Section 354A.12 Contributions by Employee and Employer
354A.12 CONTRIBUTIONS BY EMPLOYEE AND EMPLOYER.
Subdivision 1.Employee contributions.
(a) The contribution required to be paid by each member of a teachers retirement fund association is the percentage of total salary specified below for the applicable association and program:
| Association and Program | Percentage of Total Salary | |
| Duluth Teachers Retirement Fund Association | ||
| old law and new law | ||
| coordinated programs | ||
| before July 1, 2011 | 5.5 percent | |
| effective July 1, 2011 | 6.0 percent | |
| effective July 1, 2012 | 6.5 percent | |
| St. Paul Teachers Retirement Fund Association | ||
| basic program before July 1, 2011 | 8 percent | |
| basic program after June 30, 2011 | 8.25 percent | |
| basic program after June 30, 2012 | 8.5 percent | |
| basic program after June 30, 2013 | 8.75 percent | |
| basic program after June 30, 2014 | 9.0 percent | |
| coordinated program before July 1, 2011 | 5.5 percent | |
| coordinated program after June 30, 2011 | 5.75 percent | |
| coordinated program after June 30, 2012 | 6.0 percent | |
| coordinated program after June 30, 2013 | 6.25 percent | |
| coordinated program after June 30, 2014 | 6.50 percent |
(b) 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.
(c) When an employee contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid by the employer with the first payroll cycle reported.
Subd. 1a.Obligation for omitted salary deductions.
If the full required contributions are not deducted from the salary of a teacher, payment of the shortage in such deductions is the sole obligation of the employing unit during the three-year period following the end of the fiscal year in which the shortage occurred. The shortage is payable by the employing unit upon notification of the shortage by the executive director of the applicable retirement fund association. The employing unit shall also pay any employer contributions related to the shortage. The amount of the shortage in employee contributions and associated employer contributions is payable with interest at the preretirement interest assumption for the retirement fund as specified in section 356.215, subdivision 8, stated as a monthly rate from the date due until the date payment is received in the office of the association, with a minimum interest charge of $10. If the shortage payment and interest is not paid by the employing unit within 60 days of notification, the executive director shall certify the amount of the shortage payment and interest to the commissioner of management and budget, who shall deduct the amount from any state aid or appropriation amount applicable to the employing unit.
Subd. 2.Retirement contribution levy disallowed.
Except as provided in section 423A.02, subdivision 3, with respect to independent school district No. 625, notwithstanding any law to the contrary, levies for teachers retirement fund associations in the cities of Duluth and St. Paul, including levies for any employer Social Security taxes for teachers covered by the Duluth Teachers Retirement Fund Association or the St. Paul Teachers Retirement Fund Association, are disallowed.
Subd. 2a.Employer regular and additional contributions.
(a) The employing units shall make the following employer contributions to teachers retirement fund associations:
(1) 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 | ||
| before July 1, 2011 | 5.79 percent | |
| effective July 1, 2011 | 6.29 percent | |
| effective July 1, 2012 | 6.79 percent | |
| St. Paul Teachers Retirement Fund Association | ||
| before July 1, 2011 | 4.50 percent | |
| after June 30, 2011 | 4.75 percent | |
| after June 30, 2012 | 5.0 percent | |
| after June 30, 2013 | 5.25 percent | |
| after June 30, 2014 | 5.5 percent |
(2) for any basic member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make a regular employer contribution to the respective retirement fund in an amount according to the schedule below:
| before July 1, 2011 | 8.0 percent of salary | |
| after June 30, 2011 | 8.25 percent of salary | |
| after June 30, 2012 | 8.5 percent of salary | |
| after June 30, 2013 | 8.75 percent of salary | |
| after June 30, 2014 | 9.0 percent of salary |
(3) for a basic member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make an additional employer contribution to the respective fund in an amount equal to 3.64 percent of the salary of the basic member;
(4) for a coordinated member of the St. Paul Teachers Retirement Fund Association, 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:
| St. Paul Teachers Retirement Fund Association | 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.
(d) When an employer contribution rate changes for a fiscal year, the new contribution rate is effective for the entire salary paid by the employer with the first payroll cycle reported.
Subd. 2b.
[Repealed, 1997 c 233 art 3 s 12]
Subd. 3.
[Repealed, 1Sp1985 c 12 art 11 s 22]
Subd. 3a.Special direct state aid to first class city teachers retirement fund associations.
(a) The state shall pay $346,000 to the Duluth Teachers Retirement Fund Association, $2,827,000 to the St. Paul Teachers Retirement Fund Association and, for the former Minneapolis Teachers Retirement Fund Association, $12,954,000 to the Teachers Retirement Association.
(b) The direct state aids under this subdivision are payable October 1 annually. The commissioner of management and budget shall pay the direct state aid. The amount required under this subdivision is appropriated annually from the general fund to the commissioner of management and budget.
Subd. 3b.Special direct state matching aid to Teachers Retirement Association.
(a) Special School District No. 1 must make an additional employer contribution to the Teachers Retirement Fund Association. The city of Minneapolis must make a contribution to the Teachers Retirement Association. This contribution must be made by a levy of the board of estimate and taxation of the city of Minneapolis and the levy, if made, is classified as that of a special taxing district for purposes of sections 275.065 and 276.04, and for all other property tax purposes.
(b) $1,250,000 must be contributed by Special School District No. 1 and $1,250,000 must be contributed by the city of Minneapolis to the Teachers Retirement Association under paragraph (a), and the state shall pay to the Teachers Retirement Association $2,500,000 each fiscal year. The superintendent of Special School District No. 1, the mayor of the city of Minneapolis, and the executive director of the Teachers Retirement Association shall jointly certify to the commissioner of management and budget the total amount that has been contributed by Special School District No. 1 and by the city of Minneapolis to the Teachers Retirement Association. Any certification to the commissioner of education must be made quarterly. If the total certifications for a fiscal year exceed the maximum annual direct state matching aid amount in any quarter, the amount of direct state matching aid payable to the Teachers Retirement Association must be limited to the balance of the maximum annual direct state matching aid amount available. The amount required under this paragraph, subject to the maximum direct state matching aid amount, is appropriated annually to the commissioner of management and budget.
(c) The commissioner of management and budget may prescribe the form of the certifications required under paragraph (b).
Subd. 3c.Termination of supplemental contributions and direct matching and state aid.
The supplemental contributions payable to the Minneapolis Teachers Retirement Fund Association by Special School District No. 1 and the city of Minneapolis under section 423A.02, subdivision 3, must be paid to the Teachers Retirement Association and must continue until the current assets of the fund equal or exceed the actuarial accrued liability of the fund as determined in the most recent actuarial report for the fund by the actuary retained under section 356.214, or 2037, whichever occurs earlier. The supplemental contributions payable to the St. Paul Teachers Retirement Fund Association by Independent School District No. 625 under section 423A.02, subdivision 3, or the direct state aid under subdivision 3a to the St. Paul Teachers Retirement Fund Association must continue until the current assets of the fund equal or exceed the actuarial accrued liability of the fund as determined in the most recent actuarial report for the fund by the actuary retained under section 356.214 or until 2037, whichever occurs earlier.
Subd. 3d.
[Repealed, 2007 c 134 art 7 s 3]
Subd. 4.Limitation on certain articles of incorporation or bylaw amendments.
No amendment to the bylaws or articles of incorporation of a teachers retirement fund association in a city of the first class affecting benefits, contributions or actuarial assumptions shall be made without approval by the legislature. Approval shall be deemed granted and the amendment shall become effective only upon enactment of special or general legislation detailing the substance of the amendment and upon submission of the text of the proposed amendment to the articles of incorporation or bylaws by the teachers retirement fund association involved to the Legislative Commission on Pensions and Retirement prior to the effective date of the amendment. Notwithstanding any provision of the articles of incorporation or bylaws to the contrary, amendments may be adopted at an annual meeting or at a special meeting called for that purpose, without further local approval.
Subd. 5.Reporting and remittance requirements.
(a) Each employing unit shall provide to the appropriate teachers retirement fund association the following member data regarding all new or returning employees before the employee's first payroll date in a format approved by the executive secretary or director. Data changes and the dates of those changes must be reported to the association on an ongoing basis for the payroll cycle in which they occur. Data on the member includes:
(1) legal name, address, date of birth, association member number, employer-assigned employee number, and Social Security number;
(2) association status, including, but not limited to, basic, coordinated, exempt annuitant, exempt technical college teacher, or exempt independent contractor or consultant;
(3) employment status, including, but not limited to, full time, part time, intermittent, substitute, or part-time mobility;
(4) employment position, including, but not limited to, teacher, superintendent, principal, administrator, or other;
(5) employment activity, including, but not limited to, hire, termination, resumption of employment, disability, or death;
(6) leaves of absence; and
(7) other information as may be required by the association.
(b) Each employing unit shall provide the following data to the appropriate association for each payroll cycle in a format approved by the executive secretary or director:
(1) an association member number;
(2) employer-assigned employee number;
(3) Social Security number;
(4) amount of each salary deduction;
(5) amount of salary as defined in section 354A.011, subdivision 24, from which each deduction was made;
(6) reason for payment;
(7) service credit;
(8) the beginning and ending dates of the payroll period covered and the date of actual payment;
(9) fiscal year of salary earnings;
(10) total remittance amount including employee, employer, and employer additional contributions; and
(11) other information as may be required by the association.
(c) On or before August 1 each year, each employing unit must report to the appropriate association giving an itemized summary for the preceding 12 months of the total amount that was withheld from the salaries of teachers for deductions and all other information required by the association.
(d) An employing unit that does not comply with the reporting requirements under this section shall pay a fine of $5 per calendar day until the association receives the required member data.
(e) An employing unit shall remit all amounts that are due to the association and shall furnish for each pay period an itemized statement indicating the total amount that is due and is transmitted with any other information required by the association. All amounts due and other employer obligations that are not remitted within 30 days of notification by the association must be certified by the director or secretary to the commissioner of management and budget, who shall deduct the amount from any state aid or appropriation amount applicable to the employing unit and shall transmit the deducted amount to the applicable association.
Subd. 6.Adjustment for erroneous receipts.
(a) Adjustments to correct employer contributions and employee deductions taken in error from amounts which are not salary under section 354A.011, subdivision 24, must be made as specified in this section.
(b) Upon discovery of the receipt of erroneous employee deductions and employer contributions under paragraph (a), the executive director must require the employer to discontinue the erroneous employee deductions and erroneous employer contributions reported on behalf of an active member. Upon discontinuation, the executive director must provide for a refund or credit to the employer in the amount of the invalid employee deductions with interest on the employee deductions at the rate specified in section 354A.37, subdivision 3, from the received date of each invalid salary transaction to the first day of the month in which the credit or refund is made. The employer must pay the refunded employee deductions plus interest to the active member.
(c) If the individual is a former member who is not receiving a retirement annuity or benefit and has not received a refund under section 354A.37, subdivision 3, related to the applicable service, the executive director must return the erroneous employee deductions to the former member through a refund with interest at the rate specified in section 354A.37, subdivision 3, from the received date of each invalid salary transaction to the first day of the month in which the credit or refund is made.
(d) The executive director must return the invalid employer contributions reported on behalf of a member or former member to the employer by providing a credit against future contributions payable by the employer.
Subd. 6a.Erroneous salary deductions or direct payments.
If erroneous employee deductions and employer contributions reflect a plan coverage error involving any plan covered by this chapter and any plan specified in section 356.99, that section applies.
Subd. 7.Recovery of benefit overpayments.
(a) If the executive director discovers, within the time period specified in subdivision 8 following the payment of a refund or the accrual date of any retirement annuity, survivor benefit, or disability benefit, that benefit overpayment has occurred due to using invalid service or salary, or due to any erroneous calculation procedure, the executive director must recalculate the annuity or benefit payable and recover any overpayment. The executive director shall recover the overpayment by requiring direct repayment or by suspending or reducing the payment of a retirement annuity or other benefit payable under this chapter to the applicable person or the person's estate, whichever applies, until all outstanding amounts have been recovered.
(b) In the event the executive director determines that an overpaid annuity or benefit that is the result of invalid salary included in the average salary used to calculate the payment amount must be recovered, the executive director must determine the amount of the employee deductions taken in error on the invalid salary, with interest as determined under 354A.37, subdivision 3, and must subtract that amount from the total annuity or benefit overpayment, and the remaining balance of the overpaid annuity or benefit, if any, must be recovered.
(c) If the invalid employee deductions plus interest exceed the amount of the overpaid benefits, the balance must be refunded to the person to whom the benefit or annuity is being paid.
(d) Any invalid employer contributions reported on the invalid salary must be credited against future contributions payable by the employer.
(e) If a member or former member, who is receiving a retirement annuity or disability benefit for which an overpayment is being recovered, dies before recovery of the overpayment is completed and an optional annuity or refund is payable, the remaining balance of the overpaid annuity or benefit must continue to be recovered from the payment to the optional annuity beneficiary or refund recipient.
(f) The board of trustees shall adopt policies directing the period of time and manner for the collection of any overpaid retirement or optional annuity, and survivor or disability benefit, or a refund that the executive director determines must be recovered as provided under this section.
Subd. 8.Additional procedures.
(a) If paragraph (b) does not apply, the period of adjustment under subdivisions 6 and 7 is limited to the fiscal year in which the error is discovered by the executive director and the immediate two preceding fiscal years.
(b) If there is evidence of fraud or other misconduct on the part of the employee or the employer, the board of trustees may authorize adjustments to the account of a member or former member to correct erroneous employee deductions and employer contributions on invalid salary and the recovery of any overpayments for a period longer than specified under paragraph (a).
(c) Notwithstanding other provisions of this section, the executive director may apply the Revenue Procedures defined in the Internal Revenue Service Employee Plans Compliance Resolution System and not issue a refund of erroneous employee deductions and employer contributions or not recover a small overpayment of benefits if the cost to correct the error would exceed the amount of the refund or overpayment.
(d) Notwithstanding other provisions of this section, interest of $10 or less shall not be payable to a member or former member.
Subd. 9.Employer responsibility for fees, penalties.
Any fees or penalties assessed by the Internal Revenue Service for any failure by an employer to follow the statutory requirements for reporting eligible members and salary must be paid by the employer.
History:
1975 c 306 s 30; 1976 c 238 s 1; 1976 c 239 s 107; 1978 c 781 s 8; 1979 c 293 s 3; 1980 c 614 s 143; 1981 c 269 s 4; 1982 c 578 art 3 s 7; 1Sp1985 c 12 art 11 s 13; 1Sp1986 c 1 art 9 s 24; 1987 c 258 s 12; 1989 c 246 s 2; 1991 c 317 s 3; 1992 c 598 art 5 s 1; 1993 c 336 art 1 s 3-7; 1993 c 357 s 1-6; 1994 c 420 s 1; 1995 c 141 art 3 s 12; 1995 c 262 art 2 s 2; 1Sp1995 c 3 art 16 s 13; 1996 c 438 art 4 s 5,6; 1997 c 233 art 3 s 2-6; 1Sp2001 c 10 art 3 s 22; 2002 c 392 art 6 s 3; art 11 s 52; 2003 c 130 s 12; 2006 c 271 art 3 s 47; 2006 c 277 art 3 s 18-24; 2007 c 134 art 1 s 6,7,8; 2008 c 277 art 1 s 77,78,98; 2008 c 349 art 8 s 1,2; 2009 c 101 art 2 s 109; 2009 c 169 art 4 s 34-38; 2010 c 359 art 1 s 57-59; art 2 s 14
NOTE: Subdivisions 3a, 3b, and 3c are repealed by Laws 2008, chapter 349, article 8, section 4, effective the first day of the fiscal year next following the fiscal year in which neither the Teachers Retirement Association nor the St. Paul Teachers Retirement Fund Association has an unfunded actuarial accrued liability as determined in the actuarial valuation prepared under Minnesota Statutes, section 356.215, by the actuary retained under Minnesota Statutes, section 356.214. Laws 2008, chapter 349, article 8, section 4.