Career rule for teachers aged 60 with 30 years of service created.

A bill for an act

relating to retirement; creating a career rule for teachers aged 60 with 30 years of

service; amending Minnesota Statutes 2025 Supplement, sections 126C.10,

subdivision 37; 354.42, subdivision 3; 354.44, subdivision 6.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 37, is

amended to read:

Subd. 37.

Pension adjustment revenue.

(a) A school district's pension adjustment

revenue equals the sum of:

(1) the greater of zero or the product of:

(i) the difference between the district's adjustment under Minnesota Statutes 2012, section

127A.50, subdivision 1
, for fiscal year 2014 per adjusted pupil unit and the state average

adjustment under Minnesota Statutes 2012, section
127A.50, subdivision 1
, for fiscal year

2014 per adjusted pupil unit; and

(ii) the district's adjusted pupil units for the fiscal year; and

(2) the product of the salaries paid to district employees who were members of the

Teachers Retirement Association and the St. Paul Teachers' Retirement Fund Association

for the prior fiscal year and the district's pension adjustment rate for the fiscal year. The

pension adjustment rate for Independent School District No. 625, St. Paul, equals
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2.3 percent

for fiscal year 2023, 2.5 percent for fiscal year 2024 and fiscal year 2025, and 3.25 percent

for fiscal year 2026 and later
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. The pension adjustment rate for all other districts equals
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1.25 percent for fiscal year 2025 and 2.31 percent for fiscal year 2026 and later
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.

(b) For fiscal year 2025, the state total pension adjustment revenue under paragraph (a),

clause (2), must not exceed the amount calculated under paragraph (a), clause (2), for fiscal

year 2024. The commissioner must prorate the pension adjustment revenue under paragraph

(a), clause (2), so as not to exceed the maximum.

(c) For fiscal year 2026 and fiscal year 2027, the state total pension adjustment revenue

under paragraph (a), clause (2), must not be prorated.

(d) For fiscal year 2028 and later, the state total pension adjustment revenue under

paragraph (a), clause (2), must not exceed the amount calculated under paragraph (a), clause

(2), for fiscal year 2027. The commissioner must prorate the pension adjustment revenue

under paragraph (a), clause (2), so as not to exceed the maximum.

(e) Notwithstanding section
123A.26, subdivision 1
, a cooperative unit, as defined in

section
123A.24, subdivision 2
, qualifies for pension adjustment revenue under paragraph

(a), clause (2), as if it was a district, and the aid generated by the cooperative unit shall be

paid to the cooperative unit.

Sec. 2.

Minnesota Statutes 2025 Supplement, section 354.42, subdivision 3, is amended

to read:

Subd. 3.

Employer.

(a) The regular employer contribution to the fund by Special School

District No. 1, Minneapolis, is an amount equal to the applicable following percentage of

salary of each coordinated member and the applicable percentage of salary of each basic

member specified in paragraph (c).

The additional employer contribution to the fund by Special School District No. 1,

Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a

coordinated member or who is a basic member.

(b) The regular employer contribution to the fund by Independent School District No.

709, Duluth, is an amount equal to the applicable percentage of salary of each old law or

new law coordinated member specified for the coordinated program in paragraph (c).

(c) The employer contribution to the fund for every other employer is
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an amount equal

to 9.81 percent of the salary of each coordinated member and 13.81 percent of the salary

of each basic member
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.......
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.

(d) When an employer contribution rate changes for a fiscal year, the new contribution

rate is effective for the entire salary paid for each employer unit with the first payroll cycle

reported.

Sec. 3.

Minnesota Statutes 2025 Supplement, section 354.44, subdivision 6, is amended

to read:

Subd. 6.

Computation of formula program retirement annuity.

(a) The formula

retirement annuity must be computed in accordance with the applicable provisions of the

formulas stated in paragraph (b) or (d) on the basis of each member's average salary under

section
354.05, subdivision 13a
, for the period of the member's formula service credit.

(b) This paragraph, in conjunction with paragraph (c), applies to a person who first

became a member of the association or a member of a pension fund listed in section
356.30,

subdivision 3
, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e),

produces a higher annuity amount, in which case paragraph (d) applies. The average salary

as defined in section
354.05, subdivision 13a
, multiplied by the following percentages per

year of formula service credit shall determine the amount of the annuity to which the member

qualifying therefor is entitled for service rendered before July 1, 2006:

Period

Coordinated Member

Basic Member

Each year of service

during first ten

1.2 percent per year

2.2 percent per year

Each year of service

thereafter

1.7 percent per year

2.7 percent per year

For service rendered on or after July 1, 2006, by a member other than a member who

was a member of the former Duluth Teachers Retirement Fund Association between January

1, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member

who was a member of the former Duluth Teachers Retirement Fund Association between

January 1, 2013, and June 30, 2015, the average salary as defined in section
354.05,

subdivision 13a
, multiplied by the following percentages per year of service credit, determines

the amount the annuity to which the member qualifying therefor is entitled:

Period

Coordinated Member

Basic Member

Each year of service

during first ten

1.4 percent per year

2.2 percent per year

Each year of service after

ten years of service

1.9 percent per year

2.7 percent per year

(c)(1) This paragraph applies only to a person who first became a member of the

association or a member of a pension fund listed in section
356.30, subdivision 3
, before

July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction

with this paragraph than when calculated under paragraph (d), in conjunction with paragraph

(e).

(2) Where any member retires prior to normal retirement age under a formula annuity,

the member shall be paid a retirement annuity in an amount equal to the normal annuity

provided in paragraph (b) reduced by one-quarter of one percent for each month that the

member is under normal retirement age at the time of retirement except that for any member

who has 30 or more years of allowable service credit, the reduction shall be applied only

for each month that the member is under age 62.

(3) Any member whose attained age plus credited allowable service totals 90 years is

entitled, upon application, to a retirement annuity in an amount equal to the normal annuity

provided in paragraph (b), without any reduction by reason of early retirement.

(d) This paragraph applies to a member who has become at least 55 years old and first

became a member of the association after June 30, 1989, and to any other member who has

become at least 55 years old and whose annuity amount when calculated under this paragraph

and in conjunction with paragraph (e), is higher than it is when calculated under paragraph

(b), in conjunction with paragraph (c).

(1) For a basic member, the average salary, as defined in section
354.05, subdivision

13a
, multiplied by 2.7 percent for each year of service for a basic member determines the

amount of the retirement annuity to which the basic member is entitled. The annuity of a

basic member who was a member of the former Minneapolis Teachers Retirement Fund

Association as of June 30, 2006, must be determined according to the annuity formula under

the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association

in effect as of that date.

(2) For a coordinated member, the average salary, as defined in section
354.05,

subdivision 13a
, multiplied by 1.7 percent for each year of service rendered before July 1,

2006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a

member other than a member who was a member of the former Duluth Teachers Retirement

Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each

year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers

Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the

amount of the retirement annuity to which the coordinated member is entitled.

(e) This paragraph applies to a person who has become at least 55 years old and first

becomes a member of the association after June 30, 1989, and to any other member who

has become at least 55 years old and whose annuity is higher when calculated under

paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b)

in conjunction with paragraph (c). An employee who retires under the formula annuity

before the normal retirement age is entitled to receive
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an
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the normal
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annuity
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under
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provided

in paragraph (d), reduced as described in
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clause (1) or (2), as applicable.

(1) For a member who is at least age 60 and has at least 30 years of service, the annuity
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is the normal annuity provided in paragraph (d) reduced by an early reduction factor of five

percent for each year that the member's age of retirement precedes the normal retirement

age. The resulting reduced annuity
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shall be
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further
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adjusted to take into account the increase

in the monthly amount that would have occurred had the member retired early and deferred

receipt of the annuity until normal retirement age and the annuity was augmented during

the deferral period at 2.5 percent, if the member commenced employment after June 30,

2006, or at three percent, if the member commenced employment before July 1, 2006,

compounded annually.

(2) For a member who has not attained age 60 or has fewer than 30 years of service, the

annuity is
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the normal annuity provided in paragraph (d)
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reduced for each year that the

member's age of retirement precedes normal retirement age by the following early reduction

factors:

(i) for the period during which the member is age 55 through age 58, the factor is four

percent; and

(ii) for the period during which the member is at least age 59 but not yet normal retirement

age, the factor is seven percent.

The resulting annuity shall be further adjusted to take into account the increase in the

monthly amount that would have occurred had the member retired early and deferred receipt

of the annuity until normal retirement age and the annuity was augmented during the deferral

period at the applicable annual rate, compounded annually. The applicable annual rate is

the rate in effect for the month that includes the member's effective date of retirement and

must be considered as fixed for the member for the period until the member reaches normal

retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member

commenced employment after June 30, 2006, or three percent, if the member commenced

employment before July 1, 2006, compounded annually, and decreases each month beginning

July 2019 in equal monthly increments over the five-year period that begins July 1, 2019,

and ends June 30, 2024, to zero percent effective for July 2024 and thereafter.

After June 30, 2024, the reduced annuity commencing before normal retirement age

under this clause shall not take into account any augmentation.

(f) No retirement annuity is payable to a former employee with a salary that exceeds 95

percent of the governor's salary unless and until the salary figures used in computing the

highest five successive years average salary under paragraph (a) have been audited by the

Teachers Retirement Association and determined by the executive director to comply with

the requirements and limitations of section
354.05
, subdivisions 35 and 35a.