1.1 A bill for an act
1.2 relating to retirement; Teachers Retirement Association; increasing the pension
1.3 adjustment revenue for school districts; increasing employer contributions;
1.4 providing for an unreduced retirement annuity upon reaching age 62 with 30 years
1.5 of service; appropriating money; amending Minnesota Statutes 2024, sections
1.6 126C.10, subdivision 37; 354.42, subdivision 3; 354.44, subdivision 6.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2024, section 126C.10, subdivision 37, is amended to read:
1.9 Subd. 37.Pension adjustment revenue.(a) A school district's pension adjustment
1.10revenue equals the sum of:
1.11 (1) the greater of zero or the product of:
1.12 (i) the difference between the district's adjustment under Minnesota Statutes 2012, section
1.13127A.50, subdivision 1, for fiscal year 2014 per adjusted pupil unit and the state average
1.14adjustment under Minnesota Statutes 2012, section 127A.50, subdivision 1, for fiscal year
1.152014 per adjusted pupil unit; and
1.16 (ii) the district's adjusted pupil units for the fiscal year; and
1.17 (2) the product of the salaries paid to district employees who were members of the
1.18Teachers Retirement Association and the St. Paul Teachers' Retirement Fund Association
1.19for the prior fiscal year and the district's pension adjustment rate for the fiscal year. The
1.20pension adjustment rate for Independent School District No. 625, St. Paul, equals 2.3 percent
1.21for fiscal year 2023, 2.5 percent for fiscal year 2024 and fiscal year 2025, and 3.25 percent
1.22for fiscal year 2026 and later. The pension adjustment rate for all other districts equals 1.05
1Section 1.
25-04595 as introduced03/07/25 REVISOR VH/VJ
SENATE
STATE OF MINNESOTA
S.F. No. 3239NINETY-FOURTH SESSION
(SENATE AUTHORS: ABELER)
OFFICIAL STATUSD-PGDATE
Introduction and first reading04/03/2025
Referred to State and Local Government 2.1percent for fiscal year 2023, 1.25 percent for fiscal year 2024 and fiscal year 2025, and 2.0
2.23.0 percent for fiscal year 2026 and later.
2.3 (b) For fiscal year 2025, the state total pension adjustment revenue under paragraph (a),
2.4clause (2), must not exceed the amount calculated under paragraph (a), clause (2), for fiscal
2.5year 2024. The commissioner must prorate the pension adjustment revenue under paragraph
2.6(a), clause (2), so as not to exceed the maximum.
2.7 (c) For fiscal year 2026 and fiscal year 2027, the state total pension adjustment revenue
2.8under paragraph (a), clause (2), must not be prorated.
2.9 (d) For fiscal year 2028 and later, the state total pension adjustment revenue under
2.10paragraph (a), clause (2), must not exceed the amount calculated under paragraph (a), clause
2.11(2), for fiscal year 2027. The commissioner must prorate the pension adjustment revenue
2.12under paragraph (a), clause (2), so as not to exceed the maximum.
2.13 (e) Notwithstanding section 123A.26, subdivision 1, a cooperative unit, as defined in
2.14section 123A.24, subdivision 2, qualifies for pension adjustment revenue under paragraph
2.15(a), clause (2), as if it was a district, and the aid generated by the cooperative unit shall be
2.16paid to the cooperative unit.
2.17 EFFECTIVE DATE.This section is effective for revenue in fiscal years 2026 and later.
2.18 Sec. 2. Minnesota Statutes 2024, section 354.42, subdivision 3, is amended to read:
2.19 Subd. 3.Employer.(a) The regular employer contribution to the fund by Special School
2.20District No. 1, Minneapolis, is an amount equal to the applicable following percentage of
2.21salary of each coordinated member and the applicable percentage of salary of each basic
2.22member specified in paragraph (c).
2.23 The additional employer contribution to the fund by Special School District No. 1,
2.24Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a
2.25coordinated member or who is a basic member.
2.26 (b) The regular employer contribution to the fund by Independent School District No.
2.27709, Duluth, is an amount equal to the applicable percentage of salary of each old law or
2.28new law coordinated member specified for the coordinated program in paragraph (c).
2.29 (c) The employer contribution to the fund for every other employer is an amount equal
2.30to the applicable following percentage 10.5 percent of the salary of each coordinated member
2.31and the applicable following percentage 13.5 percent of the salary of each basic member:.
2Sec. 2.
25-04595 as introduced03/07/25 REVISOR VH/VJ Basic MemberCoordinated Member3.1 Period
12.55 percent8.55 percent3.2 from July 1, 2022, through June 30, 2023
12.75 percent8.75 percent3.3 from July 1, 2023, through June 30, 2025
13.5 percent9.5 percent3.4 after June 30, 2025
3.5 (d) When an employer contribution rate changes for a fiscal year, the new contribution
3.6rate is effective for the entire salary paid for each employer unit with the first payroll cycle
3.7reported.
3.8 EFFECTIVE DATE.This section is effective July 1, 2025.
3.9 Sec. 3. Minnesota Statutes 2024, section 354.44, subdivision 6, is amended to read:
3.10 Subd. 6.Computation of formula program retirement annuity.(a) The formula
3.11retirement annuity must be computed in accordance with the applicable provisions of the
3.12formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
3.13section 354.05, subdivision 13a, for the period of the member's formula service credit.
3.14 (b) This paragraph, in conjunction with paragraph (c), applies to a person who first
3.15became a member of the association or a member of a pension fund listed in section 356.30,
3.16subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e),
3.17produces a higher annuity amount, in which case paragraph (d) applies. The average salary
3.18as defined in section 354.05, subdivision 13a, multiplied by the following percentages per
3.19year of formula service credit shall determine the amount of the annuity to which the member
3.20qualifying therefor is entitled for service rendered before July 1, 2006:
Basic MemberCoordinated Member3.21 Period
2.2 percent per year1.2 percent per year3.22 Each year of service
3.23 during first ten
2.7 percent per year1.7 percent per year3.24 Each year of service
3.25 thereafter
3.26 For service rendered on or after July 1, 2006, by a member other than a member who
3.27was a member of the former Duluth Teachers Retirement Fund Association between January
3.281, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member
3.29who was a member of the former Duluth Teachers Retirement Fund Association between
3.30January 1, 2013, and June 30, 2015, the average salary as defined in section 354.05,
3.31subdivision 13a, multiplied by the following percentages per year of service credit, determines
3.32the amount the annuity to which the member qualifying therefor is entitled:
3Sec. 3.
25-04595 as introduced03/07/25 REVISOR VH/VJ Basic MemberCoordinated Member4.1 Period
2.2 percent per year1.4 percent per year4.2 Each year of service
4.3 during first ten
2.7 percent per year1.9 percent per year4.4 Each year of service after
4.5 ten years of service
4.6 (c)(1) This paragraph applies only to a person who first became a member of the
4.7association or a member of a pension fund listed in section 356.30, subdivision 3, before
4.8July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction
4.9with this paragraph than when calculated under paragraph (d), in conjunction with paragraph
4.10(e).
4.11 (2) Where any member retires prior to normal retirement age under a formula annuity,
4.12the member shall be paid a retirement annuity in an amount equal to the normal annuity
4.13provided in paragraph (b) reduced by one-quarter of one percent for each month that the
4.14member is under normal retirement age at the time of retirement except that for any member
4.15who has 30 or more years of allowable service credit, the reduction shall be applied only
4.16for each month that the member is under age 62.
4.17 (3) Any member whose attained age plus credited allowable service totals 90 years is
4.18entitled, upon application, to a retirement annuity in an amount equal to the normal annuity
4.19provided in paragraph (b), without any reduction by reason of early retirement.
4.20 (d) This paragraph applies to a member who has become at least 55 years old and first
4.21became a member of the association after June 30, 1989, and to any other member who has
4.22become at least 55 years old and whose annuity amount when calculated under this paragraph
4.23and in conjunction with paragraph (e), is higher than it is when calculated under paragraph
4.24(b), in conjunction with paragraph (c).
4.25 (1) For a basic member, the average salary, as defined in section 354.05, subdivision
4.2613a, multiplied by 2.7 percent for each year of service for a basic member determines the
4.27amount of the retirement annuity to which the basic member is entitled. The annuity of a
4.28basic member who was a member of the former Minneapolis Teachers Retirement Fund
4.29Association as of June 30, 2006, must be determined according to the annuity formula under
4.30the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association
4.31in effect as of that date.
4.32 (2) For a coordinated member, the average salary, as defined in section 354.05,
4.33subdivision 13a, multiplied by 1.7 percent for each year of service rendered before July 1,
4.342006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a
4.35member other than a member who was a member of the former Duluth Teachers Retirement
4Sec. 3.
25-04595 as introduced03/07/25 REVISOR VH/VJ 5.1Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each
5.2year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers
5.3Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the
5.4amount of the retirement annuity to which the coordinated member is entitled.
5.5 (e) This paragraph applies to a person who has become at least 55 years old and first
5.6becomes a member of the association after June 30, 1989, and to any other member who
5.7has become at least 55 years old and whose annuity is higher when calculated under
5.8paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b)
5.9in conjunction with paragraph (c). An employee who retires under the formula annuity
5.10before the normal retirement age is entitled to receive the normal annuity provided in
5.11paragraph (d), reduced as described in clause (1) or (2), as applicable.
5.12 (1) For a member who is at least age 62 and has at least 30 years of service, the annuity
5.13shall be reduced by an early reduction factor of six percent for each year that the member's
5.14age of retirement precedes the normal retirement age. The resulting reduced annuity shall
5.15be further adjusted to take into account the increase in the monthly amount that would have
5.16occurred had the member retired early and deferred receipt of the annuity until normal
5.17retirement age and the annuity was augmented during the deferral period at 2.5 percent, if
5.18the member commenced employment after June 30, 2006, or at three percent, if the member
5.19commenced employment before July 1, 2006, compounded annually is the normal annuity
5.20provided in paragraph (d), without any reduction by reason of early retirement.
5.21 (2) For a member who has not attained age 62 or has fewer than 30 years of service, the
5.22annuity shall be reduced for each year that the member's age of retirement precedes normal
5.23retirement age by the following early reduction factors:
5.24 (i) for the period during which the member is age 55 through age 58, the factor is four
5.25percent; and
5.26 (ii) for the period during which the member is at least age 59 but not yet normal retirement
5.27age, the factor is seven percent.
5.28 The resulting annuity shall be further adjusted to take into account the increase in the
5.29monthly amount that would have occurred had the member retired early and deferred receipt
5.30of the annuity until normal retirement age and the annuity was augmented during the deferral
5.31period at the applicable annual rate, compounded annually. The applicable annual rate is
5.32the rate in effect for the month that includes the member's effective date of retirement and
5.33shall be considered as fixed for the member for the period until the member reaches normal
5.34retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member
5Sec. 3.
25-04595 as introduced03/07/25 REVISOR VH/VJ 6.1commenced employment after June 30, 2006, or three percent, if the member commenced
6.2employment before July 1, 2006, compounded annually, and decreases each month beginning
6.3July 2019 in equal monthly increments over the five-year period that begins July 1, 2019,
6.4and ends June 30, 2024, to zero percent effective for July 2024 and thereafter.
6.5 After June 30, 2024, the reduced annuity commencing before normal retirement age
6.6under this clause shall not take into account any augmentation.
6.7 (f) No retirement annuity is payable to a former employee with a salary that exceeds 95
6.8percent of the governor's salary unless and until the salary figures used in computing the
6.9highest five successive years average salary under paragraph (a) have been audited by the
6.10Teachers Retirement Association and determined by the executive director to comply with
6.11the requirements and limitations of section 354.05, subdivisions 35 and 35a.
6.12 EFFECTIVE DATE.This section is effective July 1, 2025.
6.13 Sec. 4. APPROPRIATIONS; TEACHERS RETIREMENT ASSOCIATION.
6.14 (a) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
6.15general fund to the Department of Education for increased employer pension contributions
6.16to the Teachers Retirement Association. Beginning with fiscal year 2028 and later, the base
6.17must increase annually by three percent of the prior fiscal year's base.
6.18 (b) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
6.19general fund to the Minnesota State Academies for increased employer pension contributions
6.20to the Teachers Retirement Association. Beginning with fiscal year 2028 and later, the base
6.21must increase annually by three percent of the prior fiscal year's base.
6.22 (c) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
6.23general fund to the Perpich Center for Arts Education for increased employer pension
6.24contributions to the Teachers Retirement Association. Beginning with fiscal year 2028 and
6.25later, the base must increase annually by three percent of the prior fiscal year's base.
6.26 (d) $....... in fiscal year 2026 and $....... in fiscal year 2027 are appropriated from the
6.27general fund to the Minnesota State Colleges and Universities for increased employer
6.28pension contributions to the Teachers Retirement Association. Beginning with fiscal year
6.292028 and later, the base must increase annually by three percent of the prior fiscal year's
6.30base.
6Sec. 4.
25-04595 as introduced03/07/25 REVISOR VH/VJ 7.1 Sec. 5. EDUCATION APPROPRIATIONS.
7.2 Subdivision 1.Department of Education.The sums indicated are appropriated from
7.3the general fund to the Department of Education for the fiscal years designated. These sums
7.4are in addition to appropriations made for the same purpose in any other law.
7.5 Subd. 2.General education aid.For general education aid under Minnesota Statutes,
7.6section 126C.13, subdivision 4:
2026............7.7 $
2027............7.8 $
7.9 The 2026 appropriation includes $0 for 2025 and $....... for 2026.
7.10 The 2027 appropriation includes $....... for 2026 and $....... for 2027.
7Sec. 5.
25-04595 as introduced03/07/25 REVISOR VH/VJ