

(3) the use of grants to expand the number of clinics and centers, the services provided, and the availability of care; and

(4) the extent to which increased use of physician assistants, nurse practitioners, medical residents and interns, and other allied health professionals in clinics and centers would increase the availability of services.

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(b) The commissioners shall make departmental modifications and legislative recommendations as appropriate on the basis of their considerations under paragraph (a).

Sec. 12. REPORTING OF ACQUIRED INFECTIONS.

(a) The commissioner of health may consult with infection control specialists, health care facility representatives, and consumers for the purpose of obtaining recommendations regarding a determination of the need for action to implement health care associated infection control reporting in hospitals and nursing homes. If the outcome of the determination warrants, the commissioner shall consult with the group regarding:

(1) the selection of reporting measures relating to health care associated infections;

(2) design, implementation, validation, and ongoing evaluation of the reporting system; and

(3) ensuring that the reporting measures remain flexible and adaptable to changing national standards.

(b) If the commissioner determines that there is a need for the action described in paragraph (a), the commissioner shall make written recommendations to the legislature.

Sec. 13. STUDY OF HOSPITAL UNCOMPENSATED CARE.

(a) The commissioner of health shall study and report to the legislature by January 15, 2007, the following:

(1) trends in hospitals' cost of providing uncompensated care, separately identifying charity care and bad debt as components of uncompensated care;

(2) the impact of any changes in hospitals' charity care policies and debt collection practices in the past three years on the amount of uncompensated care provided and the number of patients receiving uncompensated care; and

(3) the value of hospital uncompensated care and community benefits in comparison to the value of tax exemptions received as a result of nonprofit status.

(b) The commissioner's report to the legislature shall include recommendations on: (1) the need for more uniform hospital charity care policies and debt collection practices; and (2) the need for more uniform reporting of community benefits provided by nonprofit hospitals.

Sec. 14. STUDY; REPORT.

The medical director for medical assistance and the assistant commissioner for chemical and mental health services of the Department of Human Services, in conjunction with the mental health licensing boards, shall evaluate the requirements for licensed mental health practitioners to receive medical assistance reimbursement under Minnesota Statutes, section 256B.0625, subdivision 38. The purpose of this study is to evaluate qualifications of all licensed mental health practitioners and licensed mental health professionals and make recommendations regarding requirements for medical assistance reimbursement. This study is to be completed by January 15, 2007. Written results of the study are to be submitted to the chairs of the house of representatives and senate committees with jurisdiction over health related licensing boards.

Sec. 15. APPROPRIATIONS.

$5,000 is appropriated from the state government special revenue fund in fiscal year 2006 and $5,000 is appropriated from the state government special revenue fund in fiscal year 2007 to the Board of Chiropractic Examiners, to correct programming difficulties incurred during implementation of payment processing changes. This is a onetime appropriation.

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ARTICLE 2

CHARITY CARE BY HEALTH CARE PROVIDERS

Section 1. [62J.83] REDUCED PAYMENT AMOUNTS PERMITTED.

(a) Notwithstanding any provision of chapter 148 or any other provision of law to the contrary, a health care provider may provide care to a patient at a discounted payment amount, including care provided for free.

(b) This section does not apply in a situation in which the discounted payment amount is not permitted under federal law.

Sec. 2. Minnesota Statutes 2004, section 72A.20, is amended by adding a subdivision to read:

Subd. 39. Discounted payments by health care providers; effect on use of usual and customary payments. An insurer, including, but not limited to, a health plan company as defined in section 62Q.01, subdivision 4; a reparation obligor as defined in section 65B.43, subdivision 9; and a workers' compensation insurer shall not consider in determining a health care provider's usual and customary payment, standard payment, or allowable payment used as a basis for determining the provider's payment by the insurer, the following discounted payment situations:

(1) care provided to relatives of the provider;

(2) care for which a discount or free care is given in hardship situations; and

(3) care for which a discount is given in exchange for cash payment.

For purposes of this subdivision, "health care provider" and "provider" have the meaning given in section 62J.03, subdivision 8.

Sec. 3. REPEALER.

Minnesota Statutes 2005 Supplement, section 62Q.251, is repealed.

Sec. 4. EFFECTIVE DATE.

Sections 1 to 3 are effective the day following final enactment.

ARTICLE 3

PRIVATE SECTOR HEALTH COVERAGE PROVISIONS

Section 1. Minnesota Statutes 2004, section 62D.095, subdivision 3, is amended to read:

Subd. 3. Deductibles. ~~(a)~~ A health maintenance contract issued by a health maintenance organization ~~that is assessed less than three percent of the total annual amount assessed by the Minnesota comprehensive health association~~ may impose deductibles not to exceed ~~$3,000~~ $4,000 per person, per year and ~~$6,000~~ $8,000 per family, per year. ~~For purposes of the percentage calculation, a health maintenance organization's assessments include those of its affiliates.~~

~~Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7870~~

~~(b) All other health maintenance contracts may impose deductibles not to exceed $2,250 per person, per year and $4,500 per family, per year.~~

Sec. 2. Minnesota Statutes 2004, section 62D.095, subdivision 4, is amended to read:

Subd. 4. Annual out-of-pocket maximums. ~~(a)~~ A health maintenance contract issued by a health maintenance organization ~~that is assessed less than three percent of the total annual amount assessed by the Minnesota comprehensive health association~~ must include a limitation not to exceed ~~$4,500~~ $5,000 per person and ~~$7,500~~ $10,000 per family on total annual out-of-pocket enrollee cost-sharing expenses. ~~For purposes of the percentage calculation, a health maintenance organization's assessments include those of its affiliates.~~

~~(b) All other health maintenance contracts must include a limitation not to exceed $3,000 per person and $6,000 per family on total annual out-of-pocket enrollee cost-sharing expenses.~~

Sec. 3. [62Q.645] DISTRIBUTION OF INFORMATION; ADMINISTRATIVE EFFICIENCY AND COVERAGE OPTIONS.

(a) The commissioner may use reports submitted by health plan companies, service cooperatives, and the public employee insurance program created in section 43A.316 to compile entity specific administrative efficiency reports; may make these reports available on state agency Web sites, including minnesotahealthinfo.com; and may include information on:

(1) number of covered lives;

(2) covered services;

(3) geographic availability;

(4) whom to contact to obtain current premium rates;

(5) administrative costs, using the definition of administrative costs developed under section 62J.38;

(6) Internet links to information on the health plan, if available; and

(7) any other information about the health plan identified by the commissioner as being useful for employers, consumers, providers, and others in evaluating health plan options.

(b) This section does not apply to a health plan company unless its annual Minnesota premiums exceed $50,000,000 based on the most recent assessment base of the Minnesota Comprehensive Health Association. For purposes of this determination, the premiums of a health plan company include those of its affiliates.

Sec. 4. MEDICAL MALPRACTICE INSURANCE REPORT.

(a) The commissioner of commerce shall provide to the legislature annually a brief written report on the status of the market for medical malpractice insurance in Minnesota. The report must summarize, interpret, explain, and analyze information on that subject available to the commissioner, through annual statements filed by insurance companies, information obtained under paragraph (c), and other sources.

(b) The annual report must consider, to the extent possible, using definitions developed by the commissioner, Minnesota-specific data on market shares; premiums received; amounts paid to settle claims that were not litigated, claims that were settled after litigation began, and claims that were litigated to court judgment; amounts spent on processing, investigation, litigation, and otherwise handling claims; other sales and administrative costs; and the loss ratios of the insurers.

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(c) Each insurance company that provides medical malpractice insurance in this state shall, no later than June 1 each year, file with the commissioner of commerce, on a form prescribed by the commissioner and using definitions developed by the commissioner, the Minnesota-specific data referenced in paragraph (b), other than market share, for the previous calendar year for that insurance company, shown separately for various categories of coverages including, if possible, hospitals, medical clinics, nursing homes, physicians who provide emergency medical care, obstetrician gynecologists, and ambulance services. An insurance company need not comply with this paragraph if its direct premium written in the state for the previous calendar year is less than $2,000,000.

ARTICLE 4

SERVICE COOPERATIVES

Section 1. Minnesota Statutes 2004, section 123A.21, subdivision 7, is amended to read:

Subd. 7. Educational programs and services. (a) The board of directors of each SC shall submit annually a plan to the members. The plan shall identify the programs and services which are suggested for implementation by the SC during the following year and shall contain components of long-range planning determined by the SC. These programs and services may include, but are not limited to, the following areas:

(1) administrative services;

(2) curriculum development;

(3) data processing;

(4) distance learning and other telecommunication services;

(5) evaluation and research;

(6) staff development;

(7) media and technology centers;

(8) publication and dissemination of materials;

(9) pupil personnel services;

(10) planning;

(11) secondary, postsecondary, community, adult, and adult vocational education;

(12) teaching and learning services, including services for students with special talents and special needs;

(13) employee personnel services;

(14) vocational rehabilitation;

(15) health, diagnostic, and child development services and centers;

(16) leadership or direction in early childhood and family education;

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(17) community services;

(18) shared time programs;

(19) fiscal services and risk management programs;

(20) technology planning, training, and support services;

(21) health and safety services;

(22) student academic challenges; and

(23) cooperative purchasing services.

(b) A group health, dental, or long-term disability coverage program provided by one or more service cooperatives:

(1) must rebid contracts for insurance and third-party administration at least every four years. The contracts may be regional or statewide in the discretion of the SC; and

(2) may determine premiums for its health, dental, or long-term disability coverage individually for specific employers or may determine them on a pooled or other basis established by the SC.

EFFECTIVE DATE. This section is effective the day following final enactment.

Sec. 2. Laws 2003, First Special Session chapter 14, article 12, section 93, as amended by Laws 2005, First Special Session chapter 4, article 8, section 80, is amended to read:

Sec. 93. REVIEW OF SPECIAL TRANSPORTATION ELIGIBILITY CRITERIA AND POTENTIAL COST SAVINGS.

The commissioner of human services, in consultation with the commissioner of transportation and special transportation service providers, shall review eligibility criteria for medical assistance special transportation services and shall evaluate whether the level of special transportation services provided should be based on the degree of impairment of the client, as well as the medical diagnosis. The commissioner shall also evaluate methods for reducing the cost of special transportation services, including, but not limited to:

(1) requiring providers to maintain a daily log book confirming delivery of clients to medical facilities;

(2) requiring providers to implement commercially available computer mapping programs to calculate mileage for purposes of reimbursement;

(3) restricting special transportation service from being provided solely for trips to pharmacies;

(4) modifying eligibility for special transportation;

(5) expanding alternatives to the use of special transportation services;

(6) improving the process of certifying persons as eligible for special transportation services; and

(7) examining the feasibility and benefits of licensing special transportation providers.

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The commissioner shall present recommendations for changes in the eligibility criteria and potential cost-savings for special transportation services to the chairs and ranking minority members of the house and senate committees having jurisdiction over health and human services spending by January 15, 2004. The commissioner is prohibited from using a broker or coordinator to manage special transportation services until July 1, 2006, except for the purposes of checking for recipient eligibility, authorizing recipients for appropriate level of transportation, and monitoring provider compliance with Minnesota Statutes, section 256B.0625, subdivision 17, and except that the commissioner shall extend this prohibition on using a broker or coordinator to manage special transportation services until July 1, 2007, if this extension can be done on a budget-neutral basis. The commissioner shall not amend the initial contract to broker or manage nonemergency medical transportation to extend beyond two consecutive years. The commissioner shall not enter into a broker or management contract for transportation services which denies a medical assistance recipient the free choice of health service provider, including a special transportation provider, as specified in Code of Federal Regulations, title 42, section 431.51. This prohibition does not apply to the purchase or management of common carrier transportation.

EFFECTIVE DATE. This section is effective July 1, 2006."

Renumber the sections in sequence

Delete the title and insert:

"A bill for an act relating to health; implementing health care cost-containment measures; modifying the qualification standards of certain licenses; establishing certain fees; requiring a study of hospital uncompensated care; allowing discounted payment for health care under certain circumstances; regulating eligibility criteria for medical assistance special transportation services; allowing entity certain specific administrative efficiency reports to be published on the state agency Web sites; requiring certain reports; adding provisions for service cooperatives contracts; appropriating money; amending Minnesota Statutes 2004, sections 62D.095, subdivisions 3, 4; 72A.20, by adding a subdivision; 123A.21, subdivision 7; 148.06, subdivision 1; 151.214, subdivision 1; Minnesota Statutes 2005 Supplement, section 214.071; Laws 2003, First Special Session chapter 14, article 12, section 93, as amended; proposing coding for new law in Minnesota Statutes, chapters 62J; 62M; 62Q; 144; 147; 148; 214; 256B; repealing Minnesota Statutes 2005 Supplement, section 62Q.251."

With the recommendation that when so amended the bill pass.

Joint Rule 2.03 has been waived for any subsequent committee action on this bill.

The report was adopted.

Paulsen from the Committee on Rules and Legislative Administration to which was referred:

S. F. No. 1057, A bill for an act relating to retirement; statewide and major local retirement plans; providing for various member and employer contribution rate increases; restructuring the statewide Teachers Retirement Association fund and benefit plan; providing a special postretirement adjustment to certain pre-1969 teachers; changing deferred annuities augmentation for new retirement plan members; creating a public pension plan default insurance pool; increasing the maximum retirement plan covered salary figure; providing certain early retirement incentives; creating a task force to study creation of a statewide volunteer firefighter retirement plan; appropriating money; amending Minnesota Statutes 2004, sections 352.01, subdivision 13; 352.04, subdivisions 2, 3, 12; 352.116, subdivision 1a; 352.72, subdivision 2; 352.911, subdivision 5; 352.92, subdivisions 1, 2; 352B.01, subdivision 11;

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352B.02, subdivisions 1a, 1c, 1d; 352B.30, subdivision 2; 352D.04, subdivision 2; 352D.09, subdivision 7; 353.01, subdivision 10; 353.27, subdivisions 1, 2, 3, 3a, by adding a subdivision; 353.30, subdivision 5; 353.65, subdivisions 2, 3, 6; 353.71, subdivision 2; 353B.02, subdivision 10; 353E.01, subdivision 5; 353E.05; 354.05, subdivisions 2, 13, 35; 354.42, subdivisions 2, 3, by adding a subdivision; 354.44, subdivision 6; 354.55, subdivision 11; 354A.011, subdivisions 15a, 24, 27; 354A.021, subdivisions 1, 4; 354A.092; 354A.093, subdivision 1; 354A.095; 354A.096; 354A.12, subdivisions 1, 2, 2a, 3a, 3b, 3c, 3d; 354A.30; 354A.31, subdivisions 4, 7; 354A.32, subdivision 1; 354A.37, subdivision 2; 354A.39; 354A.40, subdivision 1; 354A.41; 356.20, subdivision 2; 356.214, subdivision 1; 356.215, subdivision 8; 356.30, subdivisions 1, 3; 356.302, subdivision 7; 356.303, subdivision 4; 356.315, by adding a subdivision; 356.42, subdivision 3; 356.465, subdivision 3; 356.611, subdivision 1; 422A.01, by adding a subdivision; 423A.02, subdivision 1b; 423B.01, by adding a subdivision; 423C.01, by adding a subdivision; 490.121, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 128D; 354; 356; repealing Minnesota Statutes 2004, sections 354A.051; 354A.105; 354A.23, subdivision 1; 354A.28.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

"ARTICLE 1

MINNESOTA POSTRETIREMENT

INVESTMENT FUND CHANGES

Section 1. Minnesota Statutes 2004, section 11A.18, subdivision 9, is amended to read:

Subd. 9. Calculation of postretirement adjustment. (a) Annually, following June 30, the state board shall use the procedures in paragraphs (b), (c), and (d) to determine whether a postretirement adjustment is payable and to determine the amount of any postretirement adjustment.

(b) If the Consumer Price Index for urban wage earners and clerical workers all items index published by the Bureau of Labor Statistics of the United States Department of Labor increases from June 30 of the preceding year to June 30 of the current year, the state board shall certify the percentage increase. The amount certified must not exceed the lesser of the difference between the preretirement interest assumption and postretirement interest assumption in section 356.215, subdivision 8, paragraph (a), or 2.5 percent. For the Minneapolis Employees Retirement Fund, the amount certified must not exceed 3.5 percent.

(c) In addition to any percentage increase certified under paragraph (b), the board shall use the following procedures to determine if a postretirement adjustment is payable under this paragraph:

(1) The state board shall determine the market value of the fund on June 30 of that year;

(2) The amount of reserves required as of the current June 30 for the annuity or benefit payable to an annuitant and benefit recipient of the participating public pension plans or funds must be determined by the ~~commission-retained~~ actuary ~~as of the current June 30~~ retained under section 356.214. An annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12 full months as of the current June 30 is eligible to receive a full postretirement adjustment. An annuitant or benefit recipient who has been receiving an annuity or benefit for at least one full month, but less than 12 full months as of the current June 30, is eligible to receive a partial postretirement adjustment. Each fund shall report separately the amount of the reserves for those annuitants and benefit recipients who are eligible to receive a full postretirement benefit adjustment. This amount is known as "eligible reserves." Each fund shall also report separately the amount of the reserves for those annuitants and benefit recipients who are not eligible to receive a postretirement adjustment. This amount is known as "noneligible reserves." For an annuitant or benefit recipient who is eligible to receive a partial postretirement adjustment, each

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fund shall report separately as additional "eligible reserves" an amount that bears the same ratio to the total reserves required for the annuitant or benefit recipient as the number of full months of annuity or benefit receipt as of the current June 30 bears to 12 full months. The remainder of the annuitant's or benefit recipient's reserves must be separately reported as additional "noneligible reserves." The amount of "eligible" and "noneligible" required reserves must be certified to the board by the commission-retained actuary as soon as is practical following the current June 30;

(3) The state board shall determine the percentage increase certified under paragraph (b) multiplied by the eligible required reserves, as adjusted for mortality gains and losses under subdivision 11, determined under clause (2);

(4) The state board shall add the amount of reserves required for the annuities or benefits payable to annuitants and benefit recipients of the participating public pension plans or funds as of the current June 30 to the amount determined under clause (3);

(5) The state board shall subtract the amount determined under clause (4) from the market value of the fund determined under clause (1);

(6) The state board shall adjust the amount determined under clause (5) by the cumulative current balance determined ~~pursuant to~~ under clause (8) and any negative balance carried forward under clause (9);

(7) A positive amount resulting from the calculations in clauses (1) to (6) is the excess market value. A negative amount is the negative balance;

(8) The state board shall allocate one-fifth of the excess market value or one-fifth of the negative balance to each of five consecutive years, beginning with the fiscal year ending the current June 30; and

(9) To calculate the postretirement adjustment under this paragraph based on investment performance for a fiscal year, the state board shall add together all excess market value allocated to that year and subtract from the sum all negative balances allocated to that year. If this calculation results in a negative number, the entire negative balance must be carried forward and allocated to the next year. If the resulting amount is positive, a postretirement adjustment is payable under this paragraph. The board shall express a positive amount as a percentage of the total eligible required reserves certified to the board under clause (2).

(d) The state board shall determine the amount of any postretirement adjustment which is payable using the following procedure:

(1) The total "eligible" required reserves as of the first of January next following the end of the fiscal year for the annuitants and benefit recipients eligible to receive a full or partial postretirement adjustment as determined by clause (2) must be certified to the state board by the ~~commission-retained~~ actuary retained under section 356.214. The total "eligible" required reserves must be determined by the ~~commission-retained~~ actuary retained under section 356.214 on the assumption that all annuitants and benefit recipients eligible to receive a full or partial postretirement adjustment will be alive on the January 1 in question; and

(2) The state board shall add the percentage certified under paragraph (b) to any positive percentage calculated under paragraph (c). The board shall not subtract from the percentage certified under paragraph (b) any negative amount calculated under paragraph (c). The sum of these percentages must be carried to five decimal places and must be certified to each participating public pension fund or plan as the full postretirement adjustment percentage. The full postretirement adjustment percentage certified to each participating public pension plan or fund must not exceed five percent. For the Minneapolis Employees Retirement Fund, no maximum percentage adjustment is applicable.

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(e) A retirement annuity payable in the event of retirement before becoming eligible for Social Security benefits as provided in section 352.116, subdivision 3; 353.29, subdivision 6; or 354.35 must be treated as the sum of a period certain retirement annuity and a life retirement annuity for the purposes of any postretirement adjustment. The period certain retirement annuity plus the life retirement annuity must be the annuity amount payable until age 62 or 65, whichever applies. A postretirement adjustment granted on the period certain retirement annuity must terminate when the period certain retirement annuity terminates.

Sec. 2. [354A.42] ST. PAUL TEACHER INCREASE LIMIT.

Notwithstanding any law to the contrary, the St. Paul Teachers Retirement Fund Association may not pay a postretirement adjustment of more than five percent in any year, effective July 1, 2010.

Sec. 3. EFFECTIVE DATE.

Section 1 is effective July 1, 2010.

ARTICLE 2

DEFERRED ANNUITY

AUGMENTATION RATE CHANGE

Section 1. Minnesota Statutes 2004, section 352.116, subdivision 1a, is amended to read:

Subd. 1a. Actuarial reduction for early retirement. This subdivision applies to a person who has become at least 55 years old and first became a covered employee after June 30, 1989, and to any other covered employee who has become at least 55 years old and whose annuity is higher when calculated under section 352.115, subdivision 3, paragraph (b), in conjunction with this subdivision than when calculated under section 352.115, subdivision 3, paragraph (a), in conjunction with subdivision 1. A covered employee who retires before the normal retirement age shall be paid the normal retirement annuity provided in section 352.115, subdivisions 2 and 3, paragraph (b), reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity and the annuity amount were augmented at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, and at an annual rate of 2.5 percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee initially becomes an employee after June 30, 2006.

Sec. 2. Minnesota Statutes 2004, section 352.72, subdivision 2, is amended to read:

Subd. 2. Computation of deferred annuity. (a) The deferred annuity, if any, accruing under subdivision 1, or section 352.22, subdivision 3, must be computed as provided in section 352.22, subdivision 3, on the basis of allowable service before termination of state service and augmented as provided herein. The required reserves applicable to a deferred annuity or to an annuity for which a former employee was eligible but had not applied or to any deferred segment of an annuity must be determined as of the date the benefit begins to accrue and augmented by interest compounded annually from the first day of the month following the month in which the employee ceased to be a state employee, or July 1, 1971, whichever is later, to the first day of the month in which the annuity begins to accrue. The rates of interest used for this purpose must be five percent compounded annually until January 1, 1981, and three percent compounded annually thereafter until January 1 of the year following the year in which the former employee attains age 55., and from that date to the effective date of retirement, the rate is five percent compounded annually if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee after June 30, 2006. If a person has more than one period of uninterrupted service, the required reserves related to each period must be augmented by interest under this subdivision. The sum of the

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augmented required reserves so determined is the present value of the annuity. "Uninterrupted service" for the purpose of this subdivision means periods of covered employment during which the employee has not been separated from state service for more than two years. If a person repays a refund, the service restored by the repayment must be considered continuous with the next period of service for which the employee has credit with this system. The formula percentages used for each period of uninterrupted service must be those applicable to a new employee. The mortality table and interest assumption used to compute the annuity must be those in effect when the employee files application for annuity. This section does not reduce the annuity otherwise payable under this chapter.

(b) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former state employee who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and the tables adopted by the board and approved by the actuary retained by the Legislative Commission on Pensions and Retirement.

Sec. 3. Minnesota Statutes 2004, section 352B.30, subdivision 2, is amended to read:

Subd. 2. Computation of deferred annuity. Deferred annuities must be computed according to this chapter on the basis of allowable service before termination of service and augmented as provided in this chapter. The required reserves applicable to a deferred annuity must be augmented by interest compounded annually from the first day of the month following the month in which the member terminated service, or July 1, 1971, whichever is later, to the first day of the month in which the annuity begins to accrue. The rates of interest used for this purpose shall be five percent per year compounded annually until January 1, 1981, and after that date three percent per year compounded annually if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee after June 30, 2006. The mortality table and interest assumption used to compute the annuity shall be those in effect when the member files application for annuity.

Sec. 4. Minnesota Statutes 2004, section 353.30, subdivision 5, is amended to read:

Subd. 5. Actuarial reduction for early retirement. This subdivision applies to a member who has become at least 55 years old and first became a public employee after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under section 353.29, subdivision 3, paragraph (b), in conjunction with this subdivision than when calculated under section 353.29, subdivision 3, paragraph (a), in conjunction with subdivision 1, 1a, 1b, or 1c. An employee who retires before normal retirement age shall be paid the retirement annuity provided in section 353.29, subdivision 3, paragraph (b), reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity and the annuity amount were augmented at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee initially becomes an employee after June 30, 2006.

Sec. 5. Minnesota Statutes 2004, section 353.71, subdivision 2, is amended to read:

Subd. 2. Deferred annuity computation; augmentation. (a) The deferred annuity accruing under subdivision 1, or under sections 353.34, subdivision 3, and 353.68, subdivision 4, must be computed on the basis of allowable service prior to the termination of public service and augmented as provided in this paragraph. The required reserves applicable to a deferred annuity, or to any deferred segment of an annuity must be determined as of the first day of the month following the month in which the former member ceased to be a public employee, or July 1, 1971, whichever is later. These required reserves must be augmented at the rate of five percent annually compounded annually until January 1, 1981, and at the rate of three percent thereafter until January 1 of the year following the

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year in which the former member attains age 55. and from that date to the effective date of retirement, the rate is five percent compounded annually if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee after June 30, 2006. If a person has more than one period of uninterrupted service, the required reserves related to each period must be augmented as specified in this paragraph. The sum of the augmented required reserves is the present value of the annuity. Uninterrupted service for the purpose of this subdivision means periods of covered employment during which the employee has not been separated from public service for more than two years. If a person repays a refund, the restored service must be considered as continuous with the next period of service for which the employee has credit with this association. This section must not reduce the annuity otherwise payable under this chapter. This paragraph applies to individuals who become deferred annuitants on or after July 1, 1971. For a member who became a deferred annuitant before July 1, 1971, the paragraph applies from July 1, 1971, if the former active member applies for an annuity after July 1, 1973.

(b) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former member who terminated service before July 1, 1997, or the survivor benefit payable on behalf of a basic or police and fire member who was receiving disability benefits before July 1, 1997, which is first payable after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained by the Legislative Commission on Pensions and Retirement.

Sec. 6. Minnesota Statutes 2005 Supplement, section 354.44, subdivision 6, is amended to read:

Subd. 6. Computation of formula program retirement annuity. (a) The formula retirement annuity must be computed in accordance with the applicable provisions of the formulas stated in paragraph (b) or (d) on the basis of each member's average salary under section 354.05, subdivision 13a, for the period of the member's formula service credit.

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e), produces a higher annuity amount, in which case paragraph (d) applies. The average salary as defined in section 354.05, subdivision 13a, multiplied by the following percentages per year of formula service credit shall determine the amount of the annuity to which the member qualifying therefor is entitled:

Coordinated Member

Basic Member

Each year of service during first

ten

the percent specified in section 356.315, subdivision 1, per year

the percent specified in section 356.315, subdivision 3, per year

Each year of service thereafter

the percent specified in section 356.315, subdivision 2, per year

the percent specified in section 356.315, subdivision 4, per year

(c) (i) This paragraph applies only to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction with this paragraph than when calculated under paragraph (d), in conjunction with paragraph (e).

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(ii) Where any member retires prior to normal retirement age under a formula annuity, the member shall be paid a retirement annuity in an amount equal to the normal annuity provided in paragraph (b) reduced by one-quarter of one percent for each month that the member is under normal retirement age at the time of retirement except that for any member who has 30 or more years of allowable service credit, the reduction shall be applied only for each month that the member is under age 62.

(iii) Any member whose attained age plus credited allowable service totals 90 years is entitled, upon application, to a retirement annuity in an amount equal to the normal annuity provided in paragraph (b), without any reduction by reason of early retirement.

(e) This paragraph applies to a person who has become at least 55 years old and first becomes a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity is higher when calculated under paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b), in conjunction with paragraph (c). An employee who retires under the formula annuity before the normal retirement age shall be paid the normal annuity provided in paragraph (d) reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable to the employee if the employee deferred receipt of the annuity and the annuity amount were augmented at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee after June 30, 2006.

(f) No retirement annuity is payable to a former employee with a salary that exceeds 95 percent of the governor's salary unless and until the salary figures used in computing the highest five successive years average salary under paragraph (a) have been audited by the Teachers Retirement Association and determined by the executive director to comply with the requirements and limitations of section 354.05, subdivisions 35 and 35a.

Sec. 7. Minnesota Statutes 2004, section 354.55, subdivision 11, is amended to read:

Subd. 11. Deferred annuity; augmentation. (a) Any person covered under section 354.44, subdivision 6, who ceases to render teaching service, may leave the person's accumulated deductions in the fund for the purpose of receiving a deferred annuity at retirement. Eligibility for an annuity under this subdivision is governed pursuant to section 354.44, subdivision 1, or 354.60.

(b) The amount of the deferred retirement annuity is determined by section 354.44, subdivision 6, and augmented as provided in this subdivision. The required reserves related to that portion of the annuity which had accrued when the member ceased to render teaching service must be augmented by interest compounded annually from the first day of the month following the month during which the member ceased to render teaching service to the effective date of retirement. There shall be no augmentation if this period is less than three months or if this period commences prior to July 1, 1971. The rates of interest used for this purpose must be five percent compounded annually commencing July 1, 1971, until January 1, 1981, and three percent compounded annually thereafter until January 1 of the year following the year in which the former member attains age 55. and from that date to the effective date of retirement, the rate is five percent compounded annually if the employee became an

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employee before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee after June 30, 2006. If a person has more than one period of uninterrupted service, a separate average salary determined under section 354.44, subdivision 6, must be used for each period and the required reserves related to each period must be augmented by interest pursuant to this subdivision. The sum of the augmented required reserves so determined shall be the basis for purchasing the deferred annuity. If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has credit with this fund. If a person does not render teaching service in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of the resumption of teaching service must be those applicable to new members. The mortality table and interest assumption used to compute the annuity must be the applicable mortality table established by the board under section 354.07, subdivision 1, and the interest rate assumption under section 356.215 in effect when the member retires. A period of uninterrupted service for the purposes of this subdivision means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year.

(c) In no case shall the annuity payable under this subdivision be less than the amount of annuity payable pursuant to section 354.44, subdivision 6.

(d) The requirements and provisions for retirement before normal retirement age contained in section 354.44, subdivision 6, clause (3) or (5), shall also apply to an employee fulfilling the requirements with a combination of service as provided in section 354.60.

(e) The augmentation provided by this subdivision applies to the benefit provided in section 354.46, subdivision 2.

(f) The augmentation provided by this subdivision shall not apply to any period in which a person is on an approved leave of absence from an employer unit covered by the provisions of this chapter.

(g) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former teacher who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 8, from five percent to six percent under a calculation procedure and tables adopted by the board as recommended by an approved actuary and approved by the actuary retained by the Legislative Commission on Pensions and Retirement.

Sec. 8. Minnesota Statutes 2004, section 354A.31, subdivision 7, is amended to read:

Subd. 7. Actuarial reduction for early retirement. This subdivision applies to a person who has become at least 55 years old and first becomes a coordinated member after June 30, 1989, and to any other coordinated member who has become at least 55 years old and whose annuity is higher when calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), and subdivision 4a, paragraph (d), in conjunction with this subdivision than when calculated under subdivision 4, paragraph (c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6. A coordinated member who retires before the full benefit age shall be paid the retirement annuity calculated using the retirement annuity formula percentage in subdivision 4, paragraph (d), or subdivision 4a, paragraph (d), reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable to the member if the member deferred receipt of the annuity and the annuity amount were augmented at an annual rate of three percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually from the day the annuity begins to accrue until the normal retirement age if the person initially becomes a teacher after June 30, 2006.

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Sec. 9. Minnesota Statutes 2004, section 354A.37, subdivision 2, is amended to read:

Subd. 2. Eligibility for deferred retirement annuity. Any coordinated member who ceases to render teaching services for the school district in which the teachers retirement fund association is located, with sufficient allowable service credit to meet the minimum service requirements specified in section 354A.31, subdivision 1, shall be entitled to a deferred retirement annuity in lieu of a refund pursuant to subdivision 1. The deferred retirement annuity shall be computed pursuant to section 354A.31 and shall be augmented as provided in this subdivision. The deferred annuity shall commence upon application after the person on deferred status attains at least the minimum age specified in section 354A.31, subdivision 1.

The monthly annuity amount that had accrued when the member ceased to render teaching service must be augmented from the first day of the month following the month during which the member ceased to render teaching service to the effective date of retirement. There is no augmentation if this period is less than three months. The rate of augmentation is three percent compounded annually until January 1 of the year following the year in which the former member attains age 55, and five percent compounded annually after that date to the effective date of retirement if the employee became an employee before July 1, 2006, and at 2.5 percent compounded annually if the employee becomes an employee after June 30, 2006. If a person has more than one period of uninterrupted service, a separate average salary determined under section 354A.31 must be used for each period, and the monthly annuity amount related to each period must be augmented as provided in this subdivision. The sum of the augmented monthly annuity amounts determines the total deferred annuity payable. If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has credit with the fund. If a person does not render teaching services in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of resumption of teaching service are those applicable to new members. The mortality table and interest assumption used to compute the annuity are the table established by the fund to compute other annuities, and the interest assumption under section 356.215 in effect when the member retires. A period of uninterrupted service for the purpose of this subdivision means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year.

The augmentation provided by this subdivision applies to the benefit provided in section 354A.35, subdivision 2. The augmentation provided by this subdivision does not apply to any period in which a person is on an approved leave of absence from an employer unit.

Sec. 10. Minnesota Statutes 2004, section 356.30, subdivision 1, is amended to read:

Subdivision 1. Eligibility; computation of annuity. (a) Notwithstanding any provisions of the laws governing the retirement plans enumerated in subdivision 3, a person who has met the qualifications of paragraph (b) may elect to receive a retirement annuity from each enumerated retirement plan in which the person has at least one-half year of allowable service, based on the allowable service in each plan, subject to the provisions of paragraph (c).

(b) A person may receive, upon retirement, a retirement annuity from each enumerated retirement plan in which the person has at least one-half year of allowable service, and augmentation of a deferred annuity calculated at the appropriate rate under the laws governing each public pension plan or fund named in subdivision 3, based on the date of the person's initial entry into public employment from the date the person terminated all public service if:

(1) the person has allowable service totaling an amount that allows the person to receive an annuity in any two or more of the enumerated plans; and

(2) the person has not begun to receive an annuity from any enumerated plan or the person has made application for benefits from each applicable plan and the effective dates of the retirement annuity with each plan under which the person chooses to receive an annuity are within a one-year period.

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(c) The retirement annuity from each plan must be based upon the allowable service, accrual rates, and average salary in the applicable plan except as further specified or modified in the following clauses:

(1) the laws governing annuities must be the law in effect on the date of termination from the last period of public service under a covered retirement plan with which the person earned a minimum of one-half year of allowable service credit during that employment;

(2) the "average salary" on which the annuity from each covered plan in which the employee has credit in a formula plan must be based on the employee's highest five successive years of covered salary during the entire service in covered plans;

(3) the accrual rates to be used by each plan must be those percentages prescribed by each plan's formula as continued for the respective years of allowable service from one plan to the next, recognizing all previous allowable service with the other covered plans;

(4) the allowable service in all the plans must be combined in determining eligibility for and the application of each plan's provisions in respect to reduction in the annuity amount for retirement prior to normal retirement age; and

(5) the annuity amount payable for any allowable service under a nonformula plan of a covered plan must not be affected, but such service and covered salary must be used in the above calculation.

(d) This section does not apply to any person whose final termination from the last public service under a covered plan was before May 1, 1975.

(e) For the purpose of computing annuities under this section, the accrual rates used by any covered plan, except the public employees police and fire plan, the judges' retirement fund, and the State Patrol retirement plan, must not exceed the percent specified in section 356.315, subdivision 4, per year of service for any year of service or fraction thereof. The formula percentage used by the judges' retirement fund must not exceed the percentage rate specified in section 356.315, subdivision 8, per year of service for any year of service or fraction thereof. The accrual rate used by the public employees police and fire plan and the State Patrol retirement plan must not exceed the percentage rate specified in section 356.315, subdivision 6, per year of service for any year of service or fraction thereof. The accrual rate or rates used by the legislators retirement plan and the elective state officers retirement plan must not exceed 2.5 percent, but this limit does not apply to the adjustment provided under section 3A.02, subdivision 1, paragraph (c), or 352C.031, paragraph (b).

(f) Any period of time for which a person has credit in more than one of the covered plans must be used only once for the purpose of determining total allowable service.

(g) If the period of duplicated service credit is more than one-half year, or the person has credit for more than one-half year, with each of the plans, each plan must apply its formula to a prorated service credit for the period of duplicated service based on a fraction of the salary on which deductions were paid to that fund for the period divided by the total salary on which deductions were paid to all plans for the period.

(h) If the period of duplicated service credit is less than one-half year, or when added to other service credit with that plan is less than one-half year, the service credit must be ignored and a refund of contributions made to the person in accord with that plan's refund provisions.

Sec. 11. EFFECTIVE DATE.

Sections 1 to 10 are effective July 1, 2006.

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ARTICLE 3

TEACHERS RETIREMENT ASSOCIATION

COVERAGE AND BENEFIT RESTRUCTURING

Section 1. Minnesota Statutes 2004, section 127A.50, subdivision 1, is amended to read:

Subdivision 1. Aid adjustment. Beginning in fiscal year 1998 and each year thereafter, the commissioner of education shall adjust state aid payments to school operating funds for Independent School District No. 625, and Independent School District No. 709~~, and Special School District No. 1~~ by the net amount of clauses (1) and (2), for Special School District No. 1 by the net amount of clauses (1), (2), and (4), and for all other districts, including charter schools, but excluding any education organizations that are prohibited from receiving direct state aids under section 123A.26 or 125A.75, subdivision 7, by the net amount of clauses (1), (2), ~~and~~ (3), and (4):

(1) a decrease equal to each district's share of the fiscal year 1997 adjustment effected under Minnesota Statutes 1996, section 124.2139;

(2) an increase equal to one percent of the salaries paid to members of the general plan of the Public Employees Retirement Association in fiscal year 1997, multiplied by 0.35 for fiscal year 1998 and 0.70 each year thereafter;

(3) a decrease equal to 2.34 percent of the salaries paid to members of the Teachers Retirement Association in fiscal year 1997.; and

(4) an increase equal to 0.5 percent of the salaries paid to members of the Teachers Retirement Association in fiscal year 2007.

EFFECTIVE DATE. This section is effective for revenue for fiscal year 2008.

Sec. 2. Minnesota Statutes 2004, section 128D.10, is amended to read:

128D.10 CONTINUITY ON TENURE, PENSIONS, AND RETIREMENT.

(a) The tenure, pension, and retirement provisions of any law applicable to employees of the special school district of Minneapolis~~, including employees belonging to the municipal employees retirement fund and those belonging to the Minneapolis Teachers' Retirement Fund Association~~ before April 24, 1959, shall continue to be applicable in the same manner and to the same extent to employees of the special independent school district after April 24, 1959, except as otherwise provided in law.

(b) The provisions of any general law or laws which are applicable only to independent school districts wholly or partially within cities of the first class shall not be applicable to the special independent school district of Minneapolis.

(c) The powers, duties, and corporate structure of the Minneapolis Teachers' Retirement Fund Association, and the laws applicable thereto, shall be and remain the same in the special independent school district of Minneapolis as at the time of enactment of the within law, until changed in accordance with law.

Sec. 3. [128D.19] AID REDEDICATION.

Notwithstanding any law to the contrary and subject to section 354A.12, subdivision 3c, special direct state aid previously paid to the Minneapolis Teachers Retirement Fund Association under sections 354A.12, subdivisions 3a and 3b, and 423A.02, must be paid to the Teachers Retirement Association.

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Sec. 4. Minnesota Statutes 2004, section 354.05, subdivision 2, is amended to read:

Subd. 2. Teacher. (a) "Teacher" means:

(1) a person who renders service as a teacher, supervisor, principal, superintendent, librarian, nurse, counselor, social worker, therapist, or psychologist in a public school of the state located outside of the corporate limits of ~~a city of the first class~~ the city of Duluth or the city of St. Paul, or in any charter school, irrespective of the location of the school, or in any charitable, penal, or correctional institutions of a governmental subdivision, or who is engaged in educational administration in connection with the state public school system, but excluding the University of Minnesota, whether the position be a public office or an employment, and not including the members or officers of any general governing or managing board or body;

(2) an employee of the Teachers Retirement Association;

(3) a person who renders teaching service on a part-time basis and who also renders other services for a single employing unit. A person whose teaching service comprises at least 50 percent of the combined employment salary is a member of the association for all services with the single employing unit. If the person's teaching service comprises less than 50 percent of the combined employment salary, the executive director must determine whether all or none of the combined service is covered by the association; or

(4) a person who is not covered by the plans established under chapter 352D, 354A, or 354B and who is employed by the Board of Trustees of the Minnesota State Colleges and Universities system in an unclassified position as:

(i) a president, vice-president, or dean;

(ii) a manager or a professional in an academic or an academic support program other than specified in item (i);

(iii) an administrative or a service support faculty position; or

(iv) a teacher or a research assistant.

(b) "Teacher" does not mean:

(1) a person who works for a school or institution as an independent contractor as defined by the Internal Revenue Service;

(2) a person who renders part-time teaching service or who is a customized trainer as defined by the Minnesota State Colleges and Universities system if (i) the service is incidental to the regular nonteaching occupation of the person; and (ii) the employer stipulates annually in advance that the part-time teaching service or customized training service will not exceed 300 hours in a fiscal year and retains the stipulation in its records; and (iii) the part-time teaching service or customized training service actually does not exceed 300 hours in a fiscal year; or

(3) a person exempt from licensure under section 122A.30.

Sec. 5. Minnesota Statutes 2004, section 354.05, subdivision 13, is amended to read:

Subd. 13. Allowable service. "Allowable service" means:

(1) Any service rendered by a teacher for which on or before July 1, 1957, the teacher's account in the retirement fund was credited by reason of employee contributions in the form of salary deductions, payments in lieu of salary deductions, or in any other manner authorized by Minnesota Statutes 1953, sections 135.01 to 135.13, as amended by Laws 1955, chapters 361, 549, 550, 611, or

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(2) Any service rendered by a teacher for which on or before July 1, 1961, the teacher elected to obtain credit for service by making payments to the fund pursuant to Minnesota Statutes 1980, section 354.09 and section 354.51, or

(3) Any service rendered by a teacher after July 1, 1957, for any calendar month when the member receives salary from which deductions are made, deposited and credited in the fund, or

(4) Any service rendered by a person after July 1, 1957, for any calendar month where payments in lieu of salary deductions are made, deposited and credited into the fund as provided in Minnesota Statutes 1980, section 354.09, subdivision 4, and section 354.53, or

(5) Any service rendered by a teacher for which the teacher elected to obtain credit for service by making payments to the fund pursuant to Minnesota Statutes 1980, section 354.09, subdivisions 1 and 4, sections 354.50, 354.51, Minnesota Statutes 1957, section 135.41, subdivision 4, Minnesota Statutes 1971, section 354.09, subdivision 2, or Minnesota Statutes, 1973 Supplement, section 354.09, subdivision 3, or

(6) Both service during years of actual membership in the course of which contributions were currently made and service in years during which the teacher was not a member but for which the teacher later elected to obtain credit by making payments to the fund as permitted by any law then in effect, or

(7) Any service rendered where contributions were made and no allowable service credit was established because of the limitations contained in Minnesota Statutes 1957, section 135.09, subdivision 2, as determined by the ratio between the amounts of money credited to the teacher's account in a fiscal year and the maximum retirement contribution allowable for that year, or

(8) MS 2002 (Expired)

(9) A period of time during which a teacher who is a state employee was on strike without pay, not to exceed a period of one year, if the teacher makes a payment in lieu of salary deductions or makes a prior service credit purchase payment, whichever applies. If the payment is made within 12 months, the payment by the teacher must be an amount equal to the employee and employer contribution rates set forth in section 354.42, subdivisions 2 and 3, applied to the teacher's rate of salary in effect on the conclusion of the strike for the period of the strike without pay, plus compound interest at a monthly rate of 0.71 percent from the last day of the strike until the date of payment. If the payment by the employee is not made within 12 months, the payment must be in an amount equal to the payment amount determined under section 356.55 or 356.551, whichever applies, or

(10) A period of service before July 1, 2006, that was properly credited as allowable service by the Minneapolis Teachers Retirement Fund Association, and that was rendered by a teacher as an employee of Special School District No. 1, Minneapolis, or by an employee of the Minneapolis Teachers Retirement Fund Association who was a member of the Minneapolis Teachers Retirement Fund Association by virtue of that employment, who has not begun receiving an annuity or other retirement benefit from the former Minneapolis Teachers Retirement Fund Association calculated in whole or in part on that service before July 1, 2006, and who has not taken a refund of member contributions related to that service unless the refund is repaid under section 354.50, subdivision 4. Service as an employee of Special School District No. 1, Minneapolis on or after July 1, 2006 is "allowable service" only as provided by this chapter.

Sec. 6. Minnesota Statutes 2004, section 354.42, subdivision 2, is amended to read:

Subd. 2. Employee. (a) The employee contribution to the fund is an amount equal to ~~5.0~~ the following percentage of the salary of a member:

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(1) after July 1, 2006, for a teacher employed by Special School District No. 1, Minneapolis, 5.5 percent if the teacher is a coordinated member, and 9.0 percent if the teacher is a basic member;

(2) for every other teacher, after July 1, 2006, 5.5 percent of if the ~~salary of every~~ teacher is a coordinated member and 9.0 percent of if the ~~salary of every~~ teacher is a basic member.

(b) This contribution must be made by deduction from salary. Where any portion of a member's salary is paid from other than public funds, the member's employee contribution must be based on the entire salary received.

Sec. 7. Minnesota Statutes 2004, section 354.42, subdivision 3, is amended to read:

Subd. 3. Employer. (a) The regular employer contribution to the fund by Special School District No. 1, Minneapolis, after July 1, 2006, and before July 1, 2007, is an amount equal to 5.00 percent of the salary of each of its teachers who is a coordinated member and 9.00 percent of the salary of each of its teachers who is a basic member. After July 1, 2007, the regular employer contribution to the fund by Special School District No. 1, Minneapolis, is an amount equal to 5.50 percent of salary of each coordinated member and 9.50 percent of salary of each basic member. The additional employer contribution to the fund by Special School District No. 1, Minneapolis, after July 1, 2006, is an amount equal to 3.64 percent of the salary of each teacher who is a coordinated member or is a basic member.

(b) The employer contribution to the fund for every other employer, is an amount equal to 5.0 percent of the salary of each coordinated member and 9.0 percent of the salary of each basic member before July 1, 2007, and 5.5 percent of the salary of each coordinated member and 9.5 percent of the salary of each basic member after June 30, 2007.

Sec. 8. Minnesota Statutes 2005 Supplement, section 354.44, subdivision 6, is amended to read:

Coordinated Member

Basic Member

Each year of service during first

ten

the percent specified in section 356.315, subdivision 1, per year

the percent specified in section 356.315, subdivision 3, per year

Each year of service thereafter

the percent specified in section 356.315, subdivision 2, per year

the percent specified in section 356.315, subdivision 4, per year

For service rendered on or after July 1, 2006, the average salary as defined in section 354.05, subdivision 13a, multiplied by the following percentages per year of service credit, determines the amount the annuity to which the member qualifying therefor is:

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Coordinated Member

Basic Member

Each year of service during first

ten

the percent specified in section 356.315, subdivision 1a, per year

the percent specified in section 356.315, subdivision 3, per year

Each year of service after ten

years of service

the percent specified in section 356.315, subdivision 2b, per year

the percent specified in section 356.315, subdivision 4, per year

(c)(i) This paragraph applies only to a person who first became a member of the association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction with this paragraph than when calculated under paragraph (d), in conjunction with paragraph (e).

(d) This paragraph applies to a member who has become at least 55 years old and first became a member of the association after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity amount when calculated under this paragraph and in conjunction with paragraph (e), is higher than it is when calculated under paragraph (b), in conjunction with paragraph (c). For a basic member, the average salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified by section 356.315, subdivision 4, for each year of service for a basic member ~~and by the percent specified in section 356.315, subdivision 2, for each year of service for a coordinated member~~ shall determine the amount of the retirement annuity to which the basic member is entitled. The annuity of a basic member who was a member for the former Minneapolis Teachers Retirement Fund Association as of June 30, 2006, must be determined according to the annuity formula under the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association in effect as of that date. For a coordinated member, the average salary, as defined in section 354.05, subdivision 13a, multiplied by the percent specified in section 356.315, subdivision 2, for each year of service rendered before July 1, 2006, and by the percent specified in section 356.315, subdivision 2b, for each year of service rendered on or after July 1, 2006, determines the amount of the retirement annuity to which the coordinated member is entitled.

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Sec. 9. [354.70] CONSOLIDATION OF MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.

Subdivision 1. Membership transfer. All active, inactive, and retired members of the Minneapolis Teachers Retirement Fund Association are transferred to the Teachers Retirement Association and are no longer members of the Minneapolis Teachers Retirement Fund Association as of July 1, 2006.

Subd. 2. TRA membership. A person first hired as a teacher by Special School District No. 1, Minneapolis, after June 30, 2006, and who is a teacher as defined in section 354.05, subdivision 2, is a member of the Teachers Retirement Association for the person's teaching service.

Subd. 3. Service credit and liability transfer. All allowable service and salary credit of the members and other individuals transferred under subdivision 1 as specified in the records of the Minneapolis Teachers Retirement Fund Association on the transfer date is allowable service credit under section 354.05, subdivision 13, formula service credit under section 354.05, subdivision 25, and salary credit under section 354.05, subdivision 35, for the Teachers Retirement Association.

Subd. 4. Transfer of records. On or before June 30, 2006, the chief administrative officer of the Minneapolis Teachers Retirement Fund Association shall transfer all records and documents relating to the funds and the benefit plans of the association to the executive director of the Teachers Retirement Association. To the extent possible, original copies of all records and documents must be transferred.

Subd. 5. Transfer of assets. (a) On or before June 30, 2006, the chief administrative officer of the Minneapolis Teachers Retirement Fund Association shall transfer to the Teachers Retirement Association the entire assets of the special retirement fund of the Minneapolis Teachers Retirement Fund Association. The transfer of the assets of the Minneapolis Teachers Retirement Fund Association special retirement fund must include any accounts receivable that are determined by the executive director of the State Board of Investment as reasonably capable of being collected. Legal title to account receivables that are determined by the executive director of the State Board of Investment as not reasonably capable of being collected transfers to Special School District No. 1, Minneapolis, as of the date of the determination of the executive director of the State Board of Investment. If the account receivables transferred to Special School District No. 1, Minneapolis, are subsequently recovered by the school district, the superintendent of Special School District No. 1, Minneapolis, shall transfer the recovered amount to the executive director of the Teachers Retirement Association, in cash, for deposit in the teachers retirement fund, less the reasonable expenses of the school district related to the recovery.

(b) As of June 30, 2006, assets of the special retirement fund of the Minneapolis Teachers Retirement Fund Association are assets of the Teachers Retirement Association to be invested by the State Board of Investment pursuant to the provisions of section 354.07, subdivision 4. The Teachers Retirement Association is the successor in interest to all claims which the Minneapolis Teachers Retirement Fund Association may have or may assert against any person and is the successor in interest to all claims which could have been asserted against the former Minneapolis Teachers Retirement Fund Association, subject to the following exceptions and qualifications:

(1) the Teachers Retirement Association is not liable for any claim against the Minneapolis Teachers Retirement Fund Association, its former board or board members, which is founded upon a claim of breach of fiduciary duty, where the act or acts constituting the claimed breach were not done in good faith;

(2) the Teachers Retirement Association may assert any applicable defense to any claim in any judicial or administrative proceeding that the former Minneapolis Teachers Retirement Fund Association or its Board would otherwise have been entitled to assert;

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(3) the Teachers Retirement Association may assert any applicable defense that the Teachers Retirement Association may assert in its capacity as a statewide agency; and

(4) the Teachers Retirement Association shall indemnify any former fiduciary of the Minneapolis Teachers Retirement Fund Association consistent with the provisions of the Public Pension Fiduciary Responsibility Act, in section 356A.11.

(c) From the assets of the former Minneapolis Teachers Retirement Fund Association transferred to the Teachers Retirement Association, an amount equal to the percentage figure that represents the ratio between the market value of the Minnesota postretirement investment fund as of June 30, 2006, and the required reserves of the Minnesota post retirement investment fund as of June 30, 2006, applied to the present value of future benefits payable to annuitants of the former Minneapolis Teachers Retirement Fund Association as of June 30, 2006, including any postretirement adjustment from the Minnesota postretirement investment fund expected to be payable on January 1, 2007, must be transferred to the Minnesota postretirement investment fund. The executive director of the State Board of Investment shall estimate this ratio at the time of the transfer. By January 1, 2007, after all necessary financial information becomes available to determine the actual funded ratio of the Minnesota postretirement investment fund, the postretirement investment fund must refund to the Teachers Retirement Association any excess assets or the Teachers Retirement Association must contribute any deficiency to the Minnesota postretirement investment fund with interest under section 11A.18, subdivision 6. The balance of the assets of the former Minneapolis Teachers Retirement Fund Association after the transfer to the Minnesota postretirement investment fund must be credited to the Teachers Retirement Association.

If the assets transferred by the Minneapolis Teachers Retirement Fund Association to the Teachers Retirement Association are insufficient to meet its obligation to the Minnesota postretirement investment fund, additional assets must be transferred by the executive director of the Teachers Retirement Association to meet the amount required.

Subd. 6. Benefit calculation. (a) For every deferred, inactive, disabled, and retired member of the Minneapolis Teachers Retirement Fund Association transferred under subdivision 1, and the survivors of these members, annuities or benefits earned before the date of the transfer, other than future postretirement adjustments, must be calculated and paid by the Teachers Retirement Association under the laws, articles of incorporation, and bylaws of the former Minneapolis Teachers Retirement Fund Association that were in effect relative to the person on the date of the person's termination of active service covered by the former Minneapolis Teachers Retirement Fund Association.

(b) Former Minneapolis Teachers Retirement Fund Association members who retired before July 1, 2006, must receive postretirement adjustments after December 31, 2006, only as provided in section 11A.18. All other benefit recipients of the former Minneapolis Teachers Retirement Fund Association must receive postretirement adjustments after December 31, 2006, only as provided in section 356.41.

(c) This consolidation does not impair or diminish benefits for an active, deferred, or retired member or a survivor of an active, deferred, or retired member under the former Minneapolis Teachers Retirement Fund Association in existence at the time of the consolidation, except that any future guaranteed or investment-related postretirement adjustments must be paid after July 1, 2006, in accordance with paragraph (b), and all benefits based on service on or after July 1, 2006 must be determined only by laws governing the Teachers Retirement Association.

Subd. 7. Termination of Minneapolis Teachers Retirement Fund Association special retirement fund. (a) As of June 30, 2006, the Minneapolis Teachers Retirement Fund Association ceases to exist.

(b) Contracts, records, and obligations of the Minneapolis Teachers Retirement Fund Association special retirement fund existing at the time of consolidation with the Teachers Retirement Association are transferred to the Teachers Retirement Association pursuant to the provisions of section 15.039, subdivisions 5 and 5a, except that

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contracts, records, and obligations of the Minneapolis Teachers Retirement Fund Association special retirement fund related to investment and safekeeping of assets are transferred to the State Board of Investment pursuant to the provisions of section 15.039, subdivisions 5 and 5a. The State Board of Investment has the authority to pay the investment-related liabilities and obligations from the assets transferred from the Minnesota Teachers Retirement Fund Association incurred by the Teachers Retirement Association. The audit or examination of the Minneapolis Teachers Retirement Fund Association for year-end June 30, 2006 must be performed by either the State Auditor or the Legislative Auditor under an agreement with the Teachers Retirement Association. The costs of the audit or examination must be paid by the Teachers Retirement Association. Between the date of enactment of this section and June 30, 2006, the Minneapolis Teachers Retirement Fund Association cannot incur a new or additional enforceable contractual liability or obligation without approval of the Teachers Retirement Association.

Sec. 10. [354.75] MINNEAPOLIS EMPLOYEES RETIREMENT FUND STATE AID REDEDICATED.

Subdivision 1. Appropriation. The positive difference, if any, between the actual state aid paid to the Minneapolis Employees Retirement fund under section 422A.101, subdivision 3, and $8,065,000 annually is appropriated from the general fund to the commissioner of finance for deposit in the Teachers Retirement Association to offset all or a portion of the current and future unfunded actuarial accrued liability of the Minneapolis Teachers Retirement Fund Association.

Subd. 2. Financial requirements. The appropriation in subdivision 1 is available to the extent that financial requirements of the Minneapolis Employees Retirement Fund under section 422A.101, subdivision 3, have been satisfied.

Sec. 11. Minnesota Statutes 2004, section 354A.011, subdivision 15a, is amended to read:

Subd. 15a. Normal retirement age. "Normal retirement age" means age 65 for a person who first became a member of the coordinated program of the ~~Minneapolis or~~ St. Paul Teachers Retirement Fund Association or the new law coordinated program of the Duluth Teachers Retirement Fund Association or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989. For a person who first became a member of the coordinated program of the ~~Minneapolis or~~ St. Paul Teachers Retirement Fund Association or the new law coordinated program of the Duluth Teachers Retirement Fund Association after June 30, 1989, normal retirement age means the higher of age 65 or retirement age, as defined in United States Code, title 42, section 416(l), as amended, but not to exceed age 66. For a person who is a member of the basic program of the ~~Minneapolis or~~ St. Paul Teachers Retirement Fund Association or the old law coordinated program of the Duluth Teachers Retirement Fund Association, normal retirement age means the age at which a teacher becomes eligible for a normal retirement annuity computed upon meeting the age and service requirements specified in the applicable provisions of the articles of incorporation or bylaws of the respective teachers retirement fund association.

Sec. 12. Minnesota Statutes 2004, section 354A.011, subdivision 27, is amended to read:

Subd. 27. Teacher. (a) "Teacher" means any person who renders service for a public school district, other than a charter school, located in the corporate limits of ~~one of~~ the ~~cities of the first class which was so classified on January 1, 1979~~ Duluth and St. Paul, as any of the following:

(1) a full-time employee in a position for which a valid license from the state Department of Education is required;

(2) an employee of the teachers retirement fund association located in the city of the first class unless the employee has exercised the option pursuant to Laws 1955, chapter 10, section 1, to retain membership in the Minneapolis Employees Retirement Fund established pursuant to chapter 422A;

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(3) a part-time employee in a position for which a valid license from the state Department of Education is required; or

(4) a part-time employee in a position for which a valid license from the state Department of Education is required who also renders other nonteaching services for the school district, unless the board of trustees of the teachers retirement fund association determines that the combined employment is on the whole so substantially dissimilar to teaching service that the service may not be covered by the association.

(b) The term does not mean any person who renders service in the school district as any of the following:

(1) an independent contractor or the employee of an independent contractor;

(2) an employee who is a full-time teacher covered by the Teachers Retirement Association or by another teachers retirement fund association established pursuant to this chapter or chapter 354;

(3) an employee exempt from licensure pursuant to section 122A.30;

(4) an employee who is a teacher in a technical college located in a city of the first class unless the person elects coverage by the applicable first class city teacher retirement fund association under section 354B.21, subdivision 2;

(5) a teacher employed by a charter school, irrespective of the location of the school; or

(6) an employee who is a part-time teacher in a technical college in a city of the first class and who has elected coverage by the applicable first class city teacher retirement fund association under section 354B.21, subdivision 2, but (i) the teaching service is incidental to the regular nonteaching occupation of the person; (ii) the applicable technical college stipulates annually in advance that the part-time teaching service will not exceed 300 hours in a fiscal year; and (iii) the part-time teaching actually does not exceed 300 hours in the fiscal year to which the certification applies.

Sec. 13. Minnesota Statutes 2004, section 354A.021, subdivision 1, is amended to read:

Subdivision 1. Establishment. There is established a teachers retirement fund association in each of the cities of ~~the first class which were so classified on January 1, 1979~~ Duluth and St. Paul. The associations shall be known respectively as the "Duluth Teachers Retirement Fund Association," ~~the "Minneapolis Teachers Retirement Fund Association"~~ and the "St. Paul Teachers Retirement Fund Association." Each association shall be a continuation of the teachers retirement fund association with the same corporate name established pursuant to the authorization contained in Laws 1909, chapter 343, section 1.

Sec. 14. Minnesota Statutes 2004, section 354A.092, is amended to read:

354A.092 SABBATICAL LEAVE.

Any teacher in the coordinated program of ~~either the Minneapolis Teachers Retirement Fund Association or~~ the St. Paul Teachers Retirement Fund Association or any teacher in the new law coordinated program of the Duluth Teachers Retirement Fund Association who is granted a sabbatical leave shall be entitled to receive allowable service credit in the applicable association for periods of sabbatical leave. To obtain the service credit, the teacher on sabbatical leave shall make an employee contribution to the applicable association. No teacher shall be entitled to receive more than three years of allowable service credit pursuant to this section for a period or periods of sabbatical leave during any ten consecutive fiscal or calendar years, whichever is the applicable plan year for the teachers retirement fund association. If the teacher granted a sabbatical leave makes the employee contribution for a period of sabbatical leave pursuant to this section, the employing unit shall make an employer contribution on behalf

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of the teacher to the applicable association for that period of sabbatical leave in the manner described in section 354A.12, subdivision 2a. The employee and employer contributions shall be in an amount equal to the employee and employer contribution rates in effect for other active members of the association covered by the same program applied to a salary figure equal to the teacher's actual covered salary for the plan year immediately preceding the sabbatical leave period. Payment of the employee contribution authorized pursuant to this section shall be made by the teacher on or before June 30 of year next following the year in which the sabbatical leave terminated and shall be made without interest. For sabbatical leaves taken after June 30, 1986, the required employer contributions shall be paid by the employing unit within 30 days after notification by the association of the amount due. If the employee contributions for the sabbatical leave period are less than an amount equal to the applicable contribution rate applied to a salary figure equal to the teacher's actual covered salary for the plan year immediately preceding the sabbatical leave period, service credit shall be prorated. The prorated service credit shall be determined by the ratio between the amount of the actual payment which was made and the full contribution amount payable pursuant to this section.

Sec. 15. Minnesota Statutes 2004, section 354A.093, subdivision 1, is amended to read:

Subdivision 1. Eligibility. Any teacher in the coordinated program of ~~either the Minneapolis Teachers Retirement Fund Association or~~ the St. Paul Teachers Retirement Fund Association or any teacher in the new law coordinated program of the Duluth Teachers Retirement Fund Association who is absent from employment by reason of service in the uniformed services as defined in United States Code, title 38, section 4303(13) and who returns to the employer providing active teaching service upon discharge from uniformed service within the time frames required under United States Code, title 38, section 4312(e), may receive allowable service credit in the applicable association for all or a portion of the period of uniformed service, provided that the teacher did not separate from uniformed service with a dishonorable or bad conduct discharge or under other than honorable conditions.

Sec. 16. Minnesota Statutes 2004, section 354A.095, is amended to read:

354A.095 PARENTAL AND MATERNITY LEAVE.

Basic or coordinated members of the St. Paul Teachers Retirement Fund Association~~, the Minneapolis Teachers Retirement Fund Association,~~ and new coordinated members of the Duluth Teachers Retirement Fund Association, who are granted parental or maternity leave of absence by the employing authority, are entitled to obtain service credit not to exceed one year for the period of leave upon payment to the applicable fund by the end of the fiscal year following the fiscal year in which the leave of absence terminated. The amount of the payment must include the total required employee and employer contributions for the period of leave prescribed in section 354A.12. Payment must be based on the member's average monthly salary rate upon return to teaching service, and is payable without interest. Payment must be accompanied by a certified or otherwise adequate copy of the resolution or action of the employing authority granting or approving the leave.

Sec. 17. Minnesota Statutes 2004, section 354A.096, is amended to read:

354A.096 MEDICAL LEAVE.

Any teacher in the coordinated program of ~~either the Minneapolis Teachers Retirement Fund Association or~~ the St. Paul Teachers Retirement Fund Association or the new law coordinated program of the Duluth Teachers Retirement Fund Association who is on an authorized medical leave of absence and subsequently returns to teaching service is entitled to receive allowable service credit, not to exceed one year, for the period of leave, upon making the prescribed payment to the fund. This payment must include the required employee and employer contributions at the rates specified in section 354A.12, subdivisions 1 and 2, as applied to the member's average full-time monthly salary rate on the date the leave of absence commenced plus annual interest at the rate of 8.5 percent per year from the end of the fiscal year during which the leave terminates to the end of the month during which payment is made.

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The member must pay the total amount required unless the employing unit, at its option, pays the employer contributions. The total amount required must be paid by the end of the fiscal year following the fiscal year in which the leave of absence terminated or before the member retires, whichever is earlier. Payment must be accompanied by a copy of the resolution or action of the employing authority granting the leave and the employing authority, upon granting the leave, must certify the leave to the association in a manner specified by the executive director. A member may not receive more than one year of allowable service credit during any fiscal year by making payment under this section. A member may not receive disability benefits under section 354A.36 and receive allowable service credit under this section for the same period of time.

Sec. 18. Minnesota Statutes 2004, section 354A.12, subdivision 1, is amended to read:

Subdivision 1. Employee contributions. The contribution required to be paid by each member of a teachers retirement fund association shall not be less than the percentage of total salary specified below for the applicable association and program:

Association and Program

Percentage of

Total Salary

Duluth Teachers Retirement Association

old law and new law

coordinated programs

5.5 percent

~~Minneapolis Teachers Retirement Association~~

~~basic program~~

~~8.5 percent~~

~~coordinated program~~

~~5.5 percent~~

St. Paul Teachers Retirement Association

basic program

8 percent

coordinated program

5.5 percent

Contributions shall be made by deduction from salary and must be remitted directly to the respective teachers retirement fund association at least once each month.

Sec. 19. Minnesota Statutes 2004, section 354A.12, subdivision 2, is amended to read:

Subd. 2. Retirement contribution levy disallowed. Except as provided in ~~subdivision 3b and in section 423A.02, subdivision 3, with respect to the city of Minneapolis and special school district No. 1 and in~~ section 423A.02, subdivision 3, with respect to independent school district No. 625, notwithstanding any law to the contrary, levies for teachers retirement fund associations in the cities of ~~the first class~~ Duluth and St. Paul, including levies for any employer Social Security taxes for teachers covered by the Duluth Teachers Retirement Fund Association or the ~~Minneapolis Teachers Retirement Fund Association or the~~ St. Paul Teachers Retirement Fund Association, are disallowed.

Sec. 20. Minnesota Statutes 2004, section 354A.12, subdivision 2a, is amended to read:

Subd. 2a. Employer regular and additional contribution rates. (a) The employing units shall make the following employer contributions to teachers retirement fund associations:

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(1) for any coordinated member of a teachers retirement fund association in a city of the first class, the employing unit shall pay the employer Social Security taxes in accordance with section 355.46, subdivision 3, clause (b);

(2) for any coordinated member of one of the following teachers retirement fund associations in a city of the first class, the employing unit shall make a regular employer contribution to the respective retirement fund association in an amount equal to the designated percentage of the salary of the coordinated member as provided below:

Duluth Teachers Retirement Fund Association

4.50 percent

~~Minneapolis Teachers Retirement Fund Association~~

~~4.50 percent~~

St. Paul Teachers Retirement Fund Association

4.50 percent

(3) for any basic member of ~~one of~~ the ~~following~~ St. Paul Teachers Retirement Fund ~~associations in a city of the first class~~ Association, the employing unit shall make a regular employer contribution to the respective retirement fund in an amount equal to ~~the designated percentage~~ 8.00 percent of the salary of the basic member ~~as provided below:~~;

~~Minneapolis Teachers Retirement Fund Association~~

~~8.50 percent~~

~~St. Paul Teachers Retirement Fund Association~~

~~8.00 percent~~

(4) for a basic member of a the St. Paul Teachers Retirement Fund Association ~~in a city of the first class~~, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to ~~the designated percentage~~ 3.64 percent of the salary of the basic member~~, as provided below:~~;

~~Minneapolis Teachers Retirement~~

~~Fund Association~~

~~July 1, 1993 - June 30, 1994~~

~~4.85 percent~~

~~July 1, 1994, and thereafter~~

~~3.64 percent~~

~~St. Paul Teachers Retirement~~

~~Fund Association~~

~~July 1, 1993 - June 30, 1995~~

~~4.63 percent~~

~~July 1, 1995, and thereafter~~

~~3.64 percent~~

(5) for a coordinated member of a teachers retirement fund association in a city of the first class, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to the applicable percentage of the coordinated member's salary, as provided below:

Duluth Teachers Retirement

Fund Association

1.29 percent

~~Minneapolis Teachers Retirement~~

~~Fund Association~~

~~July 1, 1993 - June 30, 1994~~

~~0.50 percent~~

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~~July 1, 1994, and thereafter~~

~~3.64 percent~~

St. Paul Teachers Retirement

Fund Association

July 1, 1993 - June 30, 1994

0.50 percent

July 1, 1994 - June 30, 1995

1.50 percent

July 1, 1997, and thereafter

3.84 percent

(b) The regular and additional employer contributions must be remitted directly to the respective teachers retirement fund association at least once each month. Delinquent amounts are payable with interest under the procedure in subdivision 1a.

(c) Payments of regular and additional employer contributions for school district or technical college employees who are paid from normal operating funds must be made from the appropriate fund of the district or technical college.

Sec. 21. Minnesota Statutes 2004, section 354A.12, subdivision 3a, is amended to read:

Subd. 3a. Special direct state aid to first class city teachers retirement fund associations. (a) In fiscal year 1998, the state shall pay $4,827,000 to the St. Paul Teachers Retirement Fund Association, $17,954,000 to the Minneapolis Teachers Retirement Fund Association, and $486,000 to the Duluth Teachers Retirement Fund Association. In each ~~subsequent~~ fiscal year after fiscal year 2006, these payments to the first class city teachers retirement fund associations must be $2,827,000 for St. Paul, $12,954,000 to the Teachers Retirement Association for the former Minneapolis Teachers Retirement Fund Association, and $486,000 for Duluth.

(b) The direct state aids under this subdivision are payable October 1 annually. The commissioner of finance shall pay the direct state aid. The amount required under this subdivision is appropriated annually from the general fund to the commissioner of finance.

Sec. 22. Minnesota Statutes 2004, section 354A.12, subdivision 3b, is amended to read:

Subd. 3b. Special direct state matching aid to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association. (a) Special School District No. 1 ~~may~~ must make an additional employer contribution to the ~~Minneapolis~~ Teachers Retirement Fund Association. The city of Minneapolis ~~may~~ must make a contribution to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association. This contribution ~~may~~ must be made by a levy of the board of estimate and taxation of the city of Minneapolis and the levy, if made, is classified as that of a special taxing district for purposes of sections 275.065 and 276.04, and for all other property tax purposes.

(b) ~~For every $1,000~~ $1,125,000 must be contributed ~~in equal proportion~~ by Special School District No. 1 and $1,125,000 must be contributed by the city of Minneapolis to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association under paragraph (a), and the state shall pay to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association ~~$1,000, but not to exceed~~ $2,500,000 ~~in total in~~ each fiscal year ~~1994~~. The superintendent of Special School District No. 1, the mayor of the city of Minneapolis, and the executive director of the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association shall jointly certify to the commissioner of finance the total amount that has been contributed by Special School District No. 1 and by the city of Minneapolis to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association. Any certification to the commissioner of education must be made quarterly. If the total certifications for a fiscal year exceed the maximum annual direct state matching aid amount in any quarter, the amount of direct state matching aid payable to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association must be limited to the balance of the maximum annual direct state matching aid amount available. The amount required under this paragraph, subject to the maximum direct state matching aid amount, is appropriated annually to the commissioner of finance.

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Sec. 23. Minnesota Statutes 2004, section 354A.12, subdivision 3c, is amended to read:

Subd. 3c. Termination of supplemental contributions and direct matching and state aid. (a) The supplemental contributions payable to the Minneapolis Teachers Retirement Fund Association by Special School District No. 1 and the city of Minneapolis under section 423A.02, subdivision 3, which must continue to be paid to the Teachers Retirement Association until 2037, or to the St. Paul Teachers Retirement Fund Association by Independent School District No. 625 under section 423A.02, subdivision 3, or the direct state aids under subdivision 3a to the ~~first class city~~ St. Paul Teachers Retirement ~~associations, and the direct matching and state aid under subdivision 3b to the Minneapolis Teachers Retirement~~ Fund Association terminate ~~for the respective fund~~ at the end of the fiscal year in which the accrued liability funding ratio for that fund, as determined in the most recent actuarial report for that fund by the actuary retained by the Legislative Commission on Pensions and Retirement, equals or exceeds the accrued liability funding ratio for the teachers retirement association, as determined in the most recent actuarial report for the Teachers Retirement Association by the actuary retained by the Legislative Commission on Pensions and Retirement.

(b) If the state direct matching, state supplemental, or state aid is terminated for a first class city teachers retirement fund association under paragraph (a), it may not again be received by that fund.

(c) If ~~either the Minneapolis Teachers Retirement Fund Association,~~ the St. Paul Teachers Retirement Fund Association~~, or the Duluth Teachers Retirement Fund Association remain~~ is funded at ~~less than~~ the funding ratio applicable to the Teachers Retirement Association when the provisions of paragraph (b) become effective, then any state aid ~~not~~ previously distributed to that association must be immediately transferred to the ~~other associations in proportion to the relative sizes of their unfunded actuarial accrued liabilities~~ Teachers Retirement Association.

Sec. 24. Minnesota Statutes 2004, section 354A.12, subdivision 3d, is amended to read:

Subd. 3d. Supplemental administrative expense assessment. (a) The active and retired membership of the ~~Minneapolis Teachers Retirement Fund Association and of the~~ St. Paul Teachers Retirement Fund Association is responsible for defraying supplemental administrative expenses other than investment expenses of the respective teacher retirement fund association.

(b) Investment expenses of the teachers retirement fund association are those expenses incurred by or on behalf of the retirement fund in connection with the investment of the assets of the retirement fund other than investment security transaction costs. Other administrative expenses are all expenses incurred by or on behalf of the retirement fund for all other retirement fund functions other than the investment of retirement fund assets. Investment and other administrative expenses must be accounted for using generally accepted accounting principles and in a manner consistent with the comprehensive annual financial report of the teachers retirement fund association for the immediately previous fiscal year under section 356.20.

(c) Supplemental administrative expenses other than investment expenses of ~~a first class city teacher~~ the St. Paul Teachers Retirement Fund Association are those expenses for the fiscal year that:

(1) exceed, for the St. Paul Teachers Retirement Fund Association, $443,745~~, or for the Minneapolis Teacher Retirement Fund Association $671,513, plus, in each case,~~ an additional amount derived by applying the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers All Items Index published by the Bureau of Labor Statistics of the United States Department of Labor since July 1, 2001, to the ~~applicable~~ dollar amount; and

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7897

(2) exceed the amount computed by applying the most recent percentage of pay administrative expense amount, other than investment expenses, for the teachers retirement association governed by chapter 354 to the covered payroll of the respective teachers retirement fund association for the fiscal year.

(d) The board of trustees of ~~each first class city~~ the St. Paul Teachers Retirement Fund Association shall allocate the total dollar amount of supplemental administrative expenses other than investment expenses determined under paragraph (c), clause (2), among the various active and retired membership groups of the teachers retirement fund association and shall assess the various membership groups their respective share of the supplemental administrative expenses other than investment expenses, in amounts determined by the board of trustees. The supplemental administrative expense assessments must be paid by the membership group in a manner determined by the board of trustees of the respective teachers retirement association. Supplemental administrative expenses payable by the active members of the pension plan must be picked up by the employer in accordance with section 356.62.

(e) With respect to the St. Paul Teachers Retirement Fund Association, the supplemental administrative expense assessment must be fully disclosed to the various active and retired membership groups of the teachers retirement fund association. The chief administrative officer of the St. Paul Teachers Retirement Fund Association shall prepare a supplemental administrative expense assessment disclosure notice, which must include the following:

(1) the total amount of administrative expenses of the St. Paul Teachers Retirement Fund Association, the amount of the investment expenses of the St. Paul Teachers Retirement Fund Association, and the net remaining amount of administrative expenses of the St. Paul Teachers Retirement Fund Association;

(2) the amount of administrative expenses for the St. Paul Teachers Retirement Fund Association that would be equivalent to the teachers retirement association noninvestment administrative expense level described in paragraph (c);

(3) the total amount of supplemental administrative expenses required for assessment calculated under paragraph (c);

(4) the portion of the total amount of the supplemental administrative expense assessment allocated to each membership group and the rationale for that allocation;

(5) the manner of collecting the supplemental administrative expense assessment from each membership group, the number of assessment payments required during the year, and the amount of each payment or the procedure used to determine each payment; and

(6) any other information that the chief administrative officer determines is necessary to fairly portray the manner in which the supplemental administrative expense assessment was determined and allocated.

(f) The disclosure notice must be provided annually in the annual report of the association.

(g) The supplemental administrative expense assessments must be deposited in the applicable teachers retirement fund upon receipt.

(h) Any omitted active membership group assessments that remain undeducted and unpaid to the teachers retirement fund association for 90 days must be paid by the respective school district. The school district may recover any omitted active membership group assessment amounts that it has previously paid. The teachers retirement fund association shall deduct any omitted retired membership group assessment amounts from the benefits next payable after the discovery of the omitted amounts.

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7898

Sec. 25. Minnesota Statutes 2004, section 354A.30, is amended to read:

354A.30 ~~MINNEAPOLIS AND~~ ST. PAUL TEACHERS RETIREMENT FUND ~~ASSOCIATIONS~~ ASSOCIATION; COORDINATED PROGRAM.

There is established a coordinated program within the ~~Minneapolis Teachers Retirement Fund Association and a coordinated program within the~~ St. Paul Teachers Retirement Fund Association to provide retirement coverage for teachers who are covered by an agreement or modification made between the state and the secretary of health, education and welfare making the provisions of the federal Old Age, Survivors and Disability Insurance Act applicable to certain teachers covered by the teachers retirement fund association. The provisions governing the coordinated program shall be sections 354A.31 to 354A.41 and any other applicable provisions of this chapter.

Sec. 26. Minnesota Statutes 2005 Supplement, section 354A.31, subdivision 4, is amended to read:

Subd. 4. Computation of ~~the~~ normal coordinated retirement annuity; ~~Minneapolis and~~ St. Paul ~~funds~~ fund. (a) This subdivision applies to the coordinated ~~programs~~ program of the ~~Minneapolis Teachers Retirement Fund Association and the~~ St. Paul Teachers Retirement Fund Association.

(b) The normal coordinated retirement annuity is an amount equal to a retiring coordinated member's average salary under section 354A.011, subdivision 7a, multiplied by the retirement annuity formula percentage.

(c) This paragraph, in conjunction with subdivision 6, applies to a person who first became a member or a member in a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a higher annuity amount, in which case paragraph (d) will apply. The retirement annuity formula percentage for purposes of this paragraph is the percent specified in section 356.315, subdivision 1, per year for each year of coordinated service for the first ten years and the percent specified in section 356.315, subdivision 2, for each year of coordinated service thereafter.

(d) This paragraph applies to a person who has become at least 55 years old and who first becomes a member after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity amount, when calculated under this paragraph and in conjunction with subdivision 7 is higher than it is when calculated under paragraph (c), in conjunction with the provisions of subdivision 6. The retirement annuity formula percentage for purposes of this paragraph is the percent specified in section 356.315, subdivision 2, for each year of coordinated service.

Sec. 27. Minnesota Statutes 2004, section 354A.32, subdivision 1, is amended to read:

Subdivision 1. Optional forms generally. The ~~boards~~ board of the ~~Minneapolis and the~~ St. Paul Teachers Retirement Fund ~~Associations~~ Association shall ~~each~~ establish for the coordinated program and the board of the Duluth Teachers Retirement Fund Association shall establish for the new law coordinated program an optional retirement annuity which shall take the form of a joint and survivor annuity. Each board may also in its discretion establish an optional annuity which shall take the form of an annuity payable for a period certain and for life thereafter. Each board shall also establish an optional retirement annuity that guarantees payment of the balance of the annuity recipient's accumulated deductions to a designated beneficiary upon the death of the annuity recipient. Except as provided in subdivision 1a, optional annuity forms shall be the actuarial equivalent of the normal forms provided in section 354A.31. In establishing these optional annuity forms, the board shall obtain the written recommendation of the commission-retained actuary. The recommendation shall be a part of the permanent records of the board.

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7899

Sec. 28. Minnesota Statutes 2004, section 354A.39, is amended to read:

354A.39 SERVICE IN OTHER PUBLIC RETIREMENT FUNDS; ANNUITY.

Any person who has been a member of the Minnesota State Retirement System, the Public Employees Retirement Association including the Public Employees Retirement Association Police and Fire Fund, the Teachers Retirement Association, the Minnesota State Patrol Retirement Association, the legislators retirement plan, the constitutional officers retirement plan, the Minneapolis Employees Retirement Fund, the Duluth Teachers Retirement Fund Association new law coordinated program, ~~the Minneapolis Teachers Retirement Fund Association coordinated program,~~ the St. Paul Teachers Retirement Fund Association coordinated program, or any other public employee retirement system in the state of Minnesota having a like provision but excluding all other funds providing retirement benefits for police officers or firefighters shall be entitled when qualified to an annuity from each fund if the person's total allowable service in all of the funds or in any two or more of the funds totals three or more years, provided that no portion of the allowable service upon which the retirement annuity from one fund is based is used again in the computation for a retirement annuity from another fund and provided further that the person has not taken a refund from any of funds or associations since the person's membership in the fund or association has terminated. The annuity from each fund or association shall be determined by the appropriate provisions of the law governing each fund or association, except that the requirement that a person must have at least three years of allowable service in the respective fund or association shall not apply for the purposes of this section, provided that the aggregate service in two or more of these funds equals three or more years.

Sec. 29. Minnesota Statutes 2004, section 354A.40, subdivision 1, is amended to read:

Subdivision 1. Retirement annuity. Any coordinated member of ~~either the Minneapolis Teachers Retirement Fund Association or of~~ the St. Paul Teachers Retirement Fund Association who has credited service prior to July 1, 1978 shall be entitled to receive a retirement annuity when otherwise qualified, the calculation of which shall utilize the applicable retirement annuity formula specified in articles of incorporation and bylaws of the teachers retirement fund association governing the basic program for that portion of credited service which was served prior to July 1, 1978, and the retirement annuity formula specified in section 354A.31 for the remainder of the member's credited service, both applied to the member's average salary as specified in section 354A.31, subdivision 4. The formula percentages to be used in calculating the coordinated portion of the retirement annuity or coordinated service under this section shall recognize the coordinated service as a continuation of any service prior to July 1, 1978.

Sec. 30. Minnesota Statutes 2004, section 354A.41, is amended to read:

354A.41 ADMINISTRATION OF COORDINATED PROGRAM.

Subdivision 1. Administrative provisions. The provisions of the articles of incorporation and bylaws of the ~~Minneapolis or the~~ St. Paul Teachers Retirement Fund Association~~, whichever is applicable,~~ relating to the administration of the fund shall govern the administration of the coordinated ~~program~~ and basic programs and the provisions of the articles of incorporation and bylaws of the Duluth Teachers Retirement Fund Association relating to the administration of the fund shall govern the administration of the new law coordinated program in instances where the administrative provisions are not inconsistent with the provisions of sections 354A.31 to 354A.41, including but not limited to provisions relating to the composition and function of the board of trustees, the investment of assets of the teachers retirement fund association, and the definition of the plan year. The administrative provisions in the articles of incorporation and the bylaws of the Minneapolis Teachers Retirement Fund Association pertaining to the granting of pension benefits of the basic and coordinated programs are no longer in effect after June 30, 2006.

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7900

Subd. 2. Actuarial valuations. In any actuarial valuation of the ~~Minneapolis Teachers Retirement Fund Association, the~~ St. Paul Teachers Retirement Fund Association, or the Duluth Teachers Retirement Fund Association under section 356.215 prepared by the commission-retained actuary or supplemental actuarial valuation prepared by an approved actuary retained by the teachers retirement fund association, there shall be included a finding of the condition of the fund showing separately the basic and coordinated programs or the old law coordinated and new law coordinated programs, as appropriate. The finding shall include the level normal cost and the applicable employee and employer contribution rates for each program.

Sec. 31. Minnesota Statutes 2004, section 356.20, subdivision 2, is amended to read:

Subd. 2. Covered public pension plans and funds. This section applies to the following public pension plans:

(1) the general state employees retirement plan of the Minnesota State Retirement System;

(2) the general employees retirement plan of the Public Employees Retirement Association;

(3) the Teachers Retirement Association;

(4) the State Patrol retirement plan;

(5) the ~~Minneapolis Teachers Retirement Fund Association;~~

~~(6) the~~ St. Paul Teachers Retirement Fund Association;

~~(7)~~ (6) the Duluth Teachers Retirement Fund Association;

~~(8)~~ (7) the Minneapolis Employees Retirement Fund;

~~(9)~~ (8) the University of Minnesota faculty retirement plan;

~~(10)~~ (9) the University of Minnesota faculty supplemental retirement plan;

~~(11)~~ (10) the judges retirement fund;

~~(12)~~ (11) a police or firefighter's relief association specified or described in section 69.77, subdivision 1a, or 69.771, subdivision 1;

~~(13)~~ (12) the public employees police and fire plan of the Public Employees Retirement Association;

~~(14)~~ (13) the correctional state employees retirement plan of the Minnesota State Retirement System; and

~~(15)~~ (14) the local government correctional service retirement plan of the Public Employees Retirement Association.

Sec. 32. Minnesota Statutes 2004, section 356.214, subdivision 1, is amended to read:

Subdivision 1. Joint retention. (a) The chief administrative officers of the Minnesota State Retirement System, the Public Employees Retirement Association, the Teachers Retirement Association, the Duluth Teachers Retirement Fund Association, ~~the Minneapolis Teachers Retirement Fund Association,~~ the Minneapolis Employees Retirement Fund, and the St. Paul Teachers Retirement Fund Association, jointly, on behalf of the state, its employees, its taxpayers, and its various public pension plans, shall contract with an established actuarial consulting

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7901

firm to conduct annual actuarial valuations and related services for the retirement plans named in paragraph (b). The principal from the actuarial consulting firm on the contract must be an approved actuary under section 356.215, subdivision 1, paragraph (c). Prior to becoming effective, the contract under this section is subject to a review and approval by the Legislative Commission on Pensions and Retirement.

(b) The contract for actuarial services must include the preparation of actuarial valuations and related actuarial work for the following retirement plans:

(1) the teachers retirement plan, Teachers Retirement Association;

(2) the general state employees retirement plan, Minnesota State Retirement System;

(3) the correctional employees retirement plan, Minnesota State Retirement System;

(4) the State Patrol retirement plan, Minnesota State Retirement System;

(5) the judges retirement plan, Minnesota State Retirement System;

(6) the Minneapolis employees retirement plan, Minneapolis Employees Retirement Fund;

(7) the public employees retirement plan, Public Employees Retirement Association;

(8) the public employees police and fire plan, Public Employees Retirement Association;

(9) the Duluth teachers retirement plan, Duluth Teachers Retirement Fund Association;

~~(10) the Minneapolis teachers retirement plan, Minneapolis Teachers Retirement Fund Association;~~

~~(11)~~ (10) the St. Paul teachers retirement plan, St. Paul Teachers Retirement Fund Association;

~~(12)~~ (11) the legislators retirement plan, Minnesota State Retirement System;

~~(13)~~ (12) the elective state officers retirement plan, Minnesota State Retirement System; and

~~(14)~~ (13) local government correctional service retirement plan, Public Employees Retirement Association.

(c) The contract must require completion of the annual actuarial valuation calculations on a fiscal year basis, with the contents of the actuarial valuation calculations as specified in section 356.215, and in conformity with the standards for actuarial work adopted by the Legislative Commission on Pensions and Retirement.

The contract must require completion of annual experience data collection and processing and a quadrennial published experience study for the plans listed in paragraph (b), clauses (1), (2), and (7), as provided for in the standards for actuarial work adopted by the commission. The experience data collection, processing, and analysis must evaluate the following:

(1) individual salary progression;

(2) the rate of return on investments based on the current asset value;

(3) payroll growth;

(4) mortality;

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7902

(5) retirement age;

(6) withdrawal; and

(7) disablement.

The contract must include provisions for the preparation of cost analyses by the jointly retained actuary for proposed legislation that include changes in benefit provisions or funding policies prior to their consideration by the Legislative Commission on Pensions and Retirement.

(d) The actuary retained by the joint retirement systems shall annually prepare a report to the legislature, including a commentary on the actuarial valuation calculations for the plans named in paragraph (b) and summarizing the results of the actuarial valuation calculations. The actuary shall include with the report the actuary's recommendations to the legislature concerning the appropriateness of the support rates to achieve proper funding of the retirement plans by the required funding dates. The actuary shall, as part of the quadrennial experience study, include recommendations to the legislature on the appropriateness of the actuarial valuation assumptions required for evaluation in the study.

(e) If the actuarial gain and loss analysis in the actuarial valuation calculations indicates a persistent pattern of sizable gains or losses, as directed by the joint retirement systems or as requested by the chair of the Legislative Commission on Pensions and Retirement, the actuary shall prepare a special experience study for a plan listed in paragraph (b), clause (3), (4), (5), (6), (8), (9), (10), (11), (12), ~~(13),~~ or ~~(14)~~ (13), in the manner provided for in the standards for actuarial work adopted by the commission.

(f) The term of the contract between the joint retirement systems and the actuary retained may not exceed five years. The joint retirement system administrative officers shall establish procedures for the consideration and selection of contract bidders and the requirements for the contents of an actuarial services contract under this section. The procedures and requirements must be submitted to the Legislative Commission on Pensions and Retirement for review and comment prior to final approval by the joint administrators. The contract is subject to the procurement procedures under chapter 16C. The consideration of bids and the selection of a consulting actuarial firm by the chief administrative officers must occur at a meeting that is open to the public and reasonable timely public notice of the date and the time of the meeting and its subject matter must be given.

(g) The actuarial services contract may not limit the ability of the Minnesota legislature and its standing committees and commissions to rely on the actuarial results of the work prepared under the contract.

(h) The joint retirement systems shall designate one of the retirement system executive directors as the actuarial services contract manager.

Sec. 33. Minnesota Statutes 2005 Supplement, section 356.215, subdivision 8, is amended to read:

Subd. 8. Interest and salary assumptions. (a) The actuarial valuation must use the applicable following preretirement interest assumption and the applicable following postretirement interest assumption:

preretirement

postretirement

interest rate

plan

assumption

general state employees retirement plan

8.5%

6.0%

correctional state employees retirement plan

8.5

6.0

State Patrol retirement plan

8.5

6.0

legislators retirement plan

8.5

6.0

elective state officers retirement plan

8.5

6.0

judges retirement plan

8.5

6.0

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7903

general public employees retirement plan

8.5

6.0

public employees police and fire retirement plan

8.5

6.0

local government correctional service retirement

plan

8.5

6.0

teachers retirement plan

8.5

6.0

Minneapolis employees retirement plan

6.0

5.0

Duluth teachers retirement plan

8.5

~~Minneapolis teachers retirement plan~~

~~8.5~~

St. Paul teachers retirement plan

8.5

Minneapolis Police Relief Association

6.0

Fairmont Police Relief Association

5.0

Minneapolis Fire Department Relief Association

6.0

Virginia Fire Department Relief Association

5.0

Bloomington Fire Department Relief Association

6.0

local monthly benefit volunteer firefighters relief

associations

5.0

(b) The actuarial valuation must use the applicable following single rate future salary increase assumption, the applicable following modified single rate future salary increase assumption, or the applicable following graded rate future salary increase assumption:

(1) single rate future salary increase assumption

future salary

plan	increase assumption

legislators retirement plan

5.0%

elective state officers retirement plan

5.0

judges retirement plan

5.0

Minneapolis Police Relief Association

4.0

Fairmont Police Relief Association

3.5

Minneapolis Fire Department Relief Association

4.0

Virginia Fire Department Relief Association

3.5

Bloomington Fire Department Relief Association

4.0

(2) modified single rate future salary increase assumption

future salary

plan

increase assumption

Minneapolis employees retirement plan

the prior calendar year amount increased first by 1.0198 percent to prior fiscal year date and then increased by 4.0 percent annually for each future year

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7904

(3) select and ultimate future salary increase assumption or graded rate future salary increase assumption

future salary

plan	increase assumption

general state employees retirement plan

select calculation and assumption A

correctional state employees retirement

plan

assumption H G

State Patrol retirement plan

assumption H G

general public employees retirement plan

select calculation and assumption B

public employees police and fire fund

retirement plan

assumption C

local government correctional service

retirement plan

assumption H G

teachers retirement plan

assumption D

Duluth teachers retirement plan

assumption E

~~Minneapolis teachers retirement plan~~

~~assumption F~~

St. Paul teachers retirement plan

assumption G F

The select calculation is: during the ten-year select period, a designated percent is multiplied by the result of ten minus T, where T is the number of completed years of service, and is added to the applicable future salary increase assumption. The designated percent is 0.2 percent for the correctional state employees retirement plan, the State Patrol retirement plan, the public employees police and fire plan, and the local government correctional service plan; and 0.3 percent for the general state employees retirement plan, the general public employees retirement plan, the teachers retirement plan, the Duluth Teachers Retirement Fund Association, and the St. Paul Teachers Retirement Fund Association~~; and 0.4 percent for the Minneapolis Teachers Retirement Fund Association~~.

The ultimate future salary increase assumption is:

age

G F

H G

6.95%

11.50%

8.20%

8.00%

~~6.50%~~

6.90%

7.7500

6.90

11.50

8.15

8.00

~~6.50~~

6.90

7.7500

6.85

11.50

8.10

8.00

~~6.50~~

6.90

7.7500

6.80

11.50

8.05

8.00

~~6.50~~

6.90

7.7500

6.75

6.40

11.50

6.00

6.90

~~6.50~~

6.90

7.7500

6.75

6.40

11.50

6.00

6.90

~~6.50~~

6.90

7.1454

6.75

6.40

11.00

6.00

6.90

~~6.50~~

6.90

7.0725

6.75

6.40

10.50

6.00

6.85

~~6.50~~

6.85

7.0544

6.75

6.40

10.00

6.00

6.80

~~6.50~~

6.80

7.0363

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7905

6.75

6.40

9.50

6.00

6.75

~~6.50~~

6.75

7.0000

6.75

6.36

9.20

6.00

6.70

~~6.50~~

6.70

7.0000

6.75

6.32

8.90

6.00

6.65

~~6.50~~

6.65

7.0000

6.75

6.28

8.60

6.00

6.60

~~6.50~~

6.60

7.0000

6.75

6.24

8.30

6.00

6.55

~~6.50~~

6.55

7.0000

6.75

6.20

8.00

6.00

6.50

~~6.50~~

6.50

7.0000

6.75

6.16

7.80

6.00

6.45

~~6.50~~

6.45

7.0000

6.75

6.12

7.60

6.00

6.40

~~6.50~~

6.40

7.0000

6.75

6.08

7.40

6.00

6.35

~~6.50~~

6.35

7.0000

6.75

6.04

7.20

6.00

6.30

~~6.50~~

6.30

7.0000

6.75

6.00

7.00

6.00

6.25

~~6.50~~

6.25

7.0000

6.75

5.96

6.80

6.00

6.20

~~6.50~~

6.20

6.9019

6.75

5.92

6.60

6.00

6.15

~~6.50~~

6.15

6.8074

6.75

5.88

6.40

5.90

6.10

~~6.50~~

6.10

6.7125

6.75

5.84

6.20

5.80

6.05

~~6.50~~

6.05

6.6054

6.75

5.80

6.00

5.70

6.00

~~6.50~~

6.00

6.5000

6.75

5.76

5.90

5.60

5.90

~~6.50~~

5.95

6.3540

6.75

5.72

5.80

5.50

5.80

~~6.50~~

5.90

6.2087

6.65

5.68

5.70

5.40

5.70

~~6.50~~

5.85

6.0622

6.55

5.64

5.60

5.30

5.60

~~6.50~~

5.80

5.9048

6.45

5.60

5.50

5.20

5.50

~~6.50~~

5.75

5.7500

6.35

5.56

5.45

5.10

5.40

~~6.40~~

5.70

5.6940

6.25

5.52

5.40

5.00

5.30

~~6.30~~

5.65

5.6375

6.15

5.48

5.35

5.00

5.20

~~6.20~~

5.60

5.5822

6.05

5.44

5.30

5.00

5.10

~~6.10~~

5.55

5.5404

5.95

5.40

5.25

5.00

~~6.00~~

5.50

5.5000

5.85

5.36

5.25

5.00

~~5.90~~

5.45

5.4384

5.75

5.32

5.25

5.00

~~5.80~~

5.40

5.3776

5.65

5.28

5.25

5.00

~~5.70~~

5.35

5.3167

5.55

5.24

5.25

5.00

~~5.60~~

5.30

5.2826

5.45

5.20

5.25

5.00

~~5.50~~

5.25

5.2500

5.35

5.16

5.25

5.00

~~5.40~~

5.20

5.2500

5.25

5.12

5.25

5.00

~~5.30~~

5.15

5.2500

5.25

5.08

5.25

5.10

5.00

~~5.20~~

5.10

5.2500

5.25

5.04

5.25

5.20

5.00

~~5.10~~

5.05

5.2500

5.25

5.00

5.25

5.30

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.40

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.50

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.60

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.70

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.70

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.70

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.70

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.70

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.70

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.25

5.70

5.00

~~5.00~~

5.00

5.2500

5.25

5.00

5.70

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7906

(c) The actuarial valuation must use the applicable following payroll growth assumption for calculating the amortization requirement for the unfunded actuarial accrued liability where the amortization retirement is calculated as a level percentage of an increasing payroll:

payroll growth

plan	assumption

general state employees retirement plan

5.00%

correctional state employees retirement plan

5.00

State Patrol retirement plan

5.00

legislators retirement plan

5.00

elective state officers retirement plan

5.00

judges retirement plan

5.00

general public employees retirement plan

6.00

public employees police and fire retirement plan

6.00

local government correctional service retirement plan

6.00

teachers retirement plan

5.00

Duluth teachers retirement plan

5.00

~~Minneapolis teachers retirement plan~~

~~5.00~~

St. Paul teachers retirement plan

5.00

Sec. 34. Minnesota Statutes 2004, section 356.215, subdivision 11, is amended to read:

Subd. 11. Amortization contributions. (a) In addition to the exhibit indicating the level normal cost, the actuarial valuation must contain an exhibit indicating the additional annual contribution sufficient to amortize the unfunded actuarial accrued liability. For funds governed by chapters 3A, 352, 352B, 352C, 353, 354, 354A, and 490, the additional contribution must be calculated on a level percentage of covered payroll basis by the established date for full funding in effect when the valuation is prepared. For funds governed by chapter 3A, sections 352.90 through 352.951, chapters 352B, 352C, sections 353.63 through 353.68, and chapters 353C, 354A, and 490, the level percent additional contribution must be calculated assuming annual payroll growth of 6.5 percent. For funds governed by sections 352.01 through 352.86 and chapter 354, the level percent additional contribution must be calculated assuming an annual payroll growth of five percent. For the fund governed by sections 353.01 through 353.46, the level percent additional contribution must be calculated assuming an annual payroll growth of six percent. For all other funds, the additional annual contribution must be calculated on a level annual dollar amount basis.

(b) For any fund other than the Minneapolis Employees Retirement Fund and the Public Employees Retirement Association general plan, if there has not been a change in the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, which change or changes by itself or by themselves without inclusion of any other items of increase or decrease produce a net increase in the unfunded actuarial accrued liability of the fund, the established date for full funding is the first actuarial valuation date occurring after June 1, 2020.

(c) For any fund or plan other than the Minneapolis Employees Retirement Fund and the Public Employees Retirement Association general plan, if there has been a change in any or all of the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, and the change or changes, by itself or by themselves and without inclusion of any other items of increase or decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the established date for full funding must be determined using the following procedure:

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(i) the unfunded actuarial accrued liability of the fund must be determined in accordance with the plan provisions governing annuities and retirement benefits and the actuarial assumptions in effect before an applicable change;

(ii) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the unfunded actuarial accrued liability amount determined under item (i) by the established date for full funding in effect before the change must be calculated using the interest assumption specified in subdivision 8 in effect before the change;

(iii) the unfunded actuarial accrued liability of the fund must be determined in accordance with any new plan provisions governing annuities and benefits payable from the fund and any new actuarial assumptions and the remaining plan provisions governing annuities and benefits payable from the fund and actuarial assumptions in effect before the change;

(iv) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the difference between the unfunded actuarial accrued liability amount calculated under item (i) and the unfunded actuarial accrued liability amount calculated under item (iii) over a period of 30 years from the end of the plan year in which the applicable change is effective must be calculated using the applicable interest assumption specified in subdivision 8 in effect after any applicable change;

(v) the level annual dollar or level percentage amortization contribution under item (iv) must be added to the level annual dollar amortization contribution or level percentage calculated under item (ii);

(vi) the period in which the unfunded actuarial accrued liability amount determined in item (iii) is amortized by the total level annual dollar or level percentage amortization contribution computed under item (v) must be calculated using the interest assumption specified in subdivision 8 in effect after any applicable change, rounded to the nearest integral number of years, but not to exceed 30 years from the end of the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and not to be less than the period of years beginning in the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and ending by the date for full funding in effect before the change; and

(vii) the period determined under item (vi) must be added to the date as of which the actuarial valuation was prepared and the date obtained is the new established date for full funding.

(d) For the Minneapolis Employees Retirement Fund, the established date for full funding is June 30, 2020.

(e) For the general employees retirement plan of the Public Employees Retirement Association, the established date for full funding is June 30, 2031.

(f) For the Teachers Retirement Association, the established date for full funding is June 30, 2037.

(g) For the retirement plans for which the annual actuarial valuation indicates an excess of valuation assets over the actuarial accrued liability, the valuation assets in excess of the actuarial accrued liability must be recognized as a reduction in the current contribution requirements by an amount equal to the amortization of the excess expressed as a level percentage of pay over a 30-year period beginning anew with each annual actuarial valuation of the plan.

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Sec. 35. Minnesota Statutes 2004, section 356.30, subdivision 3, is amended to read:

Subd. 3. Covered plans. This section applies to the following retirement plans:

(1) the general state employees retirement plan of the Minnesota State Retirement System, established under chapter 352;

(2) the correctional state employees retirement plan of the Minnesota State Retirement System, established under chapter 352;

(3) the unclassified employees retirement program, established under chapter 352D;

(4) the State Patrol retirement plan, established under chapter 352B;

(5) the legislators retirement plan, established under chapter 3A;

(6) the elective state officers' retirement plan, established under chapter 352C;

(7) the general employees retirement plan of the Public Employees Retirement Association, established under chapter 353;

(8) the public employees police and fire retirement plan of the Public Employees Retirement Association, established under chapter 353;

(9) the local government correctional service retirement plan of the Public Employees Retirement Association, established under chapter 353E;

(10) the Teachers Retirement Association, established under chapter 354;

(11) the Minneapolis Employees Retirement Fund, established under chapter 422A;

~~(12) the Minneapolis Teachers Retirement Fund Association, established under chapter 354A;~~

~~(13)~~ (12) the St. Paul Teachers Retirement Fund Association, established under chapter 354A;

~~(14)~~ (13) the Duluth Teachers Retirement Fund Association, established under chapter 354A; and

~~(15)~~ (14) the judges' retirement fund, established by sections 490.121 to 490.132.

Sec. 36. Minnesota Statutes 2004, section 356.302, subdivision 7, is amended to read:

Subd. 7. Covered retirement plans. This section applies to the following retirement plans:

(1) the general state employees retirement plan of the Minnesota State Retirement System, established by chapter 352;

(2) the unclassified state employees retirement program of the Minnesota State Retirement System, established by chapter 352D;

(3) the general employees retirement plan of the Public Employees Retirement Association, established by chapter 353;

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(4) the Teachers Retirement Association, established by chapter 354;

(5) the Duluth Teachers Retirement Fund Association, established by chapter 354A;

~~(6) the Minneapolis Teachers Retirement Fund Association, established by chapter 354A;~~

~~(7)~~ (6) the St. Paul Teachers Retirement Fund Association, established by chapter 354A;

~~(8)~~ (7) the Minneapolis Employees Retirement Fund, established by chapter 422A;

~~(9)~~ (8) the state correctional employees retirement plan of the Minnesota State Retirement System, established by chapter 352;

~~(10)~~ (9) the State Patrol retirement plan, established by chapter 352B;

~~(11)~~ (10) the public employees police and fire plan of the Public Employees Retirement Association, established by chapter 353;

~~(12)~~ (11) the local government correctional service retirement plan of the Public Employees Retirement Association, established by chapter 353E; and

~~(13)~~ (12) the judges' retirement plan, established by sections 490.121 to 490.132.

Sec. 37. Minnesota Statutes 2004, section 356.303, subdivision 4, is amended to read:

Subd. 4. Covered retirement plans. This section applies to the following retirement plans:

(1) the legislators retirement plan, established by chapter 3A;

(2) the general state employees retirement plan of the Minnesota State Retirement System, established by chapter 352;

(3) the correctional state employees retirement plan of the Minnesota State Retirement System, established by chapter 352;

(4) the State Patrol retirement plan, established by chapter 352B;

(5) the elective state officers retirement plan, established by chapter 352C;

(6) the unclassified state employees retirement program, established by chapter 352D;

(7) the general employees retirement plan of the Public Employees Retirement Association, established by chapter 353;

(8) the public employees police and fire plan of the Public Employees Retirement Association, established by chapter 353;

(9) the local government correctional service retirement plan of the Public Employees Retirement Association, established by chapter 353E;

(10) the Teachers Retirement Association, established by chapter 354;

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(11) the Duluth Teachers Retirement Fund Association, established by chapter 354A;

~~(12) the Minneapolis Teachers Retirement Fund Association, established by chapter 354A;~~

~~(13)~~ (12) the St. Paul Teachers Retirement Fund Association, established by chapter 354A;

~~(14)~~ (13) the Minneapolis Employees Retirement Fund, established by chapter 422A; and

~~(15)~~ (14) the judges' retirement fund, established by sections 490.121 to 490.132.

Sec. 38. Minnesota Statutes 2004, section 356.315, is amended by adding a subdivision to read:

Subd. 1a. Coordinated plan members. The applicable benefit accrual rate is 1.4 percent.

Sec. 39. Minnesota Statutes 2004, section 356.315, is amended by adding a subdivision to read:

Subd. 2b. Certain coordinated program members. The applicable benefit accrual rate is 1.9 percent.

Sec. 40. Minnesota Statutes 2004, section 356.42, subdivision 3, is amended to read:

Subd. 3. Covered retirement plans. The postretirement adjustment provided in this section applies to the following retirement funds:

(1) the general employees retirement plans of the Public Employees Retirement Association;

(2) the public employees police and fire plan of the Public Employees Retirement Association;

(3) the teachers retirement association;

(4) the State Patrol retirement plan;

(5) the state employees retirement plan of the Minnesota State Retirement System;

~~(6) the Minneapolis Teachers Retirement Fund Association established under chapter 354A;~~

~~(7)~~ (6) the St. Paul Teachers Retirement Fund Association established under chapter 354A; and

~~(8)~~ (7) the Duluth Teachers Retirement Fund Association established under chapter 354A.

Sec. 41. Minnesota Statutes 2004, section 356.465, subdivision 3, is amended to read:

Subd. 3. Covered retirement plans. The provisions of this section apply to the following retirement plans:

(1) the general state employees retirement plan of the Minnesota State Retirement System established under chapter 352;

(2) the correctional state employees retirement plan of the Minnesota State Retirement System established under chapter 352;

(3) the State Patrol retirement plan established under chapter 352B;

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(4) the legislators retirement plan established under chapter 3A;

(5) the judges retirement plan established under chapter 490;

(6) the general employees retirement plan of the Public Employees Retirement Association established under chapter 353;

(7) the public employees police and fire plan of the Public Employees Retirement Association established under chapter 353;

(8) the teachers retirement plan established under chapter 354;

(9) the Duluth Teachers Retirement Fund Association established under chapter 354A;

(10) the St. Paul Teachers Retirement Fund Association established under chapter 354A;

~~(11) the Minneapolis Teachers Retirement Fund Association established under chapter 354A;~~

~~(12)~~ (11) the Minneapolis employees retirement plan established under chapter 422A;

~~(13)~~ (12) the Minneapolis Firefighters Relief Association established under chapter 423C;

~~(14)~~ (13) the Minneapolis Police Relief Association established under chapter 423B; and

~~(15)~~ (14) the local government correctional service retirement plan of the Public Employees Retirement Association established under chapter 353E.

Sec. 42. Minnesota Statutes 2004, section 423A.02, subdivision 1b, is amended to read:

Subd. 1b. Additional amortization state aid. (a) Annually, on October 1, the commissioner of revenue shall allocate the additional amortization state aid transferred under section 69.021, subdivision 11, to:

(1) all police or salaried firefighters relief associations governed by and in full compliance with the requirements of section 69.77, that had an unfunded actuarial accrued liability in the actuarial valuation prepared under sections 356.215 and 356.216 as of the preceding December 31;

(2) all local police or salaried firefighter consolidation accounts governed by chapter 353A that are certified by the executive director of the public employees retirement association as having for the current fiscal year an additional municipal contribution amount under section 353A.09, subdivision 5, paragraph (b), and that have implemented section 353A.083, subdivision 1, if the effective date of the consolidation preceded May 24, 1993, and that have implemented section 353A.083, subdivision 2, if the effective date of the consolidation preceded June 1, 1995; and

(3) the municipalities that are required to make an additional municipal contribution under section 353.665, subdivision 8, for the duration of the required additional contribution.

(b) The commissioner shall allocate the state aid on the basis of the proportional share of the relief association or consolidation account of the total unfunded actuarial accrued liability of all recipient relief associations and consolidation accounts as of December 31, 1993, for relief associations, and as of June 30, 1994, for consolidation accounts.

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(c) Beginning October 1, 2000, and annually thereafter, the commissioner shall allocate the state aid, including any state aid in excess of the limitation in subdivision 4, on the following basis:

(1) 64.5 percent to the municipalities to which section 353.665, subdivision 8, paragraph (b), or 353A.09, subdivision 5, paragraph (b), apply for distribution in accordance with paragraph (b) and subject to the limitation in subdivision 4;

(2) 34.2 percent to the city of Minneapolis to fund any unfunded actuarial accrued liability in the actuarial valuation prepared under sections 356.215 and 356.216 as of the preceding December 31 for the Minneapolis Police Relief Association or the Minneapolis Fire Department Relief Association; and

(3) 1.3 percent to the city of Virginia to fund any unfunded actuarial accrued liability in the actuarial valuation prepared under sections 356.215 and 356.216 as of the preceding December 31 for the Virginia Fire Department Relief Association.

If there is no unfunded actuarial accrued liability in both the Minneapolis Police Relief Association and the Minneapolis Fire Department Relief Association as disclosed in the most recent actuarial valuations for the relief associations prepared under sections 356.215 and 356.216, the commissioner shall allocate that 34.2 percent of the aid as follows: 49 percent to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association, 21 percent to the St. Paul Teachers Retirement Fund Association, and 30 percent as additional funding to support minimum fire state aid for volunteer firefighters relief associations. If there is no unfunded actuarial accrued liability in the Virginia Fire Department Relief Association as disclosed in the most recent actuarial valuation for the relief association prepared under sections 356.215 and 356.216, the commissioner shall allocate that 1.3 percent of the aid as follows: 49 percent to the ~~Minneapolis~~ Teachers Retirement ~~Fund~~ Association, 21 percent to the St. Paul Teachers Retirement Fund Association, and 30 percent as additional funding to support minimum fire state aid for volunteer firefighters relief associations. The allocation must be made by the commissioner at the same time and under the same procedures as specified in subdivision 3. With respect to the ~~Minneapolis Teachers Retirement Fund Association or the~~ St. Paul Teachers Retirement Fund Association, annually, beginning on July 1, 2005, if the applicable teacher's association five-year average time-weighted rate of investment return does not equal or exceed the performance of a composite portfolio assumed passively managed (indexed) invested ten percent in cash equivalents, 60 percent in bonds and similar debt securities, and 30 percent in domestic stock calculated using the formula under section 11A.04, clause (11), the aid allocation to that retirement fund under this section ceases until the five-year annual rate of investment return equals or exceeds the performance of that composite portfolio.

(d) The amounts required under this subdivision are annually appropriated to the commissioner of revenue.

Sec. 43. MTRFA EMPLOYEES.

Effective June 30, 2006, the Minneapolis Teachers Retirement Fund Association employees have their employment with the Minneapolis Teachers Retirement Fund Association terminated and, effective July 1, 2006, the Minneapolis Teachers Retirement Fund Association employees, excluding the Executive Director, become employees of the Teachers Retirement Association until December 31, 2007. The commissioner of employee relations shall place employees from the former Minneapolis Teachers Retirement Fund Association into state service in their proper classifications, except that employees are appointed without examination and must be compensated at their current hourly salary rate. Employees must have their accumulated, but unused, vacation leave balance as of June 30, 2006, posted to their credit by the Teachers Retirement Association but if the employee has vacation time in excess of the applicable maximum no additional vacation may accrue until the employee's balance falls below the maximum permitted by the state for the employee's position. The employees must receive length of service credit for vacation leave accrual for time served at the Minneapolis Teachers Retirement Fund Association. Minneapolis Teachers Retirement Fund Association employees who become employees of the Teachers Retirement Association effective on July 1, 2006 must be considered to have completed six months of continuous service for

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vacation use purposes. Employees of the former Minneapolis Teachers Retirement Fund Association appointed to the classified service are subject to a probationary period under the collective bargaining agreement or compensation plan applicable to the employee's position at the Teachers Retirement Association. Effective July 1, 2006, all transferred employees must be enrolled in the state employees' group insurance program as provided in Minnesota Statutes, sections 43A.22 to 43A.31 and the commissioner of employee relations shall provide open enrollment in all state employee health and dental insurance plans with no limitation on preexisting conditions except as specified in existing state employee certificates of coverage. The commissioner of employee relations shall provide these transferred employees with the opportunity to purchase optional life and disability insurance as provided by the state group insurance program in accordance with the policies of the department of employee relations.

Sec. 44. MTRFA ARTICLES AND BYLAWS; REPEAL; APPLICABILITY.

(a) The articles of incorporation and bylaws of the Minneapolis Teachers Retirement Fund Association are repealed and have application only as provided in section 9, subdivision 6, and in paragraph (b).

(b) The articles of incorporation and bylaws of the Minneapolis Teachers Retirement Fund Association only apply to members of the former Minneapolis Teachers Retirement Fund Association with service credit in the plan on or before June 30, 2006, and apply solely for purposes of determining the retirement annuity for or benefit on behalf of a member of the basic program of that retirement plan.

(c) No annuity adjustment or increase under article 30 of the articles of incorporation of the Minneapolis Teachers Retirement Fund Association is applicable or payable after June 30, 2006.

Sec. 45. REPEALER.

Minnesota Statutes 2004, sections 354A.051; 354A.105; 354A.23, subdivision 1; and 354A.28, are repealed effective June 30, 2006.

Sec. 46. EFFECTIVE DATE.

Sections 2 to 45 are effective July 1, 2006, except that section 9, subdivision 7, is effective the day following final enactment.

ARTICLE 4

STATE BOARD OF INVESTMENT

Section 1. Laws 2005, chapter 156, article 1, section 8, is amended to read:

Sec. 8. INVESTMENT BOARD 2,167,000 ~~2,167,000~~

151,000

Sec. 2. Minnesota Statutes 2005 Supplement, section 11A.04, is amended to read:

11A.04 DUTIES AND POWERS.

The state board shall:

(1) Act as trustees for each fund for which it invests or manages money in accordance with the standard of care set forth in section 11A.09 if state assets are involved and in accordance with chapter 356A if pension assets are involved.

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(2) Formulate policies and procedures deemed necessary and appropriate to carry out its functions. Procedures adopted by the board must allow fund beneficiaries and members of the public to become informed of proposed board actions. Procedures and policies of the board are not subject to the Administrative Procedure Act.

(3) Employ an executive director as provided in section 11A.07.

(4) Employ investment advisors and consultants as it deems necessary.

(5) Prescribe policies concerning personal investments of all employees of the board to prevent conflicts of interest.

(6) Maintain a record of its proceedings.

(7) As it deems necessary, establish advisory committees subject to section 15.059 to assist the board in carrying out its duties.

(8) Not permit state funds to be used for the underwriting or direct purchase of municipal securities from the issuer or the issuer's agent.

(9) Direct the commissioner of finance to sell property other than money that has escheated to the state when the board determines that sale of the property is in the best interest of the state. Escheated property must be sold to the highest bidder in the manner and upon terms and conditions prescribed by the board.

(10) Undertake any other activities necessary to implement the duties and powers set forth in this section.

(11) Establish a formula or formulas to measure management performance and return on investment. Public pension funds in the state shall utilize the formula or formulas developed by the state board.

(12) Except as otherwise provided in article XI, section 8, of the Constitution of the state of Minnesota, employ, at its discretion, qualified private firms to invest and manage the assets of funds over which the state board has investment management responsibility. There is annually appropriated to the state board, from the assets of the funds for which the state board utilizes a private investment manager, sums sufficient to pay the costs of employing private firms. Each year, by January 15, the board shall report to the governor and legislature on the cost and the investment performance of each investment manager employed by the board.

(13) Adopt an investment policy statement that includes investment objectives, asset allocation, and the investment management structure for the retirement fund assets under its control. The statement may be revised at the discretion of the state board. The state board shall seek the advice of the council regarding its investment policy statement. Adoption of the statement is not subject to chapter 14.

(14) Adopt a compensation plan setting the terms and conditions of employment for unclassified board employees who are not covered by a collective bargaining agreement.

There is annually appropriated to the state board, from the assets of the funds for which the state board provides investment services, sums sufficient to pay the costs of all necessary expenses for the administration of the board. These sums will be deposited in the State Board of Investment operating account, which must be established by the commissioner of finance.

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Sec. 3. Minnesota Statutes 2005 Supplement, section 11A.07, subdivision 4, is amended to read:

Subd. 4. Duties and powers. The director, at the direction of the state board, shall:

(1) plan, direct, coordinate, and execute administrative and investment functions in conformity with the policies and directives of the state board and the requirements of this chapter and of chapter 356A;

(2) prepare and submit biennial and annual budgets to the board and with the approval of the board submit the budgets to the Department of Finance;

(3) employ professional and clerical staff as necessary. Employees whose primary responsibility is to invest or manage money or employees who hold positions designated as unclassified under section 43A.08, subdivision 1a, are in the unclassified service of the state. Other employees are in the classified service. Unclassified employees who are not covered by a collective bargaining agreement are employed under the terms and conditions of the compensation plan approved under section 43A.18, subdivision 3b;

~~(3)~~ (4) report to the state board on all operations under the director's control and supervision;

~~(4)~~ (5) maintain accurate and complete records of securities transactions and official activities;

~~(5)~~ (6) establish a policy relating to the purchase and sale of securities on the basis of competitive offerings or bids. The policy is subject to board approval;

~~(6)~~ (7) cause securities acquired to be kept in the custody of the commissioner of finance or other depositories consistent with chapter 356A, as the state board deems appropriate;

~~(7)~~ (8) prepare and file with the director of the Legislative Reference Library, by December 31 of each year, a report summarizing the activities of the state board, the council, and the director during the preceding fiscal year. The report must be prepared so as to provide the legislature and the people of the state with a clear, comprehensive summary of the portfolio composition, the transactions, the total annual rate of return, and the yield to the state treasury and to each of the funds whose assets are invested by the state board, and the recipients of business placed or commissions allocated among the various commercial banks, investment bankers, and brokerage organizations. The report must contain financial statements for funds managed by the board prepared in accordance with generally accepted accounting principles;

~~(8)~~ (9) require state officials from any department or agency to produce and provide access to any financial documents the state board deems necessary in the conduct of its investment activities;

~~(9)~~ (10) receive and expend legislative appropriations; and

~~(10)~~ (11) undertake any other activities necessary to implement the duties and powers set forth in this subdivision consistent with chapter 356A.

Sec. 4. Minnesota Statutes 2004, section 11A.07, subdivision 5, is amended to read:

Subd. 5. Apportionment of expenses. The executive director shall apportion the actual expenses incurred by the board on an accrual basis among the several funds whose assets are invested by the board based on the weighted average assets under management during each quarter. The charge to each fund must be calculated, billed, and paid on a quarterly basis in accordance with procedures for interdepartmental payments established by the commissioner of finance. The amounts necessary to pay these charges are appropriated from the investment earnings of each fund. Receipts must be credited to the general fund as nondedicated receipts. The annual expenses incurred by the State Board of Investment will be apportioned among the state general fund, the retirement funds administered by the Minnesota State Retirement System, Public Employees Retirement Association, and Teachers Retirement Association, and all other funds as follows:

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(1) on a biennial basis, the State Board of Investment, in accordance with biennial budget procedures established by the commissioner of finance, may request a direct appropriation that represents the portion of the State Board of Investment expenses necessary to provide investment services to the state general fund. This appropriation must be deposited in the State Board of Investment operating account;

(2) the executive director shall apportion the actual expenses incurred by the State Board of Investment, less the charge to the state general fund, among the funds whose assets are invested by the State Board of Investment, with the exception of the state general fund, based on the weighted average assets under management during the fiscal year. The amounts necessary to pay these charges are apportioned from the investment earnings of each fund. Receipts must be credited to the State Board of Investment operating account;

(3) the actual expenses apportioned and charged to the funds, with the exception of the state general fund and the retirement funds administered by the Minnesota State Retirement System, Public Employees Retirement Association, and Teachers Retirement Association, must be calculated, billed, and paid on a quarterly basis in accordance with procedures for interdepartmental payments established by the commissioner of finance; and

(4) the annual estimated expenses to be incurred by the State Board of Investment that will be payable by the retirement funds administered by the Minnesota State Retirement System, Public Employees Retirement Association, and Teachers Retirement Association must be deposited in the State Board of Investment operating account on the first business day of each fiscal year. A reconciliation of the actual expenses compared to the estimated costs must occur at the end of each fiscal year with any surplus or deficit being credited or debited to each of the respective funds. The State Board of Investment must present a statement of accrued actual expenses to each fund at the end of each quarter during each fiscal year.

ARTICLE 5

BUDGET PRESENTATION OF

EMPLOYER PENSION CONTRIBUTIONS

Section 1. Minnesota Statutes 2004, section 43A.04, subdivision 12, is amended to read:

Subd. 12. Total compensation reporting. (a) The commissioner, in consultation with the commissioner of finance, shall report to the governor and the legislature by January 15 each year on executive branch employee salary and benefits. The purpose of the report is to assist in effective long-range planning and to provide data necessary to compute annual and biennial costs related to the state workforce. The report must use data available in the biennial budget system and other necessary sources. The report also must be made available to the public in an electronic format.

(b) The report must be organized by agency. The report must list the salary or hourly rate of pay for each agency employee. The report may list the employee by name or by an identification number.

(c) The report must also include an estimate of the average cost to the state of providing insurance and other benefits to a state employee.

(d) The report must also include the number of employees by agency or department, separated by retirement plan membership, and for each plan, the total compensation, the total employee retirement plan contribution, and the total employer retirement plan contributions.

Sec. 2. EFFECTIVE DATE.

Section 1 is effective the day following final enactment.

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ARTICLE 6

INVESTMENT PERFORMANCE REPORTING

Section 1. Minnesota Statutes 2004, section 356.219, is amended by adding a subdivision to read:

Subd. 9. Data availability. Any information received by the state auditor under this section, if the data are public, must be made available to individuals or organizations which request that information. The state auditor is authorized to charge fees sufficient to cover the cost of providing the requested information in usable formats.

Sec. 2. Minnesota Statutes 2004, section 356.219, is amended by adding a subdivision to read:

Subd. 10. Pension performance reporting. In addition to report presentations that the state auditor is required to provide elsewhere in this section, the state auditor shall provide an analysis comparing the one year and the five year rate of return for each pension fund and the benchmark rate of return for each fund. The state auditor shall select the benchmark rate of return based on the best practice in the industry.

Sec. 3. EFFECTIVE DATE.

(a) Sections 1 and 2 are effective the day following final enactment.

(b) Section 2 expires on July 1, 2010.

ARTICLE 7

STUDY OF COMPARATIVE

PUBLIC RETIREMENT PLAN PROVISIONS

Section 1. STUDY BY LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.

(a) The Legislative Commission on Pensions and Retirement shall study the structure and implications of procedures used by the Minnesota State Retirement System plans, Public Employees Retirement Association plans, the Teachers Retirement Association, the Minneapolis Employees Retirement Fund, the first class city teacher retirement fund associations, and the Minneapolis police and fire relief associations to provide investment performance based postretirement increases to plan benefit recipients. The study shall include but not be limited to consideration of the ability of these systems offset the impact of inflation; the cost, budget, and aid implications of these systems; and consistency across plans. In addition, the study must compare Minnesota teacher retirement plans with teacher pension plans in other states on the following items: normal retirement age; penalties that attach to early retirement; taxation of benefits; and pension benefits, including, but not limited to, the coordination with Social Security benefits, formula multipliers, final average salary periods, and special early normal retirement provisions.

(b) The Legislative Commission on Pensions and Retirement shall produce a report of the findings of the study. The Legislative Commission on Pensions and Retirement shall include draft proposed legislation to implement any recommended changes included in the report.

(c) The report must be filed by December 1, 2006, with the chairs of the Senate State and Local Government Operations Committee, the Senate Finance Committee, the House Government Operations and Veterans Affairs Committee, the House State Government Finance Committee, and the House Ways and Means Committee.

Sec. 2. EFFECTIVE DATE.

Section 1 is effective the day following final enactment.

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ARTICLE 8

STUDY OF STATEWIDE

RETIREMENT PLAN STRUCTURE

Section 1. STUDY BY LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.

(a) The Legislative Commission on Pensions and Retirement shall study the structure of the Minnesota combined investment funds under Minnesota Statutes, section 11A.14, and the Minnesota postretirement investment fund under Minnesota Statutes, section 11A.18, including transfer requirements between these funds.

(b) The Legislative Commission on Pensions and Retirement shall produce a report of the findings from the study. The Legislative Commission on Pensions and Retirement shall include draft proposed legislation to implement any recommended changes included in the report.

Sec. 2. EFFECTIVE DATE.

Section 1 is effective the day following final enactment."

Amend the title accordingly

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

Joint Rule 2.03 has been waived for any subsequent committee action on this bill.

The report was adopted.

Paulsen from the Committee on Rules and Legislative Administration to which was referred:

S. F. No. 2239, A bill for an act relating to retirement; Minneapolis Teachers Retirement Fund Association and expanded list plans; clarifying mutual fund authority; revising investment authority to exclude below-investment grade bonds; authorizing service credit purchase; allowing transfers of certain deferred compensation contributions; providing an early retirement incentive; appropriating money; amending Minnesota Statutes 2004, sections 3A.01, subdivisions 1, 2, 6, 8, by adding subdivisions; 3A.011; 3A.02, subdivisions 1, 1b, 3, 4, 5; 3A.03, subdivisions 1, 2; 3A.04, subdivisions 1, 2, 3, 4, by adding a subdivision; 3A.05; 3A.07; 3A.10, subdivision 1; 3A.12; 3A.13; 6.72; 69.77, subdivision 9; 136F.45, subdivision 1a; 352.04, subdivisions 2, 3; 352.113, subdivision 7a; 352.116, subdivisions 3a, 3b; 352.90; 352.91, subdivisions 1, 2, 3c, 3d, 3e, 3f, 3g, by adding subdivisions; 352.92, subdivisions 1, 2; 352B.02, subdivisions 1a, 1c; 352C.091, subdivision 1; 352C.10; 352D.02, subdivision 1; 352D.04, subdivision 2; 352F.04; 353.01, subdivisions 2a, 11a, 11b, 12, 16, by adding a subdivision; 353.03, subdivisions 1, 1a, by adding a subdivision; 353.27, subdivisions 7, 7a, 7b; 353.29, subdivision 8; 353.30, subdivisions 3a, 3b; 353.32, subdivisions 1a, 1b; 353.33, subdivisions 1, 9; 353.34, subdivision 1; 353.656, subdivisions 3, 4, 6a; 353D.01, subdivision 2; 353D.02, subdivision 3, by adding subdivisions; 353D.03, by adding

Journal of the House - 109th Day - Thursday, May 18, 2006 - Top of Page 7919

subdivisions; 353E.02, subdivision 3; 353F.04; 354.45, subdivision 1a; 354A.08; 354A.28, subdivision 5; 354A.32, subdivision 1a; 354D.05; 355.01, subdivision 3g; 355.02, subdivisions 1, 3, by adding subdivisions; 356.219, subdivisions 3, 6; 356.24, subdivision 1; 356.50; 422A.05, subdivision 2c; 422A.06, subdivisions 3, 5, 8; 422A.101, subdivision 3; 423B.07; 424A.001, by adding a subdivision; 424A.02, subdivision 8b; 424A.05, subdivision 3; 424A.10; 490.121, subdivisions 1, 6, 7, 13, 14, 15, 22, by adding subdivisions; 490.122; 490.123, subdivisions 1, 1a, 1b, 1c, 2, 3; 490.124, subdivisions 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13; 490.125, subdivisions 1, 2; 490.126, as amended; 490.133; 525.05; Minnesota Statutes 2005 Supplement, sections 353.01, subdivision 2d; 353.028, subdivision 3; 353.28, subdivision 6; 353.656, subdivision 1; 353F.02, subdivision 4; 356A.06, subdivision 7; 422A.06, subdivision 7; 423B.09, subdivision 1; 490.121, subdivision 4; Laws 2004, chapter 267, article 8, section 41; proposing coding for new law in Minnesota Statutes, chapters 352; 352C; 353; 355; proposing coding for new law as Minnesota Statutes, chapter 490A; repealing Minnesota Statutes 2004, sections 3A.01, subdivisions 3, 4, 6a, 7; 3A.02, subdivision 2; 3A.04, subdivision 1a; 3A.09; 43A.34, subdivision 1; 352C.01; 352C.011; 352C.021, subdivisions 1, 2, 3, 4, 5, 6, 7; 352C.031, subdivisions 1, 2, 4, 5, 6; 352C.033; 352C.04; 352C.051; 352C.09; 352C.091, subdivisions 2, 3; 422A.101, subdivision 4; 490.021; 490.025; 490.101; 490.102; 490.103; 490.105; 490.106; 490.107; 490.108; 490.109; 490.1091; 490.12; 490.121, subdivisions 2, 3, 5, 8, 9, 10, 11, 12, 16, 17, 18, 19; 490.124, subdivision 6; 490.132; 490.15; 490.16; 490.18; Minnesota Statutes 2005 Supplement, sections 352C.021, subdivision 1a; 490.121, subdivision 20.

Reported the same back with the following amendments to the unofficial engrossment:

Page 54, after line 3, insert:

"Sec. 4. Laws 2005, First Special Session chapter 8, article 6, section 4, is amended to read:

Sec. 4. EFFECTIVE DATE.

(a) Section 1, relating to Bridges Medical Services, is effective upon the later of:

(1) the day after the governing body of the city of Ada and its chief clerical officer timely complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3; and

(2) the first day of the month next following certification to the governing body of the city of Ada by the executive director of the Public Employees Retirement Association that the actuarial accrued liability of the special benefit coverage proposed for extension to the privatized Bridges Medical Services employees under section 1 does not exceed the actuarial gain otherwise to be accrued by the Public Employees Retirement Association, as calculated by the consulting actuary retained under Minnesota Statutes, section 356.214.

(b) Section 1, relating to the Hutchinson Area Health Care, is effective upon the later of:

(1) the day after the governing body of the city of Hutchinson and its chief clerical officer timely complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3, except that the certificate of approval must be filed before January 1, 2008; and

(2) the first day of the month next following certification to the governing body of the city of Hutchinson by the executive director of the Public Employees Retirement Association that the actuarial accrued liability of the special benefit coverage proposed for extension to the privatized Hutchinson Area Health Care employees under section 1 does not exceed the actuarial gain otherwise to be accrued by the Public Employees Retirement Association, as calculated by the consulting actuary retained ~~by the Legislative Commission on Pensions and Retirement~~ under Minnesota Statutes, section 356.214.

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(1) the day after the governing body of the city of Northfield and its chief clerical officer timely complete their compliance with Minnesota Statutes, section 645.021, subdivisions 2 and 3; and

(2) the first day of the month next following certification to the governing body of the city of Northfield by the executive director of the Public Employees Retirement Association that the actuarial accrued liability of the special benefit coverage proposed for extension to the privatized Northfield Hospital employees under section 1 does not exceed the actuarial gain otherwise to be accrued by the Public Employees Retirement Association, as calculated by the consulting actuary retained ~~by the Legislative Commission on Pensions and Retirement~~ under Minnesota Statutes, section 356.214.

(d) The cost of the actuarial calculations must be borne by the facility, the city in which the facility is located, or the purchaser of the facility.

(e) If the required actions in paragraphs (a), (b), or (c) and (d) occur, section 1 applies retroactively to the date of privatization.

(f) Section 3 is effective the day following final enactment.

(g) Section 2 is effective the day following final enactment and applies to privatizations occurring on or after the effective date."

Page 54, line 5, delete "and 3" and insert ", 3, and 4"

Pages 70 to 75, delete article 9

Renumber the sections in sequence and correct the internal references

Renumber the articles in sequence

Correct the title numbers accordingly

With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means.

Joint Rule 2.03 has been waived for any subsequent committee action on this bill.

The report was adopted.

Paulsen from the Committee on Rules and Legislative Administration to which was referred:

S. F. No. 2706, A bill for an act relating to vocational rehabilitation; extending a pilot project; amending Laws 2004, chapter 188, section 1, as amended.

Reported the same back with the recommendation that the bill pass.

Joint Rule 2.03 has been waived for any subsequent committee action on this bill.

The report was adopted.

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Paulsen from the Committee on Rules and Legislative Administration to which was referred:

S. F. No. 3260, A bill for an act relating to biotechnology zones; authorizing the designation of additional biotechnology and health sciences industry zones; amending Minnesota Statutes 2004, section 469.334, subdivisions 1, 4.

Reported the same back with the recommendation that the bill pass.

Joint Rule 2.03 has been waived for any subsequent committee action on this bill.

The report was adopted.

SECOND READING OF SENATE BILLS

S. F. Nos. 367, 2706 and 3260 were read for the second time.

ADJOURNMENT

Paulsen moved that the House adjourn. The motion prevailed, and Speaker pro tempore Davids declared the House stands adjourned until 11:00 a.m., Friday, May 19, 2006.

Albin A. Mathiowetz, Chief Clerk, House of Representatives

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