LCPR04-007
1.1 A bill for an act
1.2 relating to retirement; various retirement plans;
1.3 transferring the responsibilities to provide actuarial
1.4 valuations and proposed legislative cost estimates to
1.5 the retirement plans; amending Minnesota Statutes
1.6 2002, sections 352.03, subdivision 6; 352B.02,
1.7 subdivision 1e; 353.03, subdivision 3; 354.06,
1.8 subdivision 2a; 354A.021, subdivision 7; 356.215,
1.9 subdivisions 2 and 18; and 422A.06, subdivision 2;
1.10 repealing Minnesota Statutes 2002, sections 3.85,
1.11 subdivisions 11 and 12; and 356.217.
1.12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.13 Section 1. Minnesota Statutes 2002, section 352.03,
1.14 subdivision 6, is amended to read:
1.15 Subd. 6. DUTIES AND POWERS OF EXECUTIVE DIRECTOR. The
1.16 management of the system is vested in the director, who is the
1.17 executive and administrative head of the system. The director
1.18 shall be advisor to the board on matters pertaining to the
1.19 system and shall also act as the secretary of the board. The
1.20 director shall:
1.21 (1) attend meetings of the board;
1.22 (2) prepare and recommend to the board appropriate rules to
1.23 carry out this chapter;
1.24 (3) establish and maintain an adequate system of records
1.25 and accounts following recognized accounting principles and
1.26 controls;
1.27 (4) designate an assistant director with the approval of
1.28 the board;
2.1 (5) appoint any employees, both permanent and temporary,
2.2 that are necessary to carry out the provisions of this chapter;
2.3 (6) organize the work of the system as the director deems
2.4 necessary to fulfill the functions of the system, and define the
2.5 duties of its employees and delegate to them any powers or
2.6 duties, subject to the control of the director and under
2.7 conditions the director may prescribe. Appointments to exercise
2.8 delegated power must be by written order and shall be filed with
2.9 the secretary of state;
2.10 (7) with the advice and consent of the board, contract for
2.11 the services of an approved actuary, professional management
2.12 services, and any other consulting services as necessary and fix
2.13 the compensation for those services. The contracts are not
2.14 subject to competitive bidding under chapter 16C. Any The
2.15 approved actuary retained by the executive director shall
2.16 function as the actuarial advisor of the board and the executive
2.17 director, and may shall perform actuarial valuations and
2.18 experience studies to supplement those performed by the actuary
2.19 retained by the legislative commission on pensions and
2.20 retirement of the retirement plans administered by the system.
2.21 Any supplemental actuarial valuations or experience studies
2.22 shall must be filed with the executive director of the
2.23 Legislative Commission on Pensions and Retirement. Professional
2.24 management services may not be contracted for more often than
2.25 once in six years. Copies of professional management survey
2.26 reports must be transmitted to the secretary of the senate, the
2.27 chief clerk of the house of representatives, and the legislative
2.28 reference library as provided by section 3.195, and to the
2.29 executive director of the commission at the time as reports are
2.30 furnished to the board. Only management firms experienced in
2.31 conducting management surveys of federal, state, or local public
2.32 retirement systems are qualified to contract with the director;
2.33 (8) with the advice and consent of the board provide
2.34 in-service training for the employees of the system;
2.35 (9) make refunds of accumulated contributions to former
2.36 state employees and to the designated beneficiary, surviving
3.1 spouse, legal representative, or next of kin of deceased state
3.2 employees or deceased former state employees, as provided in
3.3 this chapter;
3.4 (10) determine the amount of the annuities and disability
3.5 benefits of employees covered by the system and authorize
3.6 payment of the annuities and benefits beginning as of the dates
3.7 on which the annuities and benefits begin to accrue, in
3.8 accordance with the provisions of this chapter;
3.9 (11) pay annuities, refunds, survivor benefits, salaries,
3.10 and necessary operating expenses of the system;
3.11 (12) certify funds available for investment to the State
3.12 Board of Investment;
3.13 (13) with the advice and approval of the board request the
3.14 State Board of Investment to sell securities when the director
3.15 determines that funds are needed for the system;
3.16 (14) prepare and submit to the board and the legislature an
3.17 annual financial report covering the operation of the system, as
3.18 required by section 356.20;
3.19 (15) prepare and submit biennial and annual budgets to the
3.20 board and with the approval of the board submit the budgets to
3.21 the Department of Finance; and
3.22 (16) with the approval of the board, perform other duties
3.23 required to administer the retirement and other provisions of
3.24 this chapter and to do its business.
3.25 Sec. 2. Minnesota Statutes 2002, section 352B.02,
3.26 subdivision 1e, is amended to read:
3.27 Subd. 1e. AUDIT; ACTUARIAL VALUATION. The legislative
3.28 auditor shall audit the fund. Any actuarial valuation of the
3.29 fund required under section 356.215 shall must be prepared by
3.30 the actuary retained by the Legislative Commission on Pensions
3.31 and Retirement Minnesota State Retirement System. Any approved
3.32 actuary retained by the executive director under section 352.03,
3.33 subdivision 6, may perform actuarial valuations and experience
3.34 studies to supplement those performed by the commission-retained
3.35 actuary. Any supplemental actuarial valuation or experience
3.36 studies shall be filed with the executive director of the
4.1 Legislative Commission on Pensions and Retirement.
4.2 Sec. 3. Minnesota Statutes 2002, section 353.03,
4.3 subdivision 3a, is amended to read:
4.4 Subd. 3a. EXECUTIVE DIRECTOR. (a) APPOINTMENT. The
4.5 board shall appoint, with the advice and consent of the senate,
4.6 an executive director on the basis of education, experience in
4.7 the retirement field, and leadership ability. The executive
4.8 director shall have had at least five years' experience in an
4.9 executive level management position, which has included
4.10 responsibility for pensions, deferred compensation, or employee
4.11 benefits. The executive director serves at the pleasure of the
4.12 board. The salary of the executive director is as provided by
4.13 section 15A.0815.
4.14 (b) DUTIES. The management of the association is vested
4.15 in the executive director who shall be the executive and
4.16 administrative head of the association. The executive director
4.17 shall act as adviser to the board on all matters pertaining to
4.18 the association and shall also act as the secretary of the
4.19 board. The executive director shall:
4.20 (1) attend all meetings of the board;
4.21 (2) prepare and recommend to the board appropriate rules to
4.22 carry out the provisions of this chapter;
4.23 (3) establish and maintain an adequate system of records
4.24 and accounts following recognized accounting principles and
4.25 controls;
4.26 (4) designate, with the approval of the board, up to two
4.27 persons who shall serve in the unclassified service and whose
4.28 salary is set in accordance with section 43A.18, subdivision 3,
4.29 appoint a confidential secretary in the unclassified service,
4.30 and appoint employees to carry out this chapter, who are subject
4.31 to chapters 43A and 179A in the same manner as are executive
4.32 branch employees;
4.33 (5) organize the work of the association as the director
4.34 deems necessary to fulfill the functions of the association, and
4.35 define the duties of its employees and delegate to them any
4.36 powers or duties, subject to the control of, and under such
5.1 conditions as, the executive director may prescribe;
5.2 (6) with the approval of the board, contract for the
5.3 services of an approved actuary, professional management
5.4 services, and any other consulting services as necessary to
5.5 fulfill the purposes of this chapter. All contracts are subject
5.6 to chapter 16C. The commissioner of administration shall not
5.7 approve, and the association shall not enter into, any contract
5.8 to provide lobbying services or legislative advocacy of any
5.9 kind. Any The approved actuary retained by the executive
5.10 director shall function as the actuarial advisor of the board
5.11 and the executive director and may shall perform actuarial
5.12 valuations and experience studies to supplement those performed
5.13 by the actuary retained by the Legislative Commission on
5.14 Pensions and Retirement of the retirement plans administered by
5.15 the retirement association. Any supplemental actuarial
5.16 valuations or experience studies shall must be filed with the
5.17 executive director of the Legislative Commission on Pensions and
5.18 Retirement. Copies of professional management survey reports
5.19 shall be transmitted to the secretary of the senate, the chief
5.20 clerk of the house of representatives, and the Legislative
5.21 Reference Library as provided by section 3.195, and to the
5.22 executive director of the commission at the same time as reports
5.23 are furnished to the board. Only management firms experienced
5.24 in conducting management surveys of federal, state, or local
5.25 public retirement systems shall be qualified to contract with
5.26 the director hereunder;
5.27 (7) with the approval of the board provide in-service
5.28 training for the employees of the association;
5.29 (8) make refunds of accumulated contributions to former
5.30 members and to the designated beneficiary, surviving spouse,
5.31 legal representative or next of kin of deceased members or
5.32 deceased former members, as provided in this chapter;
5.33 (9) determine the amount of the annuities and disability
5.34 benefits of members covered by the association and authorize
5.35 payment of the annuities and benefits beginning as of the dates
5.36 on which the annuities and benefits begin to accrue, in
6.1 accordance with the provisions of this chapter;
6.2 (10) pay annuities, refunds, survivor benefits, salaries,
6.3 and necessary operating expenses of the association;
6.4 (11) prepare and submit to the board and the legislature an
6.5 annual financial report covering the operation of the
6.6 association, as required by section 356.20;
6.7 (12) prepare and submit biennial and annual budgets to the
6.8 board for its approval and submit the approved budgets to the
6.9 department of finance for approval by the commissioner;
6.10 (13) reduce all or part of the accrued interest payable
6.11 under section 353.27, subdivisions 12, 12a, and 12b, or 353.28,
6.12 subdivision 5, upon receipt of proof by the association of an
6.13 unreasonable processing delay or other extenuating circumstances
6.14 of the employing unit. The executive director shall prescribe
6.15 and submit for approval by the board the conditions under which
6.16 such interest may be reduced; and
6.17 (14) with the approval of the board, perform such other
6.18 duties as may be required for the administration of the
6.19 association and the other provisions of this chapter and for the
6.20 transaction of its business.
6.21 Sec. 4. Minnesota Statutes 2002, section 354.06,
6.22 subdivision 2a, is amended to read:
6.23 Subd. 2a. DUTIES OF EXECUTIVE DIRECTOR. The management
6.24 of the association is vested in the executive director who shall
6.25 be the executive and administrative head of the association.
6.26 The executive director shall act as advisor to the board on all
6.27 matters pertaining to the association and shall also act as the
6.28 secretary of the board. The executive director shall:
6.29 (1) attend all meetings of the board;
6.30 (2) prepare and recommend to the board appropriate rules to
6.31 carry out the provisions of this chapter;
6.32 (3) establish and maintain an adequate system of records
6.33 and accounts following recognized accounting principles and
6.34 controls;
6.35 (4) designate an assistant executive director in the
6.36 unclassified service and two assistant executive directors in
7.1 the classified service with the approval of the board, and
7.2 appoint such employees, both permanent and temporary, as are
7.3 necessary to carry out the provisions of this chapter;
7.4 (5) organize the work of the association as the director
7.5 deems necessary to fulfill the functions of the association, and
7.6 define the duties of its employees and delegate to them any
7.7 powers or duties, subject to the director's control and under
7.8 such conditions as the director may prescribe;
7.9 (6) with the approval of the board, contract and set the
7.10 compensation for the services of an approved actuary,
7.11 professional management services, and any other consulting
7.12 services. These contracts are not subject to the competitive
7.13 bidding procedure prescribed by chapter 16C. An approved
7.14 actuary retained by the executive director shall function as the
7.15 actuarial advisor of the board and the executive director and
7.16 may perform actuarial valuations and experience studies to
7.17 supplement those performed by the actuary retained by the
7.18 legislative commission on pensions and retirement of the
7.19 retirement plan. Any supplemental actuarial valuations or
7.20 experience studies shall must be filed with the executive
7.21 director of the Legislative Commission on Pensions and
7.22 Retirement. Copies of professional management survey reports
7.23 must be transmitted to the secretary of the senate, the chief
7.24 clerk of the house of representatives, and the legislative
7.25 reference library as provided by section 3.195, and to the
7.26 executive director of the commission at the same time as reports
7.27 are furnished to the board. Only management firms experienced
7.28 in conducting management surveys of federal, state, or local
7.29 public retirement systems are qualified to contract with the
7.30 executive director;
7.31 (7) with the approval of the board, provide in-service
7.32 training for the employees of the association;
7.33 (8) make refunds of accumulated contributions to former
7.34 members and to the designated beneficiary, surviving spouse,
7.35 legal representative, or next of kin of deceased members or
7.36 deceased former members, under this chapter;
8.1 (9) determine the amount of the annuities and disability
8.2 benefits of members covered by the association and authorize
8.3 payment of the annuities and benefits beginning as of the dates
8.4 on which the annuities and benefits begin to accrue, under this
8.5 chapter;
8.6 (10) pay annuities, refunds, survivor benefits, salaries,
8.7 and necessary operating expenses of the association;
8.8 (11) prepare and submit to the board and the legislature an
8.9 annual financial report covering the operation of the
8.10 association, as required by section 356.20;
8.11 (12) certify funds available for investment to the state
8.12 board of investment;
8.13 (13) with the advice and approval of the board, request the
8.14 State Board of Investment to sell securities on determining that
8.15 funds are needed for the purposes of the association;
8.16 (14) prepare and submit biennial and annual budgets to the
8.17 board and with the approval of the board submit those budgets to
8.18 the department of finance; and
8.19 (15) with the approval of the board, perform such other
8.20 duties as may be required for the administration of the
8.21 association and the other provisions of this chapter and for the
8.22 transaction of its business. The executive director may:
8.23 (i) reduce all or part of the accrued interest and fines
8.24 payable by an employing unit for reporting requirements under
8.25 section 354.52, based on an evaluation of any extenuating
8.26 circumstances of the employing unit;
8.27 (ii) assign association employees to conduct field audits
8.28 of an employing unit to ensure compliance with the provisions of
8.29 this chapter; and
8.30 (iii) recover overpayments, if not repaid to the
8.31 association, by suspending or reducing the payment of a
8.32 retirement annuity, refund, disability benefit, survivor
8.33 benefit, or optional annuity under this chapter until the
8.34 overpayment, plus interest, has been recovered.
8.35 Sec. 5. Minnesota Statutes 2002, section 354A.021,
8.36 subdivision 7, is amended to read:
9.1 Subd. 7. ACTUARIAL CONSULTANT. The board of trustees or
9.2 directors of each teachers retirement fund association may shall
9.3 contract for the services of an approved actuary and fix the
9.4 reasonable compensation for those services. Any The approved
9.5 actuary retained by the board shall function as the actuarial
9.6 advisor to the board and may shall perform actuarial valuations
9.7 and experience studies to supplement those performed by the
9.8 actuary retained by the Legislative Commission on Pensions and
9.9 Retirement of the retirement plan. Any supplemental actuarial
9.10 valuations or experience studies shall must be filed with the
9.11 executive director of the Legislative Commission on Pensions and
9.12 Retirement.
9.13 Sec. 6. Minnesota Statutes 2002, section 356.215,
9.14 subdivision 2, is amended to read:
9.15 Subd. 2. REQUIREMENTS. (a) It is the policy of the
9.16 legislature that it is necessary and appropriate to determine
9.17 annually the financial status of tax supported retirement and
9.18 pension plans for public employees. To achieve this goal:
9.19 (1) the Legislative Commission on Pensions and Retirement
9.20 shall have prepared by the actuary retained by the commission by
9.21 the retirement plan or system shall prepare the annual actuarial
9.22 valuations of the retirement plans enumerated in section 3.85,
9.23 subdivision 11, paragraph (b), plan and the quadrennial
9.24 experience studies of the retirement plans enumerated in section
9.25 3.85, subdivision 11, paragraph (b), clauses (1), (2), and
9.26 (7) plan; and
9.27 (2) the commissioner of finance may have prepared by the
9.28 actuary retained by the commission, two years after each set of
9.29 quadrennial experience studies, quadrennial projection
9.30 valuations of at least one of the retirement plans enumerated in
9.31 section 3.85, subdivision 11 1, paragraph (b), for which the
9.32 commissioner determines that the analysis may be beneficial.
9.33 (b) The governing or managing board or administrative
9.34 officials of each public pension and retirement fund or plan
9.35 enumerated in section 356.20, subdivision 2, clauses (9), (10),
9.36 and (12), shall have prepared by an approved actuary annual
10.1 actuarial valuations of their respective funds as provided in
10.2 this section. This requirement also applies to any fund or plan
10.3 that is the successor to any organization enumerated in section
10.4 356.20, subdivision 2, or to the governing or managing board or
10.5 administrative officials of any newly formed retirement fund,
10.6 plan, or association operating under the control or supervision
10.7 of any public employee group, governmental unit, or institution
10.8 receiving a portion of its support through legislative
10.9 appropriations, and any local police or fire fund to which
10.10 section 356.216 applies.
10.11 Sec. 7. Minnesota Statutes 2002, section 356.215,
10.12 subdivision 18, is amended to read:
10.13 Subd. 18. ESTABLISHMENT OF ACTUARIAL ASSUMPTIONS. (a)
10.14 The actuarial assumptions used for the preparation of actuarial
10.15 valuations under this section that are other than those set
10.16 forth in this section may be changed only with the approval of
10.17 the Legislative Commission on Pensions and Retirement.
10.18 (b) A change in the applicable actuarial assumptions may be
10.19 proposed by the governing board of the applicable pension fund
10.20 or relief association, by the actuary retained by the
10.21 Legislative Commission on Pensions and Retirement, by the
10.22 actuarial advisor to a pension fund governed by chapter 352,
10.23 353, 354, or 354A, or by the actuary retained by a local police
10.24 or firefighters relief association governed by sections 69.77 or
10.25 69.771 to 69.776, if one is retained.
10.26 Sec. 8. Minnesota Statutes 2002, section 422A.06,
10.27 subdivision 2, is amended to read:
10.28 Subd. 2. ACTUARIAL VALUATION REQUIRED. As of July 1 of
10.29 each year, an actuarial valuation of the retirement fund shall
10.30 be prepared by the commission-retained actuary retained by the
10.31 retirement plan and filed in conformance with the provisions and
10.32 requirements of sections 356.215 to 356.23. Experience studies
10.33 shall be prepared at those times required by statute, required
10.34 by the standards for actuarial work adopted by the Legislative
10.35 Commission on Pensions and Retirement or ordered by the board.
10.36 The board may contract for the services of an approved
11.1 actuary and fix the reasonable compensation for those services.
11.2 Any The approved actuary retained by the board shall function as
11.3 the actuarial advisor to the board and may shall perform
11.4 actuarial valuations and experience studies to supplement those
11.5 performed by the actuary retained by the Legislative Commission
11.6 on Pensions and Retirement of the retirement plan.
11.7 Any supplemental actuarial valuations or experience studies
11.8 shall must be filed with the executive director of the
11.9 Legislative Commission on Pensions and Retirement.
11.10 Sec. 9. REPEALER.
11.11 Minnesota Statutes 2002, sections 3.85, subdivisions 11 and
11.12 12; and 356.217 are repealed.
11.13 Sec. 10. EFFECTIVE DATE.
11.14 Sections 1 to 9 are effective on the day following final
11.15 enactment.