WIXLIB

Article 4: Disability Benefit Changes. The article makes a number of changes to the disability benefitprograms ofthe various retirement plans administered by the Public Employees Retirement Association(PERA), including:- New dìsabìlty categories are created, to replace the existìng use of "duty" and "non-duty" to defined categories ofdìsabìHtants. As revised, a duty dìsabìHty ìs a dìsabìHty (physìcal or psychological) related to performing job-relatedduties that present ìnherent dangers, rather than beìng any disabìHty that occurs or ìs related to beìng on duty.Regular dìsabìlty, whìch replaces non-duty dìsabìHty in existìng statutes, ìs any job-related dìsabìHty resultìng fiomactìvìty that dìd not present inherent danger, and also all dìsabìHtìes resuWng from any non-duty actìvìty.- Duty dìsabìlìties wm be capped at 60 percent of the hìgh-five salary, rather than 60 percent plus three percent ofthe hìgh-five for each year of servìce over 20, except for those who quaHfy under a total and permanent standard.the high-five salary, rather than being computed Hke a servìceRegular dìsabìlitìes are capped at 45 percent ofannuity based on actual service, with a mìnìmum benefit of 45 percent of the hìgh-five.- DisabiHtants (duty-related and regular) who are at least 55 at the tìme of disabiHty but have less than 20 yearsservìce ìn duty dìsabìlity cases, or 15 years service ìn regular disabìHty cases, can receìve dìsabiHty benefìts forfive years, then the dìsabìlìty benefit must termìnate.- The dìsabìHty benefìt is converted to a retìrement annuity when the member reaches age 55 (unless the indìvidualquaHfies under a total and pel11anent standard); or for those who are 55 when the dìsabìHty commenced, on thefive year annìversary of the dìsabìlty; or when a member elects to convert to an early retìrement annuity ratherthan the dìsabìlìty benefit.- Dìsabìlty benefits can be retroactìve for up to 90 days ìf salary or salary-equìvalent benefìts were not receìveddurìng that perìod.- DìsabìHty benefits are not allowed ìf dìsabìHty ìs due to ìlegal drug use and the ìndìvìdual has not taken part in arehab program and ceased drug use.- Three years of service, rather than one year of servìce, wìl be requìred to qualìfy for survivìng spouse annuìtesifthe member's death was not a Hne-of-duty death. (A "Hne-of-duty death" ìs a new tel11 defìned as a death thatoccurs whìle performìng dutìes specific to protectìng the property and personal safety of others and that presentìnherent dangers specific to the positìons covered by the PERA-P&F. A "not-lìne-of-duty death" ìs any deaththat is not a Hne-of-duty death.)final salaryin Hne-of-duty death situatìons, and the famìly maxìmums related to lìne-of-duty deaths are revised accordìngly.-Survivìng spouse benefits in death-while-actìve sìtuatìons are ìncreased fi'om50 percent to 60 percent of- Early retìrement (by any ìndivìdual who becomes a PERA-P&F member after June 30, 2007, or by a fonnermember who ìs reìnstated after that date) wìl requìre a reductìon of 0.2 percent for each month that theìndìvìdual ìs under age 55, rather than one-tenth.- The last date for filìng a dìsabìHty benefìt appHcatìon ìs revìsed from three years after tenninatìon to 18 monthsafter termìnatìon;- Medìcal reports supporting a disabiHty appHcatìon are requìred to ìnc1ude expectations for ìmprovement, andwhere recovery ìs expected, an estimate of the date on which the medìcal professìonal beHeves the ìndìvìdual wilhave recovered from the dìsabHng event;- A report from the employer is required that there ìs no avaìlable work that the indìvìdual could perform,includìng documentation, if requested by PERA, of all steps the employer has taken to provìde contìnuedemployment for the individual and to accommodate the ìndividual's Hmìtations;- Any appHcatìon for duty-related dìsabìlty is requìred to tie the dìsabìHty to specìfic duty-related functìons oractions whìch are consìstent wìth the ìnherent dangers ofpositìons eHgìble for PERA-P&F and PERAConectìonal membershìp;-Appeals to the PERA Board ofthe Executive Director's dìsabiHty detenninatìons are pennìtted wìthìn 60 daysafter the Executìve Dìrector's detennìnation rather than wìthìn 45 days; and allows the Executive Director torequìre the participant to take part ìn a fact-fìndìng sessìon conducted by an adminìstrative law judge and/or avocatìonal assessment conducted by a qualìfìed rehabihtatìon counselor.- PERA' s trial work perìod provìsìon ìs restricted to PERA-Generalmembers rather thanmembers of all PERAplans; and-Other changes of an admìnìstratìve nature are made, largely strìkìng language in existing PERA, PERA-P&F, andPERA-Conectìonal statutes to be moved to a new proposed sectìon.Article 5: Health Care Facility Privatizations. Includes employees ofthe Lakefield Nursing Home, theLakeview Nursing Home in Gaylord, Miimesota, and the Oakland Park Nursing Home in the specialprivatization provisions ofthe Public Employees Retirement Association (PERA). Extends to January2008, the time deadline for the Hutchinson Area Health Care to privatize and avail itself ofthe enhanceddefened annuity augmentation rate.Page 3HI978-3 Summary

Article 6: Statewide Retirement Plan Appeals Process. The article replaces the statutOlY appealsprocedures for the Minnesota State Retirement System (MSRS) and the Teachers Retirement Associationthe statewide retirement plans, including the Public(TRA) with a uniform appeals procedure for all ofEmployees Retirement Association (PERA), providing statewide public pension members, fonnermembers, and beneficiaries with an opportunity to have plan administrative decisions reviewed by thegoverning body of the plan, notice of the reasons for an adverse dete111ination and of the appeals processwhenever there is a benefit denial, modification, or tennination, an opportunity for a plan member tosubmit relevant materials in connection with a review, an opportunity to appear at the board reviewhearing, a board decision on the review request based on the record, and an opportunity to have the boardreview detennination appealed to the State Court of Appeals.Article 7: First Class CityTeacher Retirement Fund AssociationChanges.The article temporarilyreplaces (as a two-year pilot program) the cunent St. Paul Teachers Retirement Fund Association postretirement adjustment mechanism, consisting of a two percent annual automatic increase and a periodicinvestment-gain-funded adjustment based on five-year average rates ofretu11 perfonnance results, with anadjustment equal to the increase in the federal Consumer Price Index up to 2.5 percent annually, ifthefund fails to ea11 at least an 8.5 percent retu11, or up to five percent ifthe annual return and five-yearaverage return equals at least 8.5 percent. By January 15, 2009, the Legislative Commission on Pensionsand Retirement must study the experience ofthe St. Paul Teachers Retirement Fund Association(SPTRF A) under the pilot program and any post-retirement adjustment proposals presented by otherpension fund administrations regarding post-retirement adjustments, and the SPTRF A is required toprepare a supplemental actuarial valuation as if the temporary post-retirement adjustment mechanism waspermanent.Article 8: Minneapolis EmlJloyees Retirement Fund (MERF) Liquidity Changes. The article perniits theMERF board to invest some or all ofthe fund's assets with the State Board ofInvestment (SBI) throughthe Minnesota Supplemental Investment Fund, a mutual fund-like family of investment accounts, or theMinnesota Combined Investment Funds, an investment pool made up of the active member assets of thevarious statewide retirement plans, pei11its that the transfer of assets between the MERF active memberinvestment account (the MERF Deposit Accumulation Fund) and the MERF retired member investmentaccount (the MERF Retirement Benefit Fund), ifthe Deposit Accumulation Fund has insuffcient assets tomake the transfer upon the retirement of an active member, be made with an internal interest-bearingpromissory obligation, with interest at the rate of five percent, plus the percentage increase in theConsumer Price Index over the period, and the interest and the principal of the obligation would bepayable first fi'om any balance in the Deposit Accumulation Fund, and repeals a statutory provisionMinneapolis to provide sufficient assets to make required transfers to MERF's retiredfund at the time of retirement.requiring the City ofAiiicle 9: Minneapolis Police and Firefighters Relief Associations Changes. A Minneapolis Police ReliefAssociation pre-J anuaiy 1, 2006, surviving spouse benefit amount provision is eliminated and anyMinneapolis Police Relief Association surviving spouse benefit payments are made consistent with thepost-December 31, 2005, benefit level before January 1, 2006. The amount available for distribution asMinneapolis Firefighters Relief Association annual "thirteenth check" post-retirement adjustment isincreased from one-half of one percent of relief association special fund assets to one percent of reliefassociation special fund assets.Article 10: Volunteer Firefighter Benefit Changes. The article coiTects an error in the 2006 creation of avolunteer firefighter supplemental survivor benefit, clarifies that a survivor supplemental benefit is onlydouble the pre-2007 supplemental benefit amount.Aiiic1e 1 1: Various Retirement Law Changes. Increases the Legislative Commission on Pensions andRetirement membership from five House members and five Senate members to seven members from eachbody. Requires the Commission's Standards for Actuarial Work to use asset valuation requirementconsistent with generally accepted accounting standards. Pennits survivors of fonner legislators who diebefore age 55 to elect optional annuity form when the fonner legislator would have reached age 55,including the surviving spouse of a fonner legislator who died March 5, 2007. Pennits the early divisionwith ex-spouse of a Legislators Retirement Plan retirement allowance. hicludes in the General StatetheMiddle Management association who are not on-leave state employees. Includes in the State PatrolRetirement Plan the Gang and DrugOversight Council Coordinator. Permits annuity withholding forhealth, accident, and long-tenn care insurance premiums for retired public safety employees. The PublicEmployees Retirement Association (PERA) staffis added to the list ofthose state entities eligible toparticipate in the post-retirement option provided under Mimiesota Statutes, Section 43A.346. The 2006Employees Retirement Plan ofthe Minnesota State Retirement System (MSRS-General) employees ofPage 4H 1978-3 Summary

special early retirement program was reenacted with a 2009 sunset date and is expanded to include allpublic pension plan members other than elected offcials and reemployed annuitants. Surviving spousesofRiver Falls Police Trust Fund are granted a one-time 3.5 percent post-retirement adjustmentthe Thiefwith a 640 per moth maximum survivor benefit.Article 12: Small Group/Single Person Provisions. Authorizes various individuals to purchase priorservice credit or prior salary credit, file a delayed disabilty benefit application, or receive back annuitypayments where a Combined Service Annuity was delayed by pension plan en'or. Exempts certain AnokaCounty medical examiner employees acquired from a former private sector contractor to be exempt fromreemployed annuitant ea11ings limitations.Third Engrossment, the House Omnibus Retirement BilSection-by-Section Summary ofH.F. 1978, theSec.Pg.Ln-Pg.LnSource Bill(s)Retirement PlanStat. ProvisionSummaryHF 1978 (Murphy, M.);SF 430 (Betzold)Legislators Plan3A.05Corrects retroactive payment date for survivor benefi of later of theHF 1977 (Murphy, M.);SF 424 (Betzold)MTRFAArtfcle 1: Various Clarifications and Corrections2.21-2.3222.33-2.39date of the benefi accrual or one year prior to the application filingso that benefit payment cannot predate the qualifying death.13.632,Subd.1The specific first class city teacher retirement fund association dataprivacy provision is amended to eliminate a reference to the formerMTRFA.34053.1-3.303.31-7.67.7-9.18HF 1977 (Murphy, M.);SF 424 (Betzold)MinneapolisPublic SchoolsSubd. 4HF 1977 (Murphy, M.);SF 424 (Betzold)PERA-Generall353.01,MTRFASubd. 2bHF 1978 (Murphy, M.);TRA354.44,SF 430 (Betzold)69.19-10.8HF 1977 (Murphy, M.);SF 424 (Betzold)126C.41,Subd. 6TRA!MTRFA354A.12,Subd. 3bThe Special School District No.1, Minneapolis, additìonal propertytax levy provision related to health insurance subsidies for certainMedicare-ineligible former Minneapolis teachers is amended toupdate a reference to the former MTRF A.The membership eligibility provision of the defined benefitretìrement plans administered by PERA is amended to eliminate areference to the former MTRF A in the exclusion for individualscovered by another Minnesota public pension plan.Completes the verb for the post-July 1, 2006, benefit accrual rateprovision with the addition of the word "entitled" after "is."The City of Minneapolis and the Special School District NO.1mandatory employer contributìon transferred from the formerMTRFA to the TRA is corrected from 1.125 million each annuallyto 1.25 milion each annually to match the 2.5 million annualstate contributìon.710.9-10.30HF 1978 (Murphy, M.);SF 430 (Betzold)First ClassCity Teachers354A.12,Subd. 3cClarifies the application of the supplementallocal contributiontermination provision by separating the prior compound sentenceinto two sentences, one for Special School District No.1,Minneapolis, and one for Ind. School District No. 625, St. PauL.810.31-12.31HF 1978 (Murphy, M.);SF 430 (Betzold)SPTRFAHF 1977 (Murphy, M.);SF 424 (Betzold)IRAP/MTRFA354A.12,Subd 3dCorrects the baseline administrative experience amount referencefor a supplemental administrative expense assessment by reinstatìng the word "plus" that had bee inadvertently stricken in 2006.912.32-13.23354B.21,Subd. 3The defined benefit plan coverage option for MnSCU technicalcollege faculty members is corrected to eliminate a reference to theformer MTRFA.10111213.24-13.2913.30-15.1015.11-16.34HF 1977 (Murphy, M.);SF 424 (Betzold)Social Security!355.01,The definition of "Minneapolis teacher" for purposes of SocialMTRFASubd. 3hSecurity coverage is corrected to eliminate a reference to theformer MTRFA and replace it with a TRA reference.HF 1978 (Murphy, M.);SF 430 (Betzold)Small Volunteer356A.06,Fire PlansSubd. 6Corrects a cross-reference to the 2006 enactment of the 2002Uniform Securities Act, replacing a reference in the investmentauthority provision to a non-existent s ction in the uniform act withwhat appears to be the correct reference.HF 1977 (Murphy, M.);SF 424 (Betzold)TRA/MTRFA423A.02,Subd. 3The portion of local police and paid fire relief associationamortizatìon aid previously redirected to the former MTRFA isreassigned to the TRA and the SPTRFA eligibility terminationprovision is appropriately revised.131416.35-17.617.7-18.1HF 1977 (Murphy, M.);SF 424 (Betzold)TRA/MTRFAHF 1978 (Murphy, M.);SF 430 (Betzold)MSRS-Corr.423A.02,Subd 5Laws 2006,Chi 271, Art.2, Sec. 12,The amortization state aid termination provision is revised toeliminate a reference to the former MTRFA.Replaces a reference to "section 1" with "this subdivision,"correcting a provision that was not correctly adapted when aseparate bill was folded into the omnibus retirement bilL.Subd.11518.2-18.14HF 1978 (Murphy, M.);SF 430 (Betzold)MSRS- Corr.Laws 2006,Ch, 271, Art.2, Sec. 13,Subd. 3Page 5Corrects an incorrect "2005" date to "2007" for the due dateprovision for a potential service credit transfer for a Dept. ofCorrections employee who may be authorized to transfer coveragefor a period of prior service.H 1978-3 Summary

Section-by-Section Summary ofH.F. 1978, the Third Engrossment, the House Omnibus Retirement BilSec.Pg.Ln-Pg.LnSource Bill(s)Retirement PlanStat. ProvisionSummary1618.15-18.27HF 1978 (Murphy, M.);SF 430 (Betzold)PERA-P&FLaws 2006,Ch. 271, Art.14, Sec. 2,Replaces language relating to a Faribault firefighter service creditpurchase authorized in 2006 that was in the bill but was omittedwhen the provision was incorporated into the 2006 omnibusSubd. 3retirement bilL.Generally effective on final enactment. Sections 1,5-8,12, and 15 are retroactive to July 1,2006, Section 11 is retroactive to August 1,2006.Section 14 is retroactive to June 14, 2006, Section 16 is retroactive to June 2,2006.Article 2: Administrative Provisions18.30-20,1220.2-21.17HF 1139 (Murphy, M.);SF 629 (Betzold)Legislators PlanHF 1139 (Murphy, M,);MSRS-General3A.02,Subd. 1SF 629 (Betzold)352.01,Subd. 2aThe annuity accrues following the executive director's receipt ofthe application rather than beginning with the first day of the monthof receipt of application; removes obsolete language; and clarifiesthat an unreduced retirement requires that the annuity commenceno earlier than normal retirement age (currently age 62).Removes obsolete language and clarifies that MSRS coverageincludes employees of the University of Minnesota unless excludedby action of the University Board of Regents.321,18-24.25HF 1139 (Murphy, M.);MSRS-GeneralSF 629 (Betzold)352.0 ,Moves language to more appropriate clauses; clarifies thatSubd. 2bindependent contractors are excluded regardless of the paymentarrangement, excludes interns hired for six months or less unlessthe individuals are eligible for an immediate appointment at the endof that period; removes obsolete language related to the Compre-hensive Employment and Training Act (CETA); and permits MSRSGeneral coverage for teachers for incidental employment as astate employee not covered by a teacher retirement association,424.26-26.27HF 1139 (Murphy, M.);MSRS-GeneralSF 629 (Betzold)352.01,Subd. 11Removes obsolete language related to pre-July 1, 1957, service;moves language to new paragraphs; and revises the authorizedleave of absence clause by referencing a new payment procedurefound in Sec, 5.526.28-27.17HF 1139 (Murphy, M.);SF 629 (Betzold)MSRS-GeneralNew352,017Members of MSRS plans covered by Chapter 352 who go on anauthorized leave of absence without pay, not to exceed one year, andwho want to obtain service credit, can purchase service credit for theleave period by making the contributions plus interest within one yearof the end of the leave, or by paying full actuarial value thereafter.627.18-27.29HF 1139 (Murphy, M,);SF 629 (Betzold)MSRS-General352.12,Subd. 2aEliminates the five-year term-certain option from the death whileactive or deferred surviving spouse term-certain provision andeliminates the requirement that monthly payments not exceed 75%of the high-five monthly salary of the deceased employee.727.30-29.8HF 1139 (Murphy, M.);SF 629 (Betzold)MSRS-General352.27Clarifies that the applicable contribution rates are those of the planunder the applicable statute for the break in service to provideuniformed service provision.829.9-29.15HF 1139 (Murphy, M.);SF 629 (Betzold)MSRS State Fire352.951Indicates that Chapter 352 is generally applicable to State FireMarshal employees under Section 352.87.HF 1139 (Murphy, M.);SF 629 (Betzold)MSRS HealthCare Savings352.98Adds an anti-garnishment provision.3520.02,Revises the provision for clarity and removes references toemploying units that no longer exists, and adds employees ofMinnesota Technology Incorporated (MTI) and the AgriculturalUtilization Research Institute (AURI), individuals employed byMnSCU as faculty or in an eligible unclassified administrativeposition wh

State of Minnesota \ LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT TO: House Members of the Legislative Commission on Pensions and Retirement FROM: Ed Burek, Deputy Director t:'h l/ RE: Summary of the 2007 Session House Omnibus Retirement Bil as recommended by the House Ways and Means Committee, H.F. 1978 (Murphy, M.), the Third Engrossment