HF 4658

03/20/26   REVISOR  TW/RC  26-08009
This Document can be made available
in alternative formats upon request  State of Minnesota
  HOUSE OF REPRESENTATIVES
  NINETY-FOURTH SESSION
  H. F. No.       4658
03/25/2026     Authored by Johnson, P.; Rehrauer and Repinski
  The bill was read for the first time and referred to the Committee on State Government Finance and Policy
1.1A bill for an act
1.2relating to retirement; Teachers Retirement Association; modifying the early
1.3retirement reduction factors for annuity commencement before normal retirement
1.4age; increasing employer contributions; appropriating money; amending Minnesota
1.5Statutes 2025 Supplement, sections 126C.10, subdivision 37; 354.44, subdivision
1.66.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8Section 1. Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 37, is
1.9amended to read:
1.10Subd. 37. Pension adjustment revenue. (a) A school district's pension adjustment
1.11revenue equals the sum of:
1.12(1) the greater of zero or the product of:
1.13(i) the difference between the district's adjustment under Minnesota Statutes 2012, section
1.14127A.50, subdivision 1, for fiscal year 2014 per adjusted pupil unit and the state average
1.15adjustment under Minnesota Statutes 2012, section 127A.50, subdivision 1, for fiscal year
1.162014 per adjusted pupil unit; and
1.17(ii) the district's adjusted pupil units for the fiscal year; and
1.18(2) the product of the salaries paid to district employees who were members of the
1.19Teachers Retirement Association and the St. Paul Teachers' Retirement Fund Association
1.20for the prior fiscal year and the district's pension adjustment rate for the fiscal year. The
1.21pension adjustment rate for Independent School District No. 625, St. Paul, equals 2.3 percent
1.22for fiscal year 2023, 2.5 percent for fiscal year 2024 and fiscal year 2025, and 3.25 percent
Section 1.  1
03/20/26   REVISOR  TW/RC  26-08009
2.1  for fiscal year 2026 and later. The pension adjustment rate for all other districts equals 1.25
2.2  percent for fiscal year 2025 and 2.31 ....... percent for fiscal year 2026 and later.
2.3      (b) For fiscal year 2025, the state total pension adjustment revenue under paragraph (a),
2.4  clause (2), must not exceed the amount calculated under paragraph (a), clause (2), for fiscal
2.5  year 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
2.8  under paragraph (a), clause (2), must not be prorated.
2.9      (d) For fiscal year 2028 and later, the state total pension adjustment revenue under
2.10 paragraph (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
2.12 under 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
2.14 section 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
2.16 paid to the cooperative unit.
2.17     EFFECTIVE DATE. This section is effective July 1, 2026.
2.18   Sec. 2. Minnesota Statutes 2025 Supplement, section 354.44, subdivision 6, is amended
2.19 to read:
2.20     Subd. 6. Computation of formula program retirement annuity. (a) The formula
2.21 retirement annuity must be computed in accordance with the applicable provisions of the
2.22 formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
2.23 section 354.05, subdivision 13a, for the period of the member's formula service credit.
2.24     (b) This paragraph, in conjunction with paragraph (c), applies to a person who first
2.25 became a member of the association or a member of a pension fund listed in section 356.30,
2.26 subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e),
2.27 produces a higher annuity amount, in which case paragraph (d) applies. The average salary
2.28 as defined in section 354.05, subdivision 13a, multiplied by the following percentages per
2.29 year of formula service credit shall determine the amount of the annuity to which the member
2.30 qualifying therefor is entitled for service rendered before July 1, 2006:
Sec. 2.  2
03/20/26   REVISOR  TW/RC  26-08009
3.1Period  Coordinated Member  Basic Member
3.2      Each year of service  1.2 percent per year  2.2 percent per year
3.3      during first ten
3.4      Each year of service  1.7 percent per year  2.7 percent per year
3.5      thereafter
3.6For service rendered on or after July 1, 2006, by a member other than a member who
3.7  was a member of the former Duluth Teachers Retirement Fund Association between January
3.8  1, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member
3.9  who was a member of the former Duluth Teachers Retirement Fund Association between
3.10 January 1, 2013, and June 30, 2015, the average salary as defined in section 354.05,
3.11 subdivision 13a, multiplied by the following percentages per year of service credit, determines
3.12 the amount the annuity to which the member qualifying therefor is entitled:
3.13Period  Coordinated Member  Basic Member
3.14     Each year of service  1.4 percent per year  2.2 percent per year
3.15     during first ten
3.16     Each year of service after     1.9 percent per year  2.7 percent per year
3.17     ten years of service
3.18(c)(1) This paragraph applies only to a person who first became a member of the
3.19 association or a member of a pension fund listed in section 356.30, subdivision 3, before
3.20 July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction
3.21 with this paragraph than when calculated under paragraph (d), in conjunction with paragraph
3.22 (e).
3.23(2) Where any member retires prior to normal retirement age under a formula annuity,
3.24 the member shall be paid a retirement annuity in an amount equal to the normal annuity
3.25 provided in paragraph (b) reduced by one-quarter of one percent for each month that the
3.26 member is under normal retirement age at the time of retirement except that for any member
3.27 who has 30 or more years of allowable service credit, the reduction shall be applied only
3.28 for each month that the member is under age 62.
3.29(3) Any member whose attained age plus credited allowable service totals 90 years is
3.30 entitled, upon application, to a retirement annuity in an amount equal to the normal annuity
3.31 provided in paragraph (b), without any reduction by reason of early retirement.
3.32(d) This paragraph applies to a member who has become at least 55 years old and first
3.33 became a member of the association after June 30, 1989, and to any other member who has
3.34 become at least 55 years old and whose annuity amount when calculated under this paragraph
3.35 and in conjunction with paragraph (e), is higher than it is when calculated under paragraph
3.36 (b), in conjunction with paragraph (c).
Sec. 2.  3
03/20/26   REVISOR  TW/RC  26-08009
4.1      (1) For a basic member, the average salary, as defined in section 354.05, subdivision
4.2  13a, multiplied by 2.7 percent for each year of service for a basic member determines the
4.3  amount of the retirement annuity to which the basic member is entitled. The annuity of a
4.4  basic member who was a member of the former Minneapolis Teachers Retirement Fund
4.5  Association as of June 30, 2006, must be determined according to the annuity formula under
4.6  the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association
4.7  in effect as of that date.
4.8      (2) For a coordinated member, the average salary, as defined in section 354.05,
4.9  subdivision 13a, multiplied by 1.7 percent for each year of service rendered before July 1,
4.10 2006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a
4.11 member other than a member who was a member of the former Duluth Teachers Retirement
4.12 Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each
4.13 year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers
4.14 Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the
4.15 amount of the retirement annuity to which the coordinated member is entitled.
4.16     (e) This paragraph applies to a person who has become at least 55 years old and first
4.17 becomes a member of the association after June 30, 1989, and to any other member who
4.18 has become at least 55 years old and whose annuity is higher when calculated under
4.19 paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b)
4.20 in conjunction with paragraph (c). An employee who retires under the formula annuity
4.21 before the normal retirement age is entitled to receive an annuity under clause (1) or (2), as
4.22 applicable.
4.23     (1) For a member who is at least age 60 and has at least 30 years of service, the annuity
4.24 is the normal annuity provided in paragraph (d) reduced by an early reduction factor of five
4.25 percent for each year that the member's age of retirement precedes the normal retirement
4.26 age. The resulting reduced annuity shall be further adjusted to take into account the increase
4.27 in the monthly amount that would have occurred had the member retired early and deferred
4.28 receipt of the annuity until normal retirement age and the annuity was augmented during
4.29 the deferral period at 2.5 percent, if the member commenced employment after June 30,
4.30 2006, or at three percent, if the member commenced employment before July 1, 2006,
4.31 compounded annually.
4.32     (2) For a member who has not attained age 60 or has fewer than 30 years of service, the
4.33 annuity is the normal annuity provided in paragraph (d) reduced for each year that the
4.34 member's age of retirement precedes normal retirement age by the following early reduction
4.35 factors:
Sec. 2.  4
03/20/26   REVISOR  TW/RC  26-08009
5.1      (i) for the period during which the member is age 55 through age 58 57, the factor is
5.2  four seven percent; and
5.3      (ii) for the period during which the member is age 58 through age 62, the factor is three
5.4  percent; and
5.5      (ii) (iii) for the period during which the member is at least age 59 63 but not yet normal
5.6  retirement age, the factor is seven percent.
5.7      The resulting annuity shall be further adjusted to take into account the increase in the
5.8  monthly amount that would have occurred had the member retired early and deferred receipt
5.9  of the annuity until normal retirement age and the annuity was augmented during the deferral
5.10 period at the applicable annual rate, compounded annually. The applicable annual rate is
5.11 the rate in effect for the month that includes the member's effective date of retirement and
5.12 must be considered as fixed for the member for the period until the member reaches normal
5.13 retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member
5.14 commenced employment after June 30, 2006, or three percent, if the member commenced
5.15 employment before July 1, 2006, compounded annually, and decreases each month beginning
5.16 July 2019 in equal monthly increments over the five-year period that begins July 1, 2019,
5.17 and ends June 30, 2024, to zero percent effective for July 2024 and thereafter.
5.18     After June 30, 2024, the reduced annuity commencing before normal retirement age
5.19 under this clause shall not take into account any augmentation.
5.20     (f) No retirement annuity is payable to a former employee with a salary that exceeds 95
5.21 percent of the governor's salary unless and until the salary figures used in computing the
5.22 highest five successive years average salary under paragraph (a) have been audited by the
5.23 Teachers Retirement Association and determined by the executive director to comply with
5.24 the requirements and limitations of section 354.05, subdivisions 35 and 35a.
5.25     EFFECTIVE DATE. This section is effective July 1, 2026.
5.26   Sec. 3. APPROPRIATIONS; TRA EMPLOYER CONTRIBUTION INCREASE.
5.27     (a) The base for the Department of Education from the general fund is increased $.......
5.28 in fiscal year 2028 for increased employer pension contributions to the Teachers Retirement
5.29 Association. Beginning with fiscal year 2029 and later, the base must increase annually by
5.30 three percent of the prior fiscal year's base.
5.31     (b) The base for the Minnesota State Academies from the general fund is increased $.......
5.32 in fiscal year 2028 for increased employer pension contributions to the Teachers Retirement
Sec. 3.  5
03/20/26   REVISOR  TW/RC  26-08009
6.1  Association. Beginning with fiscal year 2029 and later, the base must increase annually by
6.2  three percent of the prior fiscal year's base.
6.3      (c) The base for the Perpich Center for the Arts from the general fund is increased $.......
6.4  in fiscal year 2028 for increased employer pension contributions to the Teachers Retirement
6.5  Association. Beginning with fiscal year 2029 and later, the base must increase annually by
6.6  three percent of the prior fiscal year's base.
6.7      (d) The base for the Minnesota State Colleges and Universities from the general fund
6.8  is increased $....... in fiscal year 2028 for increased employer pension contributions to the
6.9  Teachers Retirement Association. Beginning with fiscal year 2029 and later, the base must
6.10 increase annually by three percent of the prior fiscal year's base.
Sec. 3.  6