Minnesota 2025-2026 Regular Session

Minnesota House Bill HF2318 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1.1 A bill for an act
2	2	1.2 relating to retirement; Teachers Retirement Association; increasing the pension
3	3	1.3 adjustment revenue for school districts; increasing employer contributions;
4	4	1.4 providing for an unreduced retirement annuity upon reaching age 62 with 30 years
5	5	1.5 of service; appropriating money; amending Minnesota Statutes 2024, sections
6	6	1.6 126C.10, subdivision 37; 354.42, subdivision 3; 354.44, subdivision 6.
7	7	1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
8	8	1.8 Section 1. Minnesota Statutes 2024, section 126C.10, subdivision 37, is amended to read:
9	9	1.9 Subd. 37.Pension adjustment revenue.(a) A school district's pension adjustment
10	10	1.10revenue equals the sum of:
11	11	1.11 (1) the greater of zero or the product of:
12	12	1.12 (i) the difference between the district's adjustment under Minnesota Statutes 2012, section
13	13	1.13127A.50, subdivision 1, for fiscal year 2014 per adjusted pupil unit and the state average
14	14	1.14adjustment under Minnesota Statutes 2012, section 127A.50, subdivision 1, for fiscal year
15	15	1.152014 per adjusted pupil unit; and
16	16	1.16 (ii) the district's adjusted pupil units for the fiscal year; and
17	17	1.17 (2) the product of the salaries paid to district employees who were members of the
18	18	1.18Teachers Retirement Association and the St. Paul Teachers' Retirement Fund Association
19	19	1.19for the prior fiscal year and the district's pension adjustment rate for the fiscal year. The
20	20	1.20pension adjustment rate for Independent School District No. 625, St. Paul, equals 2.3 percent
21	21	1.21for fiscal year 2023, 2.5 percent for fiscal year 2024 and fiscal year 2025, and 3.25 percent
22	22	1.22for fiscal year 2026 and later. The pension adjustment rate for all other districts equals 1.05
23	23	1Section 1.
24	24	REVISOR VH/VJ 25-0459503/07/25
25	25	State of Minnesota
26	26	This Document can be made available
27	27	in alternative formats upon request
28	28	HOUSE OF REPRESENTATIVES
29	29	H. F. No. 2318
30	30	NINETY-FOURTH SESSION
31	31	Authored by Nadeau, Myers, Davids, Bakeberg and Zeleznikar03/13/2025
32	32	The bill was read for the first time and referred to the Committee on State Government Finance and Policy 2.1percent for fiscal year 2023, 1.25 percent for fiscal year 2024 and fiscal year 2025, and 2.0
33	33	2.23.0 percent for fiscal year 2026 and later.
34	34	2.3 (b) For fiscal year 2025, the state total pension adjustment revenue under paragraph (a),
35	35	2.4clause (2), must not exceed the amount calculated under paragraph (a), clause (2), for fiscal
36	36	2.5year 2024. The commissioner must prorate the pension adjustment revenue under paragraph
37	37	2.6(a), clause (2), so as not to exceed the maximum.
38	38	2.7 (c) For fiscal year 2026 and fiscal year 2027, the state total pension adjustment revenue
39	39	2.8under paragraph (a), clause (2), must not be prorated.
40	40	2.9 (d) For fiscal year 2028 and later, the state total pension adjustment revenue under
41	41	2.10paragraph (a), clause (2), must not exceed the amount calculated under paragraph (a), clause
42	42	2.11(2), for fiscal year 2027. The commissioner must prorate the pension adjustment revenue
43	43	2.12under paragraph (a), clause (2), so as not to exceed the maximum.
44	44	2.13 (e) Notwithstanding section 123A.26, subdivision 1, a cooperative unit, as defined in
45	45	2.14section 123A.24, subdivision 2, qualifies for pension adjustment revenue under paragraph
46	46	2.15(a), clause (2), as if it was a district, and the aid generated by the cooperative unit shall be
47	47	2.16paid to the cooperative unit.
48	48	2.17 EFFECTIVE DATE.This section is effective for revenue in fiscal years 2026 and later.
49	49	2.18 Sec. 2. Minnesota Statutes 2024, section 354.42, subdivision 3, is amended to read:
50	50	2.19 Subd. 3.Employer.(a) The regular employer contribution to the fund by Special School
51	51	2.20District No. 1, Minneapolis, is an amount equal to the applicable following percentage of
52	52	2.21salary of each coordinated member and the applicable percentage of salary of each basic
53	53	2.22member specified in paragraph (c).
54	54	2.23 The additional employer contribution to the fund by Special School District No. 1,
55	55	2.24Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a
56	56	2.25coordinated member or who is a basic member.
57	57	2.26 (b) The regular employer contribution to the fund by Independent School District No.
58	58	2.27709, Duluth, is an amount equal to the applicable percentage of salary of each old law or
59	59	2.28new law coordinated member specified for the coordinated program in paragraph (c).
60	60	2.29 (c) The employer contribution to the fund for every other employer is an amount equal
61	61	2.30to the applicable following percentage 10.5 percent of the salary of each coordinated member
62	62	2.31and the applicable following percentage 13.5 percent of the salary of each basic member:.
63	63	2Sec. 2.
64	64	REVISOR VH/VJ 25-0459503/07/25 Basic MemberCoordinated Member3.1 Period
65	65	12.55 percent8.55 percent3.2 from July 1, 2022, through June 30, 2023
66	66	12.75 percent8.75 percent3.3 from July 1, 2023, through June 30, 2025
67	67	13.5 percent9.5 percent3.4 after June 30, 2025
68	68	3.5 (d) When an employer contribution rate changes for a fiscal year, the new contribution
69	69	3.6rate is effective for the entire salary paid for each employer unit with the first payroll cycle
70	70	3.7reported.
71	71	3.8 EFFECTIVE DATE.This section is effective July 1, 2025.
72	72	3.9 Sec. 3. Minnesota Statutes 2024, section 354.44, subdivision 6, is amended to read:
73	73	3.10 Subd. 6.Computation of formula program retirement annuity.(a) The formula
74	74	3.11retirement annuity must be computed in accordance with the applicable provisions of the
75	75	3.12formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
76	76	3.13section 354.05, subdivision 13a, for the period of the member's formula service credit.
77	77	3.14 (b) This paragraph, in conjunction with paragraph (c), applies to a person who first
78	78	3.15became a member of the association or a member of a pension fund listed in section 356.30,
79	79	3.16subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e),
80	80	3.17produces a higher annuity amount, in which case paragraph (d) applies. The average salary
81	81	3.18as defined in section 354.05, subdivision 13a, multiplied by the following percentages per
82	82	3.19year of formula service credit shall determine the amount of the annuity to which the member
83	83	3.20qualifying therefor is entitled for service rendered before July 1, 2006:
84	84	Basic MemberCoordinated Member3.21 Period
85	85	2.2 percent per year1.2 percent per year3.22 Each year of service
86	86	3.23 during first ten
87	87	2.7 percent per year1.7 percent per year3.24 Each year of service
88	88	3.25 thereafter
89	89	3.26 For service rendered on or after July 1, 2006, by a member other than a member who
90	90	3.27was a member of the former Duluth Teachers Retirement Fund Association between January
91	91	3.281, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member
92	92	3.29who was a member of the former Duluth Teachers Retirement Fund Association between
93	93	3.30January 1, 2013, and June 30, 2015, the average salary as defined in section 354.05,
94	94	3.31subdivision 13a, multiplied by the following percentages per year of service credit, determines
95	95	3.32the amount the annuity to which the member qualifying therefor is entitled:
96	96	3Sec. 3.
97	97	REVISOR VH/VJ 25-0459503/07/25 Basic MemberCoordinated Member4.1 Period
98	98	2.2 percent per year1.4 percent per year4.2 Each year of service
99	99	4.3 during first ten
100	100	2.7 percent per year1.9 percent per year4.4 Each year of service after
101	101	4.5 ten years of service
102	102	4.6 (c)(1) This paragraph applies only to a person who first became a member of the
103	103	4.7association or a member of a pension fund listed in section 356.30, subdivision 3, before
104	104	4.8July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction
105	105	4.9with this paragraph than when calculated under paragraph (d), in conjunction with paragraph
106	106	4.10(e).
107	107	4.11 (2) Where any member retires prior to normal retirement age under a formula annuity,
108	108	4.12the member shall be paid a retirement annuity in an amount equal to the normal annuity
109	109	4.13provided in paragraph (b) reduced by one-quarter of one percent for each month that the
110	110	4.14member is under normal retirement age at the time of retirement except that for any member
111	111	4.15who has 30 or more years of allowable service credit, the reduction shall be applied only
112	112	4.16for each month that the member is under age 62.
113	113	4.17 (3) Any member whose attained age plus credited allowable service totals 90 years is
114	114	4.18entitled, upon application, to a retirement annuity in an amount equal to the normal annuity
115	115	4.19provided in paragraph (b), without any reduction by reason of early retirement.
116	116	4.20 (d) This paragraph applies to a member who has become at least 55 years old and first
117	117	4.21became a member of the association after June 30, 1989, and to any other member who has
118	118	4.22become at least 55 years old and whose annuity amount when calculated under this paragraph
119	119	4.23and in conjunction with paragraph (e), is higher than it is when calculated under paragraph
120	120	4.24(b), in conjunction with paragraph (c).
121	121	4.25 (1) For a basic member, the average salary, as defined in section 354.05, subdivision
122	122	4.2613a, multiplied by 2.7 percent for each year of service for a basic member determines the
123	123	4.27amount of the retirement annuity to which the basic member is entitled. The annuity of a
124	124	4.28basic member who was a member of the former Minneapolis Teachers Retirement Fund
125	125	4.29Association as of June 30, 2006, must be determined according to the annuity formula under
126	126	4.30the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association
127	127	4.31in effect as of that date.
128	128	4.32 (2) For a coordinated member, the average salary, as defined in section 354.05,
129	129	4.33subdivision 13a, multiplied by 1.7 percent for each year of service rendered before July 1,
130	130	4.342006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a
131	131	4.35member other than a member who was a member of the former Duluth Teachers Retirement
132	132	4Sec. 3.
133	133	REVISOR VH/VJ 25-0459503/07/25 5.1Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each
134	134	5.2year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers
135	135	5.3Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the
136	136	5.4amount of the retirement annuity to which the coordinated member is entitled.
137	137	5.5 (e) This paragraph applies to a person who has become at least 55 years old and first
138	138	5.6becomes a member of the association after June 30, 1989, and to any other member who
139	139	5.7has become at least 55 years old and whose annuity is higher when calculated under
140	140	5.8paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b)
141	141	5.9in conjunction with paragraph (c). An employee who retires under the formula annuity
142	142	5.10before the normal retirement age is entitled to receive the normal annuity provided in
143	143	5.11paragraph (d), reduced as described in clause (1) or (2), as applicable.
144	144	5.12 (1) For a member who is at least age 62 and has at least 30 years of service, the annuity
145	145	5.13shall be reduced by an early reduction factor of six percent for each year that the member's
146	146	5.14age of retirement precedes the normal retirement age. The resulting reduced annuity shall
147	147	5.15be further adjusted to take into account the increase in the monthly amount that would have
148	148	5.16occurred had the member retired early and deferred receipt of the annuity until normal
149	149	5.17retirement age and the annuity was augmented during the deferral period at 2.5 percent, if
150	150	5.18the member commenced employment after June 30, 2006, or at three percent, if the member
151	151	5.19commenced employment before July 1, 2006, compounded annually is the normal annuity
152	152	5.20provided in paragraph (d), without any reduction by reason of early retirement.
153	153	5.21 (2) For a member who has not attained age 62 or has fewer than 30 years of service, the
154	154	5.22annuity shall be reduced for each year that the member's age of retirement precedes normal
155	155	5.23retirement age by the following early reduction factors:
156	156	5.24 (i) for the period during which the member is age 55 through age 58, the factor is four
157	157	5.25percent; and
158	158	5.26 (ii) for the period during which the member is at least age 59 but not yet normal retirement
159	159	5.27age, the factor is seven percent.
160	160	5.28 The resulting annuity shall be further adjusted to take into account the increase in the
161	161	5.29monthly amount that would have occurred had the member retired early and deferred receipt
162	162	5.30of the annuity until normal retirement age and the annuity was augmented during the deferral
163	163	5.31period at the applicable annual rate, compounded annually. The applicable annual rate is
164	164	5.32the rate in effect for the month that includes the member's effective date of retirement and
165	165	5.33shall be considered as fixed for the member for the period until the member reaches normal
166	166	5.34retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member
167	167	5Sec. 3.
168	168	REVISOR VH/VJ 25-0459503/07/25 6.1commenced employment after June 30, 2006, or three percent, if the member commenced
169	169	6.2employment before July 1, 2006, compounded annually, and decreases each month beginning
170	170	6.3July 2019 in equal monthly increments over the five-year period that begins July 1, 2019,
171	171	6.4and ends June 30, 2024, to zero percent effective for July 2024 and thereafter.
172	172	6.5 After June 30, 2024, the reduced annuity commencing before normal retirement age
173	173	6.6under this clause shall not take into account any augmentation.
174	174	6.7 (f) No retirement annuity is payable to a former employee with a salary that exceeds 95
175	175	6.8percent of the governor's salary unless and until the salary figures used in computing the
176	176	6.9highest five successive years average salary under paragraph (a) have been audited by the
177	177	6.10Teachers Retirement Association and determined by the executive director to comply with
178	178	6.11the requirements and limitations of section 354.05, subdivisions 35 and 35a.
179	179	6.12 EFFECTIVE DATE.This section is effective July 1, 2025.
180	180	6.13 Sec. 4. APPROPRIATIONS; TEACHERS RETIREMENT ASSOCIATION.
181	181	6.14 (a) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
182	182	6.15general fund to the Department of Education for increased employer pension contributions
183	183	6.16to the Teachers Retirement Association. Beginning with fiscal year 2028 and later, the base
184	184	6.17must increase annually by three percent of the prior fiscal year's base.
185	185	6.18 (b) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
186	186	6.19general fund to the Minnesota State Academies for increased employer pension contributions
187	187	6.20to the Teachers Retirement Association. Beginning with fiscal year 2028 and later, the base
188	188	6.21must increase annually by three percent of the prior fiscal year's base.
189	189	6.22 (c) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
190	190	6.23general fund to the Perpich Center for Arts Education for increased employer pension
191	191	6.24contributions to the Teachers Retirement Association. Beginning with fiscal year 2028 and
192	192	6.25later, the base must increase annually by three percent of the prior fiscal year's base.
193	193	6.26 (d) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
194	194	6.27general fund to the Minnesota State Colleges and Universities for increased employer
195	195	6.28pension contributions to the Teachers Retirement Association. Beginning with fiscal year
196	196	6.292028 and later, the base must increase annually by three percent of the prior fiscal year's
197	197	6.30base.
198	198	6Sec. 4.
199	199	REVISOR VH/VJ 25-0459503/07/25 7.1 Sec. 5. EDUCATION APPROPRIATIONS.
200	200	7.2 Subdivision 1.Department of Education.The sums indicated are appropriated from
201	201	7.3the general fund to the Department of Education for the fiscal years designated. These sums
202	202	7.4are in addition to appropriations made for the same purpose in any other law.
203	203	7.5 Subd. 2.General education aid.For general education aid under Minnesota Statutes,
204	204	7.6section 126C.13, subdivision 4:
205	205	2026............7.7 $
206	206	2027............7.8 $
207	207	7.9 The 2026 appropriation includes $0 for 2025 and $....... for 2026.
208	208	7.10 The 2027 appropriation includes $....... for 2026 and $....... for 2027.
209	209	7Sec. 5.
210	210	REVISOR VH/VJ 25-0459503/07/25