S. F. No. 703 was reported to the House.

Paymar moved to amend S. F. No. 703 as follows:

Page 1, after line 19, insert:

"Sec. 2. Minnesota Statutes 1996, section 205.07, subdivision 1, is amended to read:

Subdivision 1. [DATE OF ELECTION.] The municipal general election in each city shall be held on the first Tuesday after the first Monday in November in every even-numbered year. Notwithstanding any provision of law to the contrary and subject to the provisions of this section, the governing body of a city may, by ordinance passed at a regular meeting held before June 1 of any year, elect to hold the election on the first Tuesday after the first Monday in November in each odd-numbered year. A city may hold elections in either the even-numbered year or the odd-numbered year, but not both. When a city changes its elections from one year to another, and does not provide for the expiration of terms by ordinance, the term of an incumbent expiring at a time when no municipal election is held in the months immediately prior to expiration is extended until the date for taking office following the next scheduled municipal election. If the change results in having three council members to be elected at a succeeding election, the two individuals receiving the highest vote shall serve for terms of four years and the individual receiving the third highest number of votes shall serve for a term of two years. To provide an orderly transition to the odd or even year election plan, the governing body of the city may adopt supplementary ordinances regulating initial elections and officers to be chosen at the elections and shortening or lengthening the terms of incumbents and those elected at the initial election. The term of office for the mayor may be either two or four years. The term of office of council members is may be either two or four years. Whenever the time of the municipal election is changed, the city clerk immediately shall notify in writing the county auditor and secretary of state of the change of date. Thereafter the municipal general election shall be held on the first Tuesday after the first Monday in November in each odd-numbered or even-numbered year until the ordinance is revoked and notification of the change is made.

Sec. 3. [EFFECTIVE DATE.]

Section 2 is effective July 1, 1997."

Amend the title accordingly

The motion did not prevail and the amendment was not adopted.

S. F. No. 703, A bill for an act relating to elections; allowing mail balloting in certain elections in additional cities and towns; amending Minnesota Statutes 1996, section 204B.45, subdivision 1.

The bill was read for the third time and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 72 yeas and 59 nays as follows:

Those who voted in the affirmative were:

Anderson, I.	Finseth	Johnson, R.	Mariani	Osthoff	Skoglund
Bakk	Folliard	Juhnke	Marko	Otremba	Slawik
Biernat	Garcia	Kahn	McCollum	Ozment	Solberg
Carlson	Greenfield	Kalis	McGuire	Paymar	Tomassoni
Chaudhary	Greiling	Kelso	Milbert	Pelowski	Trimble
Clark	Hasskamp	Kinkel	Mullery	Peterson	Tuma
Journal of the House - 54th Day - Tuesday, May 6, 1997 - Top of Page 3718
Dawkins	Hausman	Koskinen	Munger	Pugh	Tunheim
Delmont	Huntley	Kubly	Murphy	Rest	Wagenius
Dorn	Jaros	Lieder	Olson, E.	Rukavina	Wejcman
Entenza	Jefferson	Long	Opatz	Schumacher	Westfall
Evans	Jennings	Luther	Orfield	Sekhon	Winter
Farrell	Johnson, A.	Mahon	Osskopp	Skare	Spk. Carruthers

Those who voted in the negative were:

Abrams	Dempsey	Knoblach	McElroy	Rostberg	Tingelstad
Anderson, B.	Erhardt	Koppendrayer	Molnau	Seagren	Tompkins
Bettermann	Goodno	Kraus	Ness	Seifert	Van Dellen
Boudreau	Gunther	Krinkie	Nornes	Smith	Vickerman
Bradley	Haas	Kuisle	Olson, M.	Stanek	Weaver
Broecker	Harder	Larsen	Paulsen	Stang	Wenzel
Commers	Hilty	Leppik	Pawlenty	Sviggum	Westrom
Daggett	Holsten	Lindner	Reuter	Swenson, D.	Wolf
Davids	Kielkucki	Macklin	Rhodes	Swenson, H.	Workman
Dehler	Knight	Mares	Rifenberg	Sykora

The bill was passed and its title agreed to.

S. F. No. 1684, A bill for an act relating to education; authorizing Minneapolis school board elections to be held at the same time as state elections; amending Minnesota Statutes 1996, section 128D.08, subdivision 1; repealing Minnesota Statutes 1996, section 128D.08, subdivision 2.

The bill was read for the third time and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called. There were 69 yeas and 62 nays as follows:

Those who voted in the affirmative were:

Anderson, I.	Garcia	Juhnke	Mariani	Pawlenty	Slawik
Bakk	Greenfield	Kahn	Marko	Paymar	Tomassoni
Biernat	Greiling	Kalis	McCollum	Pelowski	Tunheim
Carlson	Hasskamp	Kelso	McGuire	Peterson	Wagenius
Chaudhary	Hausman	Kinkel	Milbert	Pugh	Weaver
Clark	Hilty	Koskinen	Mullery	Rest	Wejcman
Dawkins	Huntley	Kubly	Munger	Rhodes	Winter
Delmont	Jaros	Leppik	Murphy	Rukavina	Wolf
Dorn	Jefferson	Lieder	Olson, E.	Schumacher	Spk. Carruthers
Entenza	Jennings	Long	Opatz	Sekhon
Evans	Johnson, A.	Luther	Orfield	Skare
Folliard	Johnson, R.	Mahon	Otremba	Skoglund

Those who voted in the negative were:

Abrams	Dempsey	Knoblach	Ness	Seifert	Tuma
Anderson, B.	Erhardt	Koppendrayer	Nornes	Smith	Van Dellen
Bettermann	Farrell	Kraus	Olson, M.	Stanek	Vickerman
Bishop	Finseth	Krinkie	Osskopp	Stang	Wenzel
Boudreau	Goodno	Kuisle	Osthoff	Sviggum	Westfall
Bradley	Gunther	Larsen	Ozment	Swenson, D.	Westrom
Broecker	Haas	Lindner	Paulsen	Swenson, H.	Workman
Commers	Harder	Macklin	Reuter	Sykora
Daggett	Holsten	Mares	Rifenberg	Tingelstad
Davids	Kielkucki	McElroy	Rostberg	Tompkins
Dehler	Knight	Molnau	Seagren	Trimble

H. F. No. 423 was reported to the House.

Orfield moved to amend H. F. No. 423, the first engrossment, as follows:

Page 1, after line 13, insert:

"Section 1. Minnesota Statutes 1996, section 10A.01, subdivision 5, is amended to read:

Subd. 5. [CANDIDATE.] "Candidate" means an individual who seeks nomination or election to any statewide or legislative office for which reporting is not required under federal laws. The term candidate shall also include an individual who seeks nomination or election to supreme court, court of appeals, or district court judgeships of the state. "Candidate" also means an individual who seeks nomination or election to the metropolitan council. An individual shall be deemed to seek nomination or election if the individual has taken the action necessary under the law of the state of Minnesota to qualify for nomination or election, has received contributions or made expenditures in excess of $100, or has given implicit or explicit consent for any other person to receive contributions or make expenditures in excess of $100, for the purpose of bringing about the individual's nomination or election. A candidate remains a candidate until the candidate's principal campaign committee is dissolved as provided in section 10A.24.

Sec. 2. Minnesota Statutes 1996, section 10A.09, subdivision 5, is amended to read:

Subd. 5. [FORM.] A statement of economic interest required by this section shall be on a form prescribed by the board. The individual filing shall provide the following information:

(a) Name, address, occupation and principal place of business;

(b) The name of each associated business and the nature of that association;

(c) A listing of all real property within the state, excluding homestead property, in which the individual holds: (i) a fee simple interest, a mortgage, a contract for deed as buyer or seller, or an option to buy, whether direct or indirect, and which interest is valued in excess of $2,500; or (ii) an option to buy, which property has a fair market value of $50,000 or more;

(d) A listing of all real property within the state in which a partnership of which the individual is a member holds: (i) a fee simple interest, a mortgage, a contract for deed as buyer or seller, or an option to buy, whether direct or indirect, if the individual's share of the partnership interest is valued in excess of $2,500 or (ii) an option to buy, which property has a fair market value of $50,000 or more. Any listing under clause (c) or (d) shall indicate the street address and the municipality or the section, township, range and approximate acreage, whichever applies, and the county wherein the property is located; and

(e) A listing of any investments, ownership, or interests in property connected with pari-mutuel horse racing in the United States and Canada, including a race horse, in which the individual directly or indirectly holds a partial or full interest or an immediate family member holds a partial or full interest.

(f) A candidate for or member of the metropolitan council shall also provide the following information:

(1) the information listed in paragraphs (b) to (e) regarding the individual's spouse; and

(2) all income received by the individual or spouse in excess of $500 and the source of the income.

Sec. 3. Minnesota Statutes 1996, section 10A.09, subdivision 6a, is amended to read:

Sec. 4. Minnesota Statutes 1996, section 10A.25, subdivision 2, is amended to read:

Subd. 2. (a) In a year in which an election is held for an office sought by a candidate, no expenditures shall be made by the principal campaign committee of that candidate, nor any approved expenditures made on behalf of that candidate which expenditures and approved expenditures result in an aggregate amount in excess of the following:

(1) for governor and lieutenant governor, running together, $1,626,691;

(2) for attorney general, $271,116;

(3) for secretary of state, state treasurer, and state auditor, separately, $135,559;

(4) for state senator, $40,669;

(5) for state representative, $20,335; and

(6) for metropolitan council member, $47,000.

(b) If a special election cycle occurs during a general election cycle, expenditures by or on behalf of a candidate in the special election do not count as expenditures by or on behalf of the candidate in the general election.

(c) The expenditure limits in this subdivision for an office are increased by ten percent for a candidate who is running for that office for the first time and who has not run previously for any other office whose territory now includes a population that is more than one-third of the population in the territory of the new office.

Sec. 5. Minnesota Statutes 1996, section 10A.27, subdivision 1, is amended to read:

Subdivision 1. [CONTRIBUTION LIMITS.] Except as provided in subdivision 2, no candidate shall permit the candidate's principal campaign committee to accept aggregate contributions made or delivered by any individual, political committee, or political fund in excess of the following:

(a) to candidates for governor and lieutenant governor running together, $2,000 in an election year for the office sought and $500 in other years;

(b) to a candidate for attorney general, $1,000 in an election year for the office sought and $200 in other years;

(c) to a candidate for the office of secretary of state, state treasurer or state auditor, $500 in an election year for the office sought and $100 in other years;

(d) to a candidate for state senator, $500 in an election year for the office sought and $100 in other years; and

(e) to a candidate for state representative or metropolitan council member, $500 in an election year for the office sought and $100 in the other year.

The following deliveries are not subject to the bundling limitation in this subdivision:

(1) delivery of contributions collected by a member of the candidate's principal campaign committee, such as a block worker or a volunteer who hosts a fund raising event, to the committee's treasurer; and

(2) a delivery made by an individual on behalf of the individual's spouse.

Sec. 6. [10A.313] [METROPOLITAN COUNCIL PUBLIC SUBSIDY.]

Subd. 2. [ELIGIBILITY.] A candidate is eligible to receive a public subsidy in the amount of $20,000 if the candidate has filed with the board a spending limit agreement under section 10A.322 and an affidavit of matching contributions under section 10A.323 and the candidate's name will appear on the ballot in the general election.

Subd. 3. [CERTIFICATION.] Within one week after the last day for filing a spending limit agreement under section 10A.322 and an affidavit of matching contributions under section 10A.323, the board shall certify to the metropolitan council the maximum number of candidates who would be eligible to receive the public subsidy if they were to survive the primary election. Within one week after receiving the certification, the metropolitan council shall pay to the board the amount necessary to fund the public subsidy for that number of candidates. The amount received must be deposited in the state treasury and credited to a metropolitan council public subsidy account in the special revenue fund. Money in the fund is appropriated to the board for purposes of the public subsidy program.

Subd. 4. [PAYMENT.] The board shall pay the public subsidy to the eligible candidates as soon as the board has obtained from the secretary of state the results of the primary election, but not later than one week after certification by the state canvassing board of the results of the primary. Any amounts not paid to candidates, or returned by them to the board, must be returned by the board to the metropolitan council.

Sec. 7. Minnesota Statutes 1996, section 10A.315, is amended to read:

10A.315 [SPECIAL ELECTION SUBSIDY.]

Subdivision 1. [LEGISLATIVE OFFICE.] (a) Each eligible candidate for a legislative office in a special election must be paid a public subsidy equal to the sum of:

(1) the party account money at the last general election for the candidate's party for the office the candidate is seeking; and

(2) the general account money paid to candidates for the same office at the last general election.

(b) If the filing period for the special election coincides with the filing period for the general election, the candidate must meet the matching requirements of section 10A.323 and the special election subsidy must be distributed in the same manner as money is distributed to legislative candidates in a general election.

(c) If the filing period for the special election does not coincide with the filing period for the general election, the procedures in this paragraph apply. A candidate who wishes to receive this public subsidy must submit a signed agreement under section 10A.322 to the board not later than the day after the candidate files the affidavit of candidacy or nominating petition for the office. The candidate must meet the matching requirements of section 10A.323. The special election subsidy must be distributed in the same manner as money in the party and general accounts is distributed to legislative candidates in a general election.

(d) The amount necessary to make the payments required by this subdivision is appropriated from the general fund to the state treasurer.

Subd. 2. [METROPOLITAN COUNCIL OFFICE.] Each eligible candidate for metropolitan council office in a special election must be paid a public subsidy equal to the subsidy paid in a general election. A candidate who wishes to receive this public subsidy must file a spending limit agreement under section 10A.322 and meet the matching contribution requirements of section 10A.323, except that the candidate may count contributions received during the two months immediately preceding the special election, other than contributions the candidate has previously included on an affidavit of match for another election, and the amount of match required is one-quarter of the amount stated in section 10A.323. The special election subsidy must be distributed in the same manner as the public subsidy in a general election.

Sec. 8. Minnesota Statutes 1996, section 10A.322, subdivision 1, is amended to read:

(b) Before the first day of filing for office, the board shall forward agreement forms to all filing officers. The board shall also provide agreement forms to candidates on request at any time. The candidate may sign an agreement and submit it to the filing officer on the day of filing an affidavit of candidacy or petition to appear on the ballot, in which case the filing officer shall without delay forward signed agreements to the board. Alternatively, the candidate may submit the agreement directly to the board at any time before September 1 preceding the general election. An agreement may not be filed after that date. An agreement once filed may not be rescinded.

(c) The board shall forward a copy of any agreement signed under this subdivision to the commissioner of revenue.

(d) Notwithstanding any provisions of this section, when a vacancy occurs that will be filled by means of a special election and the filing period does not coincide with the filing period for the general election, a candidate may sign and submit a spending limit agreement at any time before the deadline for submission of a signed agreement under section 10A.315 not later than the day after the candidate files the affidavit of candidacy or nominating petition for the office.

Sec. 9. Minnesota Statutes 1996, section 10A.323, is amended to read:

10A.323 [MATCHING REQUIREMENTS.]

In addition to the requirements of section 10A.322, to be eligible to receive a public subsidy under section 10A.31 or 10A.312 10A.313, a candidate or the candidate's treasurer shall file an affidavit with the board stating that during that calendar year the candidate has accumulated contributions from persons eligible to vote in this state in the amount indicated for the office sought, counting only the first $50 received from each contributor:

(1) candidates for governor and lieutenant governor running together, $35,000;

(2) candidates for attorney general, $15,000;

(3) candidates for secretary of state, state treasurer, and state auditor, separately, $6,000;

(4) candidates for the senate, $3,000; and

(5) candidates for the house of representatives, $1,500; and

(6) candidates for the metropolitan council, $2,500.

To be eligible to receive a public matching subsidy under section 10A.312, The affidavit must state the total amount of contributions that have been received from persons eligible to vote in this state and the total amount of those contributions received, disregarding the portion of any contribution in excess of $50.

The candidate or the candidate's treasurer shall submit the affidavit required by this section to the board in writing by September 1 of the general election year to receive the payment based on the results of the primary election, by September 15 to receive the payment made October 1, by October 1 to receive the payment made October 15, by November 1 to receive the payment made November 15, and by December 1 to receive the payment made December 15.

Sec. 10. Minnesota Statutes 1996, section 10A.324, subdivision 1, is amended to read:

Subdivision 1. [WHEN RETURN REQUIRED.] A candidate shall return all or a portion of the public subsidy received from the state elections campaign fund or the public matching subsidy received under section 10A.313 or 10A.315, under the circumstances in this section or section 10A.25, subdivision 11.

(b) To the extent that the amount of public subsidy received exceeds the aggregate of: (1) actual expenditures made by the principal campaign committee of the candidate; and (2) approved expenditures made on behalf of the candidate, the treasurer of the candidate's principal campaign committee shall return an amount equal to the difference to the board."

Page 2, after line 6, insert:

"Sec. 12. Minnesota Statutes 1996, section 204B.06, subdivision 4, is amended to read:

Subd. 4. [PARTICULAR OFFICES.] Candidates who seek nomination for the following offices shall state the following additional information on the affidavit:

(a) for United States senator, that the candidate will be 30 years of age or older and a citizen of the United States for not less than nine years on the next January 3 or, in the case of an election to fill a vacancy, within 21 days after the special election;

(b) for United States representative, that the candidate will be 25 years of age or older and a citizen of the United States for not less than seven years on the next January 3 or, in the case of an election to fill a vacancy, within 21 days after the special election;

(c) for governor or lieutenant governor, that on the first Monday of the next January the candidate will be 25 years of age or older and, on the day of the state general election, a resident of Minnesota for not less than one year;

(d) for supreme court justice, court of appeals judge, or district court judge, that the candidate is learned in the law;

(e) for metropolitan council, county, municipal, school district, or special district office, that the candidate meets any other qualifications for that office prescribed by law;

(f) for senator or representative in the legislature, that on the day of the general or special election to fill the office the candidate will have resided not less than one year in the state and not less than six months in the legislative district from which the candidate seeks election."

Page 3, after line 5, insert:

"Sec. 15. Minnesota Statutes 1996, section 204B.11, is amended to read:

204B.11 [CANDIDATES; FILING FEES; PETITION IN PLACE OF FILING FEE.]

Subdivision 1. [AMOUNT; DISHONORED CHECKS; CONSEQUENCES.] Except as provided by subdivision 2, a filing fee shall be paid by each candidate who files an affidavit of candidacy. The fee shall be paid at the time the affidavit is filed. The amount of the filing fee shall vary with the office sought as follows:

(a) for the office of governor, lieutenant governor, attorney general, state auditor, state treasurer, secretary of state, representative in Congress, judge of the supreme court, judge of the court of appeals, judge of the district court, or judge of the county municipal court of Hennepin county, $300;

(b) for the office of senator in Congress, $400;

(c) for office of senator or representative in the legislature, $100;

(d) for a metropolitan council or county office, $50; and

(e) for the office of soil and water conservation district supervisor, $20.

The filing fees received by the county auditor shall immediately be paid to the county treasurer. The filing fees received by the secretary of state shall immediately be paid to the state treasurer.

When an affidavit of candidacy has been filed with the appropriate filing officer and the requisite filing fee has been paid, the filing fee shall not be refunded. If a candidate's filing fee is paid with a check, draft, or similar negotiable instrument for which sufficient funds are not available or that is dishonored, notice to the candidate of the worthless instrument must be sent by the filing officer via registered mail no later than immediately upon the closing of the filing deadline with return receipt requested. The candidate will have five days from the time the filing officer receives proof of receipt to issue a check or other instrument for which sufficient funds are available. The candidate issuing the worthless instrument is liable for a service charge pursuant to section 332.50. If adequate payment is not made, the name of the candidate must not appear on any official ballot and the candidate is liable for all costs incurred by election officials in removing the name from the ballot.

Subd. 2. [PETITION IN PLACE OF FILING FEE.] At the time of filing an affidavit of candidacy, a candidate may present a petition in place of the filing fee. The petition may be signed by any individual eligible to vote for the candidate. A nominating petition filed pursuant to section 204B.07 or 204B.13, subdivision 4, is effective as a petition in place of a filing fee if the nominating petition includes a prominent statement informing the signers of the petition that it will be used for that purpose.

The number of signatures on a petition in place of a filing fee shall be as follows:

(a) for a state office voted on statewide, or for president of the United States, or United States senator, 2,000;

(b) for a congressional office, 1,000;

(c) for a county, metropolitan council, or legislative office, or for the office of district, county, or county municipal judge, 500; and

(d) for any other office which requires a filing fee as prescribed by law, municipal charter, or ordinance, the lesser of 500 signatures or five percent of the total number of votes cast in the municipality, ward, or other election district at the preceding general election at which that office was on the ballot.

An official with whom petitions are filed shall make sample forms for petitions in place of filing fees available upon request."

Page 3, after line 33, insert:

"Sec. 18. Minnesota Statutes 1996, section 204D.02, subdivision 1, is amended to read:

Subdivision 1. [OFFICERS.] All elective state, metropolitan council, and county officers, justices of the supreme court, judges of the court of appeals, district, county and county municipal courts, state senators and state representatives, and senators and representatives in Congress shall be elected at the state general election held in the year before their terms of office expire. Presidential electors shall be chosen at the state general election held in the year before the expiration of a term of a president of the United States.

Sec. 19. Minnesota Statutes 1996, section 204D.08, subdivision 6, is amended to read:

Subd. 6. [STATE AND COUNTY NONPARTISAN PRIMARY BALLOT.] The state and county nonpartisan primary ballot shall be headed "State and County Nonpartisan Primary Ballot." It shall be printed on canary paper. The names of candidates for nomination to the supreme court, court of appeals, district, county and county municipal courts and all metropolitan council and county offices shall be placed on this ballot.

Sec. 20. [204D.265] [VACANCY IN OFFICE OF METROPOLITAN COUNCIL MEMBER.]

Subdivision 1. [ELECTION IN 30 TO 60 DAYS.] Except as provided in subdivision 3, a vacancy in the office of metropolitan council member must be filled at a special election scheduled by the metropolitan council on a date not less than 30 nor more than 60 days after the vacancy occurs. The special primary or special election may be held on the same day as a regular primary or regular election but the special election must be held not less than 14 days after the special primary. The person elected at the special election shall take office immediately after receipt of the certificate of election and upon taking the oath of office and shall serve the remainder of the unexpired term. If the metropolitan council districts have been redrawn since the commencement of the term of the vacant office, the election shall be based on the district as redrawn.

Subd. 2. [WHEN VICTOR SEATED IMMEDIATELY.] If a vacancy for which a special election is required occurs less than 60 days before the general election preceding the end of the term, the vacancy must be filled by the person elected at that election for the ensuing term who shall take office immediately after receiving the certificate of election and taking the oath of office.

Subd. 3. [INABILITY OR REFUSAL TO SERVE.] In addition to the events specified in section 351.02, a vacancy in the office of metropolitan council member may be declared by the metropolitan council when a member is unable to serve in the office or attend council meetings for a 90-day period because of illness, or because of absence from or refusal to attend council meetings for a 90-day period. If any of the preceding conditions occur, the council may, after the council by resolution has declared a vacancy to exist, make an appointment to fill the vacancy at a regular or special meeting for the remainder of the unexpired term or until the ill or absent member is again able to resume duties and attend council meetings, whichever is earlier. If the original member is again able to resume duties and attend council meetings, the council shall by resolution so determine and remove the appointed officeholder and restore the original member to office.

Sec. 21. Minnesota Statutes 1996, section 204D.27, is amended by adding a subdivision to read:

Subd. 12. [SPECIAL METROPOLITAN COUNCIL ELECTION.] (a) [STATE CANVASSING BOARD.] Except as provided in subdivision 4, the state canvassing board shall complete its canvass of a special election for metropolitan council member and declare the results within four days, excluding Sundays and legal holidays, after the returns of the county canvassing boards are certified to the secretary of state.

(b) [ELECTION CONTEST.] In case of a contest of a special election for metropolitan council member, the notice of contest must be filed within two days, excluding Sundays and legal holidays, after the canvass is completed, and the contest otherwise must proceed in the manner provided by law for contesting elections.

(c) [CERTIFICATE OF ELECTION.] A certificate of election in a special election for metropolitan council member must be issued by the county auditor or the secretary of state to the individual declared elected by the county or state canvassing board two days, excluding Sundays and legal holidays, after the appropriate canvassing board finishes canvassing the returns for the election. In case of a contest, the certificate must not be issued until the district court determines the contest.

Sec. 22. Minnesota Statutes 1996, section 209.02, subdivision 1, is amended to read:

Subdivision 1. Any eligible voter, including a candidate, may contest in the manner provided in this chapter: (1) the nomination or election of any person for whom the voter had the right to vote if that person is declared nominated or elected to the senate or the house of representatives of the United States, or to a statewide, metropolitan council, county, legislative, municipal, school, or district court office; or (2) the declared result of a constitutional amendment or other question voted upon at an election. The contest may be brought over an irregularity in the conduct of an election or canvass of votes, over the question of who received the largest number of votes legally cast, over the number of votes legally cast in favor of or against a question, or on the grounds of deliberate, serious, and material violations of the Minnesota election law.

Sec. 23. Minnesota Statutes 1996, section 211A.01, subdivision 3, is amended to read:

Sec. 24. Minnesota Statutes 1996, section 211B.01, subdivision 3, is amended to read:

Subd. 3. [CANDIDATE.] "Candidate" means an individual who seeks nomination or election to a federal, statewide, metropolitan council, legislative, judicial, or local office including special districts, school districts, towns, home rule charter and statutory cities, and counties, except candidates for president and vice-president of the United States."

Page 5, line 8, strike "apportionment" and insert "redrawing"

Page 5, line 12, strike ", other than the chair,"

Page 5, line 25, delete "apportionment" and insert "redistricting"

Page 6, line 10, delete "as nearly" and insert "substantially"

Page 6, line 11, delete "as possible"

Page 6, line 12, delete "ten" and insert "five"

Page 6, line 13, delete everything after the period

Page 6, delete line 14

Page 6, line 15, delete everything to the period

Page 6, line 22, after the period insert "The council shall file a map of the new districts with the secretary of state."

Page 6, delete section 10

Pages 9 to 22, delete sections 14 to 32

Page 24, line 2, after the period, insert "The requirement that the chair must reside in the council district represented does not apply until the first Monday in January 1999."

Page 24, delete section 35

Renumber the sections in sequence

Correct internal references

Page 24, delete line 24, and insert:

"Sections 11, 16, 25, 26, 28 to 31, and 34 are effective"

Amend the title accordingly

The motion prevailed and the amendment was adopted.

Smith offered an amendment to H. F. No. 423, the first engrossment, as amended.

Larsen, Marko, Workman, McCollum and Orfield moved to amend H. F. No. 423, the first engrossment, as amended, as follows:

Page 21, line 7, delete everything after the period

Page 21, delete lines 8 to 11

Page 22, after line 17, insert:

"Sec. 33. Minnesota Statutes 1996, section 473.127, is amended to read:

473.127 [ADVISORY COMMITTEES.]

Subdivision 1. [GENERAL.] The metropolitan council may establish and appoint persons to advisory committees to assist the metropolitan council in the performance of its duties. Members of the advisory committees shall serve without compensation but shall be reimbursed for their reasonable expenses as determined by the metropolitan council.

Subd. 2. [METROPOLITAN POLICY ADVISORY COMMITTEE.] The metropolitan council shall establish a metropolitan policy advisory committee. The committee must consist of 21 members, all of whom must be local elected officials. The committee shall provide advice to the metropolitan council on its policies and plans. The council may establish a technical advisory committee to the metropolitan policy advisory committee, consisting of planning specialists, citizens, and business representatives."

Page 24, line 24, delete "and 36" and insert "33, and 37"

Renumber the sections in sequence and correct internal references

Amend the title accordingly

The motion prevailed and the amendment was adopted.

Pawlenty, Workman and Orfield moved to amend H. F. No. 423, the first engrossment, as amended, as follows:

Pages 22 and 23, delete section 33

Renumber the sections in sequence and correct internal references

Amend the title accordingly

The motion prevailed and the amendment was adopted.

Workman was excused between the hours of 2:00 p.m. and 4:15 p.m.

On the motion of Krinkie and on the demand of 10 members, a call of the House was ordered. The following members answered to their names:

Abrams	Evans	Kalis	Marko	Pawlenty	Swenson, D.
Anderson, B.	Farrell	Kelso	McCollum	Paymar	Swenson, H.
Anderson, I.	Finseth	Kielkucki	McElroy	Pelowski	Tingelstad
Bakk	Folliard	Kinkel	McGuire	Peterson	Tomassoni
Bettermann	Garcia	Knight	Milbert	Pugh	Tompkins
Biernat	Goodno	Knoblach	Molnau	Rest	Trimble
Bishop	Greenfield	Koskinen	Mulder	Reuter	Tuma
Boudreau	Gunther	Kraus	Mullery	Rhodes	Tunheim
Bradley	Haas	Krinkie	Munger	Rifenberg	Van Dellen
Broecker	Harder	Kubly	Murphy	Rostberg	Wagenius
Carlson	Hasskamp	Kuisle	Ness	Rukavina	Weaver
Chaudhary	Hausman	Larsen	Nornes	Schumacher	Wejcman
Clark	Hilty	Leppik	Olson, E.	Seagren	Wenzel
Commers	Huntley	Lieder	Olson, M.	Seifert	Westfall
Daggett	Jaros	Lindner	Opatz	Sekhon	Westrom
Davids	Jefferson	Long	Orfield	Skare	Winter
Dawkins	Jennings	Luther	Osskopp	Skoglund	Wolf
Delmont	Johnson, A.	Macklin	Osthoff	Slawik	Spk. Carruthers
Journal of the House - 54th Day - Tuesday, May 6, 1997 - Top of Page 3728
Dempsey	Johnson, R.	Mahon	Otremba	Stanek
Dorn	Juhnke	Mares	Ozment	Stang
Erhardt	Kahn	Mariani	Paulsen	Sviggum

Winter moved that further proceedings of the roll call be suspended and that the Sergeant at Arms be instructed to bring in the absentees. The motion prevailed and it was so ordered.

Seifert offered an amendment to H. F. No. 423, the first engrossment, as amended.

Winter raised a point of order pursuant to rule 3.09 that the Seifert amendment was not in order. The Speaker ruled the point of order well taken and the Seifert amendment out of order.

Marko, Larsen, Orfield and McCollum moved to amend H. F. No. 423, the first engrossment, as amended, as follows:

Page 23, after line 32, insert:

"Sec. 34. [473.248] [LEVY CAP.]

(a) Notwithstanding any other provision in this chapter, the metropolitan council shall not levy in any year a dollar amount that is greater than that levied in 1996, payable in 1997, for any purpose for which the council is authorized to levy, except as follows:

(1) for payment of bonded indebtedness as required by law and the debt instruments; and

(2) for transit levies under section 473.446.

(b) Notwithstanding any other provision in this chapter, the metropolitan council shall not levy for taxes levied in 1997, 1998, and 1999, for transit purposes under section 473.446, except for bonds or other debt obligations an amount greater than the amount they are allowed to levy for that purpose in the previous year plus the amount of homestead and agricultural credit aid the metropolitan council was certified to receive under section 273.1398 in the previous year multiplied by:

(1) one plus a percentage equal to the percentage growth in the implicit price deflator; and

(2) one plus a percentage equal to the percentage increase in number of households, if any, for the most recent 12-month period for which data is available; and

(c) For purposes of paragraph (b):

(1) "Implicit price deflator" means the implicit price deflator for government purchases of goods and services for state and local governments prepared by the bureau of economic analysis of the United States Department of Commerce for the 12-month period ending in June of the levy year;

(2) "number of households" means the number of households for the metropolitan council as established by the last federal census, by a census taken under section 275.14, or by an estimate made by the metropolitan council or by the state demographer under section 4A.02, whichever is most recent as to the stated date of the count or estimate up to and including July 1 of the current levy year; and

(3) for taxes levied in 1997 only, the amount the metropolitan council is allowed to levy in the previous year is the amount in levied for transit purposes under section 473.446, except for bonds or other debt obligations in 1996."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

The motion prevailed and the amendment was adopted.

Sviggum and Osthoff offered an amendment to H. F. No. 423, the first engrossment, as amended.

Winter raised a point of order pursuant to rule 3.09 that the Sviggum and Osthoff amendment was not in order. The Speaker ruled the point of order well taken and the Sviggum and Osthoff amendment out of order.

Abrams moved to amend H. F. No. 423, the first engrossment, as amended, as follows:

Pages 3 to 7, delete sections 4, 6 to 10

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

The question was taken on the Abrams amendment and the roll was called. There were 66 yeas and 66 nays as follows:

Those who voted in the affirmative were:

Abrams	Dempsey	Knoblach	Marko	Reuter	Swenson, H.
Anderson, B.	Erhardt	Koppendrayer	McElroy	Rhodes	Sykora
Bettermann	Finseth	Kraus	Molnau	Rifenberg	Tingelstad
Bishop	Goodno	Krinkie	Mulder	Rostberg	Tompkins
Boudreau	Gunther	Kuisle	Nornes	Seagren	Tuma
Bradley	Haas	Larsen	Olson, M.	Seifert	Van Dellen
Broecker	Harder	Leppik	Osskopp	Smith	Vickerman
Commers	Holsten	Lindner	Osthoff	Stanek	Weaver
Daggett	Kelso	Long	Ozment	Stang	Westfall
Davids	Kielkucki	Macklin	Paulsen	Sviggum	Westrom
Dehler	Knight	Mares	Pawlenty	Swenson, D.	Wolf

Those who voted in the negative were:

Anderson, I.	Farrell	Jennings	Mahon	Orfield	Skoglund
Bakk	Folliard	Johnson, A.	Mariani	Otremba	Slawik
Biernat	Garcia	Johnson, R.	McCollum	Paymar	Solberg
Carlson	Greenfield	Juhnke	McGuire	Pelowski	Tomassoni
Chaudhary	Greiling	Kahn	Milbert	Peterson	Trimble
Clark	Hasskamp	Kalis	Mullery	Pugh	Tunheim
Dawkins	Hausman	Kinkel	Munger	Rest	Wagenius
Delmont	Hilty	Koskinen	Murphy	Rukavina	Wejcman
Dorn	Huntley	Kubly	Ness	Schumacher	Wenzel
Entenza	Jaros	Lieder	Olson, E.	Sekhon	Winter
Evans	Jefferson	Luther	Opatz	Skare	Spk. Carruthers

The motion did not prevail and the amendment was not adopted.

Marko moved to amend H. F. No. 423, the first engrossment, as amended, as follows:

Page 8, line 16, before the period, insert ", but not to exceed $12,000 per year"

Page 24, delete lines 3 to 6

Page 24, line 7, delete "3" and insert "2"

The motion prevailed and the amendment was adopted.

Seifert moved to amend H. F. No. 423, the first engrossment, as amended, as follows:

Page 1, after line 13, insert:

"Section 1. Minnesota Statutes 1996, section 10A.15, is amended by adding a subdivision to read:

"Subd. 6. [CONTRIBUTIONS FROM CERTAIN NONCITIZENS; METROPOLITAN COUNCIL.] A candidate seeking nomination or election to the metropolitan council and the candidate's principal campaign committee may not accept a contribution from a person who is not a United States citizen or from a business entity organized and headquartered outside the United States. The prohibition in this subdivision does not apply to contributions from noncitizens who are legal residents of Minnesota."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

A roll call was requested and properly seconded.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 62 yeas and 68 nays as follows:

Those who voted in the affirmative were:

Abrams	Dempsey	Koppendrayer	Mulder	Seagren	Tuma
Anderson, B.	Erhardt	Kraus	Nornes	Seifert	Van Dellen
Bettermann	Finseth	Krinkie	Olson, M.	Smith	Vickerman
Bishop	Goodno	Kuisle	Osskopp	Stanek	Weaver
Boudreau	Gunther	Larsen	Ozment	Stang	Westfall
Bradley	Haas	Leppik	Paulsen	Sviggum	Westrom
Broecker	Harder	Lindner	Pawlenty	Swenson, D.	Wolf
Commers	Holsten	Macklin	Reuter	Swenson, H.
Daggett	Kielkucki	Mares	Rhodes	Sykora
Davids	Knight	McElroy	Rifenberg	Tingelstad
Dehler	Knoblach	Molnau	Rostberg	Tompkins

Those who voted in the negative were:

Anderson, I.	Folliard	Juhnke	Marko	Paymar	Tomassoni
Bakk	Garcia	Kahn	McCollum	Pelowski	Trimble
Biernat	Greenfield	Kalis	McGuire	Peterson	Tunheim
Carlson	Greiling	Kelso	Milbert	Pugh	Wagenius
Chaudhary	Hausman	Kinkel	Mullery	Rest	Wejcman
Clark	Hilty	Koskinen	Munger	Rukavina	Wenzel
Dawkins	Huntley	Kubly	Murphy	Schumacher	Winter
Delmont	Jaros	Lieder	Olson, E.	Sekhon	Spk. Carruthers
Dorn	Jefferson	Long	Opatz	Skare
Entenza	Jennings	Luther	Orfield	Skoglund
Evans	Johnson, A.	Mahon	Osthoff	Slawik
Farrell	Johnson, R.	Mariani	Otremba	Solberg

The motion did not prevail and the amendment was not adopted.

Paulsen moved to amend H. F. No. 423, the first engrossment, as amended, as follows:

Page 1, after line 13, insert:

"Section 1. Minnesota Statutes 1996, section 10A.27, is amended by adding a subdivision to read:

Subd. 13. [CONTRIBUTIONS FROM CERTAIN TYPES OF CONTRIBUTORS; METROPOLITAN COUNCIL.] A candidate seeking nomination or election to the metropolitan council who receives or accepts a public subsidy under section 10A.313 shall not permit the candidate's principal campaign committee to accept:

(1) any contribution from a political fund or a political committee other than a political party unit as defined in section 10A.275; or

(2) a contribution from a lobbyist, or a large giver, if the contribution will cause the aggregate contributions from those types of contributors to exceed an amount equal to 20 percent of the expenditure limits for the office sought by the candidate. For purposes of this subdivision, "large giver" means an individual, other than the candidate, who contributes an amount that is more than $100 and more than one-half the amount an individual may contribute."

Renumber the sections in sequence and correct internal references

Amend the title accordingly

The question was taken on the Paulsen amendment and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 62 yeas and 68 nays as follows:

Those who voted in the affirmative were:

Abrams	Dempsey	Koppendrayer	Mulder	Rostberg	Tompkins
Anderson, B.	Erhardt	Kraus	Ness	Seagren	Tuma
Bettermann	Finseth	Krinkie	Nornes	Seifert	Van Dellen
Bishop	Goodno	Kuisle	Olson, M.	Smith	Vickerman
Boudreau	Gunther	Larsen	Osskopp	Stanek	Weaver
Bradley	Haas	Leppik	Ozment	Stang	Westfall
Broecker	Harder	Lindner	Paulsen	Sviggum	Westrom
Commers	Holsten	Macklin	Pawlenty	Swenson, D.
Daggett	Kielkucki	Mares	Reuter	Swenson, H.
Davids	Knight	McElroy	Rhodes	Sykora
Dehler	Knoblach	Molnau	Rifenberg	Tingelstad

Those who voted in the negative were:

Anderson, I.	Folliard	Johnson, R.	Mariani	Paymar	Trimble
Bakk	Garcia	Juhnke	Marko	Pelowski	Tunheim
Biernat	Greenfield	Kahn	McGuire	Pugh	Wagenius
Carlson	Greiling	Kalis	Milbert	Rest	Wejcman
Chaudhary	Hasskamp	Kelso	Mullery	Rukavina	Wenzel
Clark	Hausman	Kinkel	Munger	Schumacher	Winter
Dawkins	Hilty	Koskinen	Murphy	Sekhon	Wolf
Delmont	Huntley	Kubly	Olson, E.	Skare	Spk. Carruthers
Dorn	Jaros	Lieder	Opatz	Skoglund
Entenza	Jefferson	Long	Orfield	Slawik
Evans	Jennings	Luther	Osthoff	Solberg
Farrell	Johnson, A.	Mahon	Otremba	Tomassoni

The motion did not prevail and the amendment was not adopted.

H. F. No. 423, A bill for an act relating to the metropolitan council; providing for an elected metropolitan council; providing for public financing of campaigns for council seats; imposing penalties; amending Minnesota Statutes 1996, sections 15.0597, subdivision 1; 204B.09, subdivisions 1 and 1a; 204B.135, subdivision 2; 204B.32, subdivision 2; 353D.01, subdivision 2; and 473.123, subdivisions 1, 2a, 3a, 4, 7, and by adding subdivisions; proposing coding for new law in Minnesota Statutes, chapter 473; repealing Minnesota Statutes 1996, section 473.123, subdivision 3.

The bill was read for the third time, as amended, and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 68 yeas and 62 nays as follows:

Those who voted in the affirmative were:

Anderson, I.	Garcia	Juhnke	McCollum	Peterson	Trimble
Bakk	Greenfield	Kahn	McGuire	Pugh	Tunheim
Biernat	Greiling	Kalis	Milbert	Rest	Wagenius
Carlson	Hasskamp	Kinkel	Mullery	Rukavina	Wejcman
Chaudhary	Hausman	Koskinen	Munger	Schumacher	Wenzel
Clark	Hilty	Kraus	Murphy	Sekhon	Winter
Journal of the House - 54th Day - Tuesday, May 6, 1997 - Top of Page 3733
Dawkins	Huntley	Kubly	Opatz	Skare	Workman
Delmont	Jaros	Lieder	Orfield	Skoglund	Spk. Carruthers
Dorn	Jefferson	Long	Otremba	Slawik
Entenza	Jennings	Luther	Pawlenty	Smith
Evans	Johnson, A.	Mahon	Paymar	Solberg
Folliard	Johnson, R.	Mariani	Pelowski	Tomassoni

Those who voted in the negative were:

Abrams	Dempsey	Knoblach	Molnau	Rostberg	Tuma
Anderson, B.	Erhardt	Koppendrayer	Mulder	Seagren	Van Dellen
Bettermann	Finseth	Krinkie	Ness	Seifert	Vickerman
Bishop	Goodno	Kuisle	Nornes	Stanek	Weaver
Boudreau	Gunther	Larsen	Olson, M.	Stang	Westfall
Bradley	Haas	Leppik	Osskopp	Sviggum	Westrom
Broecker	Harder	Lindner	Ozment	Swenson, D.	Wolf
Commers	Holsten	Macklin	Paulsen	Swenson, H.
Daggett	Kelso	Mares	Reuter	Sykora
Davids	Kielkucki	Marko	Rhodes	Tingelstad
Dehler	Knight	McElroy	Rifenberg	Tompkins

The bill was passed, as amended, and its title agreed to.

Mahon moved that the vote whereby S. F. No. 868, as amended, was not passed on Friday, May 2, 1997, be now reconsidered.

A roll call was requested and properly seconded.

The question was taken on the Mahon motion and the roll was called.

McCollum moved that those not voting be excused from voting. The motion prevailed.

There were 68 yeas and 63 nays as follows:

Those who voted in the affirmative were:

Bakk	Folliard	Juhnke	Marko	Paymar	Tomassoni
Biernat	Garcia	Kahn	McCollum	Pelowski	Trimble
Carlson	Greenfield	Kalis	McGuire	Peterson	Tunheim
Chaudhary	Greiling	Kelso	Milbert	Pugh	Wagenius
Clark	Hausman	Kinkel	Mullery	Rest	Wejcman
Dawkins	Hilty	Koskinen	Munger	Rukavina	Wenzel
Delmont	Huntley	Kubly	Murphy	Schumacher	Winter
Dorn	Jaros	Lieder	Olson, E.	Sekhon	Spk. Carruthers
Entenza	Jefferson	Long	Opatz	Skare
Erhardt	Jennings	Luther	Orfield	Skoglund
Evans	Johnson, A.	Mahon	Osthoff	Slawik
Farrell	Johnson, R.	Mariani	Otremba	Solberg

Those who voted in the negative were:

Abrams	Dempsey	Koppendrayer	Ness	Seagren	Tuma
Anderson, B.	Finseth	Kraus	Nornes	Seifert	Van Dellen
Bettermann	Goodno	Krinkie	Olson, M.	Smith	Vickerman
Bishop	Gunther	Kuisle	Osskopp	Stanek	Weaver
Boudreau	Haas	Larsen	Ozment	Stang	Westfall
Bradley	Harder	Leppik	Paulsen	Sviggum	Westrom
Broecker	Hasskamp	Lindner	Pawlenty	Swenson, D.	Wolf
Commers	Holsten	Mares	Reuter	Swenson, H.	Workman
Daggett	Kielkucki	McElroy	Rhodes	Sykora
Davids	Knight	Molnau	Rifenberg	Tingelstad
Dehler	Knoblach	Mulder	Rostberg	Tompkins

The motion prevailed.

S. F. No. 868 was reported to the House.

S. F. No. 868, A bill for an act relating to occupations; removing the sunset relating to state licensing of Minneapolis building contractors; amending Minnesota Statutes 1996, section 326.991, subdivision 1.

The bill was read for the third time and placed upon its final passage.

The question was taken on the passage of the bill and the roll was called.

Winter moved that those not voting be excused from voting. The motion prevailed.

There were 68 yeas and 64 nays as follows:

Those who voted in the affirmative were:

Anderson, I.	Farrell	Johnson, R.	Mariani	Paymar	Tomassoni
Bakk	Folliard	Juhnke	Marko	Pelowski	Trimble
Biernat	Garcia	Kahn	McCollum	Peterson	Tunheim
Carlson	Greenfield	Kalis	McGuire	Pugh	Wagenius
Chaudhary	Greiling	Kelso	Milbert	Rest	Wejcman
Clark	Hausman	Kinkel	Mullery	Rukavina	Wenzel
Dawkins	Hilty	Koskinen	Munger	Schumacher	Winter
Delmont	Huntley	Kubly	Murphy	Sekhon	Spk. Carruthers
Dorn	Jaros	Leppik	Olson, E.	Skare
Entenza	Jefferson	Lieder	Opatz	Skoglund
Erhardt	Jennings	Long	Orfield	Slawik
Evans	Johnson, A.	Mahon	Otremba	Solberg

Those who voted in the negative were:

Abrams	Dempsey	Koppendrayer	Mulder	Rostberg	Tompkins
Anderson, B.	Finseth	Kraus	Ness	Seagren	Tuma
Bettermann	Goodno	Krinkie	Nornes	Seifert	Van Dellen
Bishop	Gunther	Kuisle	Olson, M.	Smith	Vickerman
Journal of the House - 54th Day - Tuesday, May 6, 1997 - Top of Page 3735
Boudreau	Haas	Larsen	Osskopp	Stanek	Weaver
Bradley	Harder	Lindner	Ozment	Stang	Westfall
Broecker	Hasskamp	Luther	Paulsen	Sviggum	Westrom
Commers	Holsten	Macklin	Pawlenty	Swenson, D.	Wolf
Daggett	Kielkucki	Mares	Reuter	Swenson, H.	Workman
Davids	Knight	McElroy	Rhodes	Sykora
Dehler	Knoblach	Molnau	Rifenberg	Tingelstad

The bill was passed and its title agreed to.

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

Solberg from the Committee on Ways and Means to which was referred:

S. F. No. 94, A bill for an act relating to state land; modifying provisions for the establishment of boundary lines; modifying provisions relating to the sale of trust lands; authorizing the commissioner of natural resources to pay certain outstanding real estate taxes and assessments; authorizing the commissioner of natural resources to transfer improvements on state-owned land; authorizing the commissioner of natural resources to sell certain land; authorizing the private sale of certain land; authorizing the sale of certain surplus land for recreational purposes; providing for disposition of certain lakeshore leased lands; amending Minnesota Statutes 1996, sections 84.0273; 92.06, subdivisions 1 and 4; 92.16, subdivision 1; and 94.10, subdivision 2; proposing coding for new law in Minnesota Statutes, chapters 92; and 94.

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

Pages 2 to 13, delete Article 1

Page 13, delete lines 5 and 6

Page 14, line 27, after "state" insert "or grant-in-aid"

Page 15, line 12, delete "25" and insert "30"

Page 15, line 16, delete "25" and insert "20"

Page 15, line 18, after the period, insert "Sixty percent of this amount is for costs of the commissioner and 40 percent is for costs of local law enforcement."

Page 15, line 20, delete "purposes" and insert "initiatives above and beyond current levels of local law enforcement activities"

Page 15, after line 23, insert:

"Sec. 5. Minnesota Statutes 1996, section 84.86, subdivision 1, is amended to read:

Subdivision 1. With a view of achieving maximum use of snowmobiles consistent with protection of the environment the commissioner of natural resources shall adopt rules in the manner provided by chapter 14, for the following purposes:

(1) Registration of snowmobiles and display of registration numbers.

(2) Use of snowmobiles insofar as game and fish resources are affected.

(4) Uniform signs to be used by the state, counties, and cities, which are necessary or desirable to control, direct, or regulate the operation and use of snowmobiles.

(5) Specifications relating to snowmobile mufflers.

(6) A comprehensive snowmobile information and safety education and training program, including but not limited to the preparation and dissemination of snowmobile information and safety advice to the public, the training of snowmobile operators, and the issuance of snowmobile safety certificates to snowmobile operators who successfully complete the snowmobile safety education and training course. For the purpose of administering such program and to defray a portion of the expenses of training and certifying snowmobile operators, the commissioner shall collect a fee of not to exceed $5 from each person who receives the youth and young adult training and a fee established under chapter 16A from each person who receives the adult training. The commissioner shall deposit the fee in the snowmobile trails and enforcement account and the amount thereof is appropriated annually to the commissioner of natural resources for the administration of such programs notwithstanding the percentages in section 84.83, subdivision 3. The commissioner shall cooperate with private organizations and associations, private and public corporations, and local governmental units in furtherance of the program established under this clause. The commissioner shall consult with the commissioner of public safety in regard to training program subject matter and performance testing that leads to the certification of snowmobile operators.

(7) The operator of any snowmobile involved in an accident resulting in injury requiring medical attention or hospitalization to or death of any person or total damage to an extent of $500 or more, shall forward a written report of the accident to the commissioner on such form as the commissioner shall prescribe. If the operator is killed or is unable to file a report due to incapacitation, any peace officer investigating the accident shall file the accident report within ten business days."

Page 17, delete section 6 and insert:

"Sec. 7. [84.862] [SNOWMOBILE TRAINING REQUIRED.]

Subdivision 1. [YOUTH AND YOUNG ADULT SAFETY TRAINING.] Effective October 1, 1998, any resident born after December 31, 1979, who operates a snowmobile in Minnesota, must possess a valid snowmobile safety certificate or a driver's license or identification card with a valid snowmobile qualification indicator issued under section 171.07, subdivision 12. The certificate or qualification indicator may only be issued upon successful completion of the course authorized under section 84.86.

Subd. 2. [ADULT SAFETY TRAINING.] Effective October 1, 2002, any resident born after December 31, 1972, and before December 31, 1983, who operates a snowmobile in Minnesota, must possess a valid operators permit or drivers license or identification card with a valid snowmobile qualification indicator issued under section 171.07, subdivision 12, showing successful completion of a safety course designed for adults. Whenever possible, the course shall include a riding component that stresses stopping distances.

Subd. 3. [TRAINING FOR OFFENDERS.] Any person who is convicted for a second or subsequent speeding violation in a snowmobile season, or any conviction for careless or reckless operation of a snowmobile, must successfully complete the training course in subdivision 1 or 2 before continuing operation of a snowmobile."

Page 20, after line 23, insert:

"Sec. 14. [APPROPRIATIONS.]

Renumber the sections in sequence

Pages 20 to 29, delete Article 3

Delete the title and insert:

"A bill for an act relating to natural resources; modifying snowmobile registration provisions; requiring snowmobile state trail permit; modifying disposition of snowmobile trails and enforcement account; requiring snowmobile liability insurance; requiring snowmobile safety training; establishing night speed limit for snowmobiles; providing for enhancement of snowmobile trail posting; requiring snowmobile information on driver's license and ID cards; modifying the amount of fuel tax attributable to snowmobile use; providing definitions; appropriating money; amending Minnesota Statutes 1996, sections 84.82, subdivisions 2 and 3; 84.83, subdivision 3; 84.86, subdivision 1; 84.87, subdivision 2; 84.873; 171.07, by adding a subdivision; 296.16, subdivision 1; and 609.487, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapters 84; and 85."

With the recommendation that when so amended the bill pass.

The report was adopted.

Solberg from the Committee on Ways and Means to which was referred:

S. F. No. 637, A bill for an act relating to retirement; increasing pension benefit accrual rates; adjusting financing for pension plans; adding supplemental financial conditions information for pension funds; reducing appropriations; modifying or establishing various pension aids; appropriating money; amending Minnesota Statutes 1996, sections 3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 and 4; 3A.03, subdivision 1; 3A.07; 11A.18, subdivision 9; 69.011, subdivisions 1, 2, and by adding a subdivision; 69.021, subdivisions 7a and 10; 69.031, subdivision 5; 352.01, subdivision 25; 352.04, subdivisions 2 and 3; 352.115, subdivision 3; 352.72, subdivision 2; 352.92, subdivisions 1 and 2; 352.93, subdivisions 2, 3, and by adding a subdivision; 352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a subdivision; 352C.031, subdivision 4; 352C.033; 352D.02, subdivisions 1 and 2; 352D.04, subdivisions 1 and 2; 353.01, subdivision 37; 353.27, subdivisions 2 and 3a; 353.29, subdivision 3; 353.651, subdivision 3; 353.656, subdivision 1; 353.71, subdivision 2; 353A.08, subdivisions 1 and 2; 353A.083, by adding a subdivision; 354.05, subdivision 38; 354.42, subdivisions 2, 3, and 5; 354.44, subdivision 6, and by adding a subdivision; 354.53, subdivision 1; 354.55, subdivision 11; 354A.011, subdivision 15a; 354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, subdivisions 2, 4d, and 4g; 356.217; 356.30, subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, subdivision 8; 422A.151; 423B.01, subdivision 9, and by adding a subdivision; 423B.06, by adding a subdivision; 423B.07; 423B.09, subdivision 1, and by adding a subdivision; 423B.10, subdivision 1; 423B.15, subdivisions 2, 3, 6, and by adding a subdivision; 490.123, subdivisions 1a and 1b; and 490.124, subdivisions 1 and 5; Laws 1965, chapter 519, section 1, as amended; Laws 1979, chapter 109, section 1, as amended; Laws 1989, chapter 319, article 19, section 7, subdivisions 1, as amended, 3, 4, as amended, and 7; and Laws 1993, chapter 125, article 1, section 1; proposing coding for new law in Minnesota Statutes, chapters 124; 273; 352; 352C; 354A; 355; and 356; repealing Minnesota Statutes 1996, sections 124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 356.88, subdivision 2; and Laws 1985, chapter 259, section 3; and Laws 1993, chapter 336, article 3, section 1.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

Subd. 11. [VALUATIONS AND REPORTS TO LEGISLATURE.] (a) The commission shall contract with an established actuarial consulting firm to conduct annual actuarial valuations for the retirement plans named in paragraph (b). The contract must include provisions for performing cost analyses of proposals for changes in benefit and funding policies.

(b) The contract for actuarial valuation must include the following retirement plans:

(1) the teachers retirement plan, teachers retirement association;

(2) the general state employees retirement plan, Minnesota state retirement system;

(3) the correctional employees retirement plan, Minnesota state retirement system;

(4) the state patrol retirement plan, Minnesota state retirement system;

(5) the judges retirement plan, Minnesota state retirement system;

(6) the Minneapolis employees retirement plan, Minneapolis employees retirement fund;

(7) the public employees retirement plan, public employees retirement association;

(8) the public employees police and fire plan, public employees retirement association;

(9) the Duluth teachers retirement plan, Duluth teachers retirement fund association;

(10) the Minneapolis teachers retirement plan, Minneapolis teachers retirement fund association;

(11) the St. Paul teachers retirement plan, St. Paul teachers retirement fund association;

(12) the legislators retirement plan, Minnesota state retirement system; and

(13) the elective state officers retirement plan, Minnesota state retirement system; and

(14) the public employees local government correctional service retirement plan, public employees retirement association, if there are any participants in that plan.

(c) The contract must specify completion of annual actuarial valuation calculations on a fiscal year basis with their contents as specified in section 356.215, and the standards for actuarial work adopted by the commission.

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

(1) individual salary progression;

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

(3) payroll growth;

(4) mortality;

(5) retirement age;

(6) withdrawal; and

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

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

(f) The term of the contract between the commission and the actuary retained by the commission is two years, plus not to exceed two one-year extensions before competitive bidding. The contract is subject to competitive bidding procedures as specified by the commission.

Sec. 2. Minnesota Statutes 1996, section 3.85, subdivision 12, is amended to read:

Subd. 12. [ALLOCATION OF ACTUARIAL COST.] (a) The commission shall assess each retirement plan specified in subdivision 11, paragraph (b), the compensation paid to the actuary retained by the commission for the actuarial valuation calculations, quadrennial projection valuations, and quadrennial experience studies. The assessment is 100 percent of the amount of contract compensation for the actuarial consulting firm retained by the commission for actuarial valuation calculations, including the public employees police and fire plan consolidation accounts of the public employees retirement association, annual experience data collection and processing, and quadrennial experience studies.

The portion of the total assessment payable by each retirement system or pension plan must be determined as follows:

(1) Each pension plan specified in subdivision 11, paragraph (b), clauses (1) to (14) (13), must pay the following indexed amount based on its total active, deferred, inactive, and benefit recipient membership:

up to 2,000 members, inclusive $2.55 per member

2,001 through 10,000 members $1.13 per member

over 10,000 members $0.11 per member

The amount specified is applicable for the assessment of the July 1, 1991, to June 30, 1992, fiscal year actuarial compensation amounts. For the July 1, 1992, to June 30, 1993, fiscal year and subsequent fiscal year actuarial compensation amounts, the amount specified must be increased at the same percentage increase rate as the implicit price deflator for state and local government purchases of goods and services for the 12-month period ending with the first quarter of the calendar year following the completion date for the actuarial valuation calculations, as published by the federal Department of Commerce, and rounded upward to the nearest full cent.

(2) The total per-member portion of the allocation must be determined, and that total per-member amount must be subtracted from the total amount for allocation. Of the remainder dollar amount, the following per-retirement system and per-pension plan charges must be determined and the charges must be paid by the system or plan:

(i) 37.87 percent is the total additional per-retirement system charge, of which one-seventh must be paid by each retirement system specified in subdivision 11, paragraph (b), clauses (1), (2), (6), (7), (9), (10), and (11).

(b) The assessment must be made following the completion of the actuarial valuation calculations and the experience analysis. The amount of the assessment is appropriated from the retirement fund applicable to the retirement plan. Receipts from assessments must be deposited in the state treasury and credited to the general fund.

Sec. 3. Minnesota Statutes 1996, section 3A.02, subdivision 1, is amended to read:

Subdivision 1. [QUALIFICATIONS.] (a) A former legislator is entitled, upon written application to the director, to receive a retirement allowance monthly, if the person:

(1) has served at least six full years, without regard to the application of section 3A.10, subdivision 2, or has served during all or part of four regular sessions as a member of the legislature, which service need not be continuous;

(2) has attained the normal retirement age;

(3) has retired as a member of the legislature; and

(4) has made all contributions provided for in section 3A.03, has made payments for past service under subdivision 2, or has made payments in lieu of contributions under Minnesota Statutes 1992, section 3A.031, prior to July 1, 1994.

(b) This paragraph applies to members of the legislature who terminate service as a legislator before July 1, 1997. For service rendered before the beginning of the 1979 legislative session, but not to exceed eight years of service, the retirement allowance is an amount equal to five percent per year of service of that member's average monthly salary. For service in excess of eight years rendered before the beginning of the 1979 legislative session, and for service rendered after the beginning of the 1979 legislative session, the retirement allowance is an amount equal to 2-1/2 percent per year of service of that member's average monthly salary.

(c) This paragraph applies to members of the legislature who terminate service as a legislator after June 30, 1997. The retirement allowance is an amount equal to the applicable rate or rates under paragraph (b) per year of service of the member's average monthly salary adjusted for that person on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent. The adjustment must be calculated by or, alternatively, the adjustment procedure must be specified by, the actuary retained by the legislative commission on pensions and retirement.

(d) The retirement allowance accrues beginning with the first day of the month of receipt of the application, but not before age 60, and for the remainder of the former legislator's life, if the former legislator is not serving as a member of the legislature or as a constitutional officer or commissioner as defined in section 352C.021, subdivisions 2 and 3. The annuity shall does not begin to accrue prior to retirement as a legislator. No annuity payment shall may be made retroactive for more than 180 days before the date the annuity application is filed with the director.

(d) (e) Any member who has served during all or part of four regular sessions is considered to have served eight years as a member of the legislature.

(e) (f) The retirement allowance ceases with the last payment that accrued to the retired legislator during the retired legislator's lifetime, except that the surviving spouse, if any, is entitled to the retirement allowance for the calendar month in which the retired legislator died.

Sec. 4. Minnesota Statutes 1996, section 3A.02, subdivision 4, is amended to read:

(b) The retirement allowance of, or the survivor benefit payable on behalf of, a former member of the legislature who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board of directors of the Minnesota state retirement system and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 5. Minnesota Statutes 1996, section 11A.18, subdivision 9, is amended to read:

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

(b) If the Consumer Price Index for urban wage earners and clerical workers all items index published by the Bureau of Labor Statistics of the United States Department of Labor increases from June 30 of the preceding year to June 30 of the current year, the state board shall certify the percentage increase. The amount certified may must not exceed the lesser of the difference between the preretirement interest assumption and postretirement interest assumption in section 356.215, subdivision 4d, paragraph (a), or 3.5 2.5 percent. For the Minneapolis employees retirement fund, the amount certified must not exceed 3.5 percent.

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

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

(2) The amount of reserves required for the annuity or benefit payable to an annuitant and benefit recipient of the participating public pension plans or funds shall must be determined by the commission-retained actuary as of the current June 30. An annuitant or benefit recipient who has been receiving an annuity or benefit for at least 12 full months as of the current June 30 is eligible to receive a full postretirement adjustment. An annuitant or benefit recipient who has been receiving an annuity or benefit for at least one full month, but less than 12 full months as of the current June 30, is eligible to receive a partial postretirement adjustment. Each fund shall report separately the amount of the reserves for those annuitants and benefit recipients who are eligible to receive a full postretirement benefit adjustment. This amount is known as "eligible reserves." Each fund shall also report separately the amount of the reserves for those annuitants and benefit recipients who are not eligible to receive a postretirement adjustment. This amount is known as "noneligible reserves." For an annuitant or benefit recipient who is eligible to receive a partial postretirement adjustment, each fund shall report separately as additional "eligible reserves" an amount that bears the same ratio to the total reserves required for the annuitant or benefit recipient as the number of full months of annuity or benefit receipt as of the current June 30 bears to 12 full months. The remainder of the annuitant's or benefit recipient's reserves shall must be separately reported as additional "noneligible reserves." The amount of "eligible" and "noneligible" required reserves shall must be certified to the board by the commission-retained actuary as soon as is practical following the current June 30;

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

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

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

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

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

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

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

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

(2) The state board shall add the percentage certified under paragraph (b) to any positive percentage calculated under paragraph (c). The board shall not subtract from the percentage certified under paragraph (b) any negative amount calculated under paragraph (c). The sum of these percentages shall must be carried to five decimal places and shall must be certified to each participating public pension fund or plan as the full postretirement adjustment percentage.

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

Sec. 6. [124.2141] [AID ADJUSTMENTS DUE TO CHANGES IN EMPLOYER RETIREMENT CONTRIBUTION RATES.]

Subdivision 1. [AID ADJUSTMENT.] Beginning in fiscal year 1998 and each year thereafter, the commissioner of children, families, and learning shall adjust state aid payments to school operating funds for independent school district No. 625, independent school district No. 709 and special school district No. 1, by the net amount of clauses (1) and (2) and for all other districts, including charter schools, but excluding any education organizations that are prohibited from receiving direct state aids under section 124.193 or 124.32, subdivision 12, by the net amount of clauses (1), (2) and (3):

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

(2) an increase equal to one percent of the salaries paid to members of the general plan of the public employees retirement association in fiscal year 1997, multiplied by 0.35 for fiscal year 1998 and 0.70 each year thereafter;

(3) a decrease equal to 2.34 percent of the salaries paid to members of the teachers retirement association in fiscal year 1997.

Subd. 3. [LIMITS ON ADJUSTMENTS AND POTENTIAL REDUCTIONS.] Increases to any school districts under subdivision 1, clause (2), and decreases under subdivision 1, clauses (1) and (3), are limited to the fiscal year 1999 amounts. The commissioner of children, families, and learning may permanently reduce the adjustments to school districts under subdivision 1, clauses (1) and (2), in the same manner as prescribed for nonschool jurisdictions under section 273.13985, subdivision 2. The commissioner may, from time to time, require that the most recent fiscal year payroll information be certified by the executive director of the teachers retirement association. For any school district where the newly certified teachers retirement association payroll is significantly lower than the fiscal 1997 amount as determined by the commissioner, the commissioner shall recalculate the lower reduction under subdivision 1, clause (3), and shall permanently reduce the adjustment amount in subsequent years.

Subd. 4. [EFFECT OF REORGANIZATIONS.] The commissioner of children, families, and learning shall reapportion the aid adjustments to school districts under this section to account for significant changes in boundaries or consolidations, as determined by the commissioner. If a school district is dissolved, or a school district function thereof is assumed by either the state or a nonpublic organization, adjustments for all or the appropriate fraction of the total payroll under this section must terminate.

Subd. 5. [ADJUSTMENT TERMINATION.] All adjustments under this section terminate on June 30, 2020.

Sec. 7. [273.13985] [AID FOR PUBLIC EMPLOYEES RETIREMENT ASSOCIATION EMPLOYER CONTRIBUTION RATE INCREASE.]

Subdivision 1. [AID TO OFFSET RATE INCREASE.] Beginning with the December 26, 1997, payment, and according to the schedule for payment of local aid under section 477A.015 thereafter, the commissioner of revenue shall pay to each city, county, town, and other nonschool jurisdiction an amount equal to 0.35 percent of the fiscal year 1997 payroll for employees who were members of the general plan of the public employees retirement association. Except for the December 1997 distribution under this section, the amount of aid must be certified before September 1 of the year preceding the distribution year to the affected local government. The executive director of the public employees retirement association shall certify the general plan fiscal year covered payroll and other information requested by the commissioner of revenue, on or before August 1, 1997, and in subsequent years where necessary, in order to facilitate administration of this section. The amount necessary to make these aid payments is appropriated annually from the general fund to the commissioner of revenue. Expenditures under this section are estimated to be $7,942,500 in fiscal year 1998, and $15,885,000 in each subsequent fiscal year, less any future reductions under subdivision 2.

Subd. 2. [LIMIT ON AID AND POTENTIAL FUTURE PERMANENT AID REDUCTIONS.] The aid amount received by any jurisdiction in fiscal year 2000 or any year thereafter may not exceed the amount it received in fiscal year 1999. The commissioner may, from time to time, request the most recent fiscal year payroll information by jurisdiction to be certified by the executive director of the public employees retirement association. For any jurisdiction where newly certified public employees retirement association general plan payroll is significantly lower than the fiscal 1997 amount, as determined by the commissioner, the commissioner shall recalculate the aid amount based on the most recent fiscal year payroll information, certify the recalculated aid amount for the next distribution year, and permanently reduce the aid amount to that jurisdiction.

Subd. 3. [EFFECT OF REORGANIZATIONS.] The commissioner of revenue may adjust the aid amounts for separate jurisdictions to account for significant changes in boundaries or in the form of government, as determined by the commissioner. If a local government function and the associated public employees retirement association general plan payroll is assumed by either the state, or a nonpublic organization, the aid amounts attributable to the function under this section must terminate.

Subd. 4. [AID TERMINATION.] The aid provided under this section terminates on June 30, 2020.

Sec. 8. Minnesota Statutes 1996, section 352.01, subdivision 25, is amended to read:

Sec. 9. Minnesota Statutes 1996, section 352.04, subdivision 2, is amended to read:

Subd. 2. [EMPLOYEE CONTRIBUTIONS.] The employee contribution to the fund must be equal to 4.07 4.0 percent of salary. These contributions must be made by deduction from salary as provided in subdivision 4.

Sec. 10. Minnesota Statutes 1996, section 352.04, subdivision 3, is amended to read:

Subd. 3. [EMPLOYER CONTRIBUTIONS.] (a) The employer contribution to the fund must be equal to 4.2 4.0 percent of salary.

(b) By January 1 of each year, the board of directors shall report to the legislative commission on pensions and retirement, the chair of the committee on appropriations of the house of representatives, and the chair of the committee on finance of the senate on the amount raised by the employer and employee contribution rates in effect and whether the total amount is less than, the same as, or more than the actuarial requirement determined under section 356.215.

(c) If the legislative commission on pensions and retirement, based on the most recent valuation performed by its actuary, determines that the total amount raised by the employer and employee contributions under subdivision 2 and paragraph (b) is less than the actuarial requirements determined under section 356.215, the employer and employee rates must be increased by equal amounts as necessary to meet the actuarial requirements. The employee rate may not exceed 4.15 percent of salary and the employer rate may not exceed 4.29 percent of salary. The increases are effective on the next January 1 following the determination by the commission. The executive director of the Minnesota state retirement system shall notify employing units of any increases under this paragraph.

Sec. 11. Minnesota Statutes 1996, section 352.115, subdivision 3, is amended to read:

Subd. 3. [RETIREMENT ANNUITY FORMULA.] (a) This paragraph, in conjunction with section 352.116, subdivision 1, applies to a person who became a covered employee or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (b), in conjunction with section 352.116, subdivision 1a, produces a higher annuity amount, in which case paragraph (b) will apply. The employee's average salary, as defined in subdivision 2, multiplied by one the percent specified in section 356.19, subdivision 1, per year of allowable service for the first ten years and 1.5 the percent specified in section 356.19, subdivision 2, for each later year of allowable service and pro rata for completed months less than a full year shall determine the amount of the retirement annuity to which the employee is entitled.

(b) This paragraph applies to a person who has become at least 55 years old and first became a covered employee after June 30, 1989, and to any other covered employee who has become at least 55 years old and whose annuity amount, when calculated under this paragraph and in conjunction with section 352.116, subdivision 1a, is higher than it is when calculated under paragraph (a), in conjunction with section 352.116, subdivision 1. The employee's average salary, as defined in subdivision 2, multiplied by 1.5 the percent specified in section 356.19, subdivision 2, for each year of allowable service and pro rata for months less than a full year shall determine the amount of the retirement annuity to which the employee is entitled.

Sec. 12. Minnesota Statutes 1996, section 352.72, subdivision 2, is amended to read:

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

(b) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former state employee who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and the tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 13. Minnesota Statutes 1996, section 352.92, subdivision 1, is amended to read:

Subdivision 1. [EMPLOYEE CONTRIBUTIONS.] Beginning with the first full pay period after July 1, 1984, in lieu of employee contributions payable under section 352.04, subdivision 2, Employee contributions by of covered correctional employees must be in an amount equal to 4.90 5.50 percent of salary.

Sec. 14. Minnesota Statutes 1996, section 352.92, subdivision 2, is amended to read:

Subd. 2. [EMPLOYER CONTRIBUTIONS.] In lieu of employer contributions payable under section 352.04, subdivision 3, The employer shall contribute for covered correctional employees an amount equal to 6.75 7.70 percent of salary.

Sec. 15. Minnesota Statutes 1996, section 352.93, subdivision 2, is amended to read:

Subd. 2. [CALCULATING MONTHLY ANNUITY.] The monthly annuity under this section must be determined by multiplying the average monthly salary by the number of years, or completed months, of covered correctional service by 2.5 the percent specified in section 356.19, subdivision 5. However, the monthly annuity must not exceed 75 percent of the average monthly salary.

Sec. 16. Minnesota Statutes 1996, section 352.93, subdivision 3, is amended to read:

Subd. 3. [PAYMENTS; DURATION AND AMOUNT ANNUITY ACCRUAL.] The annuity under this section shall must begin to accrue as provided in section 352.115, subdivision 8., and must be paid for an additional 84 full calendar months or to the first of the month following the month in which the employee attains normal retirement age, whichever occurs first, except that payment must not cease before the first of the month following the month in which the employee becomes 62. It must then be reduced to the amount as calculated at normal retirement age under section 352.115, except that if this amount, when added to that portion of the social security benefit based on state service the employee would be eligible to receive at the time, is less than the benefit payable under subdivision 2, the retired employee shall receive an amount that when added to the social security benefit will equal the amount payable under subdivision 2. If the employee retired prior to age 55, the reduced benefit as calculated under section 352.115 must be actuarially reduced as provided in subdivision 2a.

When an annuity is reduced under this subdivision, the percentage adjustments, if any, that have been applied to the original annuity under section 11A.18, before the reduction, must be compounded and applied to the reduced annuity. A former correctional employee employed by the state in a position covered by the regular plan or the unclassified employees retirement program between the age of 58 and normal retirement age shall receive a partial return of correctional contributions at retirement with six percent interest based on the following formula:

Employee contributions Years and complete

contributed as a months of regular

correctional employee service between

in excess of the age 58 and the

contributions the normal retirement age

employee would have X .....................

contributed as a number of years between

regular employee age 58 and normal

Sec. 17. Minnesota Statutes 1996, section 352.93, is amended by adding a subdivision to read:

Subd. 3a. [OPTIONAL ANNUITIES.] The board may establish optional annuity forms to pay a higher amount from the date of retirement until an employee is first eligible to draw social security benefits or up to the age the employee is eligible to receive unreduced social security benefits, at which time the monthly benefits must be reduced. The optional annuity forms must be actuarially equivalent to the normal single life annuity form provided in subdivision 2. The optional annuity forms must be approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 18. [352.931] [SURVIVOR BENEFITS.]

Subdivision 1. [SURVIVING SPOUSE BENEFIT.] (a) If the correctional employee was at least age 50, has credit for at least three years allowable service, and dies before an annuity or disability benefit has become payable, notwithstanding any designation of beneficiary to the contrary, the surviving spouse of the employee may elect to receive, in lieu of the refund under section 352.12, subdivision 1, an annuity for life equal to the joint and 100 percent survivor annuity which the employee could have qualified for had the employee terminated service on the date of death. The election may be made at any time after the date of death of the employee. The surviving spouse benefit begins to accrue as of the first of the month next following the date on which the application for the benefit was filed.

(b) If the employee was under age 50, dies, and had credit for at least three years of allowable service credit on the date of death but did not yet qualify for retirement, the surviving spouse may elect to receive a 100 percent joint and survivor annuity based on the age of the employee and surviving spouse at the time of death. The annuity is payable using the early retirement reduction under section 352.93, subdivision 2a, to age 50, and one-half of the early retirement reduction from age 50 to the age payment begins. The surviving spouse eligible for surviving spouse benefits under this paragraph may apply for the annuity at any time after the employee's death. Sections 352.22, subdivision 3, and 352.72, subdivision 2, apply to a deferred annuity or surviving spouse benefit payable under this subdivision.

(c) The annuity must cease with the last payment received by the surviving spouse in the lifetime of the surviving spouse. Any employee may request in writing that this subdivision not apply and that payment be made only to a designated beneficiary as otherwise provided by this chapter.

Subd. 2. [SURVIVING SPOUSE COVERAGE; TERM CERTAIN.] In lieu of the 100 percent optional annuity under subdivision 1, the surviving spouse of a deceased employee may elect to receive survivor coverage in a term certain of ten, 15, or 20 years. The monthly term certain annuity must be actuarially equivalent to the 100 percent optional annuity under subdivision 1 and must be approved by the actuary retained by the legislative commission on pensions and retirement. The optional annuity ceases upon the expiration of the term certain period. If a survivor elects a term certain annuity and dies before the expiration of the specified term certain period, the commuted value of the remaining annuity payments must be paid in a lump sum to the survivor's estate.

Subd. 3. [DEPENDENT CHILD SURVIVOR COVERAGE.] If there is no surviving spouse eligible for benefits under subdivision 1, a dependent child as defined in section 352.01, subdivision 26, is eligible for a dependent child survivor benefit. Benefits to a dependent child must be paid from the date of the employee's death to the date the dependent child attains age 20 if the child is under age 15 on the date of death. If the child is 15 years or older on the date of death, the benefit is payable for five years. The payment to a dependent child is an amount actuarially equivalent to the value of a 100 percent joint and survivor optional annuity using the age of the employee and age of the dependent child at the date of death in lieu of the age of the surviving spouse. If there is more than one dependent child, each dependent child shall receive a proportionate share of the actuarial value of the employee's account, with the amount of the benefit payable to each child to be determined based on the portion of the total eligibility period that each child is eligible. The process for calculating the dependent child survivor benefit must be approved by the actuary retained by the legislative commission on pensions and retirement.

Subd. 4. [DEATH REFUND.] An amount equal to the excess, if any, of the accumulated contributions credited to the account of the deceased employee in excess of the total of the benefits paid to the surviving spouse and surviving child or children must be paid to the deceased employee's last designated beneficiary or, if none, as specified under section 352.12, subdivision 1.

Sec. 19. Minnesota Statutes 1996, section 352.95, subdivision 1, is amended to read:

Subdivision 1. [JOB-RELATED DISABILITY.] A covered correctional employee who becomes disabled and physically unfit to perform the duties of the position as a direct result of an injury, sickness, or other disability incurred in or arising out of any act of duty that makes the employee physically or mentally unable to perform the duties, is entitled to a disability benefit based on covered correctional service only. The benefit amount must equal 50 percent of the average salary defined in section 352.93, plus an additional 2-1/2 percent equal to that specified in section 356.19, subdivision 5, for each year of covered correctional service in excess of 20 years, ten months, prorated for completed months.

Sec. 20. Minnesota Statutes 1996, section 352.95, subdivision 5, is amended to read:

Subd. 5. [RETIREMENT STATUS AT NORMAL RETIREMENT AGE.] The disability benefit paid to a disabled correctional employee under this section shall terminate at the end of the month in which the employee reaches age 62. If the disabled correctional employee is still disabled when the employee reaches age 62, the employee shall be deemed to be a retired employee. If the employee had elected an optional annuity under subdivision 1a, the employee shall receive an annuity in accordance with the terms of the optional annuity previously elected. If the employee had not elected an optional annuity under subdivision 1a, the employee may within 90 days of attaining age 65 or reaching the five-year anniversary of the effective date of the disability benefit, whichever is later, either elect to receive a normal retirement annuity computed in the manner provided in section 352.115 352.93 or elect to receive an optional annuity as provided in section 352.116, subdivision 3, based on the same length of service as used in the calculation of the disability benefit. Election of an optional annuity must be made within 90 days before attaining age 65 or reaching the five-year anniversary of the effective date of the disability benefit, whichever is later. The reduction for retirement before normal retirement age as provided in section 352.116, subdivision 1 or 1a, does not apply. The savings clause provision of section 352.93, subdivision 3, applies. If an optional annuity is elected, the optional annuity shall begin to accrue on the first of the month following the month in which the employee reaches age 65 or the five-year anniversary of the effective date of the disability benefit, whichever is later.

Sec. 21. Minnesota Statutes 1996, section 352B.02, subdivision 1a, is amended to read:

Subd. 1a. [MEMBER CONTRIBUTIONS.] Each member shall pay a sum equal to 8.92 8.40 percent of the member's salary, which shall constitute the member contribution to the fund.

Sec. 22. Minnesota Statutes 1996, 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 14.88 12.60 percent of the salary upon which deductions were made, which shall constitute the employer contribution to the fund. Department contributions must be paid out of money appropriated to departments for this purpose.

(b) By January 1 of each year, the board of directors shall report to the legislative commission on pensions and retirement, the chair of the committee on appropriations of the house of representatives, and the chair of the committee on finance of the senate on the amount raised by the employer and employee contribution rates in effect and whether the total amount is less than, the same as, or more than the actuarial requirement determined under section 356.215.

Sec. 23. Minnesota Statutes 1996, section 352B.08, subdivision 2, is amended to read:

Subd. 2. [NORMAL RETIREMENT ANNUITY.] 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 2.65 the percent specified in section 356.19, subdivision 6, for each year and pro rata for completed months of service.

Sec. 24. Minnesota Statutes 1996, section 352B.08, subdivision 2a, is amended to read:

Subd. 2a. [EARLY RETIREMENT.] Any member who has become at least 50 years old, or former member if service ended after June 30, 1989, and who has at least three years of allowable service is entitled upon application to a reduced retirement annuity equal to the annuity calculated under subdivision 2, reduced so that the reduced annuity is the actuarial equivalent of the annuity that would be payable if the member deferred receipt of the annuity from the day the annuity begins to accrue to age 55 by two-tenths of one percent for each month that the member is under age 55 at the time of retirement.

Sec. 25. Minnesota Statutes 1996, section 352B.10, subdivision 1, is amended to read:

average monthly salary multiplied by 53 60 percent, plus an additional 2.65 percent equal to that specified in section 356.19, subdivision 6, for each year and pro rata for completed months of service in excess of 20 years, if any.

Sec. 26. Minnesota Statutes 1996, section 352B.30, is amended by adding a subdivision to read:

Subd. 4. [1997 POSTRETIREMENT FUND INTEREST CHANGES.] The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former member who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 27. Minnesota Statutes 1996, section 352C.031, subdivision 4, is amended to read:

Subd. 4. [RETIREMENT ALLOWANCE FORMULA.] (a) This paragraph applies to constitutional officers who terminate that service before July 1, 1997. The average salary multiplied by 2-1/2 percent for each year of allowable service and pro rata for completed months less than a full year shall determine the amount of the normal retirement allowance.

(b) This paragraph applies to constitutional officers who terminate that service after June 30, 1997. The retirement allowance is an amount equal to the rate under paragraph (a) per year of service of the constitutional officer's average monthly salary adjusted for that person on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent. The adjustment must be calculated by or, alternatively, the adjustment procedure must be specified by the actuary retained by the legislative commission on pensions and retirement.

Sec. 28. Minnesota Statutes 1996, section 352C.033, is amended to read:

352C.033 [DEFERRED ANNUITIES AUGMENTATION.]

(a) The deferred retirement allowance for any former constitutional officer shall must be augmented as provided in this section. The required reserves applicable to the deferred retirement allowance, determined as of the date the retirement allowance begins to accrue using the appropriate mortality table and an interest assumption of five six percent, shall be augmented from the first of the month following termination of service as a constitutional officer, or January 1, 1979, whichever is later, to the first day of the month in which the annuity begins to accrue, at the rate of five percent per annum compounded annually until January 1, 1981, and thereafter at the rate of three percent per annum compounded annually until January 1 of the year in which the former constitutional officer attains age 55. From that date to the effective date of retirement, the rate is five percent compounded annually.

(b) The retirement allowance of, or the survivor benefit payable on behalf of, a former constitutional officer who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board as recommended by an approved actuary and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 29. Minnesota Statutes 1996, section 353.01, subdivision 2a, is amended to read:

Subd. 2a. [INCLUDED EMPLOYEES.] Public employees whose salary from one governmental subdivision exceeds $425 $600 in any month shall participate as members of the association. If the salary of an employee is less than $425 $600 in a subsequent month, the employee retains membership eligibility. The following persons are considered public employees:

exceeds $5,100 $7,200 per calendar year or school year after being stipulated in advance not to exceed that amount, the stipulation is no longer valid and contributions must be made on behalf of the employee under section 353.27, subdivision 12, from the month in which the employee's salary first exceeded $425 $600;

(2) employees whose total salary from concurrent nontemporary positions in one governmental subdivision exceeds $425 $600 in any month;

(3) elected officers for service to which they were elected by the public-at-large, or persons appointed to fill a vacancy in an elective office, who elect to participate by filing an application for membership, but not for service on a joint or regional board that is a governmental subdivision under subdivision 6, paragraph (a), unless the salary earned for that service exceeds $425 $600 in any month. The option to become a member, once exercised, may not be withdrawn during the incumbency of the person in office;

(4) members who are appointed by the governor to be a state department head and elect not to be covered by the Minnesota state retirement system under section 352.021;

(5) employees of elected officers;

(6) persons who elect to remain members under section 136C.75, or 480.181, subdivision 2;

(7) employees of a school district who receive separate salaries for driving their own buses;

(8) employees of the Minnesota association of townships when the board of the association, at its option, certifies to the executive director that its employees are to be included for purposes of retirement coverage, in which case coverage of all employees of the association is permanent;

(9) employees of a county historical society who are county employees;

(10) employees of a county historical society located in the county whom the county, at its option, certifies to the executive director to be county employees for purposes of retirement coverage under this chapter, which status must be accorded to all similarly situated county historical society employees and, once established, must continue as long as a person is an employee of the county historical society and is not excluded under subdivision 2b; and

(11) employees who became members before July 1, 1988, based on the total salary of positions held in more than one governmental subdivision.

Sec. 30. Minnesota Statutes 1996, section 353.01, subdivision 2b, is amended to read:

Subd. 2b. [EXCLUDED EMPLOYEES.] The following public employees shall not participate as members of the association:

(1) elected public officers, or persons appointed to fill a vacancy in an elective office, who do not elect to participate in the association by filing an application for membership;

(2) election officers;

(3) patient and inmate personnel who perform services in charitable, penal, or correctional institutions of a governmental subdivision;

Membership eligibility of an employee who resigns or is dismissed from a temporary position and within 30 days accepts another temporary position in the same governmental subdivision is determined on the total length of employment rather than on each separate position. Membership eligibility of an employee who holds concurrent temporary and nontemporary positions in one governmental subdivision is determined by the length of employment and salary of each separate position;

(5) employees whose actual salary from one governmental subdivision does not exceed $425 $600 per month, or whose annual salary from one governmental subdivision does not exceed a stipulation prepared in advance, in writing, that the salary must not exceed $5,100 $7,200 per calendar year or per school year for school employees for employment expected to be of a full year's duration or more than the prorated portion of $5,100 $7,200 per employment period for employment expected to be of less than a full year's duration;

(6) employees who are employed by reason of work emergency caused by fire, flood, storm, or similar disaster;

(7) employees who by virtue of their employment in one governmental subdivision are required by law to be a member of and to contribute to any of the plans or funds administered by the Minnesota state retirement system, the teachers retirement association, the Duluth teachers retirement fund association, the Minneapolis teachers retirement association, the St. Paul teachers retirement fund association, the Minneapolis employees retirement fund, or any police or firefighters relief association governed by section 69.77 that has not consolidated with the public employees retirement association, or any police or firefighters relief association that has consolidated with the public employees retirement association but whose members have not elected the type of benefit coverage provided by the public employees police and fire fund under sections 353A.01 to 353A.10. This clause must not be construed to prevent a person from being a member of and contributing to the public employees retirement association and also belonging to and contributing to another public pension fund for other service occurring during the same period of time. A person who meets the definition of "public employee" in subdivision 2 by virtue of other service occurring during the same period of time becomes a member of the association unless contributions are made to another public retirement fund on the salary based on the other service or to the teachers retirement association by a teacher as defined in section 354.05, subdivision 2;

(8) persons who are excluded from coverage under the federal Old Age, Survivors, Disability, and Health Insurance Program for the performance of service as specified in United States Code, title 42, section 410(a)(8)(A), as amended through January 1, 1987, if no irrevocable election of coverage has been made under section 3121(r) of the Internal Revenue Code of 1954, as amended;

(9) full-time students who are enrolled and are regularly attending classes at an accredited school, college, or university and who are part-time employees as defined by a governmental subdivision;

(10) resident physicians, medical interns, and pharmacist residents and pharmacist interns who are serving in a degree or residency program in public hospitals;

(11) students who are serving in an internship or residency program sponsored by an accredited educational institution;

(12) persons who hold a part-time adult supplementary technical college license who render part-time teaching service in a technical college;

(13) foreign citizens working for a governmental subdivision with a work permit of less than three years, or an H-1b visa valid for less than three years of employment. Upon notice to the association that the work permit or visa extends beyond the three-year period, the foreign citizens are eligible for membership from the date of the extension;

(14) public hospital employees who elected not to participate as members of the association before 1972 and who did not elect to participate from July 1, 1988 to October 1, 1988;

(16) except as provided in section 353.87, volunteer firefighters, as defined in subdivision 36, engaging in activities undertaken as part of volunteer firefighter duties; provided that a person who is a volunteer firefighter may still qualify as a public employee under subdivision 2 and may be a member of the public employees retirement association and a participant in the public employees retirement fund or the public employees police and fire fund on the basis of compensation received from public employment activities other than those as a volunteer firefighter.

Sec. 31. Minnesota Statutes 1996, section 353.01, subdivision 11b, is amended to read:

Subd. 11b. [TERMINATION OF MEMBERSHIP.] "Termination of membership" occurs:

(1) upon termination of public service under subdivision 11a;

(2) when a member who is a part-time employee is excluded from membership as a full-time student under subdivision 2b, clause (9);

(3) when a member does not return to work within 30 days of the expiration of an authorized temporary layoff under subdivision 12 or an authorized leave of absence under subdivision 31. If the employee subsequently returns to a position in the same governmental subdivision, the employee shall not again be required to earn a salary in excess of $425 $600 per month, unless the employee has taken a refund of accumulated employee deductions plus interest under section 353.34, subdivision 1; or

(4) when a person files a written election to discontinue employee deductions under section 353.27, subdivision 7, paragraph (a), clause (1).

Sec. 32. Minnesota Statutes 1996, section 353.01, subdivision 37, is amended to read:

Subd. 37. [NORMAL RETIREMENT AGE.] "Normal retirement age" means age 65 for a person who first became a public employee or a member of a pension fund listed in section 356.30, subdivision 3, before July 1, 1989. For a person who first becomes a public employee after June 30, 1989, "normal retirement age" means the higher of age 65 or "retirement age," as defined in United States Code, title 42, section 416(l), as amended, but not to exceed age 66.

Sec. 33. Minnesota Statutes 1996, section 353.27, subdivision 2, is amended to read:

Subd. 2. [EMPLOYEE CONTRIBUTION.] The employee contribution shall be an amount (a) for a "basic member" equal to 8.23 8.75 percent of total salary; and (b) for a "coordinated member" equal to 4.23 4.75 percent of total salary. These contributions shall 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, such member's employee contribution shall must be based on the total salary received from all sources.

Sec. 34. Minnesota Statutes 1996, section 353.27, subdivision 3a, is amended to read:

Subd. 3a. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) An additional employer contribution shall must be made equal to (a) 2-1/2 2.68 percent of the total salary of each "basic member"; and (b) one-quarter of one .43 percent of the total salary of each "coordinated member." These contributions shall must be made from funds available to the employing subdivision by the means and in the manner provided in section 353.28.

(b) This subdivision is repealed once the actuarial value of the assets of the plan equal or exceed the actuarial accrued liability of the plan as determined by the actuary retained by the legislative commission on pensions and retirement under section 356.215. The repeal is effective on the first day of the first full pay period occurring after March 31 of the calendar year following the issuance of the actuarial valuation upon which the repeal is based.

Sec. 35. Minnesota Statutes 1996, section 353.29, subdivision 3, is amended to read:

subdivision 5, produces a higher annuity amount, in which case paragraph (b) will apply. The average salary as defined in subdivision 2, multiplied by two the percent specified in section 356.19, subdivision 3, for each year of allowable service for the first ten years and thereafter by 2.5 the percent specified in section 356.19, subdivision 4, per year of allowable service and completed months less than a full year for the "basic member," and one the percent specified in section 356.19, subdivision 1, for each year of allowable service for the first ten years and thereafter by 1.5 the percent specified in section 356.19, subdivision 2, per year of allowable service and completed months less than a full year for the "coordinated member," shall determine the amount of the "normal" retirement annuity.

(b) This paragraph applies to a member who has become at least 55 years old and first became a public employee after June 30, 1989, and to any other member whose annuity amount, when calculated under this paragraph and in conjunction with section 353.30, subdivision 5, is higher than it is when calculated under paragraph (a), in conjunction with section 353.30, subdivisions 1, 1a, 1b, and 1c. The average salary, as defined in subdivision 2, multiplied by 2.5 the percent specified in section 356.19, subdivision 4, for each year of allowable service and completed months less than a full year for a basic member and 1.5 the percent specified in section 356.19, subdivision 2, per year of allowable service and completed months less than a full year for a coordinated member, shall determine the amount of the normal retirement annuity.

Sec. 36. Minnesota Statutes 1996, section 353.651, subdivision 3, is amended to read:

Subd. 3. [RETIREMENT ANNUITY FORMULA.] The average salary as defined in subdivision 2, multiplied by 2.65 the percent specified in section 356.19, subdivision 6, per year of allowable service 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 such service is computed under sections 353.29 and 353.30.

Sec. 37. Minnesota Statutes 1996, section 353.656, subdivision 1, is amended to read:

Subdivision 1. [IN LINE OF DUTY; COMPUTATION OF BENEFITS.] A member of the police and fire fund who becomes disabled and physically unfit to perform duties as a police officer or firefighter subsequent to June 30, 1973, as a direct result of an injury, sickness, or other disability incurred in or arising out of any act of duty, which has or is expected to render the member physically or mentally unable to perform duties as a police officer or firefighter for a period of at least one year, shall receive disability benefits during the period of such disability. The benefits must be in an amount equal to 53 60 percent of the "average salary" under subdivision 3, plus an additional 2.65 percent specified in section 356.19, subdivision 6, of said average salary for each year of service in excess of 20 years. Should disability under this subdivision occur before the member has at least five years of allowable service credit in the police and fire fund, the disability benefit must be computed on the "average salary" from which deductions were made for contribution to the police and fire fund.

Sec. 38. Minnesota Statutes 1996, section 353.71, subdivision 2, is amended to read:

(b) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former member who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 39. Minnesota Statutes 1996, section 353A.08, subdivision 1, is amended to read:

Subdivision 1. [ELECTION OF COVERAGE BY CURRENT RETIREES.] A person who is receiving a service pension, disability benefit, or survivorship survivor benefit is eligible to elect benefit coverage provided under the relevant provisions of the public employees police and fire fund benefit plan or to retain benefit coverage provided under the relief association benefit plan in effect on the effective date of the consolidation. The relevant provisions of the public employees police and fire fund benefit plan for the person electing that benefit coverage are limited to participation in the Minnesota postretirement investment fund for any future postretirement adjustments based on the amount of the benefit or pension payable on December 31, if December 31 is the effective date of consolidation, or on the December 1 following the effective date of the consolidation, if other than December 31. The survivorship survivor benefit payable on behalf of any service pension or disability benefit recipient who elects benefit coverage under the public employees police and fire fund benefit plan must be calculated under the relief association benefit plan and is subject to participation in the Minnesota postretirement investment fund for any future postretirement adjustments based on the amount of the survivorship survivor benefit payable.

A survivor benefit calculated under the relief association benefit plan which is first payable after June 30, 1997, to the surviving spouse of a retired member of a consolidation account who, before July 1, 1997, chose to participate in the Minnesota postretirement investment fund as provided under this subdivision must be increased on the effective date of the survivor benefit on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board and approved by the actuary retained by the legislative commission on pensions and retirement.

By electing the public employees police and fire fund benefit plan, a current service pension or disability benefit recipient who, as of the first January 1 occurring after the effective date of consolidation, has been receiving the pension or benefit for at least seven months, or any survivor benefit recipient who, as of the first January 1 occurring after the effective date of consolidation, has been receiving the benefit on the person's own behalf or in combination with a prior applicable service pension or disability benefit for at least seven months is eligible to receive a partial adjustment payable from the Minnesota postretirement investment fund under section 11A.18, subdivision 9.

The election by any pension or benefit recipient must be made on or before the deadline established by the board of the public employees retirement association in a manner that recognizes the number of persons eligible to make the election and the anticipated time required to conduct any required benefit counseling.

Sec. 40. Minnesota Statutes 1996, section 353A.08, subdivision 2, is amended to read:

Subd. 2. [ELECTION OF COVERAGE BY CURRENT DEFERRED RETIREES.] (a) Any person who has terminated active employment as a police officer or firefighter, whichever applies, with the municipality, has sufficient credit for service to entitle the person to an eventual service pension and has not taken a refund of accumulated member contributions, if applicable, shall have the option to elect to have benefit coverage provided under the relevant provisions of the public employees police and fire fund benefit plan or to retain benefit coverage provided by the relief association benefit plan in effect on the effective date of consolidation. The relevant provisions of the public employees police and fire fund benefit plan for the person electing that benefit coverage shall be the provisions specified in subdivision 1.

The election shall be made when the person files an application for receipt of the deferred service pension and shall accompany that application.

actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board of trustees of the public employees retirement association and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 41. Minnesota Statutes 1996, section 353A.083, is amended by adding a subdivision to read:

Subd. 3. [PRE-1997 CONSOLIDATION.] (a) For any consolidation plan account in effect on July 1, 1997, the applicable benefit plan coverage defined in paragraph (b) or (c) applies unless the consolidation account's city approves the extension of the post-June 30, 1997, public employees police and fire fund benefit plan to the consolidation account members.

(b) If the applicable municipality has approved the July 1, 1993, public employees police and fire fund benefit provisions, but has not approved the extension of the post-June 30, 1997, public employees police and fire fund benefit provisions:

(1) the benefit accrual rate for calculating retirement annuities that apply to consolidation account members who have elected or elect coverage under the provisions of the public employees police and fire fund benefit plan is 2.9 percent of average salary under section 353.651, subdivision 2, per year of allowable service;

(2) the optional survivor annuities payable to the survivors of these consolidated members who elected coverage under the provisions of the public employees police and fire fund benefit plan must be determined using a benefit accrual rate of 2.9 percent of average salary under section 353.651, subdivision 2, per year of the member's allowable service;

(3) the disability benefit payable for these consolidated members who elected or elect coverage under the provisions of the public employees police and fire fund benefit plan and:

(i) who become disabled in the line of duty, as defined under section 353.656, subdivision 1, is an amount equal to 58 percent of average salary under section 353.651, subdivision 2, plus an additional 2.9 percent of that average salary for each year of service in excess of 20 years; or

(ii) who become disabled because of sickness or injury occurring while not on duty, as defined under section 353.656, subdivision 3, is an amount equal to 43.50 percent of average salary under section 353.651, subdivision 2, plus an additional 2.9 percent of that average salary for each year of service in excess of 15 years.

(c) If the applicable municipality has not approved the July 1, 1993, public employees police and fire fund benefit provisions, and has not approved the extension of the post-June 30, 1997, public employees police and fire fund benefit provisions:

(1) the benefit accrual rate for calculating retirement annuities that apply to consolidation account members who have elected or elect coverage under the provisions of the public employees police and fire fund benefit plan is 2.74 percent of average salary under section 353.651, subdivision 2, per year of allowable service;

(2) the optional survivor annuities payable to the survivors of these consolidated members who elected coverage under the provisions of the public employees police and fire fund benefit plan must be determined using a benefit accrual rate of 2.74 percent of average salary under section 353.651, subdivision 2, per year of the member's allowable service;

(3) the disability benefit payable for consolidated members who elected or elect the coverage under the provisions of the public employees police and fire fund benefit plan and:

(i) who become disabled in the line of duty, as defined under section 353.656, subdivision 1, is an amount equal to 54.80 percent of the average salary under section 353.651, subdivision 2, plus an additional 2.74 percent of that average salary for each year of service in excess of 20 years; or

Sec. 42. Minnesota Statutes 1996, section 354.05, subdivision 38, is amended to read:

Subd. 38. [NORMAL RETIREMENT AGE.] "Normal retirement age" means age 65 for 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. For a person who first becomes a member of the association after June 30, 1989, normal retirement age means the higher of age 65 or "retirement age," as defined in United States Code, title 42, section 416(l), as amended, but not to exceed age 66.

Sec. 43. Minnesota Statutes 1996, section 354.42, subdivision 2, is amended to read:

Subd. 2. [EMPLOYEE.] The employee contribution to the fund shall be is an amount equal to 6.5 5.0 percent of the salary of every coordinated member and 10.5 9.0 percent of the salary of every basic member. This contribution shall must be made by deduction from salary. Where any portion of a member's salary is paid from other than public funds, such the member's employee contribution shall must be based on the entire salary received.

Sec. 44. Minnesota Statutes 1996, section 354.42, subdivision 3, is amended to read:

Subd. 3. [EMPLOYER.] The employer contribution to the fund shall be is an amount equal to 4-1/2 5.0 percent of the salary of each coordinated member and 8-1/2 9.0 percent of the salary of each basic member.

Sec. 45. Minnesota Statutes 1996, section 354.42, subdivision 5, is amended to read:

Subd. 5. [ADDITIONAL EMPLOYER CONTRIBUTION.] (a) To amortize the unfunded actuarial accrued liability computed under the entry age actuarial cost method and disclosed under the annual actuarial valuations prepared by the commission-retained actuary under section 356.215, an additional employer contribution shall must be made in the amount of 3.64 1.64 percent of the salary of each member.

(b) This contribution must be made in the manner provided in section 354.52, subdivision 4.

(c) This subdivision is repealed once the actuarial value of the assets of the plan equal or exceed the actuarial accrued liability of the plan as determined by the actuary retained by the legislative commission on pensions and retirement under section 356.215. The repeal is effective on the first day of the first full pay period occurring after March 31 of the calendar year following the issuance of the actuarial valuation upon which the repeal is based.

By January 1 of each year, the board of directors shall report to the legislative commission on pensions and retirement, the chair of the committee on appropriations of the house of representatives, and the chair of the committee on finance of the senate on the amount raised by the additional employer contribution rate in effect and whether that amount is less than, the same as, or more than the required amortization contribution determined under section 356.215.

Sec. 46. Minnesota Statutes 1996, section 354.44, subdivision 6, is amended to read:

Subd. 6. [COMPUTATION OF FORMULA PROGRAM RETIREMENT ANNUITY.] (1) The formula retirement annuity hereunder shall must be computed in accordance with the applicable provisions of the formulas stated in clause (2) or (4) on the basis of each member's average salary for the period of the member's formula service credit.

For all years of formula service credit, "average salary," for the purpose of determining the member's retirement annuity, means the average salary upon which contributions were made and upon which payments were made to increase the salary limitation provided in Minnesota Statutes 1971, section 354.511, for the highest five successive years of formula service credit provided, however, that such "average salary" shall not include any more than the equivalent of 60 monthly salary payments. Average salary must be based upon all years of formula service credit if this service credit is less than five years.

multiplied by the following percentages per year of formula service credit shall determine the amount of the annuity to which the member qualifying therefor is entitled:

Coordinated Member Basic Member

Each year of service 1.13 the 2.13 the

during first ten percent percent

specified in specified in

section 356.19, section 356.19,

subdivision 1, subdivision 3,

per year per year

Each year of service 1.63 the 2.63 the

thereafter percent percent

specified in specified in

section 356.19, section 356.19,

subdivision 2, subdivision 4,

per year per year

(3)(i) This clause 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 clause (2), in conjunction with this clause than when calculated under clause (4), in conjunction with clause (5).

(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 clause (2) 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 clause (2), without any reduction by reason of early retirement.

(4) This clause 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 clause and in conjunction with clause (5), is higher than it is when calculated under clause (2), in conjunction with clause (3). The average salary, as defined in clause (1) multiplied by 2.63 the percent specified by section 356.19, subdivision 4, for each year of service for a basic member and by 1.63 the percent specified in section 356.19, subdivision 2, for each year of service for a coordinated member shall determine the amount of the retirement annuity to which the member is entitled.

(5) This clause 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 clause (4) in conjunction with this clause than when calculated under clause (2), in conjunction with clause (3). An employee who retires under the formula annuity before the normal retirement age shall be paid the normal annuity provided in clause (4) 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.

Sec. 47. Minnesota Statutes 1996, section 354.44, is amended by adding a subdivision to read:

Subd. 6a. [EXTENSION OF 1997 PERMANENT INCREASE.] (a) A percentage of the permanent increase for benefit recipients effective July 1, 1997, under section 65, as specified in paragraph (b), is payable to:

(2) a member who is determined to be totally and permanently disabled under section 354.05, subdivision 14, after June 30, 1997, and whose benefit begins to accrue during the period of July 2, 1997, to July 1, 2002, based on the member's age at disability.

(3) the survivor of a member who dies after June 30, 1997, and whose benefit begins to accrue during the period of July 2, 1997, to July 1, 2002.

(b) The percentage of the permanent increase is the amount designated for the applicable beginning benefit accrual date, as follows:

Beginning Benefit Percentage of

Accrual Date Permanent Increase

July 2, 1997 to July 1, 1998 50 percent

July 2, 1998 to July 1, 1999 40 percent

July 2, 1999 to July 1, 2000 30 percent

July 2, 2000 to July 1, 2001 20 percent

July 2, 2001 to July 1, 2002 10 percent

Sec. 48. Minnesota Statutes 1996, section 354.53, subdivision 1, is amended to read:

Subdivision 1. [EMPLOYEE AND EMPLOYER CONTRIBUTIONS.] Any employee given a leave of absence to enter military service and who returns to teaching service upon discharge from military service as provided in section 192.262, shall may obtain credit for the period of military service but shall not receive credit for any voluntary extension of military service at the instance of the member beyond the initial period of enlistment, induction or call to active duty. The member shall obtain credit by paying into the fund an employee contribution based upon the salary of the member at the date of return from military service. The amount of this contribution shall be as follows:

Period Basic Member Coordinated Member

July 1, 1973 8 percent 4 percent

thru

June 30, 1979

July 1, 1979

and 8.5 percent 4.5 percent

thereafter

The contributions specified in this subdivision shall be contribution rates in effect at the time that the military service was performed multiplied by the annual salary rate of the member for the year beginning with the date of return from military service and the number of years of military service together with interest thereon at an annual rate of 8.5 percent compounded annually from the time the military service was rendered to the first date of payment. The employer contribution and additional contribution provided in section 354.42 shall must be paid by the employing unit at the rates in effect at the time that the military service was performed, applied to the annual salary rate of the member for the year beginning with the date of return from military service, in the manner provided in section 354.52, subdivision 4.

Sec. 49. Minnesota Statutes 1996, section 354.55, subdivision 11, is amended to read:

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

the month following the month during which the member ceased to render teaching service to the effective date of retirement. There shall be no augmentation if this period is less than three months or if this period commences prior to July 1, 1971. The rates of interest used for this purpose shall must be five percent compounded annually commencing July 1, 1971, until January 1, 1981, and three percent compounded annually thereafter until January 1 of the year following the year in which the former member attains age 55. From that date to the effective date of retirement, the rate is five percent compounded annually. If a person has more than one period of uninterrupted service, a separate average salary determined under section 354.44, subdivision 6, must be used for each period and the required reserves related to each period shall must be augmented by interest pursuant to this subdivision. The sum of the augmented required reserves so determined shall be the basis for purchasing the deferred annuity. If a person repays a refund, the service restored by the repayment must be considered as continuous with the next period of service for which the person has credit with this fund. If a person does not render teaching service in any one fiscal year or more consecutive fiscal years and then resumes teaching service, the formula percentages used from the date of the resumption of teaching service shall must be those applicable to new members. The mortality table and interest assumption used to compute the annuity shall must be the applicable mortality table established by the board under section 354.07, subdivision 1, and the interest rate assumption under section 356.215 in effect when the member retires. A period of uninterrupted service for the purposes of this subdivision means a period of covered teaching service during which the member has not been separated from active service for more than one fiscal year.

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

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

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

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

(g) The retirement annuity or disability benefit of, or the survivor benefit payable on behalf of, a former teacher who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board as recommended by an approved actuary and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 50. [356.19] [RETIREMENT BENEFIT FORMULA PERCENTAGES.]

Subdivision 1. [COORDINATED PLAN MEMBERS.] The applicable benefit accrual rate is 1.2 percent.

Subd. 2. [COORDINATED PLAN MEMBERS.] The applicable benefit accrual rate is 1.7 percent.

Subd. 3. [BASIC PLAN MEMBERS.] The applicable benefit accrual rate is 2.2 percent.

Subd. 4. [BASIC PLAN MEMBERS.] The applicable benefit accrual rate is 2.7 percent.

Subd. 5. [CORRECTIONAL PLAN MEMBERS.] The applicable benefit accrual rate is 2.4 percent.

Subd. 6. [STATE TROOPERS PLAN AND POLICE/FIRE PLAN MEMBERS.] The applicable benefit accrual rate is 3.0 percent.

Subd. 7. [JUDGES PLAN.] The applicable benefit accrual rate is 2.7 percent.

Subd. 9. [FUTURE BENEFIT ACCRUAL RATE INCREASES.] After January 2, 1998, benefit accrual rate increases under this section must apply only to allowable service or formula service rendered after the effective date of the benefit accrual rate increase.

Sec. 51. Minnesota Statutes 1996, section 356.20, subdivision 2, is amended to read:

Subd. 2. [COVERED PUBLIC PENSION FUNDS.] This section applies to the following public pension plans:

(1) State employees retirement fund.

(2) Public employees retirement fund.

(3) Teachers retirement association.

(4) State patrol retirement fund.

(5) Minneapolis teachers retirement fund association.

(6) St. Paul teachers retirement fund association.

(7) Duluth teachers retirement fund association.

(8) Minneapolis employees retirement fund.

(9) University of Minnesota faculty retirement plan.

(10) University of Minnesota faculty supplemental retirement plan.

(11) Judges retirement fund.

(12) Any police or firefighter's relief association enumerated in section 69.77, subdivision 1a or 69.771, subdivision 1.

(13) Public employees police and fire fund.

(14) Minnesota state retirement system correctional officers retirement fund.

(15) Public employees local government correctional service retirement plan.

Sec. 52. Minnesota Statutes 1996, section 356.215, subdivision 2, is amended to read:

(b) The quadrennial projection valuations required under paragraph (a) are intended to serve as an additional analytical tool with which policy makers may assess the future funding status of public plans through forecasting and testing various potential outcomes over time if certain plan assumptions or valuation methods were to be modified. In consultation with the executive director of the legislative commission on pensions and retirement, the retirement fund directors, the state economist, the state demographer, the commissioner of finance, and the commissioner of employee relations, the actuary retained by the legislative commission on pensions and retirement shall perform the quadrennial projection valuations, testing future implications for plan funding by modifying assumptions and methods currently in place. The commission-retained actuary shall provide advice to the commission as to the periods over which such projections should be made, the nature and scope of the scenarios to be analyzed, the measures of funding status to be employed, and shall report the results of these analyses in the same manner as for quadrennial experience studies.

Sec. 53. Minnesota Statutes 1996, section 356.215, subdivision 4d, is amended to read:

Subd. 4d. [INTEREST AND SALARY ASSUMPTIONS.] (a) For funds governed by chapters chapter 352B, 353C, and by sections 352.90 through 352.951 and 353.63 through 353.68, the actuarial valuation must use a preretirement interest assumption of 8.5 percent, a postretirement interest assumption of five six percent, and a future salary increase assumption of 6.5 percent.

(b) For funds governed by chapter 354A, the actuarial valuation must use preretirement and postretirement assumptions of 8.5 percent and a future salary increase assumption of 6.5 percent, but the actuarial valuation must reflect the payment of postretirement adjustments to retirees, based on the methods specified in the bylaws of the fund as approved by the legislature. For a fund governed by chapter 422A, the actuarial valuation shall use a preretirement interest assumption of six percent, a postretirement interest assumption of five percent, and an assumption that in each future year the salary on which a retirement or other benefit is based is 1.04 multiplied by the salary for the preceding year.

(c) For all other funds not specified in paragraph (a), (b), (d), or (e), the actuarial valuation must use a preretirement interest assumption of five percent, a postretirement interest assumption of five percent, and a future salary increase assumption of 3.5 percent.

(d) For funds governed by chapters 3A, 352C, and 490, the actuarial valuation must use a preretirement interest assumption of 8.5 percent, a postretirement interest assumption of five six percent, and a future salary increase assumption of 6.5 percent in each future year in which the salary amount payable is not determinable from section 3.099, 15A.081, subdivision 6, or 15A.083, subdivision 1, whichever applies, or from applicable compensation council recommendations under section 15A.082.

(e) For funds governed by sections 352.01 through 352.86, 353.01 through 353.46, and chapter 354, the actuarial valuation must use a preretirement interest assumption of 8.5, a postretirement interest assumption of five six percent, and a graded rate future salary increase assumption as follows:

General stateGeneral public

employees employees Teachers

retirement retirement retirement

Age plan plan plan

16 7.2500% 8.71% 7.25%

17 7.2500 8.71 7.25

18 7.2500 8.70 7.25

19 7.2500 8.70 7.25

20 7.2500 7.70 7.25

21 7.1454 7.70 7.25

22 7.1094 7.70 7.25

23 7.0725 7.70 7.20

24 7.0363 7.70 7.15

25 7.0000 7.60 7.10

26 7.0000 7.51 7.05

27 7.0000 7.39 7.00

28 7.0000 7.30 7.00

29 7.0000 7.20 7.00

30 7.0000 7.20 7.00

31 7.0000 7.10 7.00

32 7.0000 7.10 7.00

33 7.0000 7.00 7.00

34 7.0000 7.00 7.00

35 7.0000 6.90 7.00

36 6.9019 6.80 7.00

37 6.8074 6.70 7.00

38 6.7125 6.60 6.90

39 6.6054 6.50 6.80

40 6.5000 6.40 6.70

41 6.3540 6.30 6.60

42 6.2087 6.30 6.50

43 6.0622 6.30 6.35

44 5.9048 6.20 6.20

45 5.7500 6.20 6.05

46 5.6940 6.09 5.90

47 5.6375 6.00 5.75

48 5.5822 5.90 5.70

49 5.5405 5.80 5.65

50 5.5000 5.70 5.60

51 5.4384 5.70 5.55

52 5.3776 5.70 5.50

53 5.3167 5.70 5.45

54 5.2826 5.70 5.40

55 5.2500 5.70 5.35

56 5.2500 5.70 5.30

57 5.2500 5.70 5.25

58 5.2500 5.70 5.25

59 5.2500 5.70 5.25

60 5.2500 5.00 5.25

61 5.2500 5.00 5.25

62 5.2500 5.00 5.25

63 5.2500 5.00 5.25

64 5.2500 5.00 5.25

65 5.2500 5.00 5.25

66 5.2500 5.00 5.25

67 5.2500 5.00 5.25

68 5.2500 5.00 5.25

69 5.2500 5.00 5.25

70 5.2500 5.00 5.25

Sec. 54. Minnesota Statutes 1996, section 356.215, subdivision 4g, is amended to read:

growth of five percent. For the fund governed by sections 353.01 through 353.46, the level percent additional contribution must be calculated assuming an annual payroll growth of six percent. For all other funds, the additional annual contribution must be calculated on a level annual dollar amount basis.

(b) For any fund other than the Minneapolis employees retirement fund, after the first actuarial valuation date occurring after June 1, 1989, if there has not been a change in the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, which change or changes by themselves without inclusion of any other items of increase or decrease produce a net increase in the unfunded actuarial accrued liability of the fund, the established date for full funding for the first actuarial valuation made after June 1, 1989, and each successive actuarial valuation is the first actuarial valuation date occurring after June 1, 2020.

(c) For any fund or plan other than the Minneapolis employees retirement fund, after the first actuarial valuation date occurring after June 1, 1989, if there has been a change in any or all of the actuarial assumptions used for calculating the actuarial accrued liability of the fund, a change in the benefit plan governing annuities and benefits payable from the fund, a change in the actuarial cost method used in calculating the actuarial accrued liability of all or a portion of the fund, or a combination of the three, and the change or changes, by themselves and without inclusion of any other items of increase or decrease, produce a net increase in the unfunded actuarial accrued liability in the fund, the established date for full funding must be determined using the following procedure:

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

(ii) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the unfunded actuarial accrued liability amount determined under item (i) by the established date for full funding in effect before the change must be calculated using the interest assumption specified in subdivision 4d in effect before the change;

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

(iv) the level annual dollar contribution or level percentage, whichever is applicable, needed to amortize the difference between the unfunded actuarial accrued liability amount calculated under item (i) and the unfunded actuarial accrued liability amount calculated under item (iii) over a period of 30 years from the end of the plan year in which the applicable change is effective must be calculated using the applicable interest assumption specified in subdivision 4d in effect after any applicable change;

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

(vi) the period in which the unfunded actuarial accrued liability amount determined in item (iii) is amortized by the total level annual dollar or level percentage amortization contribution computed under item (v) must be calculated using the interest assumption specified in subdivision 4d in effect after any applicable change, rounded to the nearest integral number of years, but not to exceed 30 years from the end of the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and not to be less than the period of years beginning in the plan year in which the determination of the established date for full funding using the procedure set forth in this clause is made and ending by the date for full funding in effect before the change; and

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

(e) For the public employees retirement association police and fire fund plan, the correctional employees retirement plan of the Minnesota state retirement system, and the state patrol retirement plan, an excess of valuation assets over actuarial accrued liability will must be amortized in the same manner over the same period as an unfunded actuarial accrued liability but will must serve to reduce the required contribution instead of increasing it.

Sec. 55. Minnesota Statutes 1996, section 356.217, is amended to read:

356.217 [MODIFICATIONS IN ACTUARIAL SERVICES.]

(a) The actuary retained by the legislative commission on pensions and retirement is not required to prepare actuarial valuations of the public employees local government correctional employees retirement plan unless the plan is implemented by a county under section 353C.04.

(b) The cost of any requested benefit projections by the commission-retained actuary relating to the Minnesota postretirement investment fund for the state board of investment is payable by the state board of investment.

(c) (b) Actuarial valuations under section 356.215, for July 1, 1991, and thereafter, are not required to have an individual commentary section. The commentary section, if omitted from the individual plan actuarial valuation, must be included in an appropriate generalized format as part of the report to the legislature under section 3.85, subdivision 11.

(d) (c) Actuarial valuations under section 356.215, for July 1, 1991, and thereafter, are not required to contain separate actuarial valuation results for basic and coordinated programs unless each program has a membership of at least ten percent of the total membership of the fund. Actuarial valuations under section 356.215, for July 1, 1991, and thereafter, are not required to contain cash flow forecasts.

(e) (d) Actuarial valuations of the public employees police and fire fund local consolidation accounts for July 1, 1991, and thereafter, are not required to contain separate tabulations or summaries of active member, service retirement, disability retirement, and survivor data for each local consolidation account.

(f) (e) The commission-retained actuary is:

(1) required to publish experience findings for plans for which experience findings are required only on a quadrennial basis for the four-year period ending June 30, 1992, and every four years thereafter;

(2) not required to prepare a separate experience analysis or publish separate experience findings for basic and coordinated programs if separate actuarial valuation results for the programs are not required; and

(3) not required to calculate investment rate of return experience results on any basis other than current asset value as defined in section 356.215, subdivision 1, clause (6).

Sec. 56. Minnesota Statutes 1996, section 356.30, subdivision 1, is amended to read:

Subdivision 1. [ELIGIBILITY; COMPUTATION OF ANNUITY.] (1) Notwithstanding any provisions to the contrary of the laws governing the funds enumerated in subdivision 3, a person who has met the qualifications of clause (2) may elect to receive a retirement annuity from each fund in which the person has at least six months allowable service, based on the allowable service in each fund, subject to the provisions of clause (3).

(2) A person may receive upon retirement a retirement annuity from each fund in which the person has at least six months allowable service, and augmentation of a deferred annuity calculated under the laws governing each public pension plan or fund named in subdivision 3, from the date the person terminated all public service if:

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

(3) The retirement annuity from each fund must be based upon the allowable service in each fund, except that:

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

(b) The "average salary" on which the annuity from each covered fund in which the employee has credit in a formula plan shall be based on the employee's highest five successive years of covered salary during the entire service in covered funds.

(c) The formula percentages to be used by each fund must be those percentages prescribed by each fund's formula as continued for the respective years of allowable service from one fund to the next, recognizing all previous allowable service with the other covered funds.

(d) Allowable service in all the funds must be combined in determining eligibility for and the application of each fund's provisions in respect to actuarial reduction in the annuity amount for retirement prior to normal retirement.

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

(f) This section shall not apply to any person whose final termination from the last public service under a covered fund is prior to May 1, 1975.

(g) For the purpose of computing annuities under this section the formula percentages used by any covered fund, except the basic program of the teachers retirement association, the public employees police and fire fund, and the state patrol retirement fund, must not exceed 2-1/2 the percent specified in section 356.19, subdivision 4, per year of service for any year of service or fraction thereof. The formula percentage used by the public employees police and fire fund and the state patrol retirement fund must not exceed 2.65 the percent specified in section 356.19, subdivision 6, per year of service for any year of service or fraction thereof. The formula percentage used by the teachers retirement association must not exceed 2.63 percent per year of basic program service for any year of basic program service or fraction thereof. The formula percentage used by the legislators retirement plan and the elective state officers retirement must not exceed 2.5 percent, but this limit does not apply to the adjustment provided under section 3A.02, subdivision 1, paragraph (c), or 352C.031, paragraph (b).

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

(i) If the period of duplicated service credit is more than six months, or the person has credit for more than six months with each of the funds, each fund shall apply its formula to a prorated service credit for the period of duplicated service based on a fraction of the salary on which deductions were paid to that fund for the period divided by the total salary on which deductions were paid to all funds for the period.

(j) If the period of duplicated service credit is less than six months, or when added to other service credit with that fund is less than six months, the service credit must be ignored and a refund of contributions made to the person in accord with that fund's refund provisions.

Sec. 57. Minnesota Statutes 1996, section 356.30, subdivision 3, is amended to read:

Subd. 3. [COVERED FUNDS.] This section applies to the following retirement funds:

(1) state employees retirement fund, established pursuant to chapter 352;

(2) correctional employees retirement program, established pursuant to chapter 352;

(3) unclassified employees retirement plan, established pursuant to chapter 352D;

(5) legislators' retirement plan, established pursuant to chapter 3A;

(6) elective state officers' retirement plan, established pursuant to chapter 352C;

(7) public employees retirement association, established pursuant to chapter 353;

(8) public employees police and fire fund, established pursuant to chapter 353;

(9) teachers retirement association, established pursuant to chapter 354;

(10) Minneapolis employees retirement fund, established pursuant to chapter 422A;

(11) Minneapolis teachers retirement fund association, established pursuant to chapter 354A;

(12) St. Paul teachers retirement fund association, established pursuant to chapter 354A;

(13) Duluth teachers retirement fund association, established pursuant to chapter 354A;

(14) public employees local government correctional service retirement plan established by sections 353C.01 to 353C.10; and

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

Sec. 58. Minnesota Statutes 1996, section 356.32, subdivision 2, is amended to read:

Subd. 2. [COVERED FUNDS.] The provisions of this section shall apply to the following retirement funds:

(1) state employees retirement fund, established pursuant to chapter 352;

(2) correctional employees retirement program, established pursuant to chapter 352;

(3) state patrol retirement fund, established pursuant to chapter 352B;

(4) public employees retirement fund, established pursuant to chapter 353;

(5) public employees police and fire fund, established pursuant to chapter 353;

(6) teachers retirement association, established pursuant to chapter 354;

(7) Minneapolis employees retirement fund, established pursuant to chapter 422A;

(8) Duluth teachers retirement fund association, established pursuant to chapter 354A;

(9) Minneapolis teachers retirement fund association, established pursuant to chapter 354A; and

(10) St. Paul teachers retirement fund association, established pursuant to chapter 354A;

(11) public employees local government correctional service retirement plan established by sections 353B.01 to 353B.10.

Sec. 59. Minnesota Statutes 1996, section 422A.06, subdivision 8, is amended to read:

(b) Assets equal to the required reserves for retirement allowances pursuant to this chapter determined in accordance with the appropriate mortality table adopted by the board of trustees based on the experience of the fund as recommended by the commission-retained actuary shall be transferred from the deposit accumulation fund to the retirement benefit fund as of the last business day of the month in which the retirement allowance begins. The income from investments of these assets shall be allocated to this fund. There shall be paid from this fund the retirement annuities authorized by law. A required reserve calculation for the retirement benefit fund must be made by the actuary retained by the legislative commission on pensions and retirement and must be certified to the retirement board by the commission-retained actuary.

(c) The retirement benefit fund shall be governed by the applicable laws governing the accounting and audit procedures, investment, actuarial requirements, calculation and payment of postretirement benefit adjustments, discharge of any deficiency in the assets of the fund when compared to the actuarially determined required reserves, and other applicable operations and procedures regarding the Minnesota postretirement investment fund in effect on June 30, 1997, established pursuant to under Minnesota Statutes 1996, section 11A.18, and any legal or administrative interpretations of those laws of the state board of investment, the legal advisor to the board of investment and the executive director of the state board of investment in effect on June 30, 1997. If a deferred yield adjustment account is established for the Minnesota postretirement investment fund before June 30, 1997, under Minnesota Statutes 1996, section 11A.18, subdivision 5, the retirement board shall also establish and maintain a deferred yield adjustment account within this fund.

(d) Annually, following the calculation of any postretirement adjustment payable from the retirement benefit fund, the board of trustees shall submit a report to the executive director of the legislative commission on pensions and retirement and to the commissioner of finance indicating the amount of any postretirement adjustment and the underlying calculations on which that postretirement adjustment amount is based, including the amount of dividends, the amount of interest, and the amount of net realized capital gains or losses utilized in the calculations.

(e) With respect to a former contributing member who began receiving a retirement annuity or disability benefit under section 422A.151, paragraph (a), clause (2), after June 30, 1997, or with respect to a survivor of a former contributing member who began receiving a survivor benefit under section 422A.151, paragraph (a), clause (2), after June 30, 1997, the reserves attributable to the one percent lower amount of the cost-of-living adjustment payable to those annuity or benefit recipients annually must be transferred back to the deposit accumulation fund to the credit of the metropolitan airports commission. The calculation of this annual reduced cost-of-living adjustment reserve transfer must be reviewed by the actuary retained by the legislative commission on pensions and retirement.

Sec. 60. Minnesota Statutes 1996, section 422A.151, is amended to read:

422A.151 [ALTERNATIVE CALCULATION OF ANNUITY.]

(a) In the case of a contributing member of the Minneapolis employees retirement fund who is employed as a licensed peace officer or firefighter with the metropolitan airports commission and who retires, becomes disabled within the meaning of section 422A.18, or dies, the retirement, disability, or survivor allowance is equal to the higher of the following:

(1) the retirement, disability, or survivor allowance calculated for the person under the applicable provisions of the Minneapolis employees retirement fund; or

(2) the retirement, disability, or survivor benefit that the person would be entitled to upon meeting the applicable age and allowable service requirements of section 353.651, 353.656, or 353.657 if all employment as a licensed peace officer or firefighter with the metropolitan airports commission had been allowable service under the public employees retirement association police and fire fund, instead of being covered by the Minneapolis employees retirement fund. In computing the alternative benefit under section 353.651, 353.656, or 353.657, the applicable definitions and related provisions of chapter 353 must be used.

after June 30, 1997, must not have a reduction in the previously received annuity or benefit amount, but future cost-of-living adjustments must be modified equal to the percentage the benefit would have been reduced below the person's current annuity or benefit amount to reflect the one percent lower cost-of-living adjustment under section 422A.06, subdivision 5.

(b) If a contributing member under paragraph (a) has periods of coverage by the Minneapolis employees retirement fund that include service other than employment as a licensed peace officer or firefighter as well as employment as a licensed peace officer or firefighter, the calculation of the benefit under paragraph (a), clause (2), may only utilize service as a licensed peace officer or firefighter employed by the metropolitan airports commission.

Sec. 61. Minnesota Statutes 1996, section 490.124, subdivision 1, is amended to read:

Subdivision 1. [BASIC RETIREMENT ANNUITY.] Except as qualified hereinafter from and after mandatory retirement date, normal retirement date, early retirement date, or one year from the disability retirement date, as the case may be, a retirement annuity shall be payable to a retiring judge from the judges' retirement fund in an amount equal to: (1) 2-1/2 the percent of specified in section 356.19, subdivision 7, multiplied by the judge's final average compensation multiplied by the number of years and fractions of years of allowable service rendered prior to July 1, 1980; plus (2) three the percent of specified in section 356.19, subdivision 8, multiplied by the judge's final average compensation multiplied by the number of years and fractions of years of allowable service rendered after June 30, 1980; provided that the annuity shall must not exceed 65 70 percent of the judge's annual salary for the 12 months immediately preceding retirement.

Sec. 62. Minnesota Statutes 1996, section 490.124, subdivision 5, is amended to read:

Subd. 5. [DEFERRED BENEFITS.] (a) Any benefit to which a judge is entitled under this section may be deferred until early or normal retirement date, notwithstanding termination of such judge's service prior thereto.

(b) The retirement annuity of, or the survivor benefit payable on behalf of, a former judge, who terminated service before July 1, 1997, which is not first payable until after June 30, 1997, must be increased on an actuarial equivalent basis to reflect the change in the postretirement interest rate actuarial assumption under section 356.215, subdivision 4d, from five percent to six percent under a calculation procedure and tables adopted by the board of directors of the Minnesota state retirement system and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 63. [APPROPRIATIONS; DEPARTMENT OF CORRECTIONS AND LEGISLATIVE COMMISSION ON PENSIONS AND RETIREMENT.]

(a) $900,000 in fiscal year 1998 and $900,000 in fiscal year 1999 is appropriated from the general fund to the commissioner of corrections. The commissioner of finance shall include this amount in the base budget for the agency when developing the governor's budget recommendations for the biennium ending June 30, 2001.

(b) For fiscal year 1999, $50,000 is appropriated to the legislative coordinating commission for allocation to the legislative commission on pensions and retirement.

Sec. 64. [APPROPRIATION REDUCTION.]

Subdivision 1. [REDUCTIONS BY RETIREMENT PLAN AND EMPLOYER.] In fiscal years 1998 and 1999, the commissioner of finance shall reduce allotments and cancel to the general fund the amounts determined by multiplying the general fund supported salaries of employees who are members of the teachers retirement association according to clauses (1) and (2), and for employees who are members of the general state employees retirement plan of the Minnesota state retirement system according to clauses (3), (4), and (5):

(1) 0.90 percent for the Minnesota state colleges and universities;

(2) 1.50 percent for all agencies other than the Minnesota state colleges and universities

(4) 0.12 percent for the Minnesota state colleges and universities;

(5) 0.0728 percent for the university of Minnesota.

Subd. 2. [APPROPRIATION REDUCTIONS APPLIED TO BASE BUDGETS.] The commissioner of finance shall include the reductions under subdivision 1 when developing the base budgets for all affected organizations as submitted with the governor's recommended budget for the biennium ending June 30, 2001.

Subd. 3. [PROJECTED SAVINGS.] For the biennium ending June 30, 1999, the projected general fund savings attributable to the reductions under subdivision 1 are as follows:

fiscal year

1998 1999

subdivision 1, clauses (1) and (2) $1,937,000 $2,053,000

subdivision 1, clauses (3) $1,162,000 $1,233,000

subdivision 1, clauses (4) and (5) $ 480,000 $ 509,000

Sec. 65. [PERMANENT INCREASE FOR BENEFIT RECIPIENTS.]

A monthly survivor, disability, or retirement benefit paid under Minnesota Statutes, chapters 3A, 352, 352B, 352C, 352D, 353, 353A, 354, and 490 on June 30, 1997, is permanently increased effective July 1, 1997, to reflect the change in the postretirement fund interest assumption from five percent to six percent. The benefit payable under the six percent postretirement interest assumption must be actuarially equivalent to the benefit payable under the five percent interest assumption and must be based on tables adopted by the applicable board and approved by the actuary retained by the legislative commission on pensions and retirement.

Sec. 66. [ALTERNATIVE BENEFIT ADJUSTMENTS.]

If the permanent increase under section 65, along with the annual cost-of-living adjustments paid during the ten years after the effective date of this section averages less than inflation as measured by the Consumer Price Index or 3.5 percent, whichever is lower, the executive directors of the teachers retirement association, public employees retirement association, and the Minnesota state retirement system shall suggest alternative benefit adjustments for retirees receiving benefits on June 30, 1997, who exceed their life expectancy by three or more years.

Sec. 67. [MANDATED PENSION COMMISSION STUDY; DISPOSITION OF PERA-P&F CONSOLIDATION ACCOUNTS.]

(a) The legislative commission on pensions and retirement, in consultation with the affected constituencies, shall study the advantages and disadvantages of the blending of some or all local police and salaried firefighter consolidation accounts into the public employees police and fire retirement plan established under Minnesota Statutes, sections 353.63 to 353.68.

(b) The report must be transmitted on or before January 31, 1998, to the chair of the committee on governmental operations and veterans of the senate, the chair of the governmental operations budget division of the senate, the chair of the committee on governmental operations of the house of representatives, and the chair of the state government finance division of the house of representatives.

Sec. 68. [MANDATED PENSION COMMISSION STUDY; FIRST CLASS CITY TEACHER RETIREMENT FUND CONSOLIDATION OPTIONS.]

(b) The report must be transmitted on or before January 31, 1998, to the chair of the committee on governmental operations and veterans of the senate, the chair of the governmental operations budget division of the senate, the chair of the committee on governmental operations of the house of representatives, and the chair of the state governmental finance division of the house of representatives.

Sec. 69. [TERMINATION DATE; CERTAIN TEACHERS.]

Notwithstanding Minnesota Statutes, section 354.44, subdivision 4, for purposes of eligibility for retirement benefits from the teachers retirement association, the termination date of a teacher terminating active teaching service at the end of the school year in a school where the school year was disrupted by flooding during the first half of calendar year 1997 must be determined by the closing date of the school calendar in effect immediately before the flooding.

Sec. 70. [REPEALER.]

(a) Minnesota Statutes 1996, sections 124.195, subdivision 12; 124.2139; 356.70; and 356.88, subdivision 2, are repealed.

(b) Minnesota Statutes 1996, sections 353C.01; 353C.02; 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; and 353C.10, are repealed.

Sec. 71. [EFFECTIVE DATES.]

Sections 33 and 34 are effective the first full pay period after December 31, 1997. Sections 9, 10, 13, 14, 21, and 22 are effective the first full pay period after June 30, 1997. Sections 43, 44, and 45 are effective for all salary paid July 1, 1997, or later. Sections 1 to 8, 11, 12, 15 to 20, 23 to 28, 32, 35 to 42, 46 to 68, and 70 are effective July 1, 1997. Section 69 is effective the day following final enactment.

Section 1. Minnesota Statutes 1996, section 3A.07, is amended to read:

3A.07 [APPLICATION.]

This chapter applies to members of the legislature in service upon after July 1, 1965, or thereafter, who otherwise meet the requirements of this chapter, except that members elected for the first time after June 30, 1997, are covered by the elected officers plan in chapter 352E.

Sec. 2. [352C.011] [APPLICABILITY.]

This chapter applies only to constitutional officers first elected before July 1, 1997, to a constitutional office. Constitutional officers elected for the first time to a constitutional office after June 30, 1997, are covered by the elected officers plan under chapter 352E.

Sec. 3. [352E.051] [ESTABLISHMENT.]

A retirement program for legislators and constitutional officers to be known as the elected officers plan is established in the Minnesota state retirement system.

Sec. 4. [352E.052] [DEFINITIONS.]

Subd. 2. [COVERED EMPLOYMENT.] "Covered employment" means any period for which a constitutional officer or legislator serves in office.

Subd. 3. [ELECTED OFFICERS PLAN.] "Elected officers plan" means the retirement program established by this chapter for legislators and constitutional officers who were elected for the first time to their positions after June 30, 1997.

Subd. 4. [EMPLOYEE SHARES.] "Employee shares" means shares in the supplemental fund purchased with the elected officer's contributions.

Subd. 5. [EMPLOYER SHARES.] "Employer shares" means shares in the supplemental fund purchased with the employer's contributions.

Subd. 6. [SUPPLEMENTAL FUND.] "Supplemental fund" means the fund established and governed by section 11A.17.

Subd. 7. [TOTAL SHARES.] "Total shares" means all the employee shares and employer shares credited to a participant. Where applicable, the term contributions means shares.

Subd. 8. [VALUE.] "Value" means cash value at the end of the month following receipt of an application. If no application is required, value means the cash value at the end of the month in which the event necessitating the transfer occurs.

Subd. 9. [EXECUTIVE DIRECTOR.] "Executive director" means the executive director of the Minnesota state retirement system appointed under section 352.03, subdivision 5.

Subd. 10. [PARTICIPANT.] "Participant" means any elected official who has shares invested in the elected officers plan.

Sec. 5. [352E.053] [COVERAGE.]

First-time constitutional officers elected to any constitutional office and first-time legislators elected after June 30, 1997, are eligible for coverage under the elected officers plan.

Sec. 6. [352E.0535] [MEMBER AND EMPLOYER CONTRIBUTIONS.]

(a) The money used to purchase shares under this section are the employee and employer contributions provided in this subdivision.

(b) The employee contribution is five percent of salary.

(c) The employer contribution is an amount equal to five percent of salary.

(d) These contributions must be made by deduction from salary in the manner provided in section 352.04, subdivisions 4, 5, and 6.

Sec. 7. [352E.054] [INVESTMENT OPTIONS.]

(a) An employee may elect to purchase shares in one or a combination of the income share account, growth share account, international share account, money market account, bond market account, fixed interest account, or common stock index account established in section 11A.17. The employee may elect to participate in one or more of the investment accounts in the fund by specifying, on a form provided by the executive director, the percentage of the employee's contributions provided in subdivision 2 to be used to purchase shares in each of the accounts.

(c) A participant or former participant may also change the investment options selected for all or a portion of the participant's shares previously purchased in accounts.

Sec. 8. [352E.055] [WITHDRAWAL OPTIONS.]

Subdivision 1. [PAYMENT AFTER TERMINATION.] No withdrawal of shares shall be permitted prior to termination of covered employment.

Subd. 2. [WITHDRAWAL OPTIONS.] After termination of covered employment or any time thereafter, a participant is entitled, upon application, to withdraw the cash value of the participant's total shares or leave such shares on deposit with the supplemental retirement fund. Shares not withdrawn remain on deposit with the supplemental retirement fund until the former participant becomes at least 55 years old, and applies for an annuity under section 352E.06, subdivision 1.

Sec. 9. [352E.06] [ANNUITIES.]

Subdivision 1. [ANNUITY PURCHASE.] When a participant attains at least age 55, is retired from covered service, and applies for a retirement annuity, the cash value of the participant's shares must be transferred to the Minnesota postretirement investment fund and used to provide an annuity for the retired employee based upon the participant's age when the benefit begins to accrue according to the reserve basis used by the state employees retirement fund in determining pensions and reserves.

Subd. 2. [LUMP SUM PLUS ANNUITY OPTION.] A participant has the option in an application for an annuity to apply for and receive the value of one-half of the total shares and thereafter receive an annuity, as provided in subdivision 1, based on the value of one-half of the total shares.

Subd. 3. [ANNUITY ACCRUED.] An annuity herein begins to accrue the first day of the first full month after an application is received or after termination of state service, whichever is later.

Sec. 10. [352E.07] [DISABILITY BENEFITS.]

Subdivision 1. [PAYMENT OPTION.] A participant who becomes totally and permanently disabled has the option to receive:

(1) the value of the participant's total shares;

(2) the value of one-half of the total shares and an annuity based on the value of one-half of the total shares; or

(3) an annuity based on the value of the participant's total shares.

Subd. 2. [ACCRUAL.] The annuity payable under this section begins to accrue the first day of the month following the day of disability and is based on the participant's age when the annuity begins to accrue. The shares must be valued as of the end of the month following authorization of payments.

Subd. 3. [PAYMENT IN ADDITION TO WORKERS' COMPENSATION.] The benefits payable under this section must not be reduced by amounts received or receivable under applicable workers' compensation laws.

Subd. 4. [REPAYMENT PROHIBITION.] A participant who returns to covered service after receiving benefits under this section shall not be required or allowed to repay such benefits.

Sec. 11. [352E.08] [DEATH BENEFITS.]

Subdivision 1. [SURVIVOR BENEFITS.] If a participant dies leaving a spouse and there is no named beneficiary who survives to receive payment or the spouse is named beneficiary, the spouse may receive:

(2) the value of one-half of the total shares, and receive an annuity based on the value of one-half of the total shares, provided that if the spouse dies before receiving any annuity payments the value of said shares shall be paid to the spouse's children in equal shares, but if no such children survive, then to the parents of the spouse in equal shares, but if no such children or parents survive, then to the estate of the spouse; or

(3) an annuity based on the value of the total shares, provided that if the spouse dies before receiving any annuity payments the value of said shares shall be paid to the spouse's children in equal shares, but if no such children survive, then to the parents of the spouse in equal shares, but if no such children or parent survive, then to the estate of the spouse; and further provided, if said spouse dies after receiving annuity payments but before receiving payments equal to the value of the employee shares, the value of the employee shares remaining shall be paid to the spouse's children in equal shares, but if no such children survive, then to the parents of the spouse in equal shares, but if no such children or parents survive, then to the estate of the spouse.

Subd. 2. [PAYMENT WITHOUT BENEFICIARY DESIGNATION.] If a participant dies and has named a beneficiary, the value of the total shares must be paid to such beneficiary, but if such beneficiary dies before receiving payment, or if no beneficiary has been named and there is no spouse, the value of said shares must be paid to the children of the participant in equal shares, but if no such children survive then in equal shares to the parents of the participant, but if no such children or parents survive, then to the estate of the participant.

Sec. 12. [352E.09] [ADMINISTRATION.]

Subdivision 1. [FIDUCIARY RESPONSIBILITY.] The elected officers plan and the provisions of this chapter must be administered by the Minnesota state retirement system. Fiduciary activities of the elected officers plan must be undertaken in a manner consistent with chapter 356A.

Subd. 2. [REDEMPTION OR PURCHASE OF SHARES.] Whenever redemption or purchases from the supplemental retirement fund are required to be made, the executive director shall make them.

Subd. 3. [PROSPECTUS.] The executive director shall annually distribute the prospectus prepared by the supplemental fund to each participant in covered employment.

Subd. 4. [APPLICATION.] Whenever benefits or withdrawals are authorized or required to be paid, payment must be made only after receipt of an application signed by the person or representative authorized to receive the benefit or withdrawal. Such application must be made only on forms authorized by the executive director.

Subd. 5. [DISBURSEMENT OF ACCOUNT.] If the beneficiary, surviving spouse, or estate has not made application for benefits within ten years after the date of death of a participant, the value of the shares must be appropriated to the regular fund according to section 352.12, subdivision 12. If a former participant fails to make a claim for benefits by April 1 following the year in which the former participant attains the age of 70 years and six months, the value of the shares are appropriated to the general employees retirement fund according to section 352.22, subdivision 8.

Subd. 6. [ADMINISTRATIVE FEES.] Up to one-tenth of one percent of salary must be deducted from the employee contributions and up to one-tenth of one percent salary must be deducted from the employer contributions, as authorized by section 352E.054, subdivision 2, to pay the administrative expenses of the elected officers plan.

Sec. 13. [EFFECTIVE DATE.]

Sections 1 to 12 are effective July 1, 1997.

Section 1. Minnesota Statutes 1996, section 354A.011, subdivision 15a, is amended to read:

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

Sec. 2. Minnesota Statutes 1996, section 354A.12, subdivision 1, is amended to read:

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

Association and Program Percentage of

Total Salary

Duluth teachers retirement association

old law and new law

coordinated programs 5.5 percent

Minneapolis teachers retirement association

basic program 8.5 percent

coordinated program 4.5 5.5 percent

St. Paul teachers retirement association

basic program 8 percent

coordinated program 4.5 5.5 percent

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

Sec. 3. Minnesota Statutes 1996, section 354A.12, subdivision 2a, is amended to read:

Subd. 2a. [EMPLOYER REGULAR AND ADDITIONAL CONTRIBUTION RATES.] (a) The employing units shall make the following employer contributions to teachers retirement fund associations:

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

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

Duluth teachers retirement fund association 4.50 percent

Minneapolis teachers retirement fund association 4.50 percent

St. Paul teachers retirement fund association 4.50 percent;

(3) for any basic member of one of the following 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 in an amount equal to the designated percentage of the salary of the basic member as provided below:

Minneapolis teachers retirement fund association 8.50 percent

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

Minneapolis teachers retirement fund association

July 1, 1993 - June 30, 1994 4.85 percent

July 1, 1994, and thereafter 3.64 percent

St. Paul teachers retirement fund association

July 1, 1993 - June 30, 1995 4.63 percent

July 1, 1995, and thereafter 3.64 percent

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

Duluth teachers retirement fund association 1.29 percent

Minneapolis teachers retirement fund association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994, and thereafter 3.64 percent

St. Paul teachers retirement fund association

July 1, 1993 - June 30, 1994 0.50 percent

July 1, 1994 - June 30, 1995 1.50 percent

July 1, 1995 1997, and thereafter 3.64

3.84 percent

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

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

Sec. 4. Minnesota Statutes 1996, section 354A.12, subdivision 3a, is amended to read:

Subd. 3a. [SPECIAL DIRECT STATE AID TO ST. PAUL FIRST CLASS CITY TEACHERS RETIREMENT FUND ASSOCIATION ASSOCIATIONS.] (a) In fiscal year 1998, the state shall pay $4,827,000 to the St. Paul teachers retirement fund association $500,000 in fiscal year 1994, $17,954,000 to the Minneapolis teachers retirement fund association, and $486,000 to the Duluth teachers retirement fund association. In each subsequent fiscal year, the payment these payments to the St. Paul first class city teachers retirement fund association associations must be increased at the same rate as the increase in the general education revenue formula allowance under section 124A.22, subdivision 2, in subsequent fiscal years $2,827,000 for St. Paul, $12,954,000 for Minneapolis, and $486,000 for Duluth.

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

Sec. 5. Minnesota Statutes 1996, section 354A.12, subdivision 3c, is amended to read:

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

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

Sec. 6. [354A.29] [ST. PAUL TEACHERS RETIREMENT FUND ASSOCIATION POSTRETIREMENT ADJUSTMENT.]

Subdivision 1. [ARTICLES OF INCORPORATION AND BYLAWS.] Permission is granted for the St. Paul teachers retirement fund association under Minnesota Statutes, section 354A.12, subdivision 4, to amend its articles of incorporation and bylaws to provide postretirement adjustments under this section.

Subd. 2. [ELIMINATION OF PRIOR LUMP SUM POSTRETIREMENT ADJUSTMENT MECHANISM.] As a condition precedent to the implementation of subdivisions 3 through 6, the lump sum postretirement adjustment mechanism in effect on the date of enactment of this section must be eliminated and the articles of incorporation and bylaws of the association must be amended accordingly.

Subd. 3. [POSTRETIREMENT ADJUSTMENT.] (a) The postretirement adjustment described in the articles and bylaws of the St. Paul teachers retirement fund association must be determined by the board annually after June 30 using the procedures under this section.

(b) Each eligible person who has been receiving an annuity or benefit under the articles of incorporation, the bylaws, or this chapter for at least 12 months as of the end of the fiscal year is eligible to receive a postretirement adjustment of 2.0 percent that is payable each January 1.

Subd. 4. [ADDITIONAL INVESTMENT PERCENTAGE ADJUSTMENT.] (a) An excess investment earnings percentage adjustment must be computed and paid under this subdivision to those annuitants and eligible benefit recipients who have been receiving an annuity or benefit for at least 12 months as determined each June 30 by the board of trustees.

(b) The board shall also determine the five-year annualized rate of return attributable to the assets of the St. Paul teachers retirement fund association under the formula specified in section 11A.04, clause (11), and the amount of the excess five-year annualized rate of return over the preretirement interest assumption specified in Minnesota Statutes, section 356.215.

(c) The excess investment percentage adjustment must be determined by multiplying the quantity one minus the rate of contribution deficiency, as specified in the most recent actuarial report of the actuary retained by the legislative commission on pensions and retirement under section 356.215, by the rate of return excess as determined in paragraph (b).

(d) The excess investment percentage adjustment is payable to all annuitants and benefit recipients on the following January 1.

Subd. 5. [EFFECT ON ANNUITY.] The adjustments calculated under subdivisions 3 and 4 must be included in all annuities or benefits paid to the recipient after the adjustments take effect.

Price Index for urban wage earners and clerical workers All Items Index published by the United States Department of Labor, Bureau of Labor Statistics, from the date of the initial receipt of a retirement annuity or benefit of the person whose service is the basis of the benefit to June 30, 1997.

Sec. 7. Minnesota Statutes 1996, section 354A.31, subdivision 4, is amended to read:

Subd. 4. [COMPUTATION OF THE NORMAL COORDINATED RETIREMENT ANNUITY; MINNEAPOLIS AND ST. PAUL FUNDS.] (a) This subdivision applies to the coordinated programs of the Minneapolis teachers retirement fund association and the St. Paul teachers retirement fund association.

(b) The normal coordinated retirement annuity shall be an amount equal to a retiring coordinated member's average salary multiplied by the retirement annuity formula percentage. Average salary for purposes of this section shall mean an amount equal to the average salary upon which contributions were made for the highest five successive years of service credit, but which shall not in any event include any more than the equivalent of 60 monthly salary payments. Average salary must be based upon all years of service credit if this service credit is less than five years.

(c) This paragraph, in conjunction with subdivision 6, applies to a person who first became a member or a member in a pension fund listed in section 356.30, subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with subdivision 7, produces a higher annuity amount, in which case paragraph (d) will apply. The retirement annuity formula percentage for purposes of this paragraph is one the percent specified in section 356.19, subdivision 1, per year for each year of coordinated service for the first ten years and 1.5 the percent specified in section 356.19, subdivision 2, for each year of coordinated service thereafter.

(d) This paragraph applies to a person who has become at least 55 years old and who first becomes a member after June 30, 1989, and to any other member who has become at least 55 years old and whose annuity amount, when calculated under this paragraph and in conjunction with subdivision 7 is higher than it is when calculated under paragraph (c), in conjunction with the provisions of subdivision 6. The retirement annuity formula percentage for purposes of this paragraph is 1.5 the percent specified in section 356.19, subdivision 2, for each year of coordinated service.

Sec. 8. Minnesota Statutes 1996, section 354A.31, subdivision 4a, is amended to read:

Subd. 4a. [COMPUTATION OF THE 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 multiplied by the retirement annuity formula percentage. Average salary for purposes of this section means an amount equal to the average salary upon which contributions were made for the highest five successive years of service credit, but may not in any event include any more than the equivalent of 60 monthly salary payments. Average salary must be based upon all years of service credit if this service credit is less than five years.

(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 1.13 the percent specified in section 356.19, subdivision 1, per year for each year of coordinated service for the first ten years and 1.63 the percent specified in section 356.19, subdivision 2, for each subsequent year of coordinated service.

Sec. 9. Laws 1979, chapter 109, section 1, as amended by Laws 1981, chapter 157, section 1, is amended to read:

Section 1. Authorization is hereby granted in accordance with Minnesota Statutes, Section 354A.12, for the St. Paul teachers retirement fund association to amend its bylaws as follows:

(1) Paragraph 9 of Section 3 of Article IV of the bylaws may be amended to provide a lump sum payment to annuitants and survivor benefit recipients who have been receiving annuities or benefits for at least three years, payable three months following the end of a fiscal year. The payments shall only be made if the investment income of the fund during the preceding fiscal year was in excess of 5-1/2 percent of the asset value of the fund at the end of that fiscal year. The amount that each eligible annuitant or benefit recipient shall be entitled to receive shall be determined as follows:

(a) The years of service of each annuitant as credited by the fund and the years of service of each person on behalf of whom a survivor benefit is paid as credited by the fund shall be totaled;

(b) The dollar amount equal to one-half of one percent of the asset value of the fund at the end of the previous fiscal year shall be determined;

(c) The dollar amount determined pursuant to clause (b) shall be divided by the aggregate years of credited service totaled pursuant to clause (a), the result to be considered the bonus figure per year of service credit;

(d) For each eligible annuitant and benefit recipient, the payment shall be equal to the bonus figure per year of service credit determined pursuant to clause (c) multiplied by each year of service credited for that person by the fund.

(2) A new paragraph may be added to Section 2 of Article IV of the bylaws to provide that any active member of the fund with service credit prior to July 1, 1978 who elects in the social security referendum to become a coordinated member shall be entitled to a retirement annuity when otherwise qualified, the calculation of which shall utilize the formula specified in Laws 1977, Chapter 429, Section 61 for that portion of credited service which was served prior to July 1, 1978 and the new coordinated formula specified in the bylaws for the remainder of credited service, both applied to the average salary as specified in Paragraph 2 of Section 1 of Article IX. The formula percentages to be used in calculating the coordinated portion of a retirement annuity on coordinated service shall recognize the coordinated service as a continuation of any service prior to July 1, 1978.

(3) (2) Paragraph 5 of Section 3 of Article IV of the bylaws in effect on June 1, 1978 may be amended to provide that the recomputation of a disability benefit in an amount equal to a service pension shall occur when the member attains the age of 60 years and shall be recomputed without any reduction for early retirement, and that if the disability terminates prior to age 60 the member shall be eligible for benefits as provided in Paragraph 1 of Section 3 of Article IV and the years of service and final average salary accrued to disability termination date would be used as provided in Paragraph 5 of Section 3 of Article IV of the bylaws in effect June 1, 1978 and that Paragraph 3 of Section 4 of Article IV be amended to conform to this provision.

(4) (3) Article VIII of the bylaws in effect July 1, 1978 may be amended by adding a new section 5 providing augmentation of benefits in the same manner as Minnesota Statutes 1978, Section 354.55, Subdivision 11.

Sec. 10. [DULUTH OLD PLAN BYLAWS; AUTHORITY GRANTED TO INCREASE FORMULAS.]

In accordance with Minnesota Statutes, section 354A.12, subdivision 4, approval is granted for the Duluth teachers retirement fund association to amend its articles of incorporation or bylaws by increasing the formula percentage used in computing annuities for old law coordinated program members in the Duluth teachers retirement fund association to 1.45 percent for each year of credited service.

Sec. 11. [REPEALER.]

(a) Minnesota Statutes 1996, section 354A.12, subdivision 2b, is repealed.

Sec. 12. [EFFECTIVE DATES.]

Sections 2 and 3 are effective for all salary paid on or after July 1, 1997. Sections 1 and 4 to 11 are effective July 1, 1997.

Section 1. Minnesota Statutes 1996, section 423B.01, subdivision 9, is amended to read:

Subd. 9. [EXCESS INVESTMENT INCOME.] "Excess investment income" means the amount, if any, by which the average time weighted total rate of return earned by the fund in the most recent prior five fiscal years has exceeded the actual average percentage increase in the current monthly salary of a first grade patrol officer in the most recent prior five fiscal years plus two percent, and must be expressed as a dollar amount and. The amount may not exceed one percent of the total assets of the fund, except when the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, in which case the amount must not exceed 1-1/2 percent of the total assets of the fund, and does not exist unless the yearly average percentage increase of the time weighted total rate of return of the fund for the previous five years exceeds by two percent the yearly average percentage increase in monthly salary of a first grade patrol officer during the previous five calendar years.

Sec. 2. Minnesota Statutes 1996, section 423B.01 is amended by adding a new subdivision to read:

Subd. 15. [ACTUARIAL EQUIVALENT.] "Actuarial equivalent" or "actuarially equivalent" means the condition of one annuity or benefit having an equal actuarial present value as another annuity or benefit, determined as of a given date at a specified age with each actuarial present value based on the appropriate mortality table adopted by the board of directors based on the experience of the fund and approved by the actuary retained by the legislative commission on pensions and retirement and using the applicable preretirement or postretirement interest rate assumptions specified in section 356.216.

Sec. 3. Minnesota Statutes 1996, section 423B.06, is amended by adding a subdivision to read:

Subd. 5. [TAX LEVY.] Notwithstanding any provision of section 69.77 to the contrary, if in any year after the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of the actuarial accrued liabilities of the fund and subsequently the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities, the city of Minneapolis is not required to levy a property tax to amortize any unfunded actuarial accrued liability unless the fund experiences two successive years when the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216.

Sec. 4. Minnesota Statutes 1996, section 423B.07, is amended to read:

423B.07 [AUTHORIZED FUND DISBURSEMENTS.]

The police pension fund may be used only for the payment of:

(1) service, disability, or dependency pensions;

(2) notwithstanding a contrary provision of section 69.80, the salary of the secretary of the association in an amount not to exceed 30 percent of the base salary of a first grade patrol officer, the salary of the president of the association in an amount not to exceed ten percent of the base salary of a first grade patrol officer, and the salaries of the other elected members of the board of trustees in an amount not to exceed three units;

(3) expenses of officers and employees of the association in connection with the protection of the fund;

(5) support for hospital and medical insurance for pensioners who have completed 20 years or more of service or permanent disabilitants and surviving spouses of deceased active members, disabilitants, or service pensioners who have completed 20 years or more of service in an amount equal to one unit per month, to be added to the pension otherwise provided;

(6) health and welfare benefits of one unit per month in addition to other benefits for members who retired after July 1, 1980, and have completed 20 years or more of service or for members who are permanent disabilitants; and

(7) (5) other expenses authorized by section 69.80, or other applicable law.

Sec. 5. Minnesota Statutes 1996, section 423B.09, subdivision 1, is amended to read:

Subdivision 1. [MINNEAPOLIS POLICE; PERSONS ENTITLED TO RECEIVE PENSIONS.] The association shall grant pensions payable from the police pension fund in monthly installments to persons entitled to pensions in the manner and for the following purposes.

(a) When the actuarial value of assets of the fund according to the most recent annual actuarial valuation performed in accordance with sections 356.215 and 356.216 is less than 90 percent of the actuarial accrued liabilities, an active member or a deferred pensioner who has performed duty as a member of the police department of the city for five years or more, upon written application after retiring from duty and reaching at least age 50, is entitled to be paid monthly for life a service pension equal to eight units. For full years of service beyond five years, the service pension increases by 1.6 units for each full year, to a maximum of 40 units. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is of greater than 90 percent of actuarial accrued liabilities, active members, deferred members, and service pensioners are entitled to a service pension according to the following schedule:

5 years 8.0 units

6 years 9.6 units

7 years 11.2 units

8 years 12.8 units

9 years 14.4 units

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 34.0 units

21 years 35.6 units

22 years 37.2 units

23 years 38.8 units

24 years 40.4 units

25 years 42.0 units

Fractional years of service may not be used in computing pensions.

(c) An active member who is not eligible for a service pension and who, while a member of the police department of the city, becomes diseased or sustains an injury while in the service that permanently unfits the member for the performance of police duties is entitled to be paid monthly for life a pension equal to 32 units while so disabled.

Sec. 6. Minnesota Statutes 1996, section 423B.09, is amended by adding a subdivision to read:

Subd. 6. [OPTIONAL ANNUITIES.] A member who is retired or disabled on the effective date of this subdivision may elect an optional retirement annuity within 60 days of the effective date instead of the normal retirement annuity. A member who retires or becomes disabled after the effective date of this subdivision may elect an optional retirement annuity prior to the receipt of any benefits. The optional retirement annuity may be a 50 percent, a 75 percent, or a 100 percent joint and survivor annuity without reinstatement in the event of the designated beneficiary predeceasing the member or a 50 percent, a 75 percent, or a 100 percent joint and survivor annuity with reinstatement in the event of the designated beneficiary predeceasing the member. Optional retirement annuity forms must be actuarially equivalent to the service pension and automatic survivor coverage otherwise payable to the retiring member and the member's beneficiaries. Once selected, the optional annuity is irrevocable.

Sec. 7. Minnesota Statutes 1996, section 423B.10, subdivision 1, is amended to read:

Subdivision 1. [ENTITLEMENT; BENEFIT AMOUNT.] (a) The surviving spouse of a deceased service pensioner, disability pensioner, deferred pensioner, superannuation pensioner, or active member, who was the legally married spouse of the decedent, residing with the decedent, and who was married while or before the time the decedent was on the payroll of the police department, and who, if the deceased member was a service or deferred pensioner, was legally married to the member for a period of at least one year before retirement from the police department, is entitled to a surviving spouse benefit. The surviving spouse benefit is equal to 21 22 units per month if the person is the surviving spouse of a deceased active member or disabilitant. The surviving spouse benefit is equal to six units per month, plus an additional one unit for each year of service to the credit of the decedent in excess of five years, to a maximum of 21 22 units per month, if the person is the surviving spouse of a deceased service pensioner, deferred pensioner, or superannuation pensioner. The surviving spouse benefit is payable for the life of the surviving spouse.

(b) A surviving child of a deceased service pensioner, disability pensioner, deferred pensioner, superannuation pensioner, or active member, who was living while the decedent was an active member of the police department or was born within nine months after the decedent terminated active service in the police department, is entitled to a surviving child benefit. The surviving child benefit is equal to eight units per month if the person is the surviving child of a deceased active member or disabilitant. The surviving child benefit is equal to two units per month, plus an additional four-tenths of one unit per month for each year of service to the credit of the decedent in excess of five years, to a maximum of eight units, if the person is the surviving child of a deceased service pensioner, deferred pensioner, or superannuation pensioner. The surviving child benefit is payable until the person attains age 18, or, if in full-time attendance during the normal school year, in a school approved by the board of directors, until the person receives a bachelor's degree or attains the age of 22 years, whichever occurs first. In the event of the death of both parents leaving a surviving child or children entitled to a surviving child benefit as determined in this paragraph, the surviving child is, or the surviving children are, entitled to a surviving child benefit in such sums as determined by the board of directors to be necessary for the care and education of such surviving child or children, but not to exceed the family maximum benefit per month, to the children of any one family.

(c) The surviving spouse and surviving child benefits are subject to a family maximum benefit. The family maximum benefit is 40 41 units per month.

(d) A surviving spouse who is otherwise not qualified may receive a benefit if the surviving spouse was married to the decedent for a period of five years and was residing with the decedent at the time of death. The surviving spouse benefit is the same as that provided in paragraph (a), except that if the surviving spouse is younger than the decedent, the surviving spouse benefit must be actuarially equivalent to a surviving spouse benefit that would have been paid to the member's spouse had the member been married to a person of the same age or a greater age than the member's age before retirement.

Sec. 8. Minnesota Statutes 1996, section 423B.15, subdivision 2, is amended to read:

association to the mayor and governing body of the city, the state auditor, the commissioner of finance, and the executive director of the legislative commission on pensions and retirement. The dollar amount of excess investment income up to one percent of the assets of the fund, except when the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities in which case the amount may not exceed 1-1/2 percent of the assets of the fund, must be applied for the purpose specified in subdivision 3. Excess investment income must not be considered as income to or assets of the fund for actuarial valuations of the fund for that year under sections 69.77, 356.215, and 356.216 and the provisions of this section except to offset the annual postretirement payment. Additional investment income is any realized or unrealized investment income other than the excess investment income and must be included in the actuarial valuations performed under sections 69.77, 356.215, and 356.216 and the provisions of this section.

Sec. 9. Minnesota Statutes 1996, section 423B.15, subdivision 3, is amended to read:

Subd. 3. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The amount determined under subdivision 2 must be applied in accordance with this subdivision. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is less than 102 percent of its total actuarial liabilities, the relief association shall apply the first one-half of excess investment income to the payment of an annual postretirement payment as specified in this subdivision. and the second one-half of excess investment income up to one-half of one percent of the assets of the fund must be applied to reduce the state amortization state aid or supplementary amortization state aid payments otherwise due to the relief association under section 423A.02 for the current calendar year. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is less than 102 percent funded and other conditions are met, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed one-half of one percent of the assets of the fund. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed 1-1/2 percent of the assets of the fund. Payment of the annual postretirement payment must be in a lump sum amount on June 1 following the determination date in any year. Payment of the annual postretirement payment may be made only if the average time weighted total rate of return for the most recent prior five years exceeds by two percent the actual average percentage increase in the current monthly salary of a top grade patrol officer in the most recent prior five fiscal years. The total amount of all payments to members may not exceed the amount determined under this subdivision. Payment to each eligible member must be calculated by dividing the total number of pension units to which eligible members are entitled into the excess investment income available for distribution to members, and then multiplying that result by the number of units to which each eligible member is entitled to determine each eligible member's annual postretirement payment. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, payment to each eligible member may not exceed an amount equal to the total monthly benefit that the eligible member was entitled to in the prior year under the terms of the benefit plan of the relief association or each eligible member's proportionate share of the excess investment income, whichever is less. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, payment to each eligible member must not exceed the member's proportionate share of 1-1/2 percent of the assets of the fund.

A person who received a pension or benefit for the entire 12 months before the determination date is eligible for a full annual postretirement payment. A person who received a pension or benefit for less than 12 months before the determination date is eligible for a prorated annual postretirement payment.

Sec. 10. Minnesota Statutes 1996, section 423B.15, subdivision 6, is amended to read:

Sec. 11. Minnesota Statutes 1996, section 423B.15, is amended by adding a subdivision to read:

Subd. 7. [ANNUAL ACTUARIAL VALUATION DATE.] Notwithstanding any provision of section 69.77, subdivision 2h, 356.215 or 356.216 to the contrary, the annual actuarial valuation of the fund must be completed by May 1 of each year.

Sec. 12. Laws 1965, chapter 519, section 1, as amended by Laws 1967, chapter 819, section 1; Laws 1969, chapter 123, section 1; Laws 1975, chapter 57, section 1; Laws 1977, chapter 164, section 2; Laws 1990, chapter 589, article 1, section 5; Laws 1992, chapter 454, section 2; and Laws 1994, chapter 591, article 1, section 1, is amended to read:

Section 1. [MINNEAPOLIS, CITY OF; FIREFIGHTER'S RELIEF ASSOCIATION; SURVIVING SPOUSE'S ENTITLEMENT.] Notwithstanding the provisions of Minnesota Statutes 1965, Section 69.48, to the contrary, when a service pensioner, disability pensioner, or deferred pensioner, or an active member of a relief association dies, leaving:

(1) A surviving spouse who was a legally married spouse, residing with the decedent, and who was married while or prior to the time the decedent was on the payroll of the fire department in the case of a deceased active member; and who, in case the deceased member was a service or deferred pensioner was legally married to the member at least five years before death; or

(2) A child or children who were living while the deceased was on the payroll of the fire department, or born within nine months after the decedent was withdrawn from the payroll of the fire department, the surviving spouse and the child or children shall be entitled to a pension or pensions, as follows:

(a) To the surviving spouse, a pension of not less than 17 units, and not to exceed the total of 22 units per month, as the bylaws of the association provide, for life; provided, that if the spouse shall remarry then the pension shall cease and terminate as of the date of remarriage; provided, further, if the remarriage terminates for any reason, the surviving spouse shall again be entitled to a pension as the bylaws of the association provide;

(b) To the child or children, if their other parent is living, a pension of not to exceed eight units per month for each child up to the time each child reaches the age of not less than 16 years and not to exceed an age of 18 years; provided, however, upon approval by the board of trustees, such a child who is a full-time student, upon proof of compliance with the provisions of this act, may be entitled to such pension so long as the child is a full-time student and has not reached 22 years of age, all in conformity with the bylaws of the association; provided, further, the total pensions hereunder for the surviving spouse and children of the deceased member shall not exceed the sum of 41 units per month;

(c) A child or children of a deceased member after the death of their other parent, or in the event their other parent predeceases the member, be entitled to receive a pension or pensions in such amount as the board of trustees of the association shall deem necessary to properly support the child or children until they reach the age of not less than 16 and not more than 18 years; provided, however, upon approval by the board of trustees, such a child who is a full-time student, upon proof of compliance with the provisions of this act, may be entitled to such pension so long as the child is a full-time student and has not reached 22 years of age, as the bylaws of the association may provide; but the total amount of the pension or pensions hereunder for any child or children shall not exceed the sum of 41 units per month;

(d) For the purposes of this act, a full-time student is defined as an individual who is in full-time attendance as a student at an educational institution. Whether or not the student was in full-time attendance would be determined by the board of trustees of the association in the light of the standards and practices of the school involved. Specifically excluded is a person who is paid by the person's employer while attending school at the request of the person's employer. Benefits may continue during any period of four calendar months or less in any 12 month period in which a person does not attend school if the person shows to the satisfaction of the board of trustees that the person intends to continue in full-time school attendance immediately after the end of the period. An educational institution is defined so as to permit the payment of benefits to students taking vocational or academic courses in all approved, accredited or licensed schools, colleges, and universities. The board of trustees shall make the final determination of eligibility for benefits if any question arises concerning the approved status of the educational institution which the student attends or proposes to attend;

(f) A surviving spouse of a deceased service pensioner, disability pensioner, deferred pensioner, or service pensioner who is otherwise not qualified may receive a benefit if the surviving spouse was legally married to the decedent for a period of five years and was residing with the decedent at the time of death. The surviving spouse benefit is the same as that provided under paragraph (a), except that if the surviving spouse is younger than the decedent, the surviving spouse benefit must be actuarially equivalent to a surviving spouse benefit that would have been paid to the member's spouse had the member been married to a person of the same age or a greater age than the member's age prior to retirement. A benefit paid under this paragraph may be less than 17 units, notwithstanding the 17 unit minimum established under paragraph (a).

Sec. 13. Laws 1989, chapter 319, article 19, section 7, subdivision 1, as amended by Laws 1992, chapter 471, article 2, section 5, and Laws 1996, chapter 438, article 4, section 12, is amended to read:

Subdivision 1. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; DEFINITIONS.] For the purposes of this section, each of the terms in this subdivision have the meanings given them in paragraphs (a) to (h).

(a) "Annual postretirement payment" means the payment of a lump sum postretirement benefit to an eligible member on June 1 following the determination date in any year.

(b) "City" means the city of Minneapolis.

(c) "Determination date" means December 31 of each year.

(d) "Eligible member" means a person, including a service pensioner, a disability pensioner, a survivor, or dependent of a deceased active member, service pensioner, or disability pensioner, who received a pension or benefit from the relief association during the 12 months before the determination date. A person who received a pension or benefit for the entire 12 months before the determination date is eligible for a full annual postretirement payment. A person who received a pension or benefit for less than 12 months before the determination date is eligible for a prorated annual postretirement payment.

(e) "Excess investment income" means the amount by which the average time weighted total rate of return earned by the fund in the most recent prior five fiscal years has exceeded the actual average percentage increase in the current monthly salary of a top grade firefighter in the most recent prior five fiscal years plus two percent. The excess investment income must be expressed as a dollar amount and may not exceed one percent of the total assets of the fund, except when the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities in which case the amount must not exceed 1-1/2 percent of the assets of the funds.

(f) "Fund" means the Minneapolis fire department relief association.

(g) "Relief association" means the Minneapolis fire department relief association.

(h) "Time weighted total rate of return" means the percentage amount determined by using the formula or formulas established by the state board of investment under Minnesota Statutes, section 11A.04, clause (11), and in effect on January 1, 1987.

Sec. 14. Laws 1989, chapter 319, article 19, section 7, subdivision 3, is amended to read:

under sections 69.77, 356.215, and 356.216 and the provisions of this section except to offset the annual postretirement payment. Additional investment income is any realized or unrealized investment income other than the excess investment income and must be included in the actuarial valuations performed under sections 69.77, 356.215, and 356.216 and the provisions of this section.

Sec. 15. Laws 1989, chapter 319, article 19, section 7, subdivision 4, as amended by Laws 1990, chapter 570, article 12, section 63, Laws 1992, chapter 471, article 2, section 6, and Laws 1996, chapter 438, article 4, section 13, is amended to read:

Subd. 4. [AMOUNT OF ANNUAL POSTRETIREMENT PAYMENT.] The amount determined under subdivision 3 must be applied in accordance with this subdivision. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, the relief association shall apply the first one-half of one percent of assets which constitute excess investment income to the payment of an annual postretirement payment as specified in this subdivision. and the second one-half of one percent of assets which constitute excess investment income shall be applied to reduce the state amortization state aid or supplementary amortization state aid payments otherwise due to the relief association under section 423A.02 for the current calendar year. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed one-half of one percent of the assets of the fund. Payment of the annual postretirement payment must be in a lump sum amount on June 1 following the determination date in any year. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, the relief association shall pay an annual postretirement payment to all eligible members in an amount not to exceed 1-1/2 percent of the assets of the fund. Payment of the annual postretirement payment may be made only if the average time weighted total rate of return in the most recent prior five fiscal years exceeds by two percent the actual average percentage increase in the current monthly salary of a top grade firefighter in the most recent prior five fiscal years. The total amount of all payments to members may not exceed the amount determined under subdivision 3. Payment to each eligible member must be calculated by dividing the total number of pension units to which eligible members are entitled into the excess investment income available for distribution to members, and then multiplying that result by the number of units to which each eligible member is entitled to determine each eligible member's annual postretirement payment. When the fund actuarial value of assets according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, payment to each eligible member may not exceed an amount equal to the total monthly benefit that the eligible member was entitled to in the prior year under the terms of the benefit plan of the relief association or each eligible member's proportionate share of the excess investment income, whichever is less. When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of its actuarial accrued liabilities, payment to each eligible member may not exceed the member's proportionate share of 1-1/2 percent of assets of the fund.

Sec. 16. Laws 1989, chapter 319, article 19, section 7, subdivision 7, is amended to read:

Subd. 7. [NO GUARANTEE OF ANNUAL POSTRETIREMENT PAYMENT.] No provision of or payment made under this section may be interpreted or relied upon by any member of the relief association to guarantee or entitle a member to annual postretirement payments for a period when no excess investment income is earned by the fund. If the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is less than 102 percent of its actuarial accrued liabilities, a distribution of the fund assets must not exceed one-half of one percent.

Sec. 17. Laws 1993, chapter 125, article 1, section 1, is amended to read:

Section 1. [MINNEAPOLIS, CITY OF; SERVICE PENSION RATES.]

percent of its actuarial accrued liabilities, the service pensions payable by the Minneapolis fire department relief association for members terminating active service as a Minneapolis firefighter after June 1, 1993, must be computed as follows:

length of service

credited service pension payable

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 33.0 units

21 years 34.6 units

22 years 36.2 units

23 years 37.8 units

24 years 39.4 units

25 years 41.0 units

When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is of greater than 90 percent of actuarial accrued liabilities, the following schedule applies to all active members and retired service pensioners who otherwise met the then existing requirements to receive a benefit:

length of service credited service pension payable

5 years 8.0 units

6 years 9.6 units

7 years 11.2 units

8 years 12.8 units

9 years 14.4 units

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 33.0 33.5 units

21 years 34.6 35.1 units

22 years 36.2 37.7 units

23 years 37.8 38.3 units

24 years 39.4 39.9 units

When the actuarial value of assets of the fund according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is of greater than 92.5 percent of actuarial accrued liabilities, the following schedule applies to all active members and retired service pensioners who otherwise met the then existing requirements to receive a benefit:

length of service

credited service pension payable

5 years 8.0 units

6 years 9.6 units

7 years 11.2 units

8 years 12.8 units

9 years 14.4 units

10 years 16.0 units

11 years 17.6 units

12 years 19.2 units

13 years 20.8 units

14 years 22.4 units

15 years 24.0 units

16 years 25.6 units

17 years 27.2 units

18 years 28.8 units

19 years 30.4 units

20 years 34.0 units

21 years 35.6 units

22 years 37.2 units

23 years 38.8 units

24 years 40.4 units

25 years 42.0 units

Sec. 18. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION; OPTIONAL ANNUITIES.]

A member of the Minneapolis fire department relief association who is retired or disabled on the effective date of this section may elect an optional retirement annuity within 60 days of the effective date instead of the normal retirement pension. A member who retires or becomes disabled after the effective date of this section may elect an optional retirement annuity prior to the receipt of any benefits. The optional retirement annuity may be a 50 percent, a 75 percent, or a 100 percent joint and survivor annuity without reinstatement in the event of the designated beneficiary predeceasing the member or a joint and survivor annuity with reinstatement in the event of the designated beneficiary predeceasing the member. An optional retirement annuity must be actuarially equivalent to the service pension and automatic survivor coverage otherwise payable to the retiring member and the member's beneficiaries. Once selected, the optional annuity is irrevocable.

Sec. 19. [MINNEAPOLIS FIRE DEPARTMENT RELIEF ASSOCIATION TAX LEVY.]

If in any year after the Minneapolis fire department relief actuarial value of assets of the association according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216 is greater than 102 percent of the actuarial accrued liabilities of the fund and subsequently the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216, the city of Minneapolis is not required to levy a property tax to fund any deficit unless the fund has two successive years when the actuarial value of assets are less than 100 percent of the actuarial accrued liabilities according to the most recent annual actuarial valuation prepared in accordance with Minnesota Statutes, sections 356.215 and 356.216.

Sec. 20. [ACTUARIAL VALUATION DATE.]

Sec. 21. [ACTUARIAL EQUIVALENT.]

For the purposes of the Minneapolis fire department relief association, "actuarial equivalent" or "actuarially equivalent" means the condition of one annuity or benefit having an equal actuarial present value as another annuity or benefit, determined as of a given date at a specified age with each actuarial present value based on the appropriate mortality table adopted by the board of directors based on the experience of the fund and approved by the actuary retained by the legislative commission on pensions and retirement and using the applicable preretirement or postretirement interest rate assumptions specified in Minnesota Statutes, section 356.216.

Sec. 22. [BENEFIT EXCHANGE.]

The one unit health and welfare benefit granted to members of the Minneapolis fire department relief association in Laws 1980, chapter 667, article XV, section 9, who retired after July 1, 1980, must be reduced by one-half unit upon the implementation of the benefit improvement in section 17 when the actuarial value of assets of the fund according to the most recent annual actuarial valuation report under Minnesota Statutes, sections 356.215 and 356.216 exceeds 90 percent of its actuarial accrued liabilities and the benefit must be eliminated when the actuarial value of assets of the fund exceeds 92.5 percent of its actuarial accrued liabilities and the benefit in section 15 is fully implemented.

Sec. 23. [EFFECTIVE DATE.]

The sections of this article are effective on the day after compliance by the governing body of the city of Minneapolis with Minnesota Statutes, section 645.021, subdivision 2. Section 4 is effective when the provisions of section 5 take effect. Sections 7 and 12 are effective retroactive to July 1, 1996 and apply to all current spouses of members, except that the unit increases for surviving spouses in section 7 shall not otherwise increase the surviving spouse benefit beyond 22 units."

Delete the title and insert:

"A bill for an act relating to retirement; increasing pension benefit accrual rates; adjusting financing for pension plans; adding supplemental financial conditions information for pension funds; reducing appropriations; modifying or establishing various pension aids; appropriating money; amending Minnesota Statutes 1996, sections 3.85, subdivisions 11 and 12; 3A.02, subdivisions 1 and 4; 3A.07; 11A.18, subdivision 9; 352.01, subdivision 25; 352.04, subdivisions 2 and 3; 352.115, subdivision 3; 352.72, subdivision 2; 352.92, subdivisions 1 and 2; 352.93, subdivisions 2, 3, and by adding a subdivision; 352.95, subdivisions 1 and 5; 352B.02, subdivisions 1a and 1c; 352B.08, subdivisions 2 and 2a; 352B.10, subdivision 1; 352B.30, by adding a subdivision; 352C.031, subdivision 4; 352C.033; 353.01, subdivisions 2a, 2b, 11b, and 37; 353.27, subdivisions 2 and 3a; 353.29, subdivision 3; 353.651, subdivision 3; 353.656, subdivision 1; 353.71, subdivision 2; 353A.08, subdivisions 1 and 2; 353A.083, by adding a subdivision; 354.05, subdivision 38; 354.42, subdivisions 2, 3, and 5; 354.44, subdivision 6, and by adding a subdivision; 354.53, subdivision 1; 354.55, subdivision 11; 354A.011, subdivision 15a; 354A.12, subdivisions 1, 2a, 3a, and 3c; 354A.31, subdivisions 4 and 4a; 356.20, subdivision 2; 356.215, subdivisions 2, 4d, and 4g; 356.217; 356.30, subdivisions 1 and 3; 356.32, subdivision 2; 422A.06, subdivision 8; 422A.151; 423B.01, subdivision 9, and by adding a subdivision; 423B.06, by adding a subdivision; 423B.07; 423B.09, subdivision 1, and by adding a subdivision; 423B.10, subdivision 1; 423B.15, subdivisions 2, 3, 6, and by adding a subdivision; and 490.124, subdivisions 1 and 5; Laws 1965, chapter 519, section 1, as amended; Laws 1979, chapter 109, section 1, as amended; Laws 1989, chapter 319, article 19, section 7, subdivisions 1, as amended, 3, 4, as amended, and 7; and Laws 1993, chapter 125, article 1, section 1; proposing coding for new law in Minnesota Statutes, chapters 124; 273; 352; 352C; 352E; 354A; and 356; repealing Minnesota Statutes 1996, sections 124.195, subdivision 12; 124.2139; 353C.01; 353C.02; 353C.03; 353C.04; 353C.05; 353C.06; 353C.07; 353C.08; 353C.09; 353C.10; 354A.12, subdivision 2b; 356.70; and 356.88, subdivision 2; and Laws 1985, chapter 259, section 3; and Laws 1993, chapter 336, article 3, section 1."

With the recommendation that when so amended the bill pass.

Solberg from the Committee on Ways and Means to which was referred:

S. F. No. 1208, A bill for an act relating to MinnesotaCare; eliminating the health care commission; modifying the regional coordinating boards; eliminating integrated service networks; modifying the health technology advisory committee; expanding the eligibility of the MinnesotaCare program; modifying general assistance medical care; modifying the enforcement mechanisms for the provider tax pass-through; modifying mandatory Medicare assignment; making technical, policy, and administrative changes and connections to MinnesotaCare taxes; providing grants for MinnesotaCare outreach; regulating community purchasing arrangements; requiring certain studies; appropriating money; amending Minnesota Statutes 1996, sections 60A.15, subdivision 1; 60A.951, subdivision 5; 62A.61; 62J.017; 62J.06; 62J.07, subdivisions 1 and 3; 62J.09, subdivision 1; 62J.15, subdivision 1; 62J.152, subdivisions 1, 2, 4, 5, and by adding a subdivision; 62J.17, subdivision 6a; 62J.22; 62J.25; 62J.2914, subdivision 1; 62J.2915; 62J.2916, subdivision 1; 62J.2917, subdivision 2; 62J.2921, subdivision 2; 62J.451, subdivision 6b; 62M.02, subdivision 21; 62N.01, subdivision 1; 62N.22; 62N.23; 62N.25, subdivision 5; 62N.26; 62N.40; 62Q.01, subdivisions 3, 4, and 5; 62Q.03, subdivision 5a; 62Q.106; 62Q.19, subdivision 1; 62Q.33, subdivision 2; 62Q.45, subdivision 2; 136A.1355; 144.147, subdivisions 1, 2, 3, and 4; 144.1484, subdivision 1; 256.01, subdivision 2; 256.045, subdivision 3a; 256.9352, subdivision 3; 256.9353, subdivisions 1, 3, and 7; 256.9354, subdivisions 4, 5, 6, 7, and by adding a subdivision; 256.9355, subdivisions 1, 4, and by adding a subdivision; 256.9357, subdivision 3; 256.9358, subdivision 4; 256.9359, subdivision 2; 256.9363, subdivisions 1 and 5; 256.9657, subdivision 3; 256B.0625, subdivision 13; 256D.03, subdivision 3; 295.50, subdivisions 3, 4, 6, 7, 9b, 13, 14, and by adding a subdivision; 295.51, subdivision 1; 295.52, subdivisions 1, 1a, 2, 4, and by adding subdivisions; 295.53, subdivisions 1, 3, and 4; 295.54, subdivisions 1 and 2; 295.55, subdivision 2; and 295.582; proposing coding for new law in Minnesota Statutes, chapters 16A; 144; and 256; proposing coding for new law as Minnesota Statutes, chapter 62S; repealing Minnesota Statutes 1996, sections 62E.11, subdivision 12; 62J.04, subdivisions 4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41; 147.01, subdivision 6; 295.52, subdivision 1b; and 295.53, subdivision 5; Laws 1993, chapter 247, article 4, section 8; Laws 1994, chapter 625, article 5, section 5, as amended; Laws 1995, chapter 96, section 2; and Laws 1995, First Special Session chapter 3, article 13, section 2.

Reported the same back with the following amendments:

Delete everything after the enacting clause and insert:

Section 1. Minnesota Statutes 1996, section 256.9353, subdivision 1, is amended to read:

Subdivision 1. [COVERED HEALTH SERVICES.] "Covered health services" means the health services reimbursed under chapter 256B, with the exception of inpatient hospital services, special education services, private duty nursing services, adult dental care services other than preventive services, orthodontic services, nonemergency medical transportation services, personal care assistant and case management services, nursing home or intermediate care facilities services, inpatient mental health services, and chemical dependency services. Effective July 1, 1998, adult dental care for nonpreventive services with the exception of orthodontic services is available to persons who qualify under section 256.9354, subdivisions 1 to 5, or 256.9366, with family gross income equal to or less than 175 percent of the federal poverty guidelines. Outpatient mental health services covered under the MinnesotaCare program are limited to diagnostic assessments, psychological testing, explanation of findings, medication management by a physician, day treatment, partial hospitalization, and individual, family, and group psychotherapy.

Covered health services shall be expanded as provided in this section.

Sec. 2. Minnesota Statutes 1996, section 256.9353, subdivision 3, is amended to read:

Subd. 3. [INPATIENT HOSPITAL SERVICES.] (a) Beginning July 1, 1993, covered health services shall include inpatient hospital services, including inpatient hospital mental health services and inpatient hospital and residential chemical dependency treatment, subject to those limitations necessary to coordinate the provision of these services with eligibility under the medical assistance spenddown. Prior to July 1, 1997, the inpatient hospital benefit for adult enrollees is subject to an annual benefit limit of $10,000. Effective July 1, 1997, the inpatient hospital benefit for adult enrollees who qualify under section 256.9354, subdivision 5, is subject to an annual limit of $10,000.

(b) Enrollees who qualify under section 256.9354, subdivision 5, and are determined by the commissioner to have a basis of eligibility for medical assistance shall apply for and cooperate with the requirements of medical assistance by the last day of the third month following admission to an inpatient hospital. If an enrollee fails to apply for medical assistance within this time period, the enrollee and the enrollee's family shall be disenrolled from the plan and they may not reenroll until 12 calendar months have elapsed. Enrollees and enrollees' families disenrolled for not applying for or not cooperating with medical assistance may not reenroll.

(c) Admissions for inpatient hospital services paid for under section 256.9362, subdivision 3, must be certified as medically necessary in accordance with Minnesota Rules, parts 9505.0500 to 9505.0540, except as provided in clauses (1) and (2):

(1) all admissions must be certified, except those authorized under rules established under section 254A.03, subdivision 3, or approved under Medicare; and

(2) payment under section 256.9362, subdivision 3, shall be reduced by five percent for admissions for which certification is requested more than 30 days after the day of admission. The hospital may not seek payment from the enrollee for the amount of the payment reduction under this clause.

(d) Any enrollee or family member of an enrollee who has previously been permanently disenrolled from MinnesotaCare for not applying for and cooperating with medical assistance shall be eligible to reenroll if 12 calendar months have elapsed since the date of disenrollment.

Sec. 3. Minnesota Statutes 1996, section 256.9353, subdivision 7, is amended to read:

Subd. 7. [COPAYMENTS AND COINSURANCE.] The MinnesotaCare benefit plan shall include the following copayments and coinsurance requirements:

(1) ten percent of the paid charges submitted for inpatient hospital services for adult enrollees not eligible for medical assistance, subject to an annual inpatient out-of-pocket maximum of $1,000 per individual and $3,000 per family;

(2) $3 per prescription for adult enrollees; and

(3) $25 for eyeglasses for adult enrollees; and

(4) effective July 1, 1998, 50 percent of paid charges for adult dental care services other than preventive care services for persons eligible under section 256.9354, subdivisions 1 to 5, or 256.9366 with income equal to or less than 175 percent of the federal poverty guidelines.

Sec. 4. Minnesota Statutes 1996, section 256.9354, subdivision 4, is amended to read:

Subd. 4. [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning January 1, 1993, "eligible persons" means children, parents, and dependent siblings residing in the same household who are not eligible for medical assistance without a spenddown under chapter 256B. Children who meet the criteria in subdivision 1 or 4a shall continue to be enrolled pursuant to those subdivisions. Persons who are eligible under this subdivision or subdivision 2, 3, or 5 must pay a premium as determined under sections 256.9357 and 256.9358, and children eligible under subdivision 1 must pay the premium required under section 256.9356, subdivision 1. Individuals and families whose income is greater than the limits established under section 256.9358 may not enroll in MinnesotaCare.

Sec. 5. Minnesota Statutes 1996, section 256.9354, subdivision 5, is amended to read:

Subd. 5. [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO CHILDREN.] (a) Beginning October 1, 1994, the definition of "eligible persons" is expanded to include all individuals and households with no children who have gross family incomes that are equal to or less than 125 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B.

(b) After October 1, 1995, the commissioner of human services may expand the definition of "eligible persons" to include all individuals and households with no children who have gross family incomes that are equal to or less than 135 percent of federal poverty guidelines and are not eligible for medical assistance without a spenddown under chapter 256B. This expansion may occur only if the financial management requirements of section 256.9352, subdivision 3, can be met.

(c) The commissioners of health and human services, in consultation with the legislative commission on health care access, shall make preliminary recommendations to the legislature by October 1, 1995, and final recommendations to the legislature by February 1, 1996, on whether a further expansion of the definition of "eligible persons" to include all individuals and households with no children who have gross family incomes that are equal to or less than 150 percent of federal poverty guidelines and are not eligible for medical assistance without a spenddown under chapter 256B would be allowed under the financial management constraints outlined in section 256.9352, subdivision 3.

(d) (b) Beginning July 1, 1997, the definition of eligible persons is expanded to include all individuals and households with no children who have gross family incomes that are equal to or less than 175 percent of the federal poverty guidelines and who are not eligible for medical assistance without a spenddown under chapter 256B.

(c) All eligible persons under paragraphs (a) and (b) are eligible for coverage through the MinnesotaCare program but must pay a premium as determined under sections 256.9357 and 256.9358. Individuals and families whose income is greater than the limits established under section 256.9358 may not enroll in the MinnesotaCare program.

Sec. 6. Minnesota Statutes 1996, section 256.9354, subdivision 6, is amended to read:

Sec. 7. Minnesota Statutes 1996, section 256.9354, subdivision 7, is amended to read:

Subd. 7. [GENERAL ASSISTANCE MEDICAL CARE.] A person cannot have coverage under both MinnesotaCare and general assistance medical care in the same month, except that a MinnesotaCare enrollee may be eligible for retroactive general assistance medical care according to section 256D.03, subdivision 3, paragraph (b).

Sec. 8. Minnesota Statutes 1996, section 256.9354, is amended by adding a subdivision to read:

Subd. 8. [MINNESOTACARE OUTREACH.] The commissioner shall award grants to public or private organizations to provide information on the importance of maintaining insurance coverage and on how to obtain coverage through the MinnesotaCare program in areas of the state with high uninsured populations.

Sec. 9. Minnesota Statutes 1996, section 256.9355, subdivision 1, is amended to read:

Subdivision 1. [APPLICATION AND INFORMATION AVAILABILITY.] Applications and other information must be made available to provider offices, local human services agencies, school districts, public and private elementary schools in which 25 percent or more of the students receive free or reduced price lunches, community health offices, and Women, Infants and Children (WIC) program sites. These sites may accept applications, collect the enrollment fee or initial premium fee, and forward the forms and fees to the commissioner. Otherwise, applicants may apply directly to the commissioner. Beginning January 1, 2000, MinnesotaCare enrollment sites will be expanded to include local county human services agencies which choose to participate.

Sec. 10. Minnesota Statutes 1996, section 256.9355, subdivision 2, is amended to read:

Subd. 2. [COMMISSIONER'S DUTIES.] The commissioner shall use individuals' social security numbers as identifiers for purposes of administering the plan and conduct data matches to verify income. Applicants shall submit evidence of family income, earned and unearned, including the most recent income tax return and any form W-2 wage and tax statements, wage slips, or other documentation that is necessary to verify income eligibility. The commissioner shall perform random audits to verify reported income and eligibility. The commissioner may execute data sharing arrangements with the department of revenue and any other governmental agency in order to perform income verification related to eligibility and premium payment under the MinnesotaCare program.

Sec. 11. Minnesota Statutes 1996, section 256.9355, subdivision 4, is amended to read:

Subd. 4. [APPLICATION PROCESSING.] The commissioner of human services shall determine an applicant's eligibility for MinnesotaCare no more than 30 days from the date that the application is received by the department of human services. This requirement shall be suspended for four months following the dates in which single adults and families without children become eligible for the program. Beginning July 1, 2000, this requirement also applies to local county human services agencies that determine eligibility for MinnesotaCare.

Sec. 12. Minnesota Statutes 1996, section 256.9355, is amended by adding a subdivision to read:

Subd. 5. [AVAILABILITY OF PRIVATE INSURANCE.] The commissioner, in consultation with the commissioners of health and commerce, shall provide information regarding the availability of private health insurance coverage to all families and individuals enrolled in the MinnesotaCare program whose gross family income is equal to or more than 200 percent of the federal poverty guidelines. This information must be provided upon initial enrollment and annually thereafter.

Sec. 13. Minnesota Statutes 1996, section 256.9357, subdivision 1, is amended to read:

Families and individuals who initially enrolled in MinnesotaCare under section 256.9354 or 256.9366, and whose income increases above the limits established in section sections 256.9358 and 256.9366, may continue enrollment and pay the full cost of coverage are no longer eligible for the program and shall be disenrolled by the commissioner. MinnesotaCare coverage terminates the last day of the calendar month following the month in which the department determines that the income of a family or individual, determined as required by section 256.9358, exceeds program income limits.

Sec. 14. Minnesota Statutes 1996, section 256.9357, subdivision 3, is amended to read:

Subd. 3. [PERIOD UNINSURED.] To be eligible for subsidized premium payments based on a sliding scale, families and individuals initially enrolled in the MinnesotaCare program under section 256.9354, subdivisions 4 and 5, must have had no health coverage for at least four months prior to application. The commissioner may change this eligibility criterion for sliding scale premiums without complying with rulemaking requirements in order to remain within the limits of available appropriations. The requirement of at least four months of no health coverage prior to application for the MinnesotaCare program does not apply to:

(1) families, children, and individuals who want to apply for the MinnesotaCare program upon termination from or as required by the medical assistance program, general assistance medical care program, or coverage under a regional demonstration project for the uninsured funded under section 256B.73, the Hennepin county assured care program, or the Group Health, Inc., community health plan;

(2) families and individuals initially enrolled under section 256.9354, subdivisions 1, paragraph (a), and 2;

(3) children enrolled pursuant to Laws 1992, chapter 549, article 4, section 17; or

(4) individuals currently serving or who have served in the military reserves, and dependents of these individuals, if these individuals: (i) reapply for MinnesotaCare coverage after a period of active military service during which they had been covered by the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); (ii) were covered under MinnesotaCare immediately prior to obtaining coverage under CHAMPUS; and (iii) have maintained continuous coverage; or

(5) individuals and families whose only health coverage during the four months prior to application was a qualified or Medicare supplement plan issued by the Minnesota comprehensive health association under chapter 62E.

Sec. 15. Minnesota Statutes 1996, section 256.9358, subdivision 4, is amended to read:

Subd. 4. [INELIGIBILITY.] Families with children whose gross monthly income is above the amount specified in subdivision 3 are not eligible for the plan. Beginning October 1, 1994, An individual or households with no children whose gross income is greater than 125 percent of the federal poverty guidelines the amount specified in section 256.9354, subdivision 5, are ineligible for the plan.

Sec. 16. Minnesota Statutes 1996, section 256.9359, subdivision 2, is amended to read:

Subd. 2. [RESIDENCY REQUIREMENT.] (a) Prior to July 1, 1997, to be eligible for health coverage under the MinnesotaCare program, families and individuals must be permanent residents of Minnesota.

(b) Effective July 1, 1997, to be eligible for health coverage under the MinnesotaCare program, adults without children must be permanent residents of Minnesota.

(c) Effective July 1, 1997, to be eligible for health coverage under the MinnesotaCare program, pregnant women, families, and children must meet the residency requirements as provided by Code of Federal Regulations, title 42, section 435.403, except that the provisions of section 256B.056, subdivision 1, shall apply upon receipt of federal approval.

Sec. 17. Minnesota Statutes 1996, section 256.9362, subdivision 6, is amended to read:

provided to MinnesotaCare enrollees eligible under section 256.9366, who are 18 years old or older on the date of admission to the inpatient hospital, and who are not pregnant, payment must be in accordance with paragraph (c).

(a) If the medical assistance rate minus any copayment required under section 256.9353, subdivision 6, is less than or equal to the amount remaining in the enrollee's benefit limit under section 256.9353, subdivision 3, payment must be the medical assistance rate minus any copayment required under section 256.9353, subdivision 6. The hospital must not seek payment from the enrollee in addition to the copayment. The MinnesotaCare payment plus the copayment must be treated as payment in full.

(b) If the medical assistance rate minus any copayment required under section 256.9353, subdivision 6, is greater than the amount remaining in the enrollee's benefit limit under section 256.9353, subdivision 3, payment must be the lesser of:

(1) the amount remaining in the enrollee's benefit limit; or

(2) charges submitted for the inpatient hospital services less any copayment established under section 256.9353, subdivision 6.

The hospital may seek payment from the enrollee for the amount by which usual and customary charges exceed the payment under this paragraph. If payment is reduced under section 256.9353, subdivision 3, paragraph (c), the hospital may not seek payment from the enrollee for the amount of the reduction.

(c) For admissions occurring during the period of July 1, 1997, through June 30, 1998, for adults eligible under section 256.9366 who are not pregnant, the commissioner shall pay hospitals directly, up to the medical assistance payment rate, for inpatient hospital benefits in excess of the $10,000 annual inpatient benefit limit.

Sec. 18. Minnesota Statutes 1996, section 256.9363, subdivision 5, is amended to read:

Subd. 5. [ELIGIBILITY FOR OTHER STATE PROGRAMS.] MinnesotaCare enrollees who become eligible for medical assistance or general assistance medical care will remain in the same managed care plan if the managed care plan has a contract for that population. Effective January 1, 1998, MinnesotaCare enrollees who were formerly eligible for general assistance medical care pursuant to section 256D.03, subdivision 3, within six months of MinnesotaCare enrollment and were enrolled in a prepaid health plan pursuant to section 256D.03, subdivision 4, paragraph (d), must remain in the same managed care plan if the managed care plan has a contract for that population. Contracts between the department of human services and managed care plans must include MinnesotaCare, and medical assistance and may, at the option of the commissioner of human services, also include general assistance medical care.

Sec. 19. [256.937] [ASSET REQUIREMENT FOR MINNESOTACARE.]

Subdivision 1. [DEFINITIONS.] For purposes of this section, the following definitions apply.

(a) "Asset" means cash and other personal property, as well as any real property, that a family or individual owns which has monetary value.

(b) "Homestead" means the home that is owned by, and is the usual residence of, the family or individual, together with the surrounding property which is not separated from the home by intervening property owned by others. Public rights-of-way, such as roads that run through the surrounding property and separate it from the home, will not affect the exemption of the property. "Usual residence" includes the home from which the family or individual is temporarily absent due to illness, employment, or education, or because the home is temporarily not habitable due to casualty or natural disaster.

(c) "Net asset" means the asset's fair market value minus any encumbrances including, but not limited to, liens and mortgages.

(b) For purposes of this subdivision, total net assets include all assets, with the following exceptions:

(1) a homestead is not considered;

(2) household goods and personal effects are not considered; and

(3) capital and operating assets of a trade or business up to $200,000 in net assets are not considered.

(c) If an asset excluded under paragraph (b) has a negative value, the negative value shall be subtracted from the total net assets under paragraph (a).

Subd. 3. [DOCUMENTATION.] (a) The commissioner of human services shall require individuals and families, at the time of application or renewal, to indicate on a checkoff form developed by the commissioner whether they satisfy the MinnesotaCare asset requirement. This form must include the following or similar language: "To be eligible for MinnesotaCare, individuals and families must not own net assets in excess of $30,000 for a household of two or more persons or $15,000 for a household of one person, not including a homestead, household goods and personal effects, and capital and operating assets of a trade or business up to $200,000. Do you and your household own net assets in excess of these limits?"

(b) The commissioner may require individuals and families to provide any information the commissioner determines necessary to verify compliance with the asset requirement, if the commissioner determines that there is reason to believe that an individual or family has assets that exceed the program limit.

Subd. 4. [PENALTIES.] Individuals or families who are found to have knowingly misreported the amount of their assets as described in this section shall be subject to the penalties in section 256.98. The commissioner shall present recommendations on additional penalties to the 1998 legislature.

Sec. 20. [256.9371] [PENALTIES.]

Whoever obtains or attempts to obtain, or aids or abets any person to obtain by means of a willfully false statement or representation, or by the intentional withholding or concealment of a material fact, or by impersonation, or other fraudulent device:

(1) benefits under the MinnesotaCare program to which the person is not entitled; or

(2) benefits under the MinnesotaCare program greater than that to which the person is reasonably entitled;

shall be considered to have violated section 256.98, and shall be subject to both the criminal and civil penalties provided under that section.

Sec. 21. Minnesota Statutes 1996, section 256D.03, subdivision 3, is amended to read:

Subd. 3. [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] (a) General assistance medical care may be paid for any person who is not eligible for medical assistance under chapter 256B, including eligibility for medical assistance based on a spenddown of excess income according to section 256B.056, subdivision 5, or MinnesotaCare as defined in clause (4), except as provided in paragraph (b); and:

(1) who is receiving assistance under section 256D.05, or except for families with children who are eligible under Minnesota family investment program-statewide (MFIP-S), who is having a payment made on the person's behalf under sections 256I.01 to 256I.06, or who resides in group residential housing as defined in chapter 256I and can meet a spenddown using the cost of remedial services received through group residential housing; or

exception: the maximum amount of undistributed funds in a trust that could be distributed to or on behalf of the beneficiary by the trustee, assuming the full exercise of the trustee's discretion under the terms of the trust, must be applied toward the asset maximum; and

(ii) who has countable income not in excess of the assistance standards established in section 256B.056, subdivision 4, or whose excess income is spent down pursuant to section 256B.056, subdivision 5, using a six-month budget period, except that a one-month budget period must be used for recipients residing in a long-term care facility. The method for calculating earned income disregards and deductions for a person who resides with a dependent child under age 21 shall be as specified in section 256.74, subdivision 1 follow section 256B.056, subdivision 1a. However, if a disregard of $30 and one-third of the remainder described in section 256.74, subdivision 1, clause (4), has been applied to the wage earner's income, the disregard shall not be applied again until the wage earner's income has not been considered in an eligibility determination for general assistance, general assistance medical care, medical assistance, or aid to families with dependent children MFIP-S for 12 consecutive months. The earned income and work expense deductions for a person who does not reside with a dependent child under age 21 shall be the same as the method used to determine eligibility for a person under section 256D.06, subdivision 1, except the disregard of the first $50 of earned income is not allowed; or

(3) who would be eligible for medical assistance except that the person resides in a facility that is determined by the commissioner or the federal health care financing administration to be an institution for mental diseases.

(4) Beginning July 1, 1998, applicants or recipients who meet all eligibility requirements of MinnesotaCare as defined in sections 256.9351 to 256.9363 and 256.9366 to 256.9369, and are:

(i) adults with dependent children under 21 whose gross family income is equal to or less than 275 percent of the federal poverty guidelines; or

(ii) adults without children with earned income and whose family gross income is between 75 percent of the federal poverty guidelines and the amount set by section 256.9354, subdivision 5, shall be terminated from general assistance medical care upon enrollment in MinnesotaCare.

(b) Eligibility is available for the month of application, and for three months prior to application if the person was eligible in those prior months. For services rendered on or after July 1, 1997, eligibility is limited to one month prior to application if the person is determined eligible in the prior month. A redetermination of eligibility must occur every 12 months. Beginning July 1, 1998, Minnesota health care program applications completed by recipients and applicants who are persons described in paragraph (a), clause (4), may be returned to the county agency to be forwarded to the department of human services or sent directly to the department of human services for enrollment in MinnesotaCare. If all other eligibility requirements of this subdivision are met, eligibility for general assistance medical care shall be available in any month during which a MinnesotaCare eligibility determination and enrollment are pending. Upon notification of eligibility for MinnesotaCare, notice of termination for eligibility for general assistance medical care shall be sent to an applicant or recipient. If all other eligibility requirements of this subdivision are met, eligibility for general assistance medical care shall be available until enrollment in MinnesotaCare subject to the provisions of paragraph (d).

(c) The date of an initial Minnesota health care program application necessary to begin a determination of eligibility shall be the date the applicant has provided a name, address, and social security number, signed and dated, to the county agency or the department of human services. If the applicant is unable to provide an initial application when health care is delivered due to a medical condition or disability, a health care provider may act on the person's behalf to complete the initial application. The applicant must complete the remainder of the application and provide necessary verification before eligibility can be determined. The county agency must assist the applicant in obtaining verification if necessary.

(d) County agencies are authorized to use all automated databases containing information regarding recipients' or applicants' income in order to determine eligibility for general assistance medical care or MinnesotaCare. Such use shall be considered sufficient in order to determine eligibility and premium payments by the county agency.

(d) (f) General assistance medical care is not available for applicants or recipients who do not cooperate with the county agency to meet the requirements of medical assistance. General assistance medical care is limited to payment of emergency services only for applicants or recipients as described in paragraph (a), clause (4), whose MinnesotaCare coverage is denied or terminated for nonpayment of premiums as required by sections 256.9356 to 256.9358.

(e) (g) In determining the amount of assets of an individual, there shall be included any asset or interest in an asset, including an asset excluded under paragraph (a), that was given away, sold, or disposed of for less than fair market value within the 60 months preceding application for general assistance medical care or during the period of eligibility. Any transfer described in this paragraph shall be presumed to have been for the purpose of establishing eligibility for general assistance medical care, unless the individual furnishes convincing evidence to establish that the transaction was exclusively for another purpose. For purposes of this paragraph, the value of the asset or interest shall be the fair market value at the time it was given away, sold, or disposed of, less the amount of compensation received. For any uncompensated transfer, the number of months of ineligibility, including partial months, shall be calculated by dividing the uncompensated transfer amount by the average monthly per person payment made by the medical assistance program to skilled nursing facilities for the previous calendar year. The individual shall remain ineligible until this fixed period has expired. The period of ineligibility may exceed 30 months, and a reapplication for benefits after 30 months from the date of the transfer shall not result in eligibility unless and until the period of ineligibility has expired. The period of ineligibility begins in the month the transfer was reported to the county agency, or if the transfer was not reported, the month in which the county agency discovered the transfer, whichever comes first. For applicants, the period of ineligibility begins on the date of the first approved application.

(f)(1) (h) Beginning October 1, 1993, an undocumented alien or a nonimmigrant is ineligible for general assistance medical care other than emergency services. For purposes of this subdivision, a nonimmigrant is an individual in one or more of the classes listed in United States Code, title 8, section 1101(a)(15), and an undocumented alien is an individual who resides in the United States without the approval or acquiescence of the Immigration and Naturalization Service.

(2) (i) This subdivision does not apply to a child under age 18, to a Cuban or Haitian entrant as defined in Public Law Number 96-422, section 501(e)(1) or (2)(a), or to an alien who is aged, blind, or disabled as defined in United States Code, title 42, section 1382c(a)(1).

(3) (j) For purposes of paragraph paragraphs (f) and (h), "emergency services" has the meaning given in Code of Federal Regulations, title 42, section 440.255(b)(1), except that it also means services rendered because of suspected or actual pesticide poisoning.

Sec. 22. [TRANSITION PLAN FOR MINNESOTACARE ENROLLEES.]

(a) The commissioner of human services, in consultation with the legislative commission on health care access and the commissioners of employee relations, health, and commerce, shall develop an implementation plan to transition higher-income MinnesotaCare enrollees to private sector or other nonsubsidized coverage. In developing the plan, the commissioner shall examine the feasibility of using the health insurance program for state employees administered by the commissioner of employee relations as a source of coverage, and shall also examine methods to increase the affordability of private sector coverage for individuals and families transitioning off MinnesotaCare. The commissioner shall submit the implementation plan to the legislature by December 15, 1997.

(b) The commissioner of human services shall also report to the legislature by January 15, 1998, on the impact of the outreach efforts conducted by the department of human services for the MinnesotaCare program, affordability of the MinnesotaCare premium schedule, and the reasons why families and individuals are leaving the MinnesotaCare program; regarding recommendations on the eligibility income level that will result in the greatest number of individuals having health insurance; what will encourage greater availability of coverage in the private market; steps to increase the availability of insurance in the small employer market; the need, if any, for increasing the MinnesotaCare program eligibility level for single adults and households without children; and shall make recommendations on the feasibility of increasing the eligibility income level for single adults and households without children in the MinnesotaCare program.

Sec. 23. [EFFECTIVE DATE.]

Section 1. Minnesota Statutes 1996, section 60A.951, subdivision 5, is amended to read:

Subd. 5. [INSURER.] "Insurer" means insurance company, risk retention group as defined in section 60E.02, service plan corporation as defined in section 62C.02, health maintenance organization as defined in section 62D.02, community integrated service network as defined in section 62N.02, fraternal benefit society regulated under chapter 64B, township mutual company regulated under chapter 67A, joint self-insurance plan or multiple employer trust regulated under chapter 60F, 62H, or section 471.617, subdivision 2, persons administering a self-insurance plan as defined in section 60A.23, subdivision 8, clause (2), paragraphs (a) and (d), and the workers' compensation reinsurance association established in section 79.34.

Sec. 2. Minnesota Statutes 1996, section 62A.021, is amended by adding a subdivision to read:

Subd. 3. [LOSS RATIO DISCLOSURE.] Each health care policy form or health care certificate form for which subdivision 1 requires the commissioner's approval of premium rates shall contain on its front page the following statement:

"Minnesota law requires that this policy or contract include this paragraph disclosing the loss ratio. The loss ratio is the average percentage of premiums that is expected to be paid for health care for the enrollee. This policy or contract is expected to have a loss ratio of (fill in estimated loss ratio accepted by commissioner). The lowest loss ratio permitted by state law for this policy or contract is (fill in applicable minimum loss ratio)."

Sec. 3. Minnesota Statutes 1996, section 62A.61, is amended to read:

62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO DETERMINE USUAL AND CUSTOMARY FEES.]

(a) A health carrier that bases reimbursement to health care providers upon a usual and customary fee must maintain in its office a copy of a description of the methodology used to calculate fees including at least the following:

(1) the frequency of the determination of usual and customary fees;

(2) a general description of the methodology used to determine usual and customary fees; and

(3) the percentile of usual and customary fees that determines the maximum allowable reimbursement.

(b) A health carrier must provide a copy of the information described in paragraph (a) to the Minnesota health care commission, the commissioner of health, or the commissioner of commerce, upon request.

(c) The commissioner of health or the commissioner of commerce, as appropriate, may use to enforce this section any enforcement powers otherwise available to the commissioner with respect to the health carrier. The appropriate commissioner shall enforce compliance with a request made under this section by the Minnesota health care commission, at the request of the commissioner. The commissioner of health or commerce, as appropriate, may require health carriers to provide the information required under this section and may use any powers granted under other laws relating to the regulation of health carriers to enforce compliance.

(d) For purposes of this section, "health carrier" has the meaning given in section 62A.011.

Sec. 4. Minnesota Statutes 1996, section 62A.65, subdivision 3, is amended to read:

Subd. 3. [PREMIUM RATE RESTRICTIONS.] No individual health plan may be offered, sold, issued, or renewed to a Minnesota resident unless the premium rate charged is determined in accordance with the following requirements:

purposes of this paragraph, health status includes refraining from tobacco use or other actuarially valid lifestyle factors associated with good health, provided that the lifestyle factor and its effect upon premium rates have been determined by the commissioner to be actuarially valid and have been approved by the commissioner. Variations permitted under this paragraph must not be based upon age or applied differently at different ages. This paragraph does not prohibit use of a constant percentage adjustment for factors permitted to be used under this paragraph.

(b) Premium rates may vary based upon the ages of covered persons only as provided in this paragraph. In addition to the variation permitted under paragraph (a), each health carrier may use an additional premium variation based upon age of up to plus or minus 50 percent of the index rate.

(c) A health carrier may request approval by the commissioner to establish no more than three geographic regions and to establish separate index rates for each region, provided that the index rates do not vary between any two regions by more than 20 percent. Health carriers that do not do business in the Minneapolis/St. Paul metropolitan area may request approval for no more than two geographic regions, and clauses (2) and (3) do not apply to approval of requests made by those health carriers. The commissioner may grant approval if the following conditions are met:

(1) the geographic regions must be applied uniformly by the health carrier;

(2) one geographic region must be based on the Minneapolis/St. Paul metropolitan area;

(3) for each geographic region that is rural, the index rate for that region must not exceed the index rate for the Minneapolis/St. Paul metropolitan area; and

(4) the health carrier provides actuarial justification acceptable to the commissioner for the proposed geographic variations in index rates, establishing that the variations are based upon differences in the cost to the health carrier of providing coverage.

(d) Health carriers may use rate cells and must file with the commissioner the rate cells they use. Rate cells must be based upon the number of adults or children covered under the policy and may reflect the availability of Medicare coverage. The rates for different rate cells must not in any way reflect generalized differences in expected costs between principal insureds and their spouses.

(e) In developing its index rates and premiums for a health plan, a health carrier shall take into account only the following factors:

(1) actuarially valid differences in rating factors permitted under paragraphs (a) and (b); and

(2) actuarially valid geographic variations if approved by the commissioner as provided in paragraph (c).

(f) All premium variations must be justified in initial rate filings and upon request of the commissioner in rate revision filings. All rate variations are subject to approval by the commissioner.

(g) The loss ratio must comply with the section 62A.021 requirements for individual health plans.

(h) The rates must not be approved, unless the commissioner has determined that the rates are reasonable. In determining reasonableness, the commissioner shall consider the growth rates applied cost containment goals established under section 62J.04, subdivision 1, paragraph (b), to the calendar year or years that the proposed premium rate would be in effect, actuarially valid changes in risks associated with the enrollee populations, and actuarially valid changes as a result of statutory changes in Laws 1992, chapter 549.

Sec. 5. Minnesota Statutes 1996, section 62D.02, subdivision 5, is amended to read:

Sec. 6. Minnesota Statutes 1996, section 62D.09, subdivision 3, is amended to read:

Subd. 3. Every health maintenance organization or its representative shall annually, before June 1, provide to its enrollees the following: (1) a summary of its most recent annual financial statement including a balance sheet and statement of receipts and disbursements; (2) a description of the health maintenance organization, its health care plan or plans, its facilities and personnel, any material changes therein since the last report; (3) the current evidence of coverage, or contract amendments thereto; and (4) a statement of consumer information and rights as described in section 62D.07, subdivision 3, paragraph (c). Under clause (3), a health maintenance organization may annually alternate between providing enrollees with amendments and providing current evidence of coverage.

Sec. 7. Minnesota Statutes 1996, section 62J.017, is amended to read:

62J.017 [IMPLEMENTATION TIMETABLE.]

The state seeks to complete the restructuring of the health care delivery and financing system. Beginning July 1, 1994, measures will be taken to increase the public accountability of existing health plan companies, to promote the development of small, community-based integrated service networks, and to reduce administrative costs by standardizing third-party billing forms and procedures and utilization review requirements. Voluntary formation of other integrated service networks will begin after rules have been adopted, but not before July 1, 1996. Statutes and rules for the restructured health care financing and delivery system must be enacted or adopted by January 1, 1996.

Sec. 8. Minnesota Statutes 1996, section 62J.04, subdivision 1, is amended to read:

Subdivision 1. [LIMITS ON THE RATE OF GROWTH COST CONTAINMENT GOALS.] (a) The commissioner of health shall set annual limits on the rate of growth of cost containment goals for public and private spending on health care services for Minnesota residents, as provided in paragraph (b). The limits on growth cost containment goals must be set at levels the commissioner determines to be realistic and achievable but that will reduce the rate of growth in health care spending by at least ten percent per year for the next five years. The commissioner shall set limits on growth cost containment goals based on available data on spending and growth trends, including data from group purchasers, national data on public and private sector health care spending and cost trends, and trend information from other states.

(b) The commissioner shall set the following annual limits on the rate of growth of cost containment goals for public and private spending on health care services for Minnesota residents:

(1) for calendar year 1994, the rate of growth cost containment goal must not exceed the change in the regional consumer price index for urban consumers for calendar year 1993 plus 6.5 percentage points;

(2) for calendar year 1995, the rate of growth cost containment goal must not exceed the change in the regional consumer price index for urban consumers for calendar year 1994 plus 5.3 percentage points;

(3) for calendar year 1996, the rate of growth cost containment goal must not exceed the change in the regional consumer price index for urban consumers for calendar year 1995 plus 4.3 percentage points;

(4) for calendar year 1997, the rate of growth cost containment goal must not exceed the change in the regional consumer price index for urban consumers for calendar year 1996 plus 3.4 percentage points; and

(5) for calendar year 1998, the rate of growth cost containment goal must not exceed the change in the regional consumer price index for urban consumers for calendar year 1997 plus 2.6 percentage points; and

(6) for calendar years after 1998, the commissioner shall set annual cost containment goals based on available data on spending and growth trends, including data from group purchasers, national data on public and private sector health care spending and cost trends, and trend information from other states.

(c) The commissioner shall publish:

(1) the projected limits cost containment goal in the State Register by April 15 of the year immediately preceding the year in which the limit cost containment goal will be effective except for the year 1993, in which the limit cost containment goal shall be published by July 1, 1993;

(2) the quarterly change in the regional consumer price index for urban consumers; and

(3) the health care financing administration forecast for total growth in the national health care expenditures. In setting an annual limit the cost containment goals, the commissioner is exempt from the rulemaking requirements of chapter 14. The commissioner's decision on an annual limit the cost containment goals is not appealable.

Sec. 9. Minnesota Statutes 1996, section 62J.04, subdivision 1a, is amended to read:

Subd. 1a. [ADJUSTED GROWTH LIMITS AND ENFORCEMENT COST CONTAINMENT GOALS.] (a) The commissioner shall publish the final adjusted growth limit cost containment goal in the State Register by January 31 of the year that the expenditure limit cost containment goal is to be in effect. The adjusted limit cost containment goal must reflect the actual regional consumer price index for urban consumers for the previous calendar year, and may deviate from the previously published projected growth limits cost containment goal to reflect differences between the actual regional consumer price index for urban consumers and the projected Consumer Price Index for urban consumers. The commissioner shall report to the legislature by February 15 of each year on the implementation of the growth limits cost containment goal. This annual report shall describe the differences between the projected increase in health care expenditures, the actual expenditures based on data collected, and the impact and validity of growth limits cost containment goals within the overall health care reform strategy.

(b) The commissioner, in consultation with the Minnesota health care commission, shall research and include in the annual report required in paragraph (a) for 1996, recommendations regarding the implementation of growth limits for health plan companies and providers. The commissioner shall:

(1) consider both spending and revenue approaches and report on the implementation of the interim limits as defined in sections 62J.041 and 62J.042;

(2) make recommendations regarding the enforcement mechanism and consider mechanisms to adjust future growth limits as well as mechanisms to establish financial penalties for noncompliance;

(3) address the feasibility of systemwide limits imposed on all integrated service networks; and

(4) make recommendations on the most effective way to implement growth limits on the fee-for-service system in the absence of a regulated all-payer system.

(c) The commissioner shall enforce limits on growth in spending for health plan companies and revenues for providers. If the commissioner determines that artificial inflation or padding of costs or prices has occurred in anticipation of the implementation of growth limits, the commissioner may adjust the base year spending totals or growth limits or take other action to reverse the effect of the artificial inflation or padding.

(d) The commissioner shall impose and enforce overall limits on growth in spending for health plan companies, with adjustments for changes in enrollment, benefits, severity, and risks. If a health plan company exceeds the growth limits, the commissioner may impose financial penalties up to the amount exceeding the applicable growth limit.

Sec. 10. Minnesota Statutes 1996, section 62J.04, subdivision 9, is amended to read:

Sec. 11. Minnesota Statutes 1996, section 62J.041, is amended to read:

62J.041 [INTERIM HEALTH PLAN COMPANY EXPENDITURE LIMITS.]

Subdivision 1. [DEFINITIONS.] (a) For purposes of this section, the following definitions apply.

(b) "Health plan company" has the definition provided in section 62Q.01.

(c) "Total expenditures" means incurred claims or expenditures on health care services, administrative expenses, charitable contributions, and all other payments made by health plan companies out of premium revenues.

(d) "Net expenditures" means total expenditures minus exempted taxes and assessments and payments or allocations made to establish or maintain reserves.

(e) "Exempted taxes and assessments" means direct payments for taxes to government agencies, contributions to the Minnesota comprehensive health association, the medical assistance provider's surcharge under section 256.9657, the MinnesotaCare provider tax under section 295.52, assessments by the health coverage reinsurance association, assessments by the Minnesota life and health insurance guaranty association, assessments by the Minnesota risk adjustment association, and any new assessments imposed by federal or state law.

(f) "Consumer cost-sharing or subscriber liability" means enrollee coinsurance, copayment, deductible payments, and amounts in excess of benefit plan maximums.

Subd. 2. [ESTABLISHMENT.] The commissioner of health shall establish limits on cost containment goals for the increase in net expenditures by each health carrier plan company for calendar years 1994, 1995, 1996, and 1997. The limits cost containment goals must be the same as the annual rate of growth in cost containment goals for health care spending established under section 62J.04, subdivision 1, paragraph (b). Health plan companies that are affiliates may elect to meet one combined expenditure limit cost containment goal.

Subd. 3. [DETERMINATION OF EXPENDITURES.] Health plan companies shall submit to the commissioner of health, by April 1, 1994, for calendar year 1993; April 1, 1995, for calendar year 1994; April 1, 1996, for calendar year 1995; April 1, 1997, for calendar year 1996; and April 1, 1998, for calendar year 1997 all information the commissioner determines to be necessary to implement and enforce this section. The information must be submitted in the form specified by the commissioner. The information must include, but is not limited to, expenditures per member per month or cost per employee per month, and detailed information on revenues and reserves. The commissioner, to the extent possible, shall coordinate the submittal of the information required under this section with the submittal of the financial data required under chapter 62J, to minimize the administrative burden on health plan companies. The commissioner may adjust final expenditure figures for demographic changes, risk selection, changes in basic benefits, and legislative initiatives that materially change health care costs, as long as these adjustments are consistent with the methodology submitted by the health plan company to the commissioner, and approved by the commissioner as actuarially justified. The methodology to be used for adjustments and the election to meet one expenditure limit cost containment goal for affiliated health plan companies must be submitted to the commissioner by September 1, 1994. Community integrated service networks may submit the information with their application for licensure. The commissioner shall also accept changes to methodologies already submitted. The adjustment methodology submitted and approved by the commissioner must apply to the data submitted for calendar years 1994 and 1995. The commissioner may allow changes to accepted adjustment methodologies for data submitted for calendar years 1996 and 1997. Changes to the adjustment methodology must be received by September 1, 1996, and must be approved by the commissioner.

(b) Health plan companies shall fully reflect in the premium rates the savings generated by the expenditure limits. No premium rate, currently reviewed by the departments of health or commerce, may be approved for those health plan companies unless the health plan company establishes to the satisfaction of the commissioner of commerce or the commissioner of health, as appropriate, that the proposed new rate would comply with this paragraph.

(c) Health plan companies, except those licensed under chapter 60A to sell accident and sickness insurance under chapter 62A, shall annually before the end of the fourth fiscal quarter provide to the commissioner of health or commerce, as applicable, a projection of the level of reserves the company expects to attain during each quarter of the following fiscal year. These health plan companies shall submit with required quarterly financial statements a calculation of the actual reserve level attained by the company at the end of each quarter including identification of the sources of any significant changes in the reserve level and an updated projection of the level of reserves the health plan company expects to attain by the end of the fiscal year. In cases where the health plan company has been given a certificate to operate a new health maintenance organization under chapter 62D, or been licensed as an integrated service network or community integrated service network under chapter 62N, or formed an affiliation with one of these organizations, the health plan company shall also submit with its quarterly financial statement, total enrollment at the beginning and end of the quarter and enrollment changes within each service area of the new organization. The reserve calculations shall be maintained by the commissioners as trade secret information, except to the extent that such information is also required to be filed by another provision of state law and is not treated as trade secret information under such other provisions.

(d) Health plan companies in paragraph (c) whose reserves are less than the required minimum or more than the required maximum at the end of the fiscal year shall submit a plan of corrective action to the commissioner of health or commerce under subdivision 7.

(e) The commissioner of commerce, in consultation with the commissioner of health, shall report to the legislature no later than January 15, 1995, as to whether the concept of a reserve corridor or other mechanism for purposes of monitoring reserves is adaptable for use with indemnity health insurers that do business in multiple states and that must comply with their domiciliary state's reserves requirements.

Subd. 5. [NOTICE.] The commissioner of health shall publish in the State Register and make available to the public by July 1, 1995, a list of all health plan companies that exceeded their expenditure limit cost containment goal for the 1994 calendar year. The commissioner shall publish in the State Register and make available to the public by July 1, 1996, a list of all health plan companies that exceeded their combined expenditure limit cost containment goal for calendar years 1994 and 1995. The commissioner shall notify each health plan company that the commissioner has determined that the health plan company exceeded its expenditure limit cost containment goal, at least 30 days before publishing the list, and shall provide each health plan company with ten days to provide an explanation for exceeding the expenditure limit cost containment goal. The commissioner shall review the explanation and may change a determination if the commissioner determines the explanation to be valid.

Subd. 6. [ASSISTANCE BY THE COMMISSIONER OF COMMERCE.] The commissioner of commerce shall provide assistance to the commissioner of health in monitoring health plan companies regulated by the commissioner of commerce. The commissioner of commerce, in consultation with the commissioner of health, shall enforce compliance with expenditure limits the cost containment goals for those health plan companies in which the commissioner of commerce approves the premium rates.

Subd. 7. [ENFORCEMENT.] (a) The commissioners of health and commerce shall enforce the reserve limits referenced in subdivision 4, with respect to the health plan companies that each commissioner respectively regulates. Each commissioner shall require health plan companies under the commissioner's jurisdiction to submit plans of corrective action when the reserve requirement is not met. The plan of correction must address the following:

(1) actuarial assumptions used in forecasting future financial results;

(2) trend assumptions used in setting future premiums;

(4) proposed rate increases or decreases;

(5) growth limits applied under section 62J.04, subdivision 1, paragraph (b); and

(6) other factors deemed appropriate by the health plan company or commissioner.

If the health plan company's reserves exceed the required maximum, the plan of correction shall address how the health plan company will come into compliance and set forth a timetable within which compliance would be achieved. The plan of correction may propose premium refunds, credits for prior premiums paid, policyholder dividends, or any combination of these or other methods which will benefit enrollees and/or Minnesota residents and are such that the reserve requirements can reasonably be expected to be met. The commissioner's evaluation of the plan of correction must consider:

(1) whether implementation of the plan would provide the company with an unfair advantage in the market;

(2) the extent to which the reserve excess was created by any movement of enrolled persons to another organization formed by the company;

(3) whether any proposed premium refund, credit, and/or dividend represents an equitable allocation to policyholders covered in prior periods as determined using sound actuarial practice; and

(4) any other factors deemed appropriate by the applicable commissioner.

(b) The plan of correction is subject to approval by the commissioner of health or commerce, as applicable. If such a plan is not approved by the applicable commissioner, the applicable commissioner shall enter an order stating the steps that the health plan company must take to come into compliance. Within 30 days of the date of such order, the health plan company must file a notice of appeal with the applicable commissioner or comply with the commissioner's order. If an appeal is filed, such appeal is governed by chapter 14.

(c) Health plan companies that exceed the expenditure limits based on two-year average expenditure data (1994 and 1995, 1996 and 1997) shall be required by the appropriate commissioner to pay back the amount exceeding the expenditure limit through an assessment on the health plan company. A health plan company may appeal the commissioner's order to pay back the amount exceeding the expenditure limit by mailing to the commissioner a written notice of appeal within 30 days from the date the commissioner's order was mailed. The contested case and judicial review provisions of chapter 14 apply to the appeal. The health plan company shall pay the amount specified by the commissioner either to the commissioner or into an escrow account until final resolution of the appeal. Notwithstanding sections 15.472 to 15.475, each party is responsible for its own fees and expenses, including attorneys fees, for the appeal. Any amount required to be paid back under this section shall be deposited in the health care access fund. The appropriate commissioner may approve a different repayment method to take into account the health plan company's financial condition. Health plan companies shall comply with the limits but shall also guarantee that their contractual obligations are met. Health plan companies are prohibited from meeting spending obligations by increasing subscriber liability, including copayments and deductibles and amounts in excess of benefit plan maximums.

Sec. 12. Minnesota Statutes 1996, section 62J.06, is amended to read:

62J.06 [IMMUNITY FROM LIABILITY.]

No member of the Minnesota health care commission established under section 62J.05, regional coordinating boards established under section 62J.09, or the health technology advisory committee established under section 62J.15, shall be held civilly or criminally liable for an act or omission by that person if the act or omission was in good faith and within the scope of the member's responsibilities under this chapter.

Sec. 13. Minnesota Statutes 1996, section 62J.07, subdivision 1, is amended to read:

Sec. 14. Minnesota Statutes 1996, section 62J.07, subdivision 3, is amended to read:

Subd. 3. [REPORTS TO THE COMMISSION.] The commissioner of health and the Minnesota health care commission, the regional coordinating boards, and the health technology advisory committee shall report on their activities and the activities of the regional boards annually and at other times at the request of the legislative commission on health care access. The commissioners of health, commerce, and human services shall provide periodic reports to the legislative commission on the progress of rulemaking that is authorized or required under this act and shall notify members of the commission when a draft of a proposed rule has been completed and scheduled for publication in the State Register. At the request of a member of the commission, a commissioner shall provide a description and a copy of a proposed rule.

Sec. 15. Minnesota Statutes 1996, section 62J.09, subdivision 1, is amended to read:

Subdivision 1. [GENERAL DUTIES.] (a) The commissioner shall divide the state into six regions, one of these regions being the seven-county metropolitan area.

The (b) Each rural region shall establish a locally controlled regional coordinating boards are locally controlled boards board consisting of providers, health plan companies, employers, consumers, and elected officials. Regional coordinating boards may:

(1) undertake voluntary activities to educate consumers, providers, and purchasers about community plans and projects promoting health care cost containment, consumer accountability, access, and quality and efforts to achieve public health goals;

(2) make recommendations to the commissioner regarding ways of improving affordability, accessibility, and quality of health care in the region and throughout the state;

(3) provide technical assistance to parties interested in establishing or operating a community integrated service network or integrated service network within the region. This assistance must complement assistance provided by the commissioner under section 62N.23;

(4) advise the commissioner on public health goals, taking into consideration the relevant portions of the community health service plans, plans required by the Minnesota comprehensive adult mental health act, the Minnesota comprehensive children's mental health act, and the community social service act plans developed by county boards or community health boards in the region under chapters 145A, 245, and 256E;

(5) prepare an annual regional education plan that is consistent with and supportive of public health goals identified by community health boards in the region; and

(6) serve as advisory bodies to identify potential applicants for federal Health Professional Shortage Area and federal Medically Underserved Area designation as requested by the commissioner.

Sec. 16. Minnesota Statutes 1996, section 62J.15, subdivision 1, is amended to read:

Subdivision 1. [HEALTH TECHNOLOGY ADVISORY COMMITTEE.] The Minnesota health care commission shall convene commissioner of health shall convene an advisory committee to conduct evaluations of existing research and technology assessments conducted by other entities of new and existing health care technologies as designated by the legislative commission on health care access, the commissioner, or the advisory committee. The advisory committee may include members of the state commission and other persons appointed by the commission. The advisory committee must include at least one person representing physicians, at least one person representing hospitals, and at least one person representing the health care technology industry. Health care technologies include high-cost drugs, devices, procedures, or processes applied to human health care, such as high-cost transplants and expensive scanners and imagers. The advisory committee is governed by section 15.0575, subdivision 3, except that members do not receive per diem payments.

Sec. 17. Minnesota Statutes 1996, section 62J.152, subdivision 1, is amended to read:

Subdivision 1. [GENERALLY.] The health technology advisory committee established in section 62J.15 shall:

(2) conduct evaluations of specific technologies and their specific use and application;

(3) provide the legislature with scientific evaluations of proposed benefit mandates that utilize health care technologies for a specific use and application;

(4) report the results of the evaluations to the commissioner and the Minnesota health care commission legislative commission on health care access; and

(4) (5) carry out other duties relating to health technology assigned by the commission legislature or the legislative commission on health care access.

Sec. 18. Minnesota Statutes 1996, section 62J.152, subdivision 2, is amended to read:

Subd. 2. [PRIORITIES FOR DESIGNATING TECHNOLOGIES CRITERIA FOR ASSESSMENT EVALUATION.] The health technology advisory committee shall consider the following criteria in designating assessing or evaluating technologies for evaluation:

(1) the level of controversy within the medical or scientific community, including questionable or undetermined efficacy;

(2) the cost implications;

(3) the potential for rapid diffusion;

(4) the impact on a substantial patient population;

(5) the existence of alternative technologies;

(6) the impact on patient safety and health outcome;

(7) the public health importance;

(8) the level of public and professional demand;

(9) the social, ethical, and legal concerns; and

(10) the prevalence of the disease or condition.

The committee may give different weights or attach different importance to each of the criteria, depending on the technology being considered. The committee shall consider any additional criteria approved by the commissioner and the Minnesota health care commission legislative commission on health care access. The committee shall present its list of technologies for evaluation to the legislative commission on health care access for review.

Sec. 19. Minnesota Statutes 1996, section 62J.152, subdivision 4, is amended to read:

Subd. 4. [TECHNOLOGY EVALUATION PROCESS.] (a) The health technology advisory committee shall collect and evaluate studies and research findings on the technologies selected for evaluation from as wide of a range of sources as needed, including, but not limited to: federal agencies or other units of government, international organizations conducting health care technology assessments, health carriers, insurers, manufacturers, professional and trade associations, nonprofit organizations, and academic institutions. The health technology advisory committee may use consultants or experts and solicit testimony or other input as needed to evaluate a specific technology.

findings considered in conducting the evaluation, and the health technology advisory committee's summary statement about the evaluation. Any interested persons or organizations may submit to the health technology advisory committee written comments regarding the technology evaluation within 30 days from the date the preliminary report was published in the State Register. The health technology advisory committee's final report on its technology evaluation must be submitted to the health care commission commissioner, to the legislature, and to the information clearinghouse. A summary of written comments received by the health technology advisory committee within the 30-day period must be included in the final report. The health care commission shall review the final report and prepare its comments and recommendations. Before completing its final comments and recommendations, the health care commission shall provide adequate public notice that testimony will be accepted by the health care commission. The health care commission shall then forward the final report, its comments and recommendations, and a summary of the public's comments to the commissioner and information clearinghouse.

(c) The reports of the health technology advisory committee and the comments and recommendations of the health care commission should not eliminate or bar new technology, and are not rules as defined in the administrative procedure act.

Sec. 20. Minnesota Statutes 1996, section 62J.152, subdivision 5, is amended to read:

Subd. 5. [USE OF TECHNOLOGY EVALUATION.] (a) The final report on the technology evaluation and the commission's comments and recommendations may be used:

(1) by the commissioner in retrospective and prospective review of major expenditures;

(2) by integrated service networks and other group purchasers and by employers, in making coverage, contracting, purchasing, and reimbursement decisions;

(3) by organizations in the development of practice parameters;

(4) by health care providers in making decisions about adding or replacing technology and the appropriate use of technology;

(5) by consumers in making decisions about treatment;

(6) by medical device manufacturers in developing and marketing new technologies; and

(7) as otherwise needed by health care providers, health care plans, consumers, and purchasers.

(b) At the request of the commissioner, the health care commission, in consultation with the health technology advisory committee, shall submit specific recommendations relating to technologies that have been evaluated under this section for purposes of retrospective and prospective review of major expenditures and coverage, contracting, purchasing, and reimbursement decisions affecting state programs.

Sec. 21. Minnesota Statutes 1996, section 62J.152, is amended by adding a subdivision to read:

Subd. 8. [REPEALER.] This section and sections 62J.15 and 62J.156 are repealed effective July 1, 2001.

Sec. 22. Minnesota Statutes 1996, section 62J.17, subdivision 6a, is amended to read:

Subd. 6a. [PROSPECTIVE REVIEW AND APPROVAL.] (a) [REQUIREMENT.] No health care provider subject to prospective review under this subdivision shall make a major spending commitment unless:

(1) the provider has filed an application with the commissioner to proceed with the major spending commitment and has provided all supporting documentation and evidence requested by the commissioner; and

(b) [APPLICATION.] A provider subject to prospective review and approval shall submit an application to the commissioner before proceeding with any major spending commitment. The application must address each item listed in subdivision 4a, paragraph (a), and must also include documentation to support the response to each item. The provider may submit information, with supporting documentation, regarding why the major spending commitment should be excepted from prospective review under subdivision 7. The submission may be made either in addition to or instead of the submission of information relating to the items listed in subdivision 4a, paragraph (a).

(c) [REVIEW.] The commissioner shall determine, based upon the information submitted, whether the major spending commitment is appropriate under the criteria provided in subdivision 5a, or whether it should be excepted from prospective review under subdivision 7. In making this determination, the commissioner may also consider relevant information from other sources. At the request of the commissioner, the Minnesota health care commission health technology advisory committee shall convene an expert review panel made up of persons with knowledge and expertise regarding medical equipment, specialized services, health care expenditures, and capital expenditures to review applications and make recommendations to the commissioner. The commissioner shall make a decision on the application within 60 days after an application is received.

(d) [PENALTIES AND REMEDIES.] The commissioner of health has the authority to issue fines, seek injunctions, and pursue other remedies as provided by law.

Sec. 23. Minnesota Statutes 1996, section 62J.22, is amended to read:

62J.22 [PARTICIPATION OF FEDERAL PROGRAMS.]

The commissioner of health shall seek the full participation of federal health care programs under this chapter, including Medicare, medical assistance, veterans administration programs, and other federal programs. The commissioner of human services shall under the direction of the health care commission submit waiver requests and take other action necessary to obtain federal approval to allow participation of the medical assistance program. Other state agencies shall provide assistance at the request of the commission. If federal approval is not given for one or more federal programs, data on the amount of health care spending that is collected under section 62J.04 shall be adjusted so that state and regional spending limits take into account the failure of the federal program to participate.

Sec. 24. Minnesota Statutes 1996, section 62J.25, is amended to read:

62J.25 [MANDATORY MEDICARE ASSIGNMENT.]

(a) Effective January 1, 1993, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 115 percent of the Medicare-approved amount for any Medicare-covered service provided.

(b) Effective January 1, 1994, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 110 percent of the Medicare-approved amount for any Medicare-covered service provided.

(c) Effective January 1, 1995, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of 105 percent of the Medicare-approved amount for any Medicare-covered service provided.

(d) Effective January 1, 1996, a health care provider authorized to participate in the Medicare program shall not charge to or collect from a Medicare beneficiary who is a Minnesota resident any amount in excess of the Medicare-approved amount for any Medicare-covered service provided.

Sec. 25. Minnesota Statutes 1996, section 62J.2914, subdivision 1, is amended to read:

Subdivision 1. [DISCLOSURE.] An application for approval must include, to the extent applicable, disclosure of the following:

(1) a descriptive title;

(2) a table of contents;

(3) exact names of each party to the application and the address of the principal business office of each party;

(4) the name, address, and telephone number of the persons authorized to receive notices and communications with respect to the application;

(5) a verified statement by a responsible officer of each party to the application attesting to the accuracy and completeness of the enclosed information;

(6) background information relating to the proposed arrangement, including:

(i) a description of the proposed arrangement, including a list of any services or products that are the subject of the proposed arrangement;

(ii) an identification of any tangential services or products associated with the services or products that are the subject of the proposed arrangement;

(iii) a description of the geographic territory involved in the proposed arrangement;

(iv) if the geographic territory described in item (iii), is different from the territory in which the applicants have engaged in the type of business at issue over the last five years, a description of how and why the geographic territory differs;

(v) identification of all products or services that a substantial share of consumers would consider substitutes for any service or product that is the subject of the proposed arrangement;

(vi) identification of whether any services or products of the proposed arrangement are currently being offered, capable of being offered, utilized, or capable of being utilized by other providers or purchasers in the geographic territory described in item (iii);

(vii) identification of the steps necessary, under current market and regulatory conditions, for other parties to enter the territory described in item (iii) and compete with the applicant;

(viii) a description of the previous history of dealings between the parties to the application;

(ix) a detailed explanation of the projected effects, including expected volume, change in price, and increased revenue, of the arrangement on each party's current businesses, both generally as well as the aspects of the business directly involved in the proposed arrangement;

(x) the present market share of the parties to the application and of others affected by the proposed arrangement, and projected market shares after implementation of the proposed arrangement;

(xi) a statement of why the projected levels of cost, access, or quality could not be achieved in the existing market without the proposed arrangement; and

(xii) an explanation of how the arrangement relates to any Minnesota health care commission or applicable regional coordinating board plans for delivery of health care; and

Sec. 26. Minnesota Statutes 1996, section 62J.2915, is amended to read:

62J.2915 [NOTICE AND COMMENT.]

Subdivision 1. [NOTICE.] The commissioner shall cause the notice described in section 62J.2914, subdivision 2, to be published in the State Register and sent to the Minnesota health care commission, the regional coordinating boards for any regions that include all or part of the territory covered by the proposed arrangement, and any person who has requested to be placed on a list to receive notice of applications. The commissioner may maintain separate notice lists for different regions of the state. The commissioner may also send a copy of the notice to any person together with a request that the person comment as provided under subdivision 2. Copies of the request must be provided to the applicant.

Subd. 2. [COMMENTS.] Within 20 days after the notice is published, any person may mail to the commissioner written comments with respect to the application. Within 30 days after the notice is published, the Minnesota health care commission or any regional coordinating board may mail to the commissioner comments with respect to the application. Persons submitting comments shall provide a copy of the comments to the applicant. The applicant may mail to the commissioner written responses to any comments within ten days after the deadline for mailing such comments. The applicant shall send a copy of the response to the person submitting the comment.

Sec. 27. Minnesota Statutes 1996, section 62J.2916, subdivision 1, is amended to read:

Subdivision 1. [CHOICE OF PROCEDURES.] After the conclusion of the period provided in section 62J.2915, subdivision 2, for the applicant to respond to comments, the commissioner shall select one of the three procedures provided in subdivision 2. In determining which procedure to use, the commissioner shall consider the following criteria:

(1) the size of the proposed arrangement, in terms of number of parties and amount of money involved;

(2) the complexity of the proposed arrangement;

(3) the novelty of the proposed arrangement;

(4) the substance and quantity of the comments received;

(5) any comments received from the Minnesota health care commission or regional coordinating boards; and

(6) the presence or absence of any significant gaps in the factual record.

If the applicant demands a contested case hearing no later than the conclusion of the period provided in section 62J.2915, subdivision 2, for the applicant to respond to comments, the commissioner shall not select a procedure. Instead, the applicant shall be given a contested case proceeding as a matter of right.

Sec. 28. Minnesota Statutes 1996, section 62J.2917, subdivision 2, is amended to read:

Subd. 2. [FACTORS.] (a) [GENERALLY APPLICABLE FACTORS.] In making a determination about cost, access, and quality, the commissioner may consider the following factors, to the extent relevant:

(1) whether the proposal is compatible with the cost containment plan or other plan of the Minnesota health care commission or the applicable regional plans of the regional coordinating boards;

(2) market structure:

(i) actual and potential sellers and buyers, or providers and purchasers;

(ii) actual and potential consumers;

(iv) entry conditions;

(3) current market conditions;

(4) the historical behavior of the market;

(5) performance of other, similar arrangements;

(6) whether the proposal unnecessarily restrains competition or restrains competition in ways not reasonably related to the purposes of this chapter; and

(7) the financial condition of the applicant.

(b) [COST.] The commissioner's analysis of cost must focus on the individual consumer of health care. Cost savings to be realized by providers, health carriers, group purchasers, or other participants in the health care system are relevant only to the extent that the savings are likely to be passed on to the consumer. However, where an application is submitted by providers or purchasers who are paid primarily by third party payers unaffiliated with the applicant, it is sufficient for the applicant to show that cost savings are likely to be passed on to the unaffiliated third party payers; the applicants do not have the burden of proving that third party payers with whom the applicants are not affiliated will pass on cost savings to individuals receiving coverage through the third party payers. In making determinations as to costs, the commissioner may consider:

(1) the cost savings likely to result to the applicant;

(2) the extent to which the cost savings are likely to be passed on to the consumer and in what form;

(3) the extent to which the proposed arrangement is likely to result in cost shifting by the applicant onto other payers or purchasers of other products or services;

(4) the extent to which the cost shifting by the applicant is likely to be followed by other persons in the market;

(5) the current and anticipated supply and demand for any products or services at issue;

(6) the representations and guarantees of the applicant and their enforceability;

(7) likely effectiveness of regulation by the commissioner;

(8) inferences to be drawn from market structure;

(9) the cost of regulation, both for the state and for the applicant; and

(10) any other factors tending to show that the proposed arrangement is or is not likely to reduce cost.

(c) [ACCESS.] In making determinations as to access, the commissioner may consider:

(1) the extent to which the utilization of needed health care services or products by the intended targeted population is likely to increase or decrease. When a proposed arrangement is likely to increase access in one geographic area, by lowering prices or otherwise expanding supply, but limits access in another geographic area by removing service capabilities from that second area, the commissioner shall articulate the criteria employed to balance these effects;

(2) the extent to which the proposed arrangement is likely to make available a new and needed service or product to a certain geographic area; and

If the commissioner determines that the proposed arrangement is likely to increase access and bases that determination on a projected increase in utilization, the commissioner shall also determine and make a specific finding that the increased utilization does not reflect overutilization.

(d) [QUALITY.] In making determinations as to quality, the commissioner may consider the extent to which the proposed arrangement is likely to:

(1) decrease morbidity and mortality;

(2) result in faster convalescence;

(3) result in fewer hospital days;

(4) permit providers to attain needed experience or frequency of treatment, likely to lead to better outcomes;

(5) increase patient satisfaction; and

(6) have any other features likely to improve or reduce the quality of health care.

Sec. 29. Minnesota Statutes 1996, section 62J.2921, subdivision 2, is amended to read:

Subd. 2. [NOTICE.] The commissioner shall begin a proceeding to revoke approval by providing written notice to the applicant describing in detail the basis for the proposed revocation. Notice of the proceeding must be published in the State Register and submitted to the Minnesota health care commission and the applicable regional coordinating boards. The notice must invite the submission of comments to the commissioner.

Sec. 30. Minnesota Statutes 1996, section 62J.451, subdivision 6b, is amended to read:

Subd. 6b. [CONSUMER SURVEYS.] (a) The health data institute shall develop and implement a mechanism for collecting comparative data on consumer perceptions of the health care system, including consumer satisfaction, through adoption of a standard consumer survey. This survey shall include enrollees in community integrated service networks, integrated service networks, health maintenance organizations, preferred provider organizations, indemnity insurance plans, public programs, and other health plan companies. The health data institute, in consultation with the health care commission, shall determine a mechanism for the inclusion of the uninsured. This consumer survey may be conducted every two years. A focused survey may be conducted on the off years. Health plan companies and group purchasers shall provide to the health data institute roster data as defined in subdivision 2, including the names, addresses, and telephone numbers of enrollees and former enrollees and other data necessary for the completion of this survey. This roster data provided by the health plan companies and group purchasers is classified as provided under section 62J.452. The health data institute may analyze and prepare findings from the raw, unaggregated data, and the findings from this survey may be included in the health plan company performance reports specified in subdivision 6a, and in other reports developed and disseminated by the health data institute and the commissioner. The raw, unaggregated data is classified as provided under section 62J.452, and may be made available by the health data institute to the extent permitted under section 62J.452. The health data institute shall provide raw, unaggregated data to the commissioner. The survey may include information on the following subjects:

(1) enrollees' overall satisfaction with their health care plan;

(2) consumers' perception of access to emergency, urgent, routine, and preventive care, including locations, hours, waiting times, and access to care when needed;

(3) premiums and costs;

(4) technical competence of providers;

(6) choice and continuity of providers;

(7) continuity of care;

(8) outcomes of care;

(9) services offered by the plan, including range of services, coverage for preventive and routine services, and coverage for illness and hospitalization;

(10) availability of information; and

(11) paperwork.

(b) The health data institute shall appoint a consumer advisory group which shall consist of 13 individuals, representing enrollees from public and private health plan companies and programs and two uninsured consumers, to advise the health data institute on issues of concern to consumers. The advisory group must have at least one member from each regional coordinating board region of the state. The advisory group expires June 30, 1996.

Sec. 31. Minnesota Statutes 1996, section 62L.08, subdivision 8, is amended to read:

Subd. 8. [FILING REQUIREMENT.] No later than July 1, 1993, and each year thereafter, a health carrier that offers, sells, issues, or renews a health benefit plan for small employers shall file with the commissioner the index rates and must demonstrate that all rates shall be within the rating restrictions defined in this chapter. Such demonstration must include the allowable range of rates from the index rates and a description of how the health carrier intends to use demographic factors including case characteristics in calculating the premium rates. The rates shall not be approved, unless the commissioner has determined that the rates are reasonable. In determining reasonableness, the commissioner shall consider the growth rates applied cost containment goals established under section 62J.04, subdivision 1, paragraph (b), to the calendar year or years that the proposed premium rate would be in effect, actuarially valid changes in risk associated with the enrollee population, and actuarially valid changes as a result of statutory changes in Laws 1992, chapter 549. For premium rates proposed to go into effect between July 1, 1993 and December 31, 1993, the pertinent growth rate is the growth rate applied under section 62J.04, subdivision 1, paragraph (b), to calendar year 1994.

Sec. 32. Minnesota Statutes 1996, section 62M.02, subdivision 21, is amended to read:

Subd. 21. [UTILIZATION REVIEW ORGANIZATION.] "Utilization review organization" means an entity including but not limited to an insurance company licensed under chapter 60A to offer, sell, or issue a policy of accident and sickness insurance as defined in section 62A.01; a health service plan licensed under chapter 62C; a health maintenance organization licensed under chapter 62D; a community integrated service network or an integrated service network licensed under chapter 62N; a fraternal benefit society operating under chapter 64B; a joint self-insurance employee health plan operating under chapter 62H; a multiple employer welfare arrangement, as defined in section 3 of the Employee Retirement Income Security Act of 1974 (ERISA), United States Code, title 29, section 1103, as amended; a third party administrator licensed under section 60A.23, subdivision 8, which conducts utilization review and determines certification of an admission, extension of stay, or other health care services for a Minnesota resident; or any entity performing utilization review that is affiliated with, under contract with, or conducting utilization review on behalf of, a business entity in this state.

Sec. 33. Minnesota Statutes 1996, section 62N.01, subdivision 1, is amended to read:

Subdivision 1. [CITATION.] This chapter may be cited as the "Minnesota community integrated service network act."

Sec. 34. Minnesota Statutes 1996, section 62N.22, is amended to read:

62N.22 [DISCLOSURE OF COMMISSIONS.]

Sec. 35. Minnesota Statutes 1996, section 62N.23, is amended to read:

62N.23 [TECHNICAL ASSISTANCE; LOANS.]

(a) The commissioner shall provide technical assistance to parties interested in establishing or operating a community integrated service network or an integrated service network. This shall be known as the community integrated service network technical assistance program (ISNTAP) (CISNTAP).

The technical assistance program shall offer seminars on the establishment and operation of community integrated service networks or integrated service networks in all regions of Minnesota. The commissioner shall advertise these seminars in local and regional newspapers, and attendance at these seminars shall be free.

The commissioner shall write a guide to establishing and operating a community integrated service network or an integrated service network. The guide must provide basic instructions for parties wishing to establish a community integrated service network or an integrated service network. The guide must be provided free of charge to interested parties. The commissioner shall update this guide when appropriate.

The commissioner shall establish a toll-free telephone line that interested parties may call to obtain assistance in establishing or operating a community integrated service network or an integrated service network.

(b) The commissioner shall grant loans for organizational and start-up expenses to entities forming community integrated service networks or integrated service networks, or to networks less than one year old, to the extent of any appropriation for that purpose. The commissioner shall allocate the available funds among applicants based upon the following criteria, as evaluated by the commissioner within the commissioner's discretion:

(1) the applicant's need for the loan;

(2) the likelihood that the loan will foster the formation or growth of a network; and

(3) the likelihood of repayment.

The commissioner shall determine any necessary application deadlines and forms and is exempt from rulemaking in doing so.

Sec. 36. Minnesota Statutes 1996, section 62N.25, subdivision 5, is amended to read:

Subd. 5. [BENEFITS.] Community integrated service networks must offer the health maintenance organization benefit set, as defined in chapter 62D, and other laws applicable to entities regulated under chapter 62D, except that the community integrated service network may impose a deductible, not to exceed $1,000 per person per year, provided that out-of-pocket expenses on covered services do not exceed $3,000 per person or $5,000 per family per year. The deductible must not apply to preventive health services as described in Minnesota Rules, part 4685.0801, subpart 8. Community networks and chemical dependency facilities under contract with a community network shall use the assessment criteria in Minnesota Rules, parts 9530.6600 to 9530.6660, when assessing enrollees for chemical dependency treatment.

Sec. 37. Minnesota Statutes 1996, section 62N.26, is amended to read:

62N.26 [SHARED SERVICES COOPERATIVE.]

Sec. 38. Minnesota Statutes 1996, section 62N.40, is amended to read:

62N.40 [CHEMICAL DEPENDENCY SERVICES.]

Each community integrated service network and integrated service network regulated under this chapter must ensure that chemically dependent individuals have access to cost-effective treatment options that address the specific needs of individuals. These include, but are not limited to, the need for: treatment that takes into account severity of illness and comorbidities; provision of a continuum of care, including treatment and rehabilitation programs licensed under Minnesota Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; the safety of the individual's domestic and community environment; gender appropriate and culturally appropriate programs; and access to appropriate social services.

Sec. 39. Minnesota Statutes 1996, section 62Q.01, subdivision 3, is amended to read:

Subd. 3. [HEALTH PLAN.] "Health plan" means a health plan as defined in section 62A.011; a policy, contract, or certificate issued by a community integrated service network; or an integrated service network.

Sec. 40. Minnesota Statutes 1996, section 62Q.01, subdivision 4, is amended to read:

Subd. 4. [HEALTH PLAN COMPANY.] "Health plan company" means:

(1) a health carrier as defined under section 62A.011, subdivision 2; or

(2) an integrated service network as defined under section 62N.02, subdivision 8; or

(3) a community integrated service network as defined under section 62N.02, subdivision 4a.

Sec. 41. Minnesota Statutes 1996, section 62Q.01, subdivision 5, is amended to read:

Subd. 5. [MANAGED CARE ORGANIZATION.] "Managed care organization" means: (1) a health maintenance organization operating under chapter 62D; (2) a community integrated service network as defined under section 62N.02, subdivision 4a; or (3) an integrated service network as defined under section 62N.02, subdivision 8; or (4) an insurance company licensed under chapter 60A, nonprofit health service plan corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other health plan company, to the extent that it covers health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers.

Sec. 42. Minnesota Statutes 1996, section 62Q.03, subdivision 5a, is amended to read:

Subd. 5a. [PUBLIC PROGRAMS.] (a) A separate risk adjustment system must be developed for state-run public programs, including medical assistance, general assistance medical care, and MinnesotaCare. The system must be developed in accordance with the general risk adjustment methodologies described in this section, must include factors in addition to age and sex adjustment, and may include additional demographic factors, different targeted conditions, and/or different payment amounts for conditions. The risk adjustment system for public programs must attempt to reflect the special needs related to poverty, cultural, or language barriers and other needs of the public program population.

(c) The public programs risk adjustment work group must be representative of the persons served by publicly paid health programs and providers and health plans that meet their needs. To the greatest extent possible, the appointing authorities shall attempt to select representatives that have historically served a significant number of persons in publicly paid health programs or the uninsured. Membership of the work group shall be as follows:

(1) one provider member appointed by the Minnesota Medical Association;

(2) two provider members appointed by the Minnesota Hospital Association, at least one of whom must represent a major disproportionate share hospital;

(3) five members appointed by the Minnesota Council of HMOs, one of whom must represent an HMO with fewer than 50,000 enrollees located outside the metropolitan area and one of whom must represent an HMO with at least 50 percent of total membership enrolled through a public program;

(4) two representatives of counties appointed by the Association of Minnesota Counties;

(5) three representatives of organizations representing the interests of families, children, childless adults, and elderly persons served by the various publicly paid health programs appointed by the governor;

(6) two representatives of persons with mental health, developmental or physical disabilities, chemical dependency, or chronic illness appointed by the governor; and

(7) three public members appointed by the governor, at least one of whom must represent a community health board. The risk adjustment association may appoint a representative, if a representative is not otherwise appointed by an appointing authority.

(d) The commissioners of health and human services, with the advice of the public programs risk adjustment work group, shall develop a work plan and time frame and shall coordinate their efforts with the private sector risk adjustment association's activities and other state initiatives related to public program managed care reimbursement. The commissioners of health and human services shall report to the health care commission and to the appropriate legislative committees on January 15, 1996, and on January 15, 1997, on any policy or legislative changes necessary to implement the public program risk adjustment system.

Sec. 43. Minnesota Statutes 1996, section 62Q.106, is amended to read:

62Q.106 [DISPUTE RESOLUTION BY COMMISSIONER.]

A complainant may at any time submit a complaint to the appropriate commissioner to investigate. After investigating a complaint, or reviewing a company's decision, the appropriate commissioner may order a remedy as authorized under section 62N.04, 62Q.30, or chapter 45, 60A, or 62D.

Sec. 44. Minnesota Statutes 1996, section 62Q.33, subdivision 2, is amended to read:

Subd. 2. [REPORT ON SYSTEM DEVELOPMENT.] The commissioner of health, in consultation with the state community health services advisory committee and the commissioner of human services, and representatives of local health departments, county government, a municipal government acting as a local board of health, the Minnesota health care commission, area Indian health services, health care providers, and citizens concerned about public health, shall coordinate the process for defining implementation and financing responsibilities of the local government core public health functions. The commissioner shall submit recommendations and an initial and final report on local government core public health functions according to the timeline established in subdivision 5.

Sec. 45. Minnesota Statutes 1996, section 62Q.45, subdivision 2, is amended to read:

company licensed under chapter 60A, nonprofit health service plan corporation operating under chapter 62C, fraternal benefit society operating under chapter 64B, or any other health plan company, to the extent that it covers health care services delivered to Minnesota residents through a preferred provider organization or a network of selected providers.

Sec. 46. [62Q.52] [REFERRALS FOR RESIDENTS OF HEALTH CARE FACILITIES.]

If an enrollee is a resident of a health care facility licensed under chapter 144A or a housing with services establishment registered under chapter 144D, the enrollee's primary care physician must refer the enrollee to that facility's skilled nursing unit or that facility's appropriate care setting, provided that the health plan company and the provider can best meet the patient's needs in that setting, if the following conditions are met:

(1) the facility agrees to be reimbursed at that health plan company's contract rate negotiated with similar providers for the same services and supplies; and

(2) the facility meets all guidelines established by the health plan company related to quality of care, utilization, referral authorization, risk assumption, use of health plan company network, and other criteria applicable to providers under contract for the same services and supplies.

Sec. 47. [62Q.65] [ACCESS TO PROVIDER DISCOUNTS.]

Subdivision 1. [REQUIREMENT.] A high deductible health plan must, when used in connection with a medical savings account, provide the enrollee access to any discounted provider fees for services covered by the high deductible health plan, regardless of whether the enrollee has satisfied the deductible for the high deductible health plan.

Subd. 2. [DEFINITIONS.] For purposes of this section, the following terms have the meanings given:

(1) "high deductible health plan" has the meaning given under the Internal Revenue Code of 1986, section 220(c)(2);

(2) "medical savings account" has the meaning given under the Internal Revenue Code of 1986, section 220(d)(1); and

(3) "discounted provider fees" means fees contained in a provider agreement entered into by the issuer of the high deductible health plan, or an affiliate of the issuer, for use in connection with the high deductible health plan.

Sec. 48. Minnesota Statutes 1996, section 256.9363, subdivision 1, is amended to read:

Subdivision 1. [SELECTION OF VENDORS.] In order to contain costs, the commissioner of human services shall select vendors of medical care who can provide the most economical care consistent with high medical standards and shall, where possible, contract with organizations on a prepaid capitation basis to provide these services. The commissioner shall consider proposals by counties and vendors for managed care plans which may include: prepaid capitation programs, competitive bidding programs, or other vendor payment mechanisms designed to provide services in an economical manner or to control utilization, with safeguards to ensure that necessary services are provided. Managed care plans may include integrated service networks as defined in section 62N.02.

Sec. 49. Minnesota Statutes 1996, section 256.9657, subdivision 3, is amended to read:

(b) For purposes of this subdivision, total premium revenue means:

(1) premium revenue recognized on a prepaid basis from individuals and groups for provision of a specified range of health services over a defined period of time which is normally one month, excluding premiums paid to a health maintenance organization, integrated service network, or community integrated service network from the Federal Employees Health Benefit Program;

(2) premiums from Medicare wrap-around subscribers for health benefits which supplement Medicare coverage;

(3) Medicare revenue, as a result of an arrangement between a health maintenance organization, an integrated service network, or a community integrated service network and the health care financing administration of the federal Department of Health and Human Services, for services to a Medicare beneficiary; and

(4) medical assistance revenue, as a result of an arrangement between a health maintenance organization, integrated service network, or community integrated service network and a Medicaid state agency, for services to a medical assistance beneficiary.

If advance payments are made under clause (1) or (2) to the health maintenance organization, integrated service network, or community integrated service network for more than one reporting period, the portion of the payment that has not yet been earned must be treated as a liability.

(c) When a health maintenance organization or an integrated service network or community integrated service network merges or consolidates with or is acquired by another health maintenance organization, integrated service network, or community integrated service network, the surviving corporation or the new corporation shall be responsible for the annual surcharge originally imposed on each of the entities or corporations subject to the merger, consolidation, or acquisition, regardless of whether one of the entities or corporations does not retain a certificate of authority under chapter 62D or a license under chapter 62N.

(d) Effective July 1 of each year, the surviving corporation's or the new corporation's surcharge shall be based on the revenues earned in the second previous calendar year by all of the entities or corporations subject to the merger, consolidation, or acquisition regardless of whether one of the entities or corporations does not retain a certificate of authority under chapter 62D or a license under chapter 62N until the total premium revenues of the surviving corporation include the total premium revenues of all the merged entities as reported to the commissioner of health.

(e) When a health maintenance organization, integrated service network, or community integrated service network, which is subject to liability for the surcharge under this chapter, transfers, assigns, sells, leases, or disposes of all or substantially all of its property or assets, liability for the surcharge imposed by this chapter is imposed on the transferee, assignee, or buyer of the health maintenance organization, integrated service network, or community integrated service network.

(f) In the event a health maintenance organization, integrated service network, or community integrated service network converts its licensure to a different type of entity subject to liability for the surcharge under this chapter, but survives in the same or substantially similar form, the surviving entity remains liable for the surcharge regardless of whether one of the entities or corporations does not retain a certificate of authority under chapter 62D or a license under chapter 62N.

(g) The surcharge assessed to a health maintenance organization, integrated service network, or community integrated service network ends when the entity ceases providing services for premiums and the cessation is not connected with a merger, consolidation, acquisition, or conversion.

Sec. 50. [MEIP STUDY.]

Sec. 51. [REVISOR INSTRUCTIONS.]

The revisor of statutes shall delete references to "integrated service network," but not "community integrated service network," wherever it appears in Minnesota Statutes and make conforming changes as necessary.

Sec. 52. [REPEALER.]

(a) Minnesota Statutes 1996, sections 62J.03, subdivision 3; 62J.04, subdivisions 4 and 7; 62J.041, subdivision 7; 62J.042; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41; and 147.01, subdivision 6, are repealed.

(b) Laws 1993, chapter 247, article 4, section 8; Laws 1995, chapter 96, section 2; and Laws 1995, First Special Session chapter 3, article 13, section 2, are repealed.

(c) Laws 1994, chapter 625, article 5, section 5, as amended by Laws 1995, chapter 234, article 3, section 8, is repealed.

Sec. 53. [EFFECTIVE DATE.]

Section 24 [62J.25] is effective the day following final enactment. Section 47 [62Q.65] is effective January 1, 1998, and applies to high deductible health plans issued or renewed on or after that date.

Section 1. [16A.76] [FEDERAL RESERVE; HEALTH CARE ACCESS FUND.]

Subdivision 1. [ESTABLISH RESERVE.] The federal contingency reserve is established within the health care access fund for uses necessary to preserve access to basic health care services when federal funding is significantly reduced.

Subd. 2. [RESERVE FINANCING.] The funds in reserve shall be equal to the amount of federal financial participation received since July 1, 1995, for services and administrative activities funded by the health care access fund up to a reserve limit of $150,000,000. Investment income attributed to the federal contingency reserve balances shall also be included in the total reserve amount.

Subd. 3. [PERMITTED USE.] The federal contingency reserve is established to protect access to basic health care services that are publicly funded. Funds held in the federal contingency reserve are available for appropriation in the event that federal funds for basic health care services are significantly reduced such as under federal reform or other significant changes to federal law.

Subd. 4. [LIMITS ON USE.] The federal contingency reserve is not available for supplementing reductions in federal funding resulting from application of current federal law funding formulas, for funding long-term care services, or for replacing existing general fund commitments.

Sec. 2. Minnesota Statutes 1996, section 60A.15, subdivision 1, is amended to read:

(b) Installments under paragraph (a), (d), or (e) are percentages of gross premiums less return premiums on all direct business received by the insurer in this state, or by its agents for it, in cash or otherwise, during such year.

(c) Failure of a company to make payments of at least one-third of either (1) the total tax paid during the previous calendar year or (2) 80 percent of the actual tax for the current calendar year shall subject the company to the penalty and interest provided in this section, unless the total tax for the current tax year is $500 or less.

(d) For health maintenance organizations, nonprofit health services plan corporations, integrated service networks, and community integrated service networks, the installments must be based on an amount equal to one percent of premiums described in paragraph (b) that are paid after December 31, 1995.

(e) For purposes of computing installments for town and farmers' mutual insurance companies and for mutual property casualty companies with total assets on December 31, 1989, of $1,600,000,000 or less, the following rates apply:

(1) for all life insurance, two percent;

(2) for town and farmers' mutual insurance companies and for mutual property and casualty companies with total assets of $5,000,000 or less, on all other coverages, one percent; and

(3) for mutual property and casualty companies with total assets on December 31, 1989, of $1,600,000,000 or less, on all other coverages, 1.26 percent.

(f) Premiums under medical assistance, general assistance medical care, the MinnesotaCare program, and the Minnesota comprehensive health insurance plan and all payments, revenues, and reimbursements received from the federal government for Medicare-related coverage as defined in section 62A.31, subdivision 3, paragraph (e), are not subject to tax under this section.

Sec. 3. Minnesota Statutes 1996, section 256.9352, subdivision 3, is amended to read:

Subd. 3. [FINANCIAL MANAGEMENT.] (a) The commissioner shall manage spending for the MinnesotaCare program in a manner that maintains a minimum reserve equal to five percent of the expected cost of state premium subsidies in accordance with section 16A.76. The commissioner must make a quarterly assessment of the expected expenditures for the covered services for the remainder of the current biennium and for the following biennium. The estimated expenditure, including minimum the reserve requirements described in section 16A.76, shall be compared to an estimate of the revenues that will be deposited in the health care access fund. Based on this comparison, and after consulting with the chairs of the house ways and means committee and the senate finance committee, and the legislative commission on health care access, the commissioner shall, as necessary, make the adjustments specified in paragraph (b) to ensure that expenditures remain within the limits of available revenues for the remainder of the current biennium and for the following biennium. The commissioner shall not hire additional staff using appropriations from the health care access fund until the commissioner of finance makes a determination that the adjustments implemented under paragraph (b) are sufficient to allow MinnesotaCare expenditures to remain within the limits of available revenues for the remainder of the current biennium and for the following biennium.

(b) The adjustments the commissioner shall use must be implemented in this order: first, stop enrollment of single adults and households without children; second, upon 45 days' notice, stop coverage of single adults and households without children already enrolled in the MinnesotaCare program; third, upon 90 days' notice, decrease the premium subsidy amounts by ten percent for families with gross annual income above 200 percent of the federal poverty guidelines; fourth, upon 90 days' notice, decrease the premium subsidy amounts by ten percent for families with gross annual income at or below 200 percent; and fifth, require applicants to be uninsured for at least six months prior to eligibility in the MinnesotaCare program. If these measures are insufficient to limit the expenditures to the estimated amount of revenue, the commissioner shall further limit enrollment or decrease premium subsidies.

By February 1, 1995, the department of human services and the department of health shall develop a plan to adjust benefit levels, eligibility guidelines, or other steps necessary to ensure that expenditures for the MinnesotaCare program are contained within the two percent taxes imposed under section 295.52 and the gross premiums tax imposed under section 60A.15, subdivision 1, paragraph (e), for fiscal year 1997.

(c) Notwithstanding paragraphs (a) and (b), the commissioner shall proceed with the enrollment of single adults and households without children in accordance with section 256.9354, subdivision 5, paragraph (a), even if the expenditures do not remain within the limits of available revenues through fiscal year 1997 to allow the departments of human services and health to develop the plan required under paragraph (b).

Sec. 4. Minnesota Statutes 1996, section 295.50, subdivision 3, is amended to read:

Subd. 3. [GROSS REVENUES.] "Gross revenues" are total amounts received in money or otherwise by:

(1) a hospital for patient services;

(2) a surgical center for patient services;

(3) a health care provider, other than a staff model health carrier, for patient services;

(4) a wholesale drug distributor for sale or distribution of legend drugs that are delivered: (i) to a Minnesota resident by a wholesale drug distributor who is a nonresident pharmacy directly, by common carrier, or by mail; or (ii) in Minnesota by the wholesale drug distributor, by common carrier, or by mail, unless the legend drugs are delivered to another wholesale drug distributor who sells legend drugs exclusively at wholesale. Legend drugs do not include nutritional products as defined in Minnesota Rules, part 9505.0325; and

(5) a staff model health plan company as gross premiums for enrollees, copayments, deductibles, coinsurance, and fees for patient services covered under its contracts with groups and enrollees; and

(6) a pharmacy for medical supplies, appliances, and equipment.

Sec. 5. Minnesota Statutes 1996, section 295.50, subdivision 4, is amended to read:

Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care provider" means:

(1) a person whose health care occupation is regulated or required to be regulated by the state of Minnesota furnishing any or all of the following goods or services directly to a patient or consumer: medical, surgical, optical, visual, dental, hearing, nursing services, drugs, medical supplies, medical appliances, or laboratory, diagnostic, or therapeutic services, or any;

(2) a person who provides goods and services not listed above in clause (1) that qualify for reimbursement under the medical assistance program provided under chapter 256B. For purposes of this clause, "directly to a patient or consumer" includes goods and services provided in connection with independent medical examinations under section 65B.56 or other examinations for purposes of litigation or insurance claims;

(2) (3) a staff model health plan company; or

(3) (4) an ambulance service required to be licensed; or

(5) a person who sells or repairs hearing aids and related equipment or prescription eyewear.

Minnesota Rules, parts 4665.0100 to 4665.9900,; residential care homes licensed under chapter 144B,; board and lodging establishments providing only custodial services that are licensed under chapter 157 and registered under section 157.17 to provide supportive services or health supervision services,; adult foster homes as defined in Minnesota Rules, part 9555.5105,; day training and habilitation services for adults with mental retardation and related conditions as defined in section 252.41, subdivision 3,; and boarding care homes, as defined in Minnesota Rules, part 4655.0100.

(c) For purposes of this subdivision, "directly to a patient or consumer" includes goods and services provided in connection with independent medical examinations under section 65B.56 or other examinations for purposes of litigation or insurance claims.

Sec. 6. Minnesota Statutes 1996, section 295.50, subdivision 6, is amended to read:

Subd. 6. [HOME HEALTH CARE SERVICES.] "Home health care services" are services:

(1) defined under the state medical assistance program as home health agency services provided by a home health agency, personal care services and supervision of personal care services, private duty nursing services, and waivered services or services by home care providers required to be licensed under chapter 144A; and

(2) provided at a recipient's residence, if the recipient does not live in a hospital, nursing facility, as defined in section 62A.46, subdivision 3, or intermediate care facility for persons with mental retardation as defined in section 256B.055, subdivision 12, paragraph (d).

Sec. 7. Minnesota Statutes 1996, section 295.50, subdivision 7, is amended to read:

Subd. 7. [HOSPITAL.] "Hospital" means a hospital licensed under chapter 144, or a hospital licensed by any other state or province or territory of Canada jurisdiction.

Sec. 8. Minnesota Statutes 1996, section 295.50, subdivision 13, is amended to read:

Subd. 13. [SURGICAL CENTER.] "Surgical center" is an outpatient surgical center as defined in Minnesota Rules, chapter 4675 or a similar facility located in any other state or province or territory of Canada jurisdiction.

Sec. 9. Minnesota Statutes 1996, section 295.50, subdivision 14, is amended to read:

Subd. 14. [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug distributor" means a wholesale drug distributor required to be licensed under sections 151.42 to 151.51 or a nonresident pharmacy required to be registered under section 151.19.

Sec. 10. Minnesota Statutes 1996, section 295.51, subdivision 1, is amended to read:

Subdivision 1. [BUSINESS TRANSACTIONS IN MINNESOTA.] A hospital, surgical center, pharmacy, or health care provider is subject to tax under sections 295.50 to 295.59 if it is "transacting business in Minnesota." A hospital, surgical center, pharmacy, or health care provider is transacting business in Minnesota if it maintains contacts with or presence in the state of Minnesota sufficient to permit taxation of gross revenues received for patient services under the United States Constitution.

Sec. 11. Minnesota Statutes 1996, section 295.52, subdivision 1, is amended to read:

Subdivision 1. [HOSPITAL TAX.] A tax is imposed on each hospital equal to two 1.50 percent of its gross revenues.

Sec. 12. Minnesota Statutes 1996, section 295.52, subdivision 1a, is amended to read:

Sec. 13. Minnesota Statutes 1996, section 295.52, subdivision 2, is amended to read:

Subd. 2. [PROVIDER TAX.] A tax is imposed on each health care provider equal to two 1.50 percent of its gross revenues.

Sec. 14. Minnesota Statutes 1996, section 295.52, subdivision 3, is amended to read:

Subd. 3. [WHOLESALE DRUG DISTRIBUTOR TAX.] A tax is imposed on each wholesale drug distributor equal to two 1.50 percent of its gross revenues.

Sec. 15. Minnesota Statutes 1996, section 295.52, subdivision 4, is amended to read:

Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] A person that receives prescription drugs for resale or use in Minnesota, other than from a wholesale drug distributor that paid the tax under subdivision 3, is subject to a tax equal to two 1.50 percent of the price paid. Liability for the tax is incurred when prescription drugs are received or delivered in Minnesota by the person.

Sec. 16. Minnesota Statutes 1996, section 295.52, is amended by adding a subdivision to read:

Subd. 6. [HEARING AIDS AND PRESCRIPTION EYEWEAR.] The tax liability of a person who meets the definition of a health care provider solely because the person sells or repairs hearing aids and related equipment or prescription eyewear is limited to the gross revenues received from the sale or repair of these items.

Sec. 17. Minnesota Statutes 1996, section 295.53, subdivision 1, is amended to read:

Subdivision 1. [EXEMPTIONS.] (a) The following payments are excluded from the gross revenues subject to the hospital, surgical center, or health care provider taxes under sections 295.50 to 295.57:

(1) payments received for services provided under the Medicare program, including payments received from the government, and organizations governed by sections 1833 and 1876 of title XVIII of the federal Social Security Act, United States Code, title 42, section 1395, and enrollee deductibles, coinsurance, and copayments, whether paid by the Medicare enrollee or by a Medicare supplemental coverage as defined in section 62A.011, subdivision 3, clause (10). Payments for services not covered by Medicare are taxable;

(2) medical assistance payments including payments received directly from the government or from a prepaid plan;

(3) payments received for home health care services;

(4) payments received from hospitals or surgical centers for goods and services on which liability for tax is imposed under section 295.52 or the source of funds for the payment is exempt under clause (1), (2), (7), (8), or (10);

(5) payments received from health care providers for goods and services on which liability for tax is imposed under this chapter or the source of funds for the payment is exempt under clause (1), (2), (7), (8), or (10);

(6) amounts paid for legend drugs, other than nutritional products, to a wholesale drug distributor who is subject to tax under section 295.52, subdivision 3, reduced by reimbursements received for legend drugs under clauses (1), (2), (7), and (8);

(7) payments received under the general assistance medical care program including payments received directly from the government or from a prepaid plan;

(9) payments received by a health care provider or the wholly owned subsidiary of a health care provider for care provided outside Minnesota to a patient who is not domiciled in Minnesota;

(10) payments received from the chemical dependency fund under chapter 254B;

(11) payments received in the nature of charitable donations that are not designated for providing patient services to a specific individual or group;

(12) payments received for providing patient services incurred through a formal program of health care research conducted in conformity with federal regulations governing research on human subjects. Payments received from patients or from other persons paying on behalf of the patients are subject to tax;

(13) payments received from any governmental agency for services benefiting the public, not including payments made by the government in its capacity as an employer or insurer;

(14) payments received for services provided by community residential mental health facilities licensed under Minnesota Rules, parts 9520.0500 to 9520.0690, community support programs and family community support programs approved under Minnesota Rules, parts 9535.1700 to 9535.1760, and community mental health centers as defined in section 245.62, subdivision 2;

(15) government payments received by a regional treatment center;

(16) payments received for hospice care services;

(17) payments received by a health care provider for medical supplies, appliances, and equipment hearing aids and related equipment or prescription eyewear delivered outside of Minnesota;

(18) payments received by a post-secondary educational institution from student tuition, student activity fees, health care service fees, government appropriations, donations, or grants. Fee for service payments and payments for extended coverage are taxable; and

(19) payments received for services provided by: assisted living programs and congregate housing programs.

(b) Payments received by wholesale drug distributors for prescription legend drugs sold directly to veterinarians or veterinary bulk purchasing organizations are excluded from the gross revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.

Sec. 18. Minnesota Statutes 1996, section 295.53, subdivision 3, is amended to read:

Subd. 3. [SEPARATE STATEMENT OF TAX.] A hospital, surgical center, pharmacy, or health care provider must not state the tax obligation under section 295.52 in a deceptive or misleading manner. It must not separately state tax obligations on bills provided to patients, consumers, or other payers when the amount received for the services or goods is not subject to tax.

Pharmacies that separately state the tax obligations on bills provided to consumers or to other payers who purchase legend drugs may state the tax obligation as two 1.50 percent of the wholesale price of the legend drugs. Pharmacies must not state the tax obligation as two 1.50 percent of the retail price.

Sec. 19. Minnesota Statutes 1996, section 295.53, subdivision 4, is amended to read:

Subd. 4. [DEDUCTION FOR RESEARCH.] (a) In addition to the exemptions allowed under subdivision 1, a hospital or health care provider which is exempt under section 501(c)(3) of the Internal Revenue Code of 1986 or is owned and operated under authority of a governmental unit, may deduct from its gross revenues subject to the hospital or health care provider taxes under sections 295.50 to 295.57 revenues equal to expenditures for qualifying research conducted by an allowable research programs program.

(b) For purposes of this subdivision, the following requirements apply:

(1) expenditures for allowable research programs are the direct and general must be for program costs for activities which are part of qualifying research conducted by an allowable research program;

(2) an allowable research program must be a formal program of medical and health care research approved by the governing body of the hospital or health care provider which also includes active solicitation of research funds from government and private sources. Allowable conducted by an entity which is exempt under section 501(c)(3) of the Internal Revenue Code of 1986 or is owned and operated under authority of a governmental unit; and

(3) qualifying research must:

(i) be approved in writing by the governing body of the hospital or health care provider which is taking the deduction under this subdivision;

(1) (ii) have as its purpose the development of new knowledge in basic or applied science relating to the diagnosis and treatment of conditions affecting the human body;

(2) (iii) be subject to review by individuals with expertise in the subject matter of the proposed study but who have no financial interest in the proposed study and are not involved in the conduct of the proposed study; and

(3) (iv) be subject to review and supervision by an institutional review board operating in conformity with federal regulations if the research involves human subjects or an institutional animal care and use committee operating in conformity with federal regulations if the research involves animal subjects. Research expenses are not exempt if the study is a routine evaluation of health care methods or products used in a particular setting conducted for the purpose of making a management decision. Costs of clinical research activities paid directly for the benefit of an individual patient are excluded from this exemption. Basic research in fields including biochemistry, molecular biology, and physiology are also included if such programs are subject to a peer review process.

(c) No deduction shall be allowed under this subdivision for any revenue received by the hospital or health care provider in the form of a grant, gift, or otherwise, whether from a government or nongovernment source, on which the tax liability under section 295.52 is not imposed or for which the tax liability under section 295.52 has been received from a third party as provided for in section 295.582.

Sec. 20. Minnesota Statutes 1996, section 295.54, subdivision 1, is amended to read:

Subdivision 1. [TAXES PAID TO ANOTHER STATE.] A hospital, surgical center, pharmacy, or health care provider that has paid taxes to another state or province or territory of Canada jurisdiction measured by gross revenues and is subject to tax under sections 295.52 to 295.59 on the same gross revenues is entitled to a credit for the tax legally due and paid to another state or province or territory of Canada jurisdiction to the extent of the lesser of (1) the tax actually paid to the other state or province or territory of Canada jurisdiction, or (2) the amount of tax imposed by Minnesota on the gross revenues subject to tax in the other taxing jurisdictions.

Sec. 21. Minnesota Statutes 1996, section 295.54, subdivision 2, is amended to read:

Subd. 2. [PHARMACY CREDIT REFUND.] A pharmacy may claim a quarterly credit an annual refund against the total amount of tax, if any, the pharmacy owes during that quarter calendar year under section 295.52, subdivision 1b, as provided in this subdivision 2. The credit refund shall equal two 1.50 percent of the amount paid by the pharmacy to a wholesale drug distributor subject to tax under section 295.52, subdivision 3, for legend drugs delivered by the pharmacy outside of Minnesota. If the amount of the credit exceeds the tax liability of the pharmacy under section 295.52, subdivision 1b, the commissioner shall provide the pharmacy with a refund equal to the excess amount. Each qualifying pharmacy must apply for the refund on the annual return as provided under section 295.55, subdivision 5. The refund must be claimed within one year of the due date of the return. Interest on refunds paid under this subdivision will begin to accrue 60 days after the date a claim for refund is filed. For purposes of this subdivision, the date a claim is filed is the due date of the return or the date of the actual claim for refund, whichever is later.

Sec. 22. Minnesota Statutes 1996, section 295.55, subdivision 2, is amended to read:

Subd. 2. [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) Each hospital or surgical center must make estimated payments of the taxes for the calendar year in monthly installments to the commissioner within ten 15 days after the end of the month.

(b) Estimated tax payments are not required of hospitals or surgical centers if the tax for the calendar year is less than $500 or if a hospital has been allowed a grant under section 144.1484, subdivision 2, for the year.

(c) Underpayment of estimated installments bear interest at the rate specified in section 270.75, from the due date of the payment until paid or until the due date of the annual return at the rate specified in section 270.75. An underpayment of an estimated installment is the difference between the amount paid and the lesser of (1) 90 percent of one-twelfth of the tax for the calendar year or (2) the tax for the actual gross revenues received during the month.

Sec. 23. Minnesota Statutes 1996, section 295.582, is amended to read:

295.582 [AUTHORITY.]

the entities must pay the additional expense. Nothing in this section limits the ability of a hospital, surgical center, pharmacy, wholesale drug distributor, or health care provider to recover all or part of the section 295.52 obligation by other methods, including increasing fees or charges.

(b) Each third-party purchaser regulated under any chapter cited in paragraph (a) shall include with its annual renewal for certification of authority or licensure documentation indicating compliance with paragraph (a).

(c) Any hospital, surgical center, or health care provider subject to a tax under section 295.52 or a pharmacy that has paid additional expense transferred under this section by a wholesale drug distributor may file a complaint with the commissioner responsible for regulating the third-party purchaser if at any time the third-party purchaser fails to comply with paragraph (a).

(d) If the commissioner responsible for regulating the third-party purchaser finds at any time that the third-party purchaser has not complied with paragraph (a), the commissioner may take enforcement action against a third-party purchaser which is subject to the commissioner's regulatory jurisdiction and which does not allow a hospital, surgical center, pharmacy, or provider to pass-through the tax. The commissioner may by order fine or censure the third-party purchaser or revoke or suspend the certificate of authority or license of the third-party purchaser to do business in this state if the commissioner finds that the third-party purchaser has not complied with this section. The third-party purchaser may appeal the commissioner's order through a contested case hearing in accordance with chapter 14.

Sec. 24. [REPEALER.]

Minnesota Statutes 1996, sections 295.52, subdivision 1b; and 295.53, subdivision 5, are repealed.

Sec. 25. [EFFECTIVE DATES.]

Sections 7 [295.50, s.7], 8 [295.50, s.13], 9 [295.50, s.14], 15 [295.52, s.4], and 20 [295.54, s.1] are effective the day following final enactment.

Section 19 [295.53, s.4] is effective for research expenditures incurred after December 31, 1996. Section 2 [60A.15, s.1] is effective for payments, revenues, and reimbursements received from the federal government after December 31, 1996.

Section 22 [295.55, s.2] is effective for estimated payments due after July 1, 1997.

Section 16 [295.52, s.6] is effective for services rendered and revenue received after December 31, 1997. Sections 5 [295.50, s.4], 11 [295.52, s.1], 12 [295.52, s.1a], 13 [295.52, s.2], 14 [295.52, s.3], 15 [295.52, s.4], and 21 [295.54, s.2] are effective for gross revenues received after December 31, 1997.

Sections 4 [295.50, s.3], 6 [295.50, s.6], 10 [295.51, s.1], 17 [295.53, s.1], and 18 [295.53, s.3] are effective January 1, 1998.

Section 1. [256.955] [SENIOR CITIZEN DRUG PROGRAM.]

Subdivision 1. [ESTABLISHMENT; ELIGIBILITY.] The commissioner, in consultation with county social service agencies, shall establish and administer a senior citizen drug program. Qualified senior citizens shall be eligible for prescription drug coverage under the program beginning January 1, 1998. Persons who initially enroll as qualified senior citizens and whose income increases above the limits specified in subdivision 2, paragraph (d), may continue enrollment but must pay the full cost of coverage.

Subd. 2. [DEFINITIONS.] (a) For purposes of this section, the following definitions apply.

(c) "Health plan company" has the meaning provided in section 62Q.01, subdivision 4.

(d) "Qualified senior citizen" means an individual age 65 or older who:

(1) has a household income that does not exceed 120 percent of the federal poverty guidelines;

(2) owns assets whose value does not exceed twice the limit used to determine eligibility under the supplemental security income program;

(3) is enrolled in Medicare Part A and Part B;

(4) is not eligible for prescription drug coverage under a health plan;

(5) does not have coverage for prescription drugs under a Medicare supplement plan, as defined in sections 62A.31 to 62A.44, or policies, contracts, or certificates that supplement Medicare issued by health maintenance organizations or those policies, contracts, or certificates governed by section 1833 or 1876 of the federal Social Security Act, United States Code, title 42, section 1395, et seq., as amended;

(6) is not eligible for medical assistance without a spenddown, general assistance medical care without a spenddown, or MinnesotaCare;

(7) has not had coverage described in clauses (4) and (5) for at least four months prior to application for the program; and

(8) is a permanent resident of Minnesota as defined in section 256.9359.

Subd. 3. [PRESCRIPTION DRUG COVERAGE.] (a) Coverage under the program is limited to prescription drugs covered under the medical assistance program, except as provided in paragraph (b).

(b) As of the date the commissioner determines that, in a given county, at least two health plan companies offer policies, contracts, or certificates governed by section 1833 or 1876 of the federal Social Security Act that provide a prescription drug benefit as part of their standard coverage for Medicare enrollees, eligibility for prescription drug coverage under the senior drug program for enrollees who are residents of the county shall be limited to coverage of prescription drug costs in excess of any annual expenditure limit for enrollees of the health plan companies.

Subd. 4. [APPLICATION PROCEDURES AND ADMINISTRATION.] Applications and information on the program must be made available at county social service agencies, health care provider offices, and agencies and organizations serving senior citizens. Senior citizens shall submit applications and any information specified by the commissioner as being necessary to verify eligibility directly to the county social service agencies. County social service agencies shall determine an applicant's eligibility for the program within 30 days from the date the application is received.

Subd. 5. [DRUG UTILIZATION REVIEW PROGRAM.] The commissioner shall implement a drug utilization review program for program enrollees. The commissioner shall establish an advisory committee to assist the commissioner in developing criteria for the utilization review program. The committee shall be comprised of an equal number of physicians and pharmacists with expertise in treating elderly persons, and shall use a consensus process to develop clinically relevant standards for drug utilization review designed to improve health care outcomes for senior citizens. The advisory committee is governed by section 15.059.

Subd. 6. [PHARMACY ENROLLMENT AND REIMBURSEMENT.] Pharmacies may apply to the commissioner to participate in the senior citizen drug program. The commissioner shall reimburse participating pharmacies for drug and dispensing costs at the MinnesotaCare reimbursement level, minus the copayment required under subdivision 7.

(b) Program enrollees shall pay a copayment of $10 for each prescription.

(c) Program enrollees must satisfy $200 annual deductible, based upon expenditures for prescription drugs.

(d) The commissioner shall include payments or expenditures by an enrollee under this subdivision as expenses for medical care when determining an enrollee's eligibility for medical assistance or general assistance medical care based upon a spenddown.

Subd. 8. [REPORT.] The commissioner shall submit to the legislature by December 1, 1998, a report on the senior citizen drug program. The report must include demographic information on enrollees, per-prescription expenditures, total program expenditures, hospital and nursing home costs avoided by enrollees, any savings to medical assistance and Medicare resulting from the provision of prescription drug coverage under Medicare by health maintenance organizations, other public and private options for drug assistance to the senior population, and any recommendations for changes in the senior drug program.

Subd. 9. [SUNSET.] The commissioner shall have no authority under this section and section 256B.04, subdivision 19, to pay claims for prescription drugs, accept premiums from qualified senior citizens, or impose rebates on manufacturers for drugs dispensed to qualified senior citizens, on or after the effective date of any waiver approved by the federal Health Care Financing Administration that would allow the commissioner to provide prescription drug coverage to Medicare beneficiaries whose income is less than 150 percent of the federal poverty guidelines.

Sec. 2. Minnesota Statutes 1996, section 256B.04, is amended by adding a subdivision to read:

Subd. 19. [PRESCRIPTION DRUG CONTRACT REQUIREMENT.] The commissioner shall include, as part of any medical assistance prescription drug contract with a drug manufacturer, a requirement that the drug manufacturer provide for payment of a 15.1 percent rebate on each unit of drug paid for by the senior citizen drug program under section 256.955 on behalf of a qualified senior citizen enrolled in the program, after satisfaction of any deductible and copayment requirements.

Section 1. Minnesota Statutes 1996, section 62E.02, subdivision 13, is amended to read:

Subd. 13. [ELIGIBLE PERSON.] (a) "Eligible person" means an individual who:

(1) is currently and has been a resident of Minnesota for the six months immediately preceding the date of receipt by the association or its writing carrier of a completed certificate of eligibility and who;

(2) meets the enrollment requirements of section 62E.14; and

(3) is not otherwise ineligible under this subdivision.

(b) No individual is eligible for coverage under a qualified or a Medicare supplement plan issued by the association for whom a premium is paid or reimbursed by a federal, state, or local agency as of the first day of any term for which a premium amount is paid or reimbursed.

Sec. 2. Minnesota Statutes 1996, section 62E.02, subdivision 18, is amended to read:

Sec. 3. Minnesota Statutes 1996, section 62E.11, is amended by adding a subdivision to read:

Subd. 13. [REPORT TO LEGISLATURE.] The commissioner shall report to the legislature annually on the costs incurred by the association in providing coverage to individuals enrolled in medical assistance under chapter 256B or general assistance medical care under chapter 256D. The report shall be provided to the chairs of the house committee on health and human services and the senate committee on health and family security no later than January 15 of each year. The report's contents shall be determined by the commissioner, in consultation with the department of human services and the association. At a minimum, the report shall provide a breakdown, for the association in aggregate and for each category of individuals enrolled in medical assistance under chapter 256B or general assistance medical care under chapter 256D, of:

(1) administrative costs;

(2) claims costs;

(3) premiums paid;

(4) deductibles, coinsurance, and copayments paid;

(5) state payments to providers satisfying deductibles, coinsurance, or copayments required to be paid under a qualified or Medicare supplement plan issued by the association;

(6) the number of individuals;

(7) losses; and

(8) appropriated state funds.

The commissioner of human services, the association, and the writing carrier shall cooperate with the commissioner and provide all information that the commissioner determines is necessary to prepare this report.

Sec. 4. Minnesota Statutes 1996, section 62E.13, subdivision 2, is amended to read:

Subd. 2. The association may select policies and contracts, or parts thereof, submitted by a member or members of the association, or by the association or others, to develop specifications for bids from any members entity which wish wishes to be selected as a writing carrier to administer the state plan. The selection of the writing carrier shall be based upon criteria including established by the board of directors of the association and approved by the commissioner. The criteria shall outline specific qualifications that an entity must satisfy in order to be selected and, at a minimum, shall include the member's entity's proven ability to handle large group accident and health insurance cases, efficient claim paying capacity, and the estimate of total charges for administering the plan. The association may select separate writing carriers for the two types of qualified plans, the qualified medicare supplement plan, and the health maintenance organization contract.

Sec. 5. Minnesota Statutes 1996, section 256B.056, subdivision 8, is amended to read:

Sec. 6. Minnesota Statutes 1996, section 256B.0625, subdivision 15, is amended to read:

Subd. 15. [HEALTH PLAN PREMIUMS AND COPAYMENTS.] (a) Medical assistance covers health care prepayment plan premiums, insurance premiums, and copayments if determined to be cost-effective by the commissioner. For purposes of obtaining Medicare part A and part B, and copayments, expenditures may be made even if federal funding is not available.

(b) Effective for all premiums due on or after June 30, 1997, medical assistance does not cover premiums that a recipient is required to pay under a qualified or Medicare supplement plan issued by the Minnesota comprehensive health association.

Sec. 7. Minnesota Statutes 1996, section 256D.03, subdivision 3b, is amended to read:

Subd. 3b. [COOPERATION.] (a) General assistance or general assistance medical care applicants and recipients must cooperate with the state and local agency to identify potentially liable third-party payors and assist the state in obtaining third-party payments. Cooperation includes identifying any third party who may be liable for care and services provided under this chapter to the applicant, recipient, or any other family member for whom application is made and providing relevant information to assist the state in pursuing a potentially liable third party. General assistance medical care applicants and recipients must cooperate by providing information about any group health plan in which they may be eligible to enroll. They must cooperate with the state and local agency in determining if the plan is cost-effective. For purposes of this subdivision, coverage provided by the Minnesota comprehensive health association under chapter 62E shall not be considered group health plan coverage or cost-effective by the state and local agency. If the plan is determined cost-effective and the premium will be paid by the state or local agency or is available at no cost to the person, they must enroll or remain enrolled in the group health plan. Cost-effective insurance premiums approved for payment by the state agency and paid by the local agency are eligible for reimbursement according to subdivision 6.

(b) Effective for all premiums due on or after June 30, 1997, general assistance medical care does not cover premiums that a recipient is required to pay under a qualified or Medicare supplement plan issued by the Minnesota comprehensive health association.

Sec. 8. Minnesota Statutes 1996, section 295.58, is amended to read:

295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.]

(a) The commissioner shall deposit all revenues, including penalties and interest, derived from the taxes imposed by sections 295.50 to 295.57 and from the insurance premiums tax on health maintenance organizations, community integrated service networks, integrated service networks, and nonprofit health service plan corporations in the health care access fund in the state treasury. Refunds of overpayments must be paid from the health care access fund in the state treasury. There is annually appropriated from the health care access fund to the commissioner of revenue the amount necessary to make any refunds required under section 295.54.

(b) The revenues, including penalties and interest, derived from the tax on insurance premiums imposed by section 60A.15 on health maintenance organizations, community integrated service networks, and nonprofit health service plan corporations must be deposited in the general fund and are annually appropriated to the Minnesota comprehensive health association to offset assessments made to subsidize the costs of the Minnesota comprehensive insurance plan established under chapter 62E.