Bill Text: MN SF1191 | 2013-2014 | 88th Legislature | Engrossed

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Bill Title: Omnibus retirement bill #2

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2013-05-20 - General Orders: Stricken and returned to author [SF1191 Detail]

Download: Minnesota-2013-SF1191-Engrossed.html

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A bill for an act

relating to retirement; various retirement plans; redefining salary for benefit
and contribution purposes; increasing member and employer contributions;
increasing vesting to ten years for new hires; capping allowable service for
computing annuities; modifying the trigger for increasing or lowering annual
postretirement adjustments for all plans; modifying duty disability definitions
and clarifying disability application requirements for the public employees
police and fire and local government correctional plan; increasing the reduction
for early retirement; clarifying survivor benefit provisions; delaying the first
annual postretirement adjustment for the public employees police and fire
retirement plan; increase the normal retirement age for new judge; permitting
existing judges to elect to be treated as a new judge for benefit and contribution
purposes; mandating certain dues and other payment deductions by MSRS and
PERA; modifying the Teachers Retirement Association level benefit tier early
retirement reduction factors; increasing member and employer contributions to
the Duluth Teachers Retirement Fund Association and the St. Paul Teachers
Retirement Fund Association; increasing direct state aid to the DTRFA and to
the SPTRFA; increasing the DTRFA and SPTRFA benefit accrual rates for
prospective allowable service; revising the DTRFA postretirement adjustment
provision; modifying certain salary increase and payroll growth actuarial
assumptions;amending Minnesota Statutes 2012, sections 352B.011, subdivision
4; 352B.02, subdivisions 1a, 1c; 352B.08, subdivisions 1, 2, 2a; 352B.10,
subdivision 5; 352B.11, subdivisions 1, 2b; 353.01, subdivisions 10, 17a, 41,
47; 353.031, subdivision 4; 353.35, subdivision 1; 353.65, subdivisions 2, 3;
353.651, subdivisions 3, 4; 353.657, subdivisions 2a, 3a; 353E.001, subdivision
1; 354.44, subdivision 6; 354A.011, subdivision 21; 354A.12, subdivisions 1,
2a, 3a, 3c, 7, by adding subdivisions; 354A.27, subdivision 7, by adding a
subdivision; 354A.31, subdivisions 3, 4, 4a, 7; 354A.35, subdivision 2; 356.215,
subdivision 8; 356.315, by adding a subdivision; 356.415, subdivisions 1,
1b, 1c, 1e, by adding a subdivision; 356.47, subdivision 1; 356.91; 423A.02,
subdivision 5; 490.121, subdivisions 21f, 22, by adding subdivisions; 490.123,
subdivisions 1a, 1b; 490.124, subdivision 1; proposing coding for new law in
Minnesota Statutes, chapters 354; 490; repealing Minnesota Statutes 2012,
sections 352B.11, subdivision 2c; 354A.27, subdivision 6.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

ARTICLE 1

STATE PATROL RETIREMENT PLAN FINANCIAL SOLVENCY MEASURES

    Section 1. Minnesota Statutes 2012, section 352B.011, subdivision 4, is amended to
read:
    Subd. 4. Average monthly salary. (a) Subject to the limitations of section 356.611,
"average monthly salary" means the average of the highest monthly salaries for five years
of service as a member upon which contributions were deducted from pay under section
352B.02 , or upon which appropriate contributions or payments were made to the fund to
receive allowable service and salary credit as specified under the applicable law. Average
monthly salary must be based upon all allowable service if this service is less than five years.
(b) The salary used for the calculation of "average monthly salary" means the salary
of the member as defined in section 352.01, subdivision 13. "Average monthly salary"
includes the salary of the member during the period of covered employment rendered after
reaching the allowable service credit limit of section 352B.08, subdivision 2, paragraph
(b). The salary used for the calculation of "average monthly salary" does not include any
lump-sum annual leave payments and overtime payments made at the time of separation
from state service, any amounts of severance pay, or any reduced salary paid during the
period the person is entitled to workers' compensation benefit payments for temporary
disability.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2012, section 352B.02, subdivision 1a, is amended to read:
    Subd. 1a. Member contributions. (a) The member contribution is the following
percentage of the member's salary:

		(1) before the first day of the first pay period beginning after July 1, 2011 2014	10.40 12.4 percent
		(2) on or after the first day of the first pay period beginning after July 1, 2011 2014, to June 30, 2016	12.40 13.4 percent
		(3) after June 30, 2016	14.4 percent

(b) These contributions must be made by deduction from salary as provided in
section 352.04, subdivision 4.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 3. Minnesota Statutes 2012, section 352B.02, subdivision 1c, is amended to read:
    Subd. 1c. Employer contributions. (a) In addition to member contributions,
department heads shall pay a sum equal to the specified percentage of the salary upon which
deductions were made, which constitutes the employer contribution to the fund as follows:

		(1) before the first day of the first pay period beginning after July 1, 2011 2014	15.60 18.6 percent
		(2) on or after the first day of the first pay period beginning after July 1, 2011 2014, to June 30, 2016	18.60 20.1 percent
		(3) after June 30, 2016	21.6 percent

(b) Department contributions must be paid out of money appropriated to departments
for this purpose.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 4. Minnesota Statutes 2012, section 352B.08, subdivision 1, is amended to read:
    Subdivision 1. Eligibility; when to apply; accrual. (a) Every member who is
credited with three or more years of allowable service if first employed before July 1, 2010
2013, or with at least five ten years of allowable service if first employed after June 30,
2010 2013, is entitled to separate from state service and upon becoming 50 years old, is
entitled to receive a life annuity, upon separation from state service.
(b) Members must apply for an annuity in a form and manner prescribed by the
executive director.
(c) No application may be made more than 90 days before the date the member is
eligible to retire by reason of both age and service requirements.
(d) An annuity begins to accrue no earlier than 180 days before the date the
application is filed with the executive director.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 5. Minnesota Statutes 2012, section 352B.08, subdivision 2, is amended to read:
    Subd. 2. Normal retirement annuity. (a) The annuity must be paid in monthly
installments. The annuity shall be equal to the amount determined by multiplying
the average monthly salary of the member by the percent specified in section 356.315,
subdivision 6 , for each year of allowable service and pro rata prorated for additional
completed months of allowable service, unless restricted under paragraph (b).
(b) Allowable service in excess of 33 years must not be used in computing the
annuity. This restriction does not apply to any member who has at least 28 years of
allowable service before July 1, 2013.
(c) When the annuity commences, any member contributions attributable to
allowable service not used to compute the annuity due to the restrictions in paragraph (b)
must be refunded using procedures specified in section 352B.11, subdivision 1.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 6. Minnesota Statutes 2012, section 352B.08, subdivision 2a, is amended to read:
    Subd. 2a. Early retirement. Any member who has become at least 50 years old
and who has at least three years of allowable service if first employed before July 1,
2010 2013, or who has at least five ten years of allowable service if first employed after
June 30, 2010 2013, is entitled upon application to a reduced retirement annuity equal
to the annuity calculated under subdivision 2, reduced by one-tenth of one percent for
each month that the member is under age 55 at the time of retirement, if first employed
the effective date of retirement is before July 1, 2010, or reduced by two-tenths of one
percent 2015. If the effective date of retirement is after June 30, 2015, the reduction is
0.34 percent for each month that the member is under age 55 at the time of retirement if
first employed after June 30, 2010.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 7. Minnesota Statutes 2012, section 352B.10, subdivision 5, is amended to read:
    Subd. 5. Optional annuity. A disabilitant may elect, in lieu of spousal survivorship
coverage under section 352B.11, subdivisions subdivision 2b and 2c, the normal disability
benefit or an optional annuity as provided in section 352B.08, subdivision 3. The choice
of an optional annuity must be made in writing, on a form prescribed by the executive
director, and must be made before the commencement of the payment of the disability
benefit, or within 90 days before reaching age 55 or before reaching the five-year
anniversary of the effective date of the disability benefit, whichever is later. The optional
annuity is effective on the date on which the disability benefit begins to accrue, or the
month following the attainment of age 55 or following the five-year anniversary of the
effective date of the disability benefit, whichever is later.

    Sec. 8. Minnesota Statutes 2012, section 352B.11, subdivision 1, is amended to read:
    Subdivision 1. Refund of payments. (a) A member who has not received other
benefits under this chapter is entitled to a refund of payments made by salary deduction,
plus interest, if the member is separated, either voluntarily or involuntarily, from the state
service that entitled the member to membership.
(b) A refund under section 352B.08, subdivision 2, paragraph (c), does not result in
a forfeiture of salary credit for the allowable service credit covered by the refund.
(b) (c) In the event of the member's death, if there are no survivor benefits payable
under this chapter, a refund plus interest is payable to the last designated beneficiary on
a form filed with the director before death, or if no designation is filed, is payable to
the member's estate. Interest under this subdivision must be calculated as provided in
section 352.22, subdivision 2. To receive a refund, the application must be made on a
form prescribed by the executive director.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2012, section 352B.11, subdivision 2b, is amended to read:
    Subd. 2b. Surviving spouse benefit eligibility. (a) If an active member with
three or more years of allowable service if first employed before July 1, 2010 2013, or
with at least five years of allowable service if first employed after June 30, 2010 2013,
dies before attaining age 55, the surviving spouse is entitled to the a benefit specified in
subdivision 2c, paragraph (b) for life equal to 50 percent of the average monthly salary
of the deceased member. On the first of the month next following the date on which the
deceased member would have attained exact age 55, in lieu of continued receipt of the
prior benefit, the surviving spouse is eligible to commence receipt of the second half of
a 100 percent joint and survivor annuity if this provides a larger benefit. The joint and
survivor annuity must be computed assuming the exact age 55 for the deceased member
and the age of the surviving spouse on the date of death.
(b) If an active member with less than three years of allowable service if first
employed before July 1, 2010 2013, or with fewer than five years of allowable service if
first employed after June 30, 2010 2013, dies at any age, the surviving spouse is entitled to
receive the a benefit specified in subdivision 2c, paragraph (c) for life equal to 50 percent
of the average monthly salary of the deceased member.
(c) If an active member with three or more years of allowable service if first
employed before July 1, 2010 2013, or with at least five years of allowable service if first
employed after June 30, 2010 2013, dies on or after attaining exact age 55, the surviving
spouse is entitled to receive the benefits specified in subdivision 2c, paragraph (d) a benefit
for life equal to 50 percent of the average monthly salary of the deceased member, or the
second half of a 100 percent joint and survivor annuity, whichever is larger. The joint and
survivor annuity must be computed using the age of the deceased member on the date of
death and the age of the surviving spouse on that same date.
(d) If a disabilitant dies while receiving a disability benefit under section 352B.10
or before the benefit under that section commenced, and an optional annuity was not
elected under section 352B.10, subdivision 5, the surviving spouse is entitled to receive
the a benefit specified in subdivision 2c, paragraph (b) for life equal to 50 percent of the
average monthly salary of the deceased member. On the first of the month next following
the date on which the deceased member would have attained exact age 55, in lieu of
continued receipt of the prior benefit, the surviving spouse is eligible to commence receipt
of the second half of a 100 percent joint and survivor annuity if this provides a larger
benefit. The joint and survivor annuity must be computed assuming the exact age 55 for
the deceased member and the age of the surviving spouse on the date of death.
(e) If a former member with three or more years of allowable service if first employed
before July 1, 2010 2013, or with at least five years of allowable service if first employed
after June 30, 2010 2013, who terminated from service and has not received a refund or
commenced receipt of any other benefit provided by this chapter, dies, the surviving
spouse is entitled to receive the as a benefit specified in subdivision 2c, paragraph (e) the
second half of a 100 percent joint and survivor annuity, commencing on the first of the
month next following the deceased member's date of death, or the first of the month next
following the date on which the deceased member would have attained age 55, whichever
is later. The joint and survivor annuity must be computed using the age of the deceased
member on the date of death and the age of the surviving spouse on that same date.
(f) If a former member with less than three years of allowable service if first
employed before July 1, 2010 2013, or with fewer than five years of allowable service if
first employed after June 30, 2010 2013, who terminated from service and has not received
a refund or commenced receipt of any other benefit, if applicable, provided by this chapter,
dies, the surviving spouse is entitled to receive the refund specified in subdivision 2c,
paragraph (f) or, if none, the children or, if none, the deceased member's estate is entitled to
a refund of the employee contributions plus interest computed as specified in subdivision 1.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 10. Minnesota Statutes 2012, section 356.415, subdivision 1e, is amended to read:
    Subd. 1e. Annual postretirement adjustments; State Patrol retirement plan.
(a) Retirement annuity, disability benefit, or survivor benefit recipients of the State Patrol
retirement plan are entitled to a postretirement adjustment annually on January 1, as
follows:
(1) a postretirement increase of 1.5 one percent must be applied each year, effective
on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient
who has been receiving an annuity or a benefit for at least 18 full months before the
January 1 increase; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least six full months, an annual postretirement increase of 1/12 of 1.5 one
percent for each month that the person has been receiving an annuity or benefit must be
applied, effective January 1, following the calendar year in which the person has been
retired for at least six months, but has been retired for less than 18 months.
(b) The increases provided by this subdivision commence on January 1, 2011
2014. Increases under this subdivision paragraph (a) for the State Patrol retirement plan
terminate on December 31 of the calendar year in which the actuarial valuation prepared
by the approved actuary under sections 356.214 and 356.215 and the standards for
actuarial work promulgated by the Legislative Commission on Pensions and Retirement
indicates that the market value of assets of the retirement plan equals or exceeds 90
85 percent of the actuarial accrued liability of the retirement plan and increases under
subdivision 1 paragraph (c) recommence after that date.
(c) Retirement annuity, disability benefit, or survivor benefit recipients of the State
Patrol retirement plan are entitled to a postretirement adjustment annually on January
1, as follows:
(1) a postretirement increase of 1.5 percent must be applied each year, effective on
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who
has been receiving an annuity or a benefit for at least 18 full months before the January 1
increase; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least six full months, an annual postretirement increase of 1/12 of 1.5 percent
for each month that the person has been receiving an annuity or benefit must be applied,
effective January 1, following the calendar year in which the person has been retired for at
least six months, but has been retired for less than 18 months.
(d) Increases under paragraph (c) for the State Patrol retirement plan terminate on
December 31 of the calendar year in which the actuarial valuation prepared by the approved
actuary under sections 356.214 and 356.215 and the standards for actuarial work adopted by
the Legislative Commission on Pensions and Retirement indicates that the market value of
assets of the retirement plan equals or exceeds 90 percent of the actuarial accrued liability
of the retirement plan and increases under subdivision 1 recommence after that date.
(c) (e) An increase in annuity or benefit payments under this subdivision must be
made automatically unless written notice is filed by the annuitant or benefit recipient
with the executive director of the applicable covered retirement plan requesting that the
increase not be made.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 11. PUBLIC SAFETY; APPROPRIATIONS.
The following amounts are appropriated to the Department of Public Safety for the
increased employer contribution in section 3:
(1) $95,000 in fiscal year 2015 is appropriated from the general fund. The general
fund base appropriation for fiscal year 2017 is $189,000;
(2) $546,000 in fiscal year 2015 is appropriated from the trunk highway fund. The
trunk highway fund base appropriation for fiscal year 2017 is $1,093,000; and
(3) $8,000 in fiscal year 2015 is appropriated from the highway user tax distribution
fund. The highway user tax distribution fund base appropriation for fiscal year 2017 is
$16,000.

    Sec. 12. REPEALER.
Minnesota Statutes 2012, section 352B.11, subdivision 2c, is repealed.
EFFECTIVE DATE.This section is effective July 1, 2013.

ARTICLE 2

PERA PLANS SALARY DEFINITION

    Section 1. Minnesota Statutes 2012, section 353.01, subdivision 10, is amended to read:
    Subd. 10. Salary. (a) Subject to the limitations of section 356.611, "salary" means:
    (1) the wages or periodic compensation of payable to a public employee, by the
employing governmental subdivision before:
    (i) employee retirement deductions that are designated as picked-up contributions
under section 356.62;
    (ii) any employee-elected deductions for deferred compensation, supplemental
retirement plans, or other voluntary salary reduction programs, and also means "wages"
and includes net income from fees that would have otherwise been available as a cash
payment to the employee; and
(iii) employee deductions for contributions to a supplemental plan or to a
governmental trust established under section 356.24, subdivision 1, clause (7), to save for
postretirement health care expenses, unless otherwise excluded under paragraph (b);
    (2) for a public employee who is covered by a supplemental retirement plan under
section 356.24, subdivision 1, clause (8), (9), or (10), or (12) which require all plan
contributions be made by the employer, the contribution contributions to the applicable
supplemental retirement plan when an agreement between the parties establishes that the
contribution contributions will either result in a mandatory reduction of employees' wages
through payroll withholdings, or be made in lieu of an amount that would otherwise be
paid as wages; and
    (3) for a public employee who has prior service covered by a local police or
firefighters relief association that has consolidated with the Public Employees Retirement
Association or to which section 353.665 applies and who has elected coverage either
under the public employees police and fire fund benefit plan under section 353A.08
following the consolidation or under section 353.665, subdivision 4, the rate of salary
upon which member contributions to the special fund of the relief association were made
prior to the effective date of the consolidation as specified by law and by bylaw provisions
governing the relief association on the date of the initiation of the consolidation procedure
and the actual periodic compensation of the public employee after the effective date of
consolidation.;
(4) a payment from a public employer through a grievance proceeding, settlement,
or court order that is attached to a specific earnings period in which the employee's regular
salary was not earned or paid to the member due to a suspension or a period of involuntary
termination that is not a wrongful discharge under section 356.50; provided the amount is
not less than the equivalent of the average of the hourly base salary rate in effect during
the last six months of allowable service prior to the suspension or period of involuntary
termination, plus any applicable increases awarded during the period that would have been
paid under a collective bargaining agreement or personnel policy but for the suspension
or involuntary termination, multiplied by the average number of regular hours for which
the employee was compensated during the six months of allowable service prior to the
suspension or period of involuntary termination, but not to exceed the compensation that
the public employee would have earned if regularly employed during the applicable period;
(5) the amount paid to a member who is absent from employment by reason of
personal, parental, or military leave of absence if equivalent to the hourly base salary
rate in effect during the six months of allowable service, or portions thereof, prior to the
leave, multiplied by the average number of regular hours for which the employee was
compensated during the six months of allowable service prior to the applicable leave of
absence;
(6) the amount paid to a member who is absent from employment by reason of an
authorized medical leave of absence if specified in advance to be at least one-half, but
no more than equal to the earnings the member received, on which contributions were
reported and allowable service credited during the six months immediately preceding
the medical leave of absence; and
    (7) for a public employee who receives in addition to regular salary or in lieu
of regular salary increases performance or merit bonus payment under a written
compensation plan, policy, or collective bargaining agreement, the compensation paid to
the employee for attaining or exceeding performance goals, duties, or measures during a
specified period of employment.
    (b) Salary does not mean:
    (1) the fees paid to district court reporters,;
    (2) unused annual leave, vacation, or sick leave payments, in the form of lump-sum
or periodic payments,;
    (3) for the donor, payment to another person of the value of hours donated under a
benevolent vacation, personal, or sick leave donation program;
    (4) any form of severance payments, or retirement incentive payments;
    (5) an allowance payment or per diem payments for or reimbursement of expenses,;
    (6) lump-sum settlements not attached to a specific earnings period, or;
    (7) workers' compensation payments or disability insurance payments, including
payments from employer self-insurance arrangements;
    (2) (8) employer-paid amounts used by an employee toward the cost of insurance
coverage, employer-paid fringe benefits, flexible spending accounts, cafeteria plans, health
care expense accounts, day care expenses, or any payments in lieu of any employer-paid
group insurance coverage, including the difference between single and family rates that
may be paid to a member with single coverage and certain amounts determined by the
executive director to be ineligible;
(9) employer-paid fringe benefits, including, but not limited to:
(i) employer-paid premiums or supplemental contributions for employees for all
types of insurance;
(ii) membership dues or fees for the use of fitness or recreational facilities;
(iii) incentive payments or cash awards relating to a wellness program;
(iv) the value of any nonmonetary benefits;
(v) any form of payment made in lieu of an employer-paid fringe benefit;
(vi) an employer-paid amount made to a deferred compensation or tax-sheltered
annuity program; and
(vii) any amount paid by the employer as a supplement to salary, either as a
lump-sum amount or a fixed or matching amount paid on a recurring basis, that is not
available to the employee as cash;
    (3) (10) the amount equal to that which the employing governmental subdivision
would otherwise pay toward single or family insurance coverage for a covered employee
when, through a contract or agreement with some but not all employees, the employer:
    (i) discontinues, or for new hires does not provide, payment toward the cost of the
employee's selected insurance coverages under a group plan offered by the employer;
    (ii) makes the employee solely responsible for all contributions toward the cost of
the employee's selected insurance coverages under a group plan offered by the employer,
including any amount the employer makes toward other employees' selected insurance
coverages under a group plan offered by the employer; and
    (iii) provides increased salary rates for employees who do not have any
employer-paid group insurance coverages;
    (4) (11) except as provided in section 353.86 or 353.87, compensation of any
kind paid to volunteer ambulance service personnel or volunteer firefighters, as defined
in subdivision 35 or 36;
    (5) (12) the amount of compensation that exceeds the limitation provided in section
356.611 ; and
    (6) (13) amounts paid by a federal or state grant for which the grant specifically
prohibits grant proceeds from being used to make pension plan contributions, unless the
contributions to the plan are made from sources other than the federal or state grant.; and
(14) bonus pay that is not performance or merit pay under paragraph (a), clause (6).
    (c) Amounts, other than those provided under paragraph (a), clause (4), provided to
an employee by the employer through a grievance proceeding, a court order, or a legal
settlement are salary only if the settlement or court order is reviewed by the executive
director and the amounts are determined by the executive director to be consistent with
paragraph (a) and prior determinations.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 3

PUBLIC EMPLOYEES POLICE AND FIRE RETIREMENT PLAN
FINANCIAL SOLVENCY MEASURES

    Section 1. Minnesota Statutes 2012, section 353.01, subdivision 17a, is amended to read:
    Subd. 17a. Average salary. (a) "Average salary," for purposes of calculating a
retirement annuity under section 353.29, subdivision 3, means an amount equivalent to
the average of the highest salary of the member, police officer, or firefighter, whichever
applies, upon which employee contributions were paid for any five successive years of
allowable service, based on dates of salary periods as listed on salary deduction reports.
"Average salary" includes the salary of the employee during the period of covered
employment rendered after reaching the allowable service credit limit of section 353.651,
subdivision 3, paragraph (b). Average salary must be based upon all allowable service if
this service is less than five years.
(b) "Average salary" may not include any reduced salary paid during a period
in which the employee is entitled to benefit payments from workers' compensation for
temporary disability, unless the average salary is higher, including this period.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 2. Minnesota Statutes 2012, section 353.01, subdivision 41, is amended to read:
    Subd. 41. Duty disability. "Duty disability," physical or psychological, means a
condition that is expected to prevent a member, for a period of not less than 12 months,
from performing the normal duties of the position held by a person who is a member of the
public employees police and fire retirement plan, and that is the direct result of an injury
incurred during, or a disease arising out of, the performance of normal duties or the actual
performance of less frequent inherently dangerous duties, either of which are specific to
protecting the property and personal safety of others and that present inherent dangers that
are specific to the positions covered by the public employees police and fire retirement plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2012, section 353.01, subdivision 47, is amended to read:
    Subd. 47. Vesting. (a) "Vesting" means obtaining a nonforfeitable entitlement
to an annuity or benefit from a retirement plan administered by the Public Employees
Retirement Association by having credit for sufficient allowable service under paragraph
(b) or, (c), or (d), whichever applies.
(b) For purposes of qualifying for an annuity or benefit as a basic or coordinated plan
member of the general employees retirement plan of the Public Employees Retirement
Association:
(1) a public employee who first became a member of the association before July
1, 2010, is 100 percent vested when the person has accrued credit for not less than three
years of allowable service as defined under subdivision 16; and
(2) a public employee who first becomes a member of the association after June 30,
2010, is 100 percent vested when the person has accrued credit for not less than five years
of allowable service as defined under subdivision 16.
(c) For purposes of qualifying for an annuity or benefit as a member of the police
and fire plan or a member of the local government correctional employees retirement plan:
(1) a public employee who first became a member of the association before July
1, 2010, is 100 percent vested when the person has accrued credit for not less than three
years of allowable service as defined under subdivision 16; and
(2) a public employee who first becomes a member of the association after June
30, 2010, is vested at the following percentages when the person has accrued credited
allowable service as defined under subdivision 16, as follows:
(i) 50 percent after five years;
(ii) 60 percent after six years;
(iii) 70 percent after seven years;
(iv) 80 percent after eight years;
(v) 90 percent after nine years; and
(vi) 100 percent after ten years.
(d) For purposes of qualifying for an annuity or benefit as a member of the public
employees police and fire retirement plan:
(1) a public employee who first became a member of the association before July
1, 2010, is 100 percent vested when the person has accrued credit for not less than three
years of allowable service as defined under subdivision 16;
(2) a public employee who first becomes a member of the association after June 30,
2010, and before July 1, 2014, is vested at the following percentages when the person has
accrued credited allowable service as defined under subdivision 16, as follows:
(i) 50 percent after five years;
(ii) 60 percent after six years;
(iii) 70 percent after seven years;
(iv) 80 percent after eight years;
(v) 90 percent after nine years; and
(vi) 100 percent after ten years; and
(3) a public employee who first becomes a member of the association after June
30, 2014, is vested at the following percentages when the person has accrued credited
allowable service as defined under subdivision 16, as follows:
(i) 50 percent after ten years;
(ii) 55 percent after 11 years;
(iii) 60 percent after 12 years;
(iv) 65 percent after 13 years;
(v) 70 percent after 14 years;
(vi) 75 percent after 15 years;
(vii) 80 percent after 16 years;
(viii) 85 percent after 17 years;
(ix) 90 percent after 18 years;
(x) 95 percent after 19 years; and
(xi) 100 percent after 20 or more years.

    Sec. 4. Minnesota Statutes 2012, section 353.031, subdivision 4, is amended to read:
    Subd. 4. Additional requirements; eligibility for police and fire or local
government correctional service retirement plan disability benefits. (a) If an
application for disability benefits is filed within two years of the date of the injury or the
onset of the illness that gave rise to the disability application, the application must be
supported by evidence that the applicant is unable to perform the duties of the position
held by the applicant on the date of the injury or the onset of the illness causing the
disability. The employer must provide evidence indicating whether the applicant is able or
unable to perform the duties of the position held on the date of the injury or onset of the
illness causing the disability and the specifications, a clear explanation of any duties that
the individual can or cannot perform, and an explanation of why the employer may or may
not authorize continued employment to the applicant in the current or some other position.
    (b) If an application for disability benefits is filed more than two years after the
date of injury or the onset of an illness causing the disability, the application must be
supported by evidence that the applicant is unable to perform the most recent duties that
are were expected to be performed by the applicant during the 90 days before preceding
the filing of last day the application applicant performed services for the employer. The
employer must provide evidence of the duties that are were expected to be performed by
the applicant during the 90 days before preceding the filing of last day the application
applicant performed services, whether the applicant can or cannot perform those duties
overall, and the specifications a clear explanation of any duties that the applicant can
or cannot perform, and an explanation of why the employer may or may not authorize
continued employment to the applicant in the current or some other position.
    (c) Any report supporting a claim to disability benefits under section 353.656 or
353E.06 must specifically relate the disability to its cause; and for any claim to duty
disability from an injury or illness arising out of an act of duty, the report must state the
specific act of duty giving rise to the claim, and relate the cause of disability to inherently
dangerous duties specific tasks or functions required to be performed by the employee in
fulfilling the employee's duty-related acts which must be specific to the inherent dangers of
the positions eligible for membership in covered by the public employees police and fire
fund plan and the local government correctional service retirement plan. Any report that
does not relate the cause of disability to specific acts or functions inherently dangerous
duties performed by the employee may not be relied upon as evidence to support eligibility
for benefits and may be disregarded in the executive director's decision-making process.
    (d) Any application for duty disability must be supported by a first report of injury as
defined in section 176.231.
    (e) If a member who has applied for and been approved for disability benefits before
the termination of service does not terminate service or is not placed on an authorized
leave of absence as certified by the governmental subdivision within 45 days following
the date on which the application is approved, the application shall be canceled. If an
approved application for disability benefits has been canceled, a subsequent application
for disability benefits may not be filed on the basis of the same medical condition for a
minimum of one year from the date on which the previous application was canceled.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 5. Minnesota Statutes 2012, section 353.35, subdivision 1, is amended to read:
    Subdivision 1. Refund rights. (a) Except as provided in paragraph (b), when any
former member accepts a refund, all existing service credits and all rights and benefits to
which the person was entitled prior to the acceptance of the refund must terminate.
(b) A refund under section 353.651, subdivision 3, paragraph (c), does not result in a
forfeiture of salary credit for the allowable service credit covered by the refund.
(c) The rights and benefits of a former member must not be restored until the person
returns to active service and acquires at least six months of allowable service credit
after taking the last refund and repays the refund or refunds taken and interest received
under section 353.34, subdivisions 1 and 2, plus interest at an annual rate of 8.5 percent
compounded annually. If the person elects to restore service credit in a particular fund
from which the person has taken more than one refund, the person must repay all refunds
to that fund. All refunds must be repaid within six months of the last date of termination
of public service.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 6. Minnesota Statutes 2012, section 353.65, subdivision 2, is amended to read:
    Subd. 2. Employee contribution. (a) For members other than members who were
active members of the former Minneapolis Firefighters Relief Association on December
29, 2011, or for members other than members who were active members of the former
Minneapolis Police Relief Association on December 29, 2011, the employee contribution
is 9.4 percent an amount equal to the following percentage of the total salary of the each
member in calendar year 2010 and is, as follows: 9.6 percent of the salary of the member
in each before calendar year after 2010 2014; 10.2 percent in calendar year 2014; and 10.8
percent in calendar year 2015 and thereafter.
(b) For members who were active members of the former Minneapolis Firefighters
Relief Association on December 29, 2011, the employee contribution is an amount
equal to eight percent of the monthly unit value under section 353.01, subdivision 10a,
multiplied by 80 and expressed as a biweekly amount for each member. The employee
contribution made by a member with at least 25 years of service credit as an active
member of the former Minneapolis Firefighters Relief Association must be deposited in
the postretirement health care savings account established under section 352.98.
(c) For members who were active members of the former Minneapolis Police Relief
Association on December 29, 2011, the employee contribution is an amount equal to eight
percent of the monthly unit value under section 353.01, subdivision 10b, multiplied by 80
and expressed as a biweekly amount for each member. The employee contribution made
by a member with at least 25 years of service credit as an active member of the former
Minneapolis Police Relief Association must be deposited in the postretirement health care
savings account established under section 352.98.
(d) Contributions under this section must be made by deduction from salary in
the manner provided in subdivision 4. Where any portion of a member's salary is paid
from other than public funds, the member's employee contribution is based on the total
salary received from all sources.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2012, section 353.65, subdivision 3, is amended to read:
    Subd. 3. Employer contribution. (a) With respect to members other than members
who were active members of the former Minneapolis Firefighters Relief Association on
December 29, 2011, or for members other than members who were active members of
the former Minneapolis Police Relief Association on December 29, 2011, the employer
contribution is 14.1 percent an amount equal to the following percentage of the total salary
of the each member in calendar year 2010 and is, as follows: 14.4 percent of the salary of
the member in each before calendar year after 2010 2014; 15.3 percent in calendar year
2014; and 16.2 percent in calendar year 2015 and thereafter.
(b) With respect to members who were active members of the former Minneapolis
Firefighters Relief Association on December 29, 2011, the employer contribution is an
amount equal to the amount of the member contributions under subdivision 2, paragraph
(b).
(c) With respect to members who were active members of the former Minneapolis
Police Relief Association on December 29, 2011, the employer contribution is an amount
equal to the amount of the member contributions under subdivision 2, paragraph (c).
(d) Contributions under this subdivision must be made from funds available to the
employing subdivision by the means and in the manner provided in section 353.28.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 8. Minnesota Statutes 2012, section 353.651, subdivision 3, is amended to read:
    Subd. 3. Retirement annuity formula. (a) The average salary as defined in
section 353.01, subdivision 17a, multiplied by the percent specified in section 356.315,
subdivision 6 , per year multiplied by years of allowable service, multiplied by the
applicable vesting percentage indicated in section 353.01, subdivision 47, determines the
amount of the normal retirement annuity. If the member has earned allowable service
for performing services other than those of a police officer or firefighter, the annuity
representing that service must be computed under sections 353.29 and 353.30.
(b) For a member first enrolled in the public employees police and fire retirement
plan after June 30, 2014, the average salary as defined in section 353.01, subdivision 17a,
paragraph (a), includes salary for all years for which contributions have been reported to
the public employees police and fire retirement plan, but allowable service included in
the calculation is limited to 33 years and the normal retirement annuity must not exceed
99 percent of the average salary.
(c) When the annuity begins for members of the public employees police and fire
retirement plan enrolled after June 30, 2014, a prorated share of the contributions for
allowable service exceeding 33 years must be refunded to the member. The prorated
share of the contributions to be refunded is determined by multiplying the accumulated
deductions paid by the member to the public employees police and fire retirement plan by
a percentage determined using the number of months of service in excess of 396 as the
numerator and the total number of months of allowable service on which contributions
were reported as the denominator. Interest as defined in section 353.34, subdivision 2,
is to be applied to the prorated share of contributions from the first of the 397th month
of allowable service reported to the public employees police and fire retirement plan to
the first of the month the annuity begins.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2012, section 353.651, subdivision 4, is amended to read:
    Subd. 4. Early retirement. (a) A person who becomes a public employees police
and fire retirement plan member after June 30, 2007, or a former member who is reinstated
as a member of the plan after that date, who is at least 50 years of age and who is at least
partially vested under section 353.01, subdivision 47, upon the termination of public
service before July 1, 2014, if the person is other than a county sheriff or after January 4,
2015, if the person is a county sheriff is entitled upon application to a retirement annuity
equal to the normal annuity calculated under subdivision 3, reduced by two-tenths of one
percent for each month that the member is under age 55 at the time of retirement.
    (b) Upon the termination of public service before July 1, 2014, if the person is
other than a county sheriff or upon the termination of public service before January 5,
2015, if the person is a county sheriff, any public employees police and fire retirement
plan member who first became a member of the plan before July 1, 2007, and who is
not specified in paragraph (a), upon attaining at least 50 years of age with at least three
years of allowable service is entitled upon application to a retirement annuity equal to the
normal annuity calculated under subdivision 3, reduced by one-tenth of one percent for
each month that the member is under age 55 at the time of retirement.
(c) A person other than a county sheriff who is a member of the public employees
police and fire retirement plan on or after July 1, 2014, or a county sheriff who is a
member of the public employees police and fire retirement plan on or after January 5,
2015, and who is at least 50 years old and is at least partially vested under section 353.01,
subdivision 47, and whose benefit effective date is after July 1, 2014, if other than a
county sheriff or after January 4, 2015, if a county sheriff and on or before July 1, 2019, is
entitled upon application to a retirement annuity equal to the normal annuity calculated
under subdivision 3, reduced for each month the member is under age 55 at the time of
retirement by applying a blended monthly rate that is equivalent to the sum of:
(1) one-sixtieth of the annual rate of five percent, prorated for each month the
person's benefit effective date is after July 1, 2014, or after December 31, 2014, whichever
applies; and
(2) one-sixtieth of the annual rate provided under paragraph (a) or (b), whichever
applies, for each month the person's benefit effective date is before July 1, 2019.
(d) A person other than a county sheriff who is a member of the public employees
police and fire retirement plan on or after July 1, 2014, or a county sheriff who is a member
of the public employees police and fire retirement plan on or after January 5, 2015, and
who is at least 50 years old and is at least partially vested under section 353.01, subdivision
47, whose benefit effective date is after July 1, 2019, is entitled, upon application, to a
retirement annuity equal to the normal annuity calculated under subdivision 3, reduced by
five percent annually, prorated for each month that the member is under age 55.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. Minnesota Statutes 2012, section 353.657, subdivision 2a, is amended to read:
    Subd. 2a. Death while eligible survivor benefit. (a) If a member or former member
who has attained the age of at least 50 years and either who is vested under section
353.01, subdivision 47 , or who has credit for at least 30 years of allowable service,
regardless of age attained, dies before the annuity or disability benefit becomes payable,
notwithstanding any designation of beneficiary to the contrary, the surviving spouse may
elect to receive a death while eligible survivor benefit.
    (b) Notwithstanding the definition of surviving spouse in section 353.01, subdivision
20 , a former spouse of the member, if any, is entitled to a portion of the death while
eligible survivor benefit if stipulated under the terms of a marriage dissolution decree
filed with the association. If there is no surviving spouse or child or children, a former
spouse may be entitled to a lump-sum refund payment under section 353.32, subdivision
1 , if provided for in a marriage dissolution decree but not a death while eligible survivor
benefit despite the terms of a marriage dissolution decree filed with the association.
    (c) The benefit may be elected instead of a refund with interest under section 353.32,
subdivision 1 , or surviving spouse benefits otherwise payable under subdivisions 1 and
2. The benefit must be an annuity equal to the 100 percent joint and survivor annuity
which the member could have qualified for on the date of death, computed as provided in
sections 353.651, subdivisions 2 and subdivision 3, and 353.30, subdivision 3.
    (d) The surviving spouse may apply for the annuity at any time after the date
on which the deceased employee would have attained the required age for retirement
based on the employee's allowable service. Sections 353.34, subdivision 3, and 353.71,
subdivision 2 , apply to a deferred annuity payable under this subdivision.
    (e) No payment accrues beyond the end of the month in which entitlement to
such annuity has terminated. An amount equal to the excess, if any, of the accumulated
contributions which were credited to the account of the deceased employee over and
above the total of the annuities paid and payable to the surviving spouse must be paid to
the deceased member's last designated beneficiary or, if none, to the legal representative of
the estate of such deceased member.
    (f) Any member may request in writing, with the signed consent of the spouse, that
this subdivision not apply and that payment be made only to the designated beneficiary, as
otherwise provided by this chapter.
    (g) For a member who is employed as a full-time firefighter by the Department of
Military Affairs of the state of Minnesota, allowable service as a full-time state Military
Affairs Department firefighter credited by the Minnesota State Retirement System may be
used in meeting the minimum allowable service requirement of this subdivision.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 11. Minnesota Statutes 2012, section 353.657, subdivision 3a, is amended to read:
    Subd. 3a. Maximum and minimum family benefits. (a) The maximum monthly
benefit per family must not exceed the following percentages of the member's average
monthly salary as specified in subdivision 3:
    (1) 80 percent, if the member's death was a line of duty death; or
    (2) 70 percent, if the member's death was not a line of duty death or occurred while
the member was receiving a disability benefit that accrued before July 1, 2007.
    (b) The minimum monthly benefit per family, including the joint and survivor
optional annuity under subdivision 2a, and section 353.656, subdivision 1a, must not be
less than the following percentage of the member's average monthly salary as specified in
subdivision 3:
    (1) 60 percent, if the death was a line of duty death; or
    (2) 50 percent, if the death was not a line of duty death or occurred while the member
was receiving a disability benefit that accrued before July 1, 2007.
    (c) If the maximum under paragraph (a) is exceeded, the monthly benefit of the
joint annuitant, surviving spouse, and dependent children, as applicable, must each be
reduced to the amount necessary proportionately so that the total family benefit does
not exceed the applicable maximum. The joint and survivor optional annuity, surviving
spouse, or dependent children benefit, as applicable, must be restored, plus applicable
postretirement adjustments under Minnesota Statutes 2008, section 356.41 or section
356.415 , as the dependent child or children become no longer dependent under section
353.01, subdivision 15 , or in the event of the death of the joint and survivor annuity
recipient or the surviving spouse.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 12. Minnesota Statutes 2012, section 353E.001, subdivision 1, is amended to read:
    Subdivision 1. Duty disability. "Duty disability," physical or psychological, means
a condition that is expected to prevent a member, for a period of not less than 12 months,
from performing the normal duties of a local government correctional service employee as
defined under section 353E.02 and that is the direct result of an injury incurred during, or
a disease arising out of, the performance of normal duties or the actual performance of
less frequent inherently dangerous duties, either of which are specific to protecting the
property and personal safety of others and that present inherent dangers that are specific to
the positions covered by the local government correctional service retirement plan.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 13. Minnesota Statutes 2012, section 356.415, subdivision 1b, is amended to read:
    Subd. 1b. Annual postretirement adjustments; PERA; general employees
retirement plan and local government correctional retirement plan. (a) Retirement
annuity, disability benefit, or survivor benefit recipients of the general employees
retirement plan of the Public Employees Retirement Association and the local government
correctional service retirement plan are entitled to a postretirement adjustment annually
on January 1, as follows:
(1) for January 1, 2011, and each successive January 1 until funding stability is
restored for the applicable retirement plan, a postretirement increase of one percent must
be applied each year, effective on January 1, to the monthly annuity or benefit amount of
each annuitant or benefit recipient who has been receiving an annuity or benefit for at least
12 full months as of the current June 30;
(2) for January 1, 2011, and each successive January 1 until funding stability is
restored for the applicable retirement plan, for each annuitant or benefit recipient who has
been receiving an annuity or a benefit for at least one full month, but less than 12 full
months as of the current June 30, an annual postretirement increase of 1/12 of one percent
for each month the person has been receiving an annuity or benefit must be applied;
(3) for each January 1 following the restoration of funding stability for the applicable
retirement plan, a postretirement increase of 2.5 percent must be applied each year,
effective January 1, to the monthly annuity or benefit amount of each annuitant or benefit
recipient who has been receiving an annuity or benefit for at least 12 full months as of
the current June 30; and
(4) for each January 1 following restoration of funding stability for the applicable
retirement plan, for each annuity or benefit recipient who has been receiving an annuity or
a benefit for at least one full month, but less than 12 full months as of the current June
30, an annual postretirement increase of 1/12 of 2.5 percent for each month the person
has been receiving an annuity or benefit must be applied.
(b) Funding stability is restored when the market value of assets of the applicable
retirement plan equals or exceeds 90 percent of the actuarial accrued liabilities of the
applicable plan in the two most recent prior consecutive actuarial valuation valuations
prepared under section 356.215 and the standards for actuarial work by the approved
actuary retained by the Public Employees Retirement Association under section 356.214.
(c) If, after applying the increase as provided for in paragraph (a), clauses (3)
and (4), the market value of the applicable retirement plan is determined in the next
subsequent actuarial valuation prepared under section 356.215 to be less than 90 percent
of the actuarial accrued liability of any of the applicable Public Employees Retirement
Association plans, After having met the definition of funding stability under paragraph
(b), the increase provided in paragraph (a), clauses (1) and (2), are rather than an increase
under subdivision 1, is again to be applied as of the next successive January until funding
stability is again restored. in a subsequent year or years if the market value of assets of
the applicable plan equals or is less than:
(1) 85 percent of the actuarial accrued liabilities of the applicable plan for two
consecutive actuarial valuations; or
(2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most
recent actuarial valuation.
(d) An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the Public Employees Retirement Association requesting that the
increase not be made.
(e) The retirement annuity payable to a person who retires before becoming eligible
for Social Security benefits and who has elected the optional payment, as provided in
section 353.29, subdivision 6, 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 for section 353.29, subdivision 6. A postretirement
adjustment granted on the period-certain retirement annuity must terminate when the
period-certain retirement annuity terminates.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 14. Minnesota Statutes 2012, section 356.415, subdivision 1c, is amended to read:
    Subd. 1c. Annual postretirement adjustments; PERA-police and fire. (a)
Retirement annuity, disability benefit, or survivor benefit recipients of the public
employees police and fire retirement plan are entitled to a postretirement adjustment
annually on January 1, until funding stability is restored, as follows:
(1) for January 1, 2011, and for January 1, 2012, for each annuitant or benefit
recipient whose annuity or benefit effective date is on or before June 1, 2014, who has
been receiving the annuity or benefit for at least 12 full months as of the immediate
preceding June 30, an amount equal to one percent in each year; or
(2) for January 1, 2011, and for January 1, 2012, for each annuitant or benefit
recipient whose annuity or benefit effective date is on or before June 1, 2014, who has
been receiving the annuity or benefit for at least one full month, but not less than 11
months, as of the immediate preceding June 30, an amount equal to 1/12 of one percent in
each year for each month of annuity or benefit receipt; and
(3) for January 1, 2013, and each successive January 1 that follows the loss of
funding stability as defined under paragraph (b) until funding stability as defined under
paragraph (b) is again restored, for each annuitant or benefit recipient whose annuity
or benefit effective date is after June 1, 2014, who has will have been receiving the an
annuity or benefit for at least 12 36 full months as of the immediate preceding June 30,
an amount equal to 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 between the immediate preceding June 30 and the
June 30 occurring 12 months previous, but not to exceed 1.5 one percent; or
(4) for January 1, 2013, and each successive January 1 that follows the loss of funding
stability as defined under paragraph (b) until funding stability as defined under paragraph
(b) is again restored, for each annuitant or benefit recipient whose annuity or benefit
effective date is after June 1, 2014, who has been receiving the annuity or benefit for at
least one 25 full month months, but less than 36 months as of the immediate preceding June
30, an amount equal to 1/12 of 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 between the immediate preceding June
30 and the June 30 occurring 12 months previous for each full month of annuity or benefit
receipt, but not to exceed 1/12 of 1.5 one percent for each full month of annuity or benefit
receipt during the fiscal year in which the annuity or benefit was effective;.
(5) for (b) Retirement annuity, disability benefit, or survivor benefit recipients of
the public employees police and fire retirement plan are entitled to a postretirement
adjustment annually on each January 1 following the restoration of funding stability as
defined under paragraph (b) (c) and during the continuation of funding stability as defined
under paragraph (b) (c), as follows:
(1) for each annuitant or benefit recipient who has been receiving the annuity or
benefit for at least 12 36 full months as of the immediate preceding June 30, an amount
equal to 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 between the immediate preceding June 30 and the June 30
occurring 12 months previous, but not to exceed 2.5 percent; and
(6) for each January 1 following the restoration of funding stability as defined under
paragraph (b) and during the continuation of funding stability as defined under paragraph
(b), (2) for each annuitant or benefit recipient who has been receiving the annuity or benefit
for at least one 25 full month months, but less than 36 full months, as of the immediate
preceding June 30, an amount equal to 1/12 of 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 between the
immediate preceding June 30 and the June 30 occurring 12 months previous for each full
month of annuity or benefit receipt during the fiscal year in which the annuity or benefit
was effective, but not to exceed 1/12 of 2.5 percent for each full month of annuity or
benefit receipt during the fiscal year in which the annuity or benefit was effective.
(b) (c) Funding stability is restored when the market value of assets of the public
employees police and fire retirement plan equals or exceeds 90 percent of the actuarial
accrued liabilities of the applicable plan in the two most recent prior consecutive actuarial
valuation valuations prepared under section 356.215 and under the standards for actuarial
work of the Legislative Commission on Pensions and Retirement by the approved actuary
retained by the Public Employees Retirement Association under section 356.214.
(d) After having met the definition of funding stability under paragraph (c), a full
or prorated increase, as provided in paragraph (a), clause (1), (2), (3), or (4), whichever
applies, rather than adjustments under paragraph (b), is again applied in a subsequent year
or years if the market value of assets of the public employees police and fire retirement
plan equals or is less than:
(1) 85 percent of the actuarial accrued liabilities of the applicable plan for two
consecutive actuarial valuations; or
(2) 80 percent of the actuarial accrued liabilities of the applicable plan for the most
recent actuarial valuation.
(c) (e) An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the Public Employees Retirement Association requesting that the
increase not be made.
EFFECTIVE DATE.This section is effective the day following final enactment.

ARTICLE 4

TEACHERS RETIREMENT ASSOCIATION EARLY RETIREMENT
REDUCTION FACTORS

    Section 1. Minnesota Statutes 2012, 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 for service rendered before July 1, 2006:

				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 entitled:

				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).
    (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.
    (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 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 of 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.
    (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. Except in regards to section 354.46,
this paragraph remains in effect until June 30, 2015.
(f) After June 30, 2020, 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 is entitled to receive the normal
annuity provided in paragraph (d). For a person who is at least age 62 or older and has at
least 30 years of service, the annuity must be reduced by an early reduction factor of six
percent per year 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 became an employee after June 30, 2006.
For a person who is not at least age 62 or older and does not have at least 30 years of
service, the annuity would be reduced by an early reduction factor of four percent per year
for ages 55 through 59 and seven percent per year 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
became an employee after June 30, 2006.
(g) After June 30, 2015, and before July 1, 2020, for a person who would have
a reduced retirement annuity under either paragraph (e) or (f) if they were applicable,
the employee is entitled to receive a reduced annuity which must be calculated using
a blended reduction factor augmented monthly by 1/60 of the difference between the
reduction required under paragraph (e) and the reduction required under paragraph (f).
    (f) (h) 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.
EFFECTIVE DATE.This section is effective July 1, 2013.

ARTICLE 5

FIRST CLASS CITY TEACHER RETIREMENT INCREASES AND
FINANCIAL SOLVENCY MEASURES

    Section 1. [354.436] DIRECT STATE AID ON BEHALF OF THE FORMER
MINNEAPOLIS TEACHERS RETIREMENT FUND ASSOCIATION.
    Subdivision 1. Aid authorization. The state shall pay $12,954,000 to the Teachers
Retirement Association on behalf of the former Minneapolis Teachers Retirement Fund
Association.
    Subd. 2. Aid appropriation. The commissioner of management and budget shall
pay the aid annually on October 1. The amount required is appropriated annually from the
general fund to the commissioner of management and budget.
    Subd. 3. Aid expiration. The aid specified in this section terminates and this
section expires when the current assets of the Teachers Retirement Association fund equal
or exceed the actuarial accrued liabilities of the fund as determined in the most recent
actuarial valuation report for the Teachers Retirement Association fund by the actuary
retained under section 356.214, or on the established date for full funding under section
356.215, subdivision 11, whichever occurs earlier.
EFFECTIVE DATE.This section is effective July 1, 2014.

    Sec. 2. Minnesota Statutes 2012, section 354A.011, subdivision 21, is amended to read:
    Subd. 21. Retirement. (a) "Retirement" means the time after the date of cessation
of active teaching service by a teacher who is thereafter then entitled to an accrued
retirement annuity commencing beginning as designated by the board of trustees and
payable pursuant to an upon filing a valid application for an annuity filed with the board.
The applicable provisions of law, articles of incorporation and bylaws in effect on the date
of cessation of active teaching service thereafter determine the rights of the person.
(b) For members of the St. Paul Teachers Retirement Fund Association, a right to
a retirement annuity requires a complete and continuous separation for 90 days from
employment in any form with Independent School District No. 625, including service
provided to the school district as an independent contractor or as an employee of an
independent contractor.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 3. Minnesota Statutes 2012, section 354A.12, subdivision 1, is amended to read:
    Subdivision 1. Employee contributions. (a) The contribution required to be paid
by each member of a teachers retirement fund association is the percentage of total salary
specified below for the applicable association and program:

		Association and Program	Percentage of Total Salary
	Duluth Teachers Retirement Fund Association
		old law and new law
		coordinated programs
		before July 1, 2011 2013	5.5 6.5 percent
		effective July 1, 2011 2013	6.0 7.0 percent
		effective July 1, 2012 2014	6.5 7.5 percent
	St. Paul Teachers Retirement Fund Association
		basic program before July 1, 2011	8 percent
		basic program after June 30, 2011	8.25 percent
		basic program after June 30, 2012	8.5 percent
		basic program after June 30, 2013	8.75 percent
		basic program after June 30, 2014	9.0 percent
		basic program after June 30, 2015	9.5 percent
		basic program after June 30, 2016	10.0 percent
		coordinated program before July 1, 2011	5.5 percent
		coordinated program after June 30, 2011	5.75 percent
		coordinated program after June 30, 2012	6.0 percent
		coordinated program after June 30, 2013	6.25 percent
		coordinated program after June 30, 2014	6.50 percent
		coordinated program after June 30, 2015	7.0 percent
		coordinated program after June 30, 2016	7.50 percent

(b) 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.
(c) When an employee contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid by the employer with the first
payroll cycle reported.
EFFECTIVE DATE.This section is effective with respect to the Duluth Teachers
Retirement Fund Association on July 1, 2013, and is effective with respect to the St. Paul
Teachers Retirement Fund Association on the day following final enactment.

    Sec. 4. Minnesota Statutes 2012, section 354A.12, subdivision 2a, is amended to read:
    Subd. 2a. Employer regular and additional contributions. (a) The employing
units shall make the following employer contributions to teachers retirement fund
associations:
(1) 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
		before July 1, 2011 2013	5.79 6.79 percent
		effective July 1, 2011 2013	6.29 7.29 percent
		effective July 1, 2012 2014	6.79 7.50 percent
	St. Paul Teachers Retirement Fund Association
		before July 1, 2011	4.50 percent
		after June 30, 2011	4.75 percent
		after June 30, 2012	5.0 percent
		after June 30, 2013	5.25 percent
		after June 30, 2014	5.5 percent
		after June 30, 2015	6.0 percent
		after June 30, 2016	6.25 percent
		after June 30, 2017	6.5 percent

(2) for any basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make a regular employer contribution to the respective retirement
fund in an amount according to the schedule below:

		before July 1, 2011	8.0 percent of salary
		after June 30, 2011	8.25 percent of salary
		after June 30, 2012	8.5 percent of salary
		after June 30, 2013	8.75 percent of salary
		after June 30, 2014	9.0 percent of salary
		after June 30, 2015	9.5 percent of salary
		after June 30, 2016	9.75 percent of salary
		after June 30, 2017	10.0 percent of salary

(3) for a basic member of the St. Paul Teachers Retirement Fund Association, the
employing unit shall make an additional employer contribution to the respective fund in
an amount equal to 3.64 percent of the salary of the basic member;
(4) for a coordinated member of the St. Paul Teachers Retirement Fund Association,
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:

St. Paul Teachers Retirement Fund Association

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.
(d) When an employer contribution rate changes for a fiscal year, the new
contribution rate is effective for the entire salary paid by the employer with the first
payroll cycle reported.
EFFECTIVE DATE.This section is effective with respect to the Duluth Teachers
Retirement Fund Association on July 1, 2013, and is effective with respect to the St. Paul
Teachers Retirement Fund Association on the day following final enactment.

    Sec. 5. Minnesota Statutes 2012, section 354A.12, is amended by adding a subdivision
to read:
    Subd. 2c. Duluth Teachers Retirement Fund Association; employer
contributions for reemployed annuitants. The school district shall make the regular
employer contributions and additional employer contributions specified in subdivision 2a
on behalf of any retired member of the Duluth Teachers Retirement Fund Association who
is reemployed by Independent School District No. 709, including providing service to the
school district as an independent contractor or as an employee of an independent contractor.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 6. Minnesota Statutes 2012, section 354A.12, is amended by adding a subdivision
to read:
    Subd. 2d. St. Paul Teachers Retirement Fund Association; employer
contributions for reemployed annuitants. Independent School District No. 625 shall
make the regular employer contribution and additional employer contribution specified in
subdivision 2a, plus a supplemental contribution equal to 2.5 percent of salary, on behalf
of any retired member of the St. Paul Teachers Retirement Fund Association who is
reemployed by Independent School District No. 625, including providing service to the
school district as an independent contractor or as an employee of an independent contractor.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 7. Minnesota Statutes 2012, section 354A.12, subdivision 3a, is amended to read:
    Subd. 3a. Special direct state aid to first class city teachers retirement fund
associations. (a) The state shall pay $346,000 $6,346,000 as special direct state aid to
the Duluth Teachers Retirement Fund Association, and $2,827,000 $9,827,000 to the St.
Paul Teachers Retirement Fund Association and, for the former Minneapolis Teachers
Retirement Fund Association, $12,954,000 to the Teachers Retirement Association.
    (b) The direct state aids under this subdivision are payable October 1 annually. The
commissioner of management and budget shall pay the direct state aid aids specified in
this subdivision. The amount amounts required under this subdivision is are appropriated
annually from the general fund to the commissioner of management and budget.
EFFECTIVE DATE.This section is effective July 1, 2014.

    Sec. 8. Minnesota Statutes 2012, 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 St. Paul Teachers
Retirement Fund Association by Independent School District No. 625 under section
423A.02, subdivision 3 , or the direct and all forms of state aid under subdivision 3a to the
St. Paul Teachers Retirement Fund Association must continue until the current assets of
the fund equal or exceed the actuarial accrued liability of the fund as determined in the
most recent actuarial report for the fund by the actuary retained under section 356.214 or
until June 30, 2037, whichever occurs earlier.
(b) The aid to the Duluth Teachers Retirement Fund Association under section
423A.02, subdivision 3, and all forms of state aid under subdivision 3a to the Duluth
Teachers Retirement Fund Association must continue until the current assets of the fund
equal or exceed the actuarial accrued liability of the fund as determined in the most
recent actuarial report for the fund by the actuary retained under section 356.214 or until
the established date for full funding under section 356.215, subdivision 11, whichever
occurs earlier.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 9. Minnesota Statutes 2012, section 354A.12, subdivision 7, is amended to read:
    Subd. 7. Recovery of benefit overpayments. (a) If the executive director discovers,
within the time period specified in subdivision 8 following the payment of a refund or
the accrual date of any retirement annuity, survivor benefit, or disability benefit, that
benefit overpayment has occurred due to using invalid service or salary, or due to any
erroneous calculation procedure, the executive director must recalculate the annuity or
benefit payable and recover any overpayment. The executive director shall recover the
overpayment by requiring direct repayment or by suspending or reducing the payment of a
retirement annuity or other benefit payable under this chapter to the applicable person or
the person's estate, whichever applies, until all outstanding amounts have been recovered.
If a benefit overpayment or improper payment of benefits occurred caused by a failure
of the person to satisfy length of separation requirements for retirement under section
354A.011, subdivision 21, the executive director shall recover the improper payments by
requiring direct repayment. The repayment must include interest at the rate of 0.71 percent
per month from the first of the month in which a monthly benefit amount was paid to the
first of the month in which the amount is repaid, with annual compounding.
(b) In the event the executive director determines that an overpaid annuity or benefit
that is the result of invalid salary included in the average salary used to calculate the
payment amount must be recovered, the executive director must determine the amount of
the employee deductions taken in error on the invalid salary, with interest as determined
under 354A.37, subdivision 3, and must subtract that amount from the total annuity or
benefit overpayment, and the remaining balance of the overpaid annuity or benefit, if
any, must be recovered.
(c) If the invalid employee deductions plus interest exceed the amount of the
overpaid benefits, the balance must be refunded to the person to whom the benefit or
annuity is being paid.
(d) Any invalid employer contributions reported on the invalid salary must be
credited against future contributions payable by the employer.
(e) If a member or former member, who is receiving a retirement annuity or
disability benefit for which an overpayment is being recovered, dies before recovery of the
overpayment is completed and an optional annuity or refund is payable, the remaining
balance of the overpaid annuity or benefit must continue to be recovered from the payment
to the optional annuity beneficiary or refund recipient.
(f) The board of trustees shall adopt policies directing the period of time and manner
for the collection of any overpaid retirement or optional annuity, and survivor or disability
benefit, or a refund that the executive director determines must be recovered as provided
under this section.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 10. Minnesota Statutes 2012, section 354A.27, is amended by adding a
subdivision to read:
    Subd. 6a. Postretirement adjustment transition. (a) If the funded ratio of the
retirement plan based on the actuarial value of assets is at least 90 percent as reported
in the most recent actuarial valuation prepared under sections 356.214 and 356.215,
this subdivision expires and subsequent postretirement adjustments are governed by
subdivision 7.
(b) Each annuity or benefit recipient of the retirement plan who has been receiving
that annuity or benefit for at least 12 months as of the applicable January 1 is eligible to
receive a postretirement adjustment of one percent, payable on January 1.
EFFECTIVE DATE.This section is effective July 1, 2013, and applies to the
January 1, 2014, postretirement increase.

    Sec. 11. Minnesota Statutes 2012, section 354A.27, subdivision 7, is amended to read:
    Subd. 7. Calculation of postretirement adjustments. (a) This subdivision applies
if subdivision 6 6a has expired.
(b) A percentage adjustment must be computed and paid under this subdivision to
eligible persons under subdivision 5. This adjustment is determined by reference to the
Consumer Price Index for urban wage earners and clerical workers all items index as
reported by the Bureau of Labor Statistics within the United States Department of Labor
each year as part of the determination of annual cost-of-living adjustments to recipients
of federal old-age, survivors, and disability insurance. For calculations of cost-of-living
adjustments under paragraph (c), the term "average third quarter Consumer Price Index
value" means the sum of the monthly index values as initially reported by the Bureau of
Labor Statistics for the months of July, August, and September, divided by 3.
(c) Before January 1 of each year, the executive director must calculate the amount
of the cost-of-living adjustment by dividing the most recent average third quarter index
value by the same average third quarter index value from the previous year, subtract one
from the resulting quotient, and express the result as a percentage amount, which must be
rounded to the nearest one-tenth of one percent.
(d) The amount calculated under paragraph (c) is the full cost-of-living adjustment
to be applied as a permanent increase to the regular payment of each eligible member
on January 1 of the next calendar year. For any eligible member whose effective date
of benefit commencement occurred during the calendar year before the cost-of-living
adjustment is applied, the full increase amount must be prorated on the basis of whole
calendar quarters in benefit payment status in the calendar year prior to the January 1 on
which the cost-of-living adjustment is applied, calculated to the third decimal place.
(e) The adjustment must not be less than zero nor greater than five percent.
(f) If the funding ratio of the plan as determined in the most recent actuarial
valuation using the actuarial value of assets is less than 80 percent there will be no
postretirement adjustment the following January 1.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 12. Minnesota Statutes 2012, section 354A.31, subdivision 3, is amended to read:
    Subd. 3. Resumption of teaching after commencement of a retirement annuity.
    (a) Any person who retired and is receiving a coordinated program retirement annuity
under the provisions of sections 354A.31 to 354A.41 or any person receiving a basic
program retirement annuity under the governing sections in the articles of incorporation
or bylaws and who has resumed teaching service for the school district in which the
teachers retirement fund association exists is entitled to continue to receive retirement
annuity payments, except that all or a portion of the annuity payments must be deferred
during the calendar year immediately following the calendar year in which the person's
salary from the teaching service is in an amount greater than $46,000. The amount of the
annuity deferral is one-third the salary amount in excess of $46,000 and must be deducted
from the annuity payable for the calendar year immediately following the calendar year
in which the excess amount was earned.
    (b) If the person is retired for only a fractional part of the calendar year during the
initial year of retirement, the maximum reemployment salary exempt from triggering a
deferral as specified in this subdivision must be prorated for that calendar year.
    (c) After a person has reached the Social Security normal retirement age, no deferral
requirement is applicable regardless of the amount of any compensation received for
teaching service for the school district in which the teachers retirement fund association
exists.
    (d) The amount of the retirement annuity deferral must be handled or disposed
of as provided in section 356.47.
(e) Notwithstanding other paragraphs of this subdivision, for any retired Duluth
Teachers Retirement Fund Association member whose effective date of retirement is after
June 30, 2013, amounts specified as deferred under this subdivision must instead be
forfeited to the Duluth Teachers Retirement Fund Association fund.
(f) Notwithstanding other paragraphs of this subdivision, for any retired St. Paul
Teachers Retirement Fund Association basic or coordinated program member whose
effective date of retirement is after June 30, 2013, amounts specified as deferred under
this subdivision must instead be forfeited to the St. Paul Teachers Retirement Fund
Association fund.
    (e) (g) For the purpose of this subdivision, salary from teaching service includes: (i)
all income for services performed as a consultant or independent contractor; or income
resulting from working with the school district in any capacity; and (ii) the greater of either
the income received or an amount based on the rate paid with respect to an administrative
position, consultant, or independent contractor in the school district in which the teachers
retirement fund association exists and at the same level as the position occupied by the
person who resumes teaching service.
    (f) (h) On or before February 15 of each year, each applicable employing unit
shall report to the teachers retirement fund association the amount of postretirement
salary as defined in this subdivision, earned as a teacher, consultant, or independent
contractor during the previous calendar year by each retiree of the teachers retirement
fund association for teaching service performed after retirement. The report must be in
a format approved by the executive secretary or director.
EFFECTIVE DATE.This section is effective with respect to the Duluth Teachers
Retirement Fund Association on July 1, 2013, and is effective with respect to the St. Paul
Teachers Retirement Fund Association on the day following final enactment.

    Sec. 13. Minnesota Statutes 2012, section 354A.31, subdivision 4, is amended to read:
    Subd. 4. Computation of normal coordinated retirement annuity; St. Paul
fund. (a) This subdivision applies to the coordinated program of 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. For service rendered
before July 1, 2015, 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. For service rendered after
June 30, 2015, the retirement annuity formula percentage for purposes of this paragraph
is the percent specified in section 356.315, subdivision 1a, per year for each year of
coordinated service for the first ten years and the percent specified in section 356.315,
subdivision 2b , 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 rendered before July 1, 2015, and
the percent specified in section 356.215, subdivision 2b, for each year of coordinated
service thereafter.
EFFECTIVE DATE.This section is effective July 1, 2014.

    Sec. 14. Minnesota Statutes 2012, section 354A.31, subdivision 4a, is amended to read:
    Subd. 4a. Computation of normal coordinated retirement annuity; Duluth
fund. (a) This subdivision applies to the new law coordinated program of the Duluth
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) applies. 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 program service for the first
ten years rendered through June 30, 2013, and the percent specified in section 356.315,
subdivision 1a, per year for each year of coordinated program service rendered after June
30, 2013, and the percent specified in section 356.315, subdivision 2, for each subsequent
year of coordinated program service through June 30, 2013, and the percent specified in
section 356.315, subdivision 2b, per year for each year of coordinated program service
rendered after June 30, 2013.
(d) This paragraph applies to a person who is at least 55 years old and who first
becomes a member after June 30, 1989, and to any other member who is 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 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 program service through June 30, 2013, and the percent specified in section
356.315, subdivision 2b, per year for each year of coordinated program service rendered
after June 30, 2013.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 15. Minnesota Statutes 2012, section 354A.31, subdivision 7, is amended to read:
    Subd. 7. Actuarial reduction for early retirement. (a) 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 or subdivision 4a, paragraph (d),
as applicable, in conjunction with this subdivision than when calculated under subdivision
4, paragraph (c), or subdivision 4a, paragraph (c), in conjunction with subdivision 6.
(b) A coordinated member who retires before the full benefit normal retirement
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. whichever is applicable, multiplied by the applicable early
retirement factor specified below:

				Under age 62		Age 62 or older
				or less than 30 years of service		with 30 years of service
	Normal retirement age:			65	66	65	66
		Age at retirement
			55	0.5376	0.4592
			56	0.5745	0.4992
			57	0.6092	0.5370
			58	0.6419	0.5726
			59	0.6726	0.6062
			60	0.7354	0.6726
			61	0.7947	0.7354
			62	0.8507	0.7947	0.8831	0.8389
			63	0.9035	0.8507	0.9246	0.8831
			64	0.9533	0.9035	0.9635	0.9246
			65	1.0000	0.9533	1.0000	0.9635
			66		1.0000		1.0000

For normal retirement ages between ages 65 and 66, the early retirement factors will
be determined by linear interpolation between the early retirement factors applicable for
normal retirement ages 65 and 66.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 16. Minnesota Statutes 2012, section 354A.35, subdivision 2, is amended to read:
    Subd. 2. Death while eligible to retire; surviving spouse optional annuity. (a)
The surviving spouse of a vested coordinated member who dies prior to retirement may
elect to receive, instead of a refund with interest under subdivision 1, an annuity equal
to the 100 percent joint and survivor annuity the member could have qualified for had
the member terminated service on the date of death. The surviving spouse eligible for
a surviving spouse benefit under this paragraph may apply for the annuity at any time
after the date on which the deceased employee would have attained the required age for
retirement based on the employee's allowable service. A surviving spouse eligible for
surviving spouse benefits under paragraph (b) or (c) may apply for an annuity at any time
after the member's death. The member's surviving spouse shall be paid a joint and survivor
annuity under section 354A.32 and computed under section 354A.31.
(b) If the member was under age 55 and has credit for at least 30 years of allowable
service on the date of death, the surviving spouse may elect to receive a 100 percent joint
and survivor annuity based on the age of the member and surviving spouse on the date
of death. The annuity is payable using the full early retirement reduction under section
354A.31, subdivision 6 , paragraph (a), to age 55 and one-half of the early retirement
reduction from age 55 to the age payment begins.
(c) If a vested member of the Duluth Teachers Retirement Fund Association was
under age 55 on the date of death but did not yet qualify for retirement, the surviving
spouse may elect to receive the 100 percent joint and survivor annuity based on the age
of the member and the survivor at the time of death. The annuity is payable using the
full early retirement reduction under section 354A.31, subdivision 6 or 7, to age 55 and
one-half of the early retirement reduction from age 55 to the date payment begins.
(d) If a vested member of the St. Paul Teachers Retirement Fund Association was
under age 55 on the date of death but did not yet qualify for retirement, the surviving
spouse may elect to receive the 100 percent joint and survivor annuity based on the age
of the member and the survivor at the time of death. The annuity is payable using the
full early retirement reduction under section 354A.31, subdivision 6 or 7, to age 55 and
one-half of the actuarial equivalent reduction from age 55 to the date payment begins.
The actuarial equivalent reduction is calculated 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 2.5
percent compounded annually from the day the annuity begins to accrue until the normal
retirement age.
(d) (e) Sections 354A.37, subdivision 2, and 354A.39 apply to a deferred annuity
or surviving spouse benefit payable under this section. The benefits are payable for the
life of the surviving spouse, or upon expiration of the term certain benefit payment under
subdivision 2b.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 17. Minnesota Statutes 2012, 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:
(1) select and ultimate interest rate assumption

	plan	ultimate preretirement interest rate assumption	ultimate postretirement interest rate 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	0.0	-2.0 until June 30, 2040, and -2.5 after June 30, 2040
	elective state officers retirement plan	0.0	-2.0 until June 30, 2040, and -2.5 after June 30, 2040
	judges retirement plan	8.5	6.0
	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
	Duluth teachers retirement plan	8.5	8.5
	St. Paul teachers retirement plan	8.5	8.5

Except for the legislators retirement plan and the elective state officers retirement
plan, the select preretirement interest rate assumption for the period after June 30, 2012,
through June 30, 2017, is 8.0 percent. Except for the legislators retirement plan and the
elective state officers retirement plan, the select postretirement interest rate assumption for
the period after June 30, 2012, through June 30, 2017, is 5.5 percent, except for the Duluth
teachers retirement plan and the St. Paul teachers retirement plan, each with a select
postretirement interest rate assumption for the period after June 30, 2012, through June
30, 2017, of 8.0 percent.
(2) single rate preretirement and postretirement interest rate assumption

	plan	interest rate assumption
	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

	plan	future salary increase assumption
	legislators retirement plan		5.0%
	judges retirement plan		3.0
	Bloomington Fire Department Relief Association		4.0

    (2) age-related future salary increase age-related select and ultimate future salary
increase assumption or graded rate future salary increase assumption

	plan	future salary increase assumption
	local government correctional service retirement plan	assumption C
	Duluth teachers retirement plan	assumption A
	St. Paul teachers retirement plan	assumption B

For plans other than the Duluth teachers
retirement plan, the select calculation
is: during the designated select period, a
designated percentage rate is multiplied by
the result of the designated integer minus T,
where T is the number of completed years
of service, and is added to the applicable
future salary increase assumption. The
designated select period is ten years and the
designated integer is ten for all retirement
plans covered by this clause the Duluth
Teachers Retirement Fund Association
and for the local government correctional
service retirement plan and 15 for the St.
Paul Teachers Retirement Fund Association.
The designated percentage rate is 0.3 0.2
percent for the St. Paul Teachers Retirement
Fund Association. The select calculation
for the Duluth Teachers Retirement Fund
Association is 8.00 percent per year for
service years one through seven, 7.25 percent
per year for service years seven and eight,
and 6.50 percent per year for service years
eight and nine.
    The ultimate future salary increase assumption is:

	age	A	B	C
	16	8.00%6.00%	6.90%5.90%	9.00%
	17	8.006.00	6.905.90	9.00
	18	8.006.00	6.905.90	9.00
	19	8.006.00	6.905.90	9.00
	20	6.906.00	6.905.90	9.00
	21	6.906.00	6.905.90	8.75
	22	6.906.00	6.905.90	8.50
	23	6.856.00	6.855.85	8.25
	24	6.806.00	6.805.80	8.00
	25	6.756.00	6.755.75	7.75
	26	6.706.00	6.705.70	7.50
	27	6.656.00	6.655.65	7.25
	28	6.606.00	6.605.60	7.00
	29	6.556.00	6.555.55	6.75
	30	6.506.00	6.505.50	6.75
	31	6.456.00	6.455.45	6.50
	32	6.406.00	6.405.40	6.50
	33	6.356.00	6.355.35	6.50
	34	6.306.00	6.305.30	6.25
	35	6.256.00	6.255.25	6.25
	36	6.205.86	6.205.20	6.00
	37	6.155.73	6.155.15	6.00
	38	6.105.59	6.105.10	6.00
	39	6.055.45	6.055.05	5.75
	40	6.005.31	6.005.00	5.75
	41	5.905.18	5.954.95	5.75
	42	5.805.04	5.904.90	5.50
	43	5.704.90	5.854.85	5.25
	44	5.604.76	5.804.80	5.25
	45	5.504.63	5.754.75	5.00
	46	5.404.49	5.704.70	5.00
	47	5.304.35	5.654.65	5.00
	48	5.204.21	5.604.60	5.00
	49	5.104.08	5.554.55	5.00
	50	5.003.94	5.504.50	5.00
	51	4.903.80	5.454.45	5.00
	52	4.803.66	5.404.40	5.00
	53	4.703.53	5.354.35	5.00
	54	4.603.39	5.304.30	5.00
	55	4.503.25	5.254.25	4.75
	56	4.403.25	5.204.20	4.75
	57	4.303.25	5.154.15	4.50
	58	4.203.25	5.104.10	4.25
	59	4.103.25	5.054.05	4.25
	60	4.003.25	5.004.00	4.25
	61	3.903.25	5.004.00	4.25
	62	3.803.25	5.004.00	4.25
	63	3.703.25	5.004.00	4.25
	64	3.603.25	5.004.00	4.25
	65	3.503.25	5.004.00	4.00
	66	3.503.25	5.004.00	4.00
	67	3.503.25	5.004.00	4.00
	68	3.503.25	5.004.00	4.00
	69	3.503.25	5.004.00	4.00
	70	3.503.25	5.004.00	4.00

(3) service-related ultimate future salary increase assumption

	general state employees retirement plan of the Minnesota State Retirement System	assumption A
	general employees retirement plan of the Public Employees Retirement Association	assumption B
	Teachers Retirement Association	assumption C
	public employees police and fire retirement plan	assumption D
	State Patrol retirement plan	assumption E
	correctional state employees retirement plan of the Minnesota State Retirement System	assumption F

	service length	A	B	C	D	E	F
	1	10.50%	12.03%	12.00%	13.00%	8.00%	6.00%
	2	8.10	8.90	9.00	11.00	7.50	5.85
	3	6.90	7.46	8.00	9.00	7.00	5.70
	4	6.20	6.58	7.50	8.00	6.75	5.55
	5	5.70	5.97	7.25	6.50	6.50	5.40
	6	5.30	5.52	7.00	6.10	6.25	5.25
	7	5.00	5.16	6.85	5.80	6.00	5.10
	8	4.70	4.87	6.70	5.60	5.85	4.95
	9	4.50	4.63	6.55	5.40	5.70	4.80
	10	4.40	4.42	6.40	5.30	5.55	4.65
	11	4.20	4.24	6.25	5.20	5.40	4.55
	12	4.10	4.08	6.00	5.10	5.25	4.45
	13	4.00	3.94	5.75	5.00	5.10	4.35
	14	3.80	3.82	5.50	4.90	4.95	4.25
	15	3.70	3.70	5.25	4.80	4.80	4.15
	16	3.60	3.60	5.00	4.80	4.65	4.05
	17	3.50	3.51	4.75	4.80	4.50	3.95
	18	3.50	3.50	4.50	4.80	4.35	3.85
	19	3.50	3.50	4.25	4.80	4.20	3.75
	20	3.50	3.50	4.00	4.80	4.05	3.75
	21	3.50	3.50	3.90	4.70	4.00	3.75
	22	3.50	3.50	3.80	4.60	4.00	3.75
	23	3.50	3.50	3.70	4.50	4.00	3.75
	24	3.50	3.50	3.60	4.50	4.00	3.75
	25	3.50	3.50	3.50	4.50	4.00	3.75
	26	3.50	3.50	3.50	4.50	4.00	3.75
	27	3.50	3.50	3.50	4.50	4.00	3.75
	28	3.50	3.50	3.50	4.50	4.00	3.75
	29	3.50	3.50	3.50	4.50	4.00	3.75
	30 or more	3.50	3.50	3.50	4.50	4.00	3.75

    (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:

	plan	payroll growth assumption
	general state employees retirement plan of the Minnesota State Retirement System	3.75%
	correctional state employees retirement plan	3.75
	State Patrol retirement plan	3.75
	judges retirement plan	3.00
	general employees retirement plan of the Public Employees Retirement Association	3.75
	public employees police and fire retirement plan	3.75
	local government correctional service retirement plan	3.75
	teachers retirement plan	3.75
	Duluth teachers retirement plan	4.503.50
	St. Paul teachers retirement plan	5.004.00

    (d) The assumptions set forth in paragraphs (b) and (c) continue to apply, unless a
different salary assumption or a different payroll increase assumption:
    (1) has been proposed by the governing board of the applicable retirement plan;
    (2) is accompanied by the concurring recommendation of the actuary retained under
section 356.214, subdivision 1, if applicable, or by the approved actuary preparing the
most recent actuarial valuation report if section 356.214 does not apply; and
    (3) has been approved or deemed approved under subdivision 18.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 18. Minnesota Statutes 2012, section 356.47, subdivision 1, is amended to read:
    Subdivision 1. Application. (a) This section applies to the balance of annual
retirement annuities on the amount of retirement annuity reductions after reemployed
annuitant earnings limitations for retirement plans governed by section 352.115,
subdivision 10 ; 353.37; 354.44, subdivision 5; or 354A.31, subdivision 3.
(b) This section also applies to the balance of annual retirement annuities on
the amount of retirement annuity reductions under section 354A.31, subdivision 3, for
members of the Duluth Teachers Retirement Fund Association whose effective date of
retirement is before July 1, 2013.
(c) This section also applies to the balance of annual retirement annuities on
the amount of retirement annuity reductions under section 354A.31, subdivision 3, for
members of the St. Paul Teachers Retirement Fund Association whose effective date of
retirement is before July 1, 2013.
EFFECTIVE DATE.This section is effective with respect to the Duluth Teachers
Retirement Fund Association on July 1, 2013, and is effective with respect to the St. Paul
Teachers Retirement Fund Association on the day following final enactment.

    Sec. 19. Minnesota Statutes 2012, section 423A.02, subdivision 5, is amended to read:
    Subd. 5. Termination of state aid programs. The amortization state aid,
supplemental amortization state aid, and additional amortization state aid programs
terminate as of the December 31, next following the date of the actuarial valuation when
the assets of the St. Paul Teachers Retirement Fund Association equal the actuarial accrued
liability of that plan or December 31, 2009 June 30, 2037, whichever is later earlier.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 20. DULUTH TEACHERS RETIREMENT FUND ASSOCIATION BYLAW
AMENDMENT AUTHORIZATION.
Consistent with Minnesota Statutes, section 354A.12, subdivision 4, the Duluth
Teachers Retirement Fund Association is authorized to amend its articles of incorporation
or its bylaws to specify the revised contribution rates under sections 3 and 4, required
employee contributions on behalf of reemployed annuitants as specified under section 5,
and revised treatment of reemployed annuitant holding accounts under sections 12 and 18.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 21. ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION BYLAW
AMENDMENT AUTHORIZATION.
Consistent with Minnesota Statutes, section 354A.12, subdivision 4, the St. Paul
Teachers Retirement Fund Association is authorized to amend its articles of incorporation
or its bylaws to apply the reduction factors stated in section 15 rather than the actuarial
reduction factors previously authorized.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 22. CONSOLIDATION STUDY.
The boards and executive directors of the Duluth Teachers Retirement Fund
Association, the St. Paul Teachers Retirement Fund Association, and the Teachers
Retirement Association shall jointly study and develop a report on the feasibility and
requirements necessary for the consolidation of the Duluth Teachers Retirement Fund
Association and the St. Paul Teachers Retirement Fund Association into the Teachers
Retirement Association. The report shall include detailed actuarial analysis that will define
the financial requirements for consolidating with the Teachers Retirement Association
in a manner, consistent with past practice, that assures that the assets of the Teachers
Retirement Association are protected, that the merging funds are fully funded, and that the
Teachers Retirement Association is not subsidizing the merged funds. The report shall
include implementation plans, proposed allocation of costs between the state and all
interested parties, time frames sufficient for an orderly transition, necessary management
and administrative changes, asset investment related considerations, and education and
communication plans to fully inform the executive branch, the legislative branch, and all
system stakeholders of financial requirements. The report shall include plans to treat
the employees of the Duluth Teachers Retirement Fund Association and the St. Paul
Teachers Retirement Fund Association in a manner comparable to that provided to the
former employees of the former Minneapolis Teachers Retirement Fund Association upon
consolidation into the Teachers Retirement Fund Association. The boards and executive
directors shall consult with the executive director of the State Board of Investment on
investment management transition issues. The report must be submitted to the Legislative
Commission on Pensions and Retirement by January 6, 2014.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 23. REPEALER.
Minnesota Statutes 2012, section 354A.27, subdivision 6, is repealed.

ARTICLE 6

JUDGES RETIREMENT PLAN FINANCIAL SOLVENCY MEASURES

    Section 1. Minnesota Statutes 2012, section 356.315, is amended by adding a
subdivision to read:
    Subd. 8a. Judges plan. The applicable benefit accrual rate is 2.5 percent.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 2. Minnesota Statutes 2012, section 356.415, subdivision 1, is amended to read:
    Subdivision 1. Annual postretirement adjustments; generally. (a) Except as
otherwise provided in subdivision 1a, 1b, 1c, 1d, or 1e, or 1f, retirement annuity, disability
benefit, or survivor benefit recipients of a covered retirement plan are entitled to a
postretirement adjustment annually on January 1, as follows:
(1) a postretirement increase of 2.5 percent must be applied each year, effective
January 1, to the monthly annuity or benefit of each annuitant or benefit recipient who has
been receiving an annuity or a benefit for at least 12 full months prior to the January 1
increase; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit amount for at least one full month, an annual postretirement increase of 1/12 of 2.5
percent for each month that the person has been receiving an annuity or benefit must be
applied, effective on January 1 following the calendar year in which the person has been
retired for less than 12 months.
(b) The increases provided by this subdivision commence on January 1, 2010.
(c) An increase in annuity or benefit payments under this section must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the covered retirement plan requesting that the increase not be made.
(d) The retirement annuity payable to a person who retires before becoming eligible
for Social Security benefits and who has elected the optional payment as provided in
section 353.29, subdivision 6, 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 for section 353.29, subdivision 6. A postretirement
adjustment granted on the period certain retirement annuity must terminate when the
period certain retirement annuity terminates.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 3. Minnesota Statutes 2012, section 356.415, is amended by adding a subdivision
to read:
    Subd. 1f. Annual postretirement adjustments; Minnesota State Retirement
System judges retirement plan. (a) The increases provided under this subdivision begin
on January 1, 2014, and are in lieu of increases under subdivision 1 or 1a for retirement
annuity, disability benefit, or survivor benefit recipients of the judges retirement plan.
(b) Retirement annuity, disability benefit, or survivor benefit recipients of the
judges retirement plan are entitled to a postretirement adjustment annually on January
1, as follows:
(1) a postretirement increase of 1.75 percent must be applied each year, effective
on January 1, to the monthly annuity or benefit of each annuitant or benefit recipient
who has been receiving an annuity or a benefit for at least 18 full months before the
January 1 increase; and
(2) for each annuitant or benefit recipient who has been receiving an annuity or a
benefit for at least six full months, an annual postretirement increase of 1/12 of 1.75
percent for each month that the person has been receiving an annuity or benefit must be
applied, effective January 1, following the calendar year in which the person has been
retired for at least six months, but has been retired for less than 18 months.
(c) Increases under this subdivision terminate on December 31 of the calendar
year in which the actuarial valuation prepared by the approved actuary under sections
356.214 and 356.215 and the standards for actuarial work promulgated by the Legislative
Commission on Pensions and Retirement indicates that the market value of assets of the
judges retirement plan equals or exceeds 70 percent of the actuarial accrued liability of
the retirement plan. Increases under subdivision 1 or 1a, whichever is applicable, begin
on the January 1 next following that date.
(d) An increase in annuity or benefit payments under this subdivision must be made
automatically unless written notice is filed by the annuitant or benefit recipient with the
executive director of the applicable covered retirement plan requesting that the increase
not be made.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 4. Minnesota Statutes 2012, section 490.121, subdivision 21f, is amended to read:
    Subd. 21f. Normal retirement date. (a) For a judge in the tier I program, "normal
retirement date" means the date a the judge attains the age of 65.
(b) For a judge in the tier II program, "normal retirement date" means the date
the judge attains age 66.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 5. Minnesota Statutes 2012, section 490.121, subdivision 22, is amended to read:
    Subd. 22. Service credit limit. "Service credit limit" means, for a judge covered
by tier I, the greater of: (1) 24 years of allowable service under this chapter; or (2), for
judges a judge with allowable service rendered before July 1, 1980, the number of years of
allowable service under chapter 490, which, when multiplied by the percentage listed in
section 356.315, subdivision 7 or 8, whichever is applicable to each year of service, equals
76.8. For a judge covered by tier II, there is no service credit limit.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 6. Minnesota Statutes 2012, section 490.121, is amended by adding a subdivision
to read:
    Subd. 25. Tier I. "Tier I" is the benefit program of the retirement plan with a
membership specified by section 490.1221, paragraph (b), and governed by sections
356.315, subdivisions 7 and 8; 356.415, subdivisions 1 and 1f; and 490.121 to 490.133,
except as modified in sections 356.315, subdivision 8a; 490.121, subdivision 21f,
paragraph (b); 490.1222; 490.123, subdivision 1a, paragraph (b); and 490.124, subdivision
1, paragraphs (c) and (d).
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 7. Minnesota Statutes 2012, section 490.121, is amended by adding a subdivision
to read:
    Subd. 26. Tier II. "Tier II" is the benefit program of the retirement plan with a
membership specified by section 490.1221, paragraph (c), and governed by sections
356.315, subdivision 8a; 356.415, subdivisions 1 and 1f; 490.121 to 490.133, as modified
in section 490.121, subdivision 21f, paragraph (b); 490.1222; 490.123, subdivision 1a,
paragraph (b); and 490.124, subdivision 1, paragraphs (c) and (d).
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 8. [490.1221] JUDGES PLAN PROGRAMS.
(a) Members of the judges retirement plan are members of either the tier I or tier II
program.
(b) A tier I program judge is a person who was first appointed or elected as a judge
before July 1, 2013, who was not eligible for the tier II program because the judge had
five or more years of allowable service on or before December 30, 2013, or did not elect
that program.
(c) A tier II program judge is a person who:
(1) was first appointed or elected as a judge after June 30, 2013; or
(2) was first appointed or elected as a judge before July 1, 2013, had less than five
years of allowable service on or before December 30, 2013, and made an election under
section 14 to be in the tier II program.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 9. [490.1222] APPLICATION OF SERVICE CREDIT LIMIT.
The service credit limit specified in section 490.121, subdivision 22, does not apply
to a judge in the tier II program.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 10. Minnesota Statutes 2012, section 490.123, subdivision 1a, is amended to read:
    Subd. 1a. Member contribution rates. (a) A judge who is covered by the federal
Old Age, Survivors, Disability, and Health Insurance Program and in the tier I program
whose service does not exceed the service credit limit in section 490.121, subdivision 22,
shall contribute to the fund from each salary payment a sum equal to 8.00 9.00 percent
of salary.
(b) A judge in the tier II program shall contribute to the fund from each salary
payment a sum equal to 7.00 percent of salary.
    (b) The contribution (c) Contributions under this subdivision is are payable by salary
deduction. The deduction must be made by the state court administrator under section
352.04 , subdivisions 4, 5, and 8.
EFFECTIVE DATE.This section is effective beginning on the first day of the first
full payroll period following an increase in judicial salaries of at least one percent due to
action by the legislature during calendar year 2013 or later.

    Sec. 11. Minnesota Statutes 2012, section 490.123, subdivision 1b, is amended to read:
    Subd. 1b. Employer contribution rate. (a) The employer contribution rate to the
fund on behalf of a judge is 20.5 22.5 percent of salary. The employer obligation continues
after a judge exceeds the service credit limit in section 490.121, subdivision 22.
    (b) The employer contribution must be paid by the state court administrator. The
employer contribution is payable at the same time as member contributions are made
under subdivision 1a or as employee contributions are made to the unclassified program
governed by chapter 352D for judges whose service exceeds the limit in section 490.121,
subdivision 22, are remitted.
EFFECTIVE DATE.This section is effective the first day of the first full payroll
period after June 30, 2013.

    Sec. 12. Minnesota Statutes 2012, section 490.124, subdivision 1, is amended to read:
    Subdivision 1. Basic Retirement annuity. (a) Except as qualified hereinafter from
and after the mandatory retirement date, the normal retirement date, the early retirement
date, or one year from the disability retirement date, as the case may be, a retiring judge is
eligible to receive a retirement annuity from the judges' retirement fund.
    (b) For a tier I program judge, the retirement annuity is an amount equal to:
    (1) the percent specified in section 356.315, subdivision 7, multiplied by the judge's
final average compensation with that result then multiplied by the number of years and
fractions of years of allowable service rendered before July 1, 1980; plus
    (2) the percent specified in section 356.315, subdivision 8, multiplied by the judge's
final average compensation with that result then multiplied by the number of years and
fractions of years of allowable service rendered after June 30, 1980.
(c) For a tier II program judge who was first appointed or elected as a judge before
July 1, 2013, the retirement annuity is an amount equal to:
(1) the percent specified in section 356.315, subdivision 8, multiplied by the judge's
final average compensation with that result then multiplied by the number of years and
fractions of years of allowable service rendered before January 1, 2014; plus
(2) the percentage specified in section 356.315, subdivision 8a, multiplied by the
judge's final average compensation with that result then multiplied by the number of years
and fractions of years of allowable service rendered after December 31, 2013.
(d) For a tier II program judge who was first appointed or elected as a judge after
June 30, 2013, the retirement annuity is an amount equal to the percent specified in section
356.315, subdivision 8a, multiplied by the judge's final average compensation with that
result then multiplied by the number of years and fractions of years of allowable service.
    (c) (e) For a judge in the tier I program, service that exceeds the service credit limit in
section 490.121, subdivision 22, must be excluded in calculating the retirement annuity, but
the compensation earned by the judge during this period of judicial service must be used in
determining a judge's final average compensation and calculating the retirement annuity.
EFFECTIVE DATE.This section is effective July 1, 2013.

    Sec. 13. MEMBER CONTRIBUTION INCREASE CONDITION.
Any increase in judicial salaries enacted by the legislature during calendar year 2013
or later is not applicable to a judge in the tier I program if the member contribution rate
applicable to that judge in the tier I program under section 10 is not deducted from the
salary of the judge.
EFFECTIVE DATE.This section is effective the day following final enactment.

    Sec. 14. TIER II PROGRAM ELECTION; PRE-JULY 1, 2013, JUDGES.
    Subdivision 1. Authority. A person who was first appointed or elected as a judge
covered by the Minnesota State Retirement System judges retirement plan before July 1,
2013, is eligible to elect treatment as a tier II program judge if the judge has less than five
years of allowable service on the date the judge makes a valid election under subdivision 2.
    Subd. 2. Election procedure. An eligible judge under subdivision 1 may elect
to be subject to provisions of Minnesota Statutes, chapter 490, applicable to a tier II
program judge rather than the tier I program by electing that treatment in writing before
January 1, 2014, on a form provided by the executive director of the Minnesota State
Retirement System.
    Subd. 3. Effect of election. (a) The election is irrevocable.
(b) An eligible judge who fails to make an election remains in the tier I program.
(c) If the tier II program is elected by an eligible judge, member contributions based on
revised member contribution rates under Minnesota Statutes, section 490.123, subdivision
1a, begin on the first day of the first full pay period occurring after January 1, 2014.
EFFECTIVE DATE.This section is effective July 1, 2013.

ARTICLE 7

MISCELLANEOUS PROVISIONS

    Section 1. Minnesota Statutes 2012, section 356.91, is amended to read:
356.91 VOLUNTARY MEMBERSHIP DUES DEDUCTION.
    (a) Upon written authorization of a person receiving an annuity from a public
pension fund administered by the Minnesota State Retirement System or the Public
Employees Retirement Association, the executive director of the public pension fund may
shall deduct from the retirement annuity an amount requested by the annuitant to be paid
as membership dues or other payments to any labor organization that is an exclusive
bargaining agent representing public employees or an organization representing retired
public employees of which the annuitant is a member and shall, on a monthly basis, pay
the amount to the organization so designated by the annuitant.
    (b) A pension fund and the plan fiduciaries which authorize or administer deductions
of dues payments under paragraph (a) are not liable for failure to properly deduct or transmit
the dues amounts, provided that the fund and the fiduciaries have acted in good faith.
    (c) The deductions under paragraph (a) may occur no more frequently than two times
per year and may not be used for political purposes. Any labor organization that is an
exclusive bargaining agent representing public employees or an organization representing
retired public employees may conduct blind mailings to the annuitants of a retirement
system specified in paragraph (a) by requesting that the retirement system mail voluntary
membership information and dues deduction cards to annuitants. Such mailings shall not
be for the purpose of supporting or opposing any candidate, political party, or ballot
measure. The organization requesting the blind mailing shall pay all costs associated
with these mailings, including but not limited to copying, labeling, mailing, postage, and
record keeping. In lieu of administering a blind mailing in-house, a retirement system
may transmit annuitant data necessary for conducting a blind mailing to a mail center
pursuant to a secure data share agreement with the mail center which provides that neither
the organization nor any other entity shall have direct access to the data transmitted by
the retirement system. The retirement system shall have no obligation to approve or
disapprove, or otherwise be responsible for, the content of the mailings. No organization
shall conduct more than two blind mailings per calendar year.
    (d) Any labor organization specified in paragraph (a) shall reimburse the public
pension fund for the administrative expense of withholding premium amounts.