SF 5181

03/18/26  REVISOR  TW/BH  26-08039  as introduced
  SENATE
  STATE OF MINNESOTA
  NINETY-FOURTH SESSION  S.F. No. 5181
  (SENATE AUTHORS: GUSTAFSON, Kupec, Mann and McEwen)
  DATE       D-PG  OFFICIAL STATUS
  04/20/2026      8523 Introduction and first reading
  Referred to State and Local Government
  04/22/2026      8964 Authors added Kupec; Mann
  04/28/2026      9201 Author added McEwen
1.1A bill for an act
1.2relating to retirement; creating a career rule for teachers aged 60 with 30 years of
1.3service; amending Minnesota Statutes 2025 Supplement, sections 126C.10,
1.4subdivision 37; 354.42, subdivision 3; 354.44, subdivision 6.
1.5    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6Section 1. Minnesota Statutes 2025 Supplement, section 126C.10, subdivision 37, is
1.7    amended to read:
1.8Subd. 37. Pension adjustment revenue. (a) A school district's pension adjustment
1.9    revenue equals the sum of:
1.10(1) the greater of zero or the product of:
1.11(i) the difference between the district's adjustment under Minnesota Statutes 2012, section
1.12   127A.50, subdivision 1, for fiscal year 2014 per adjusted pupil unit and the state average
1.13   adjustment under Minnesota Statutes 2012, section 127A.50, subdivision 1, for fiscal year
1.14   2014 per adjusted pupil unit; and
1.15(ii) the district's adjusted pupil units for the fiscal year; and
1.16(2) the product of the salaries paid to district employees who were members of the
1.17   Teachers Retirement Association and the St. Paul Teachers' Retirement Fund Association
1.18   for the prior fiscal year and the district's pension adjustment rate for the fiscal year. The
1.19   pension adjustment rate for Independent School District No. 625, St. Paul, equals 2.3 percent
1.20   for fiscal year 2023, 2.5 percent for fiscal year 2024 and fiscal year 2025, and 3.25 percent
1.21   for fiscal year 2026 and later ........ The pension adjustment rate for all other districts equals
1.22   1.25 percent for fiscal year 2025 and 2.31 percent for fiscal year 2026 and later ........
Section 1.  1
 03/18/26  REVISOR  TW/BH  26-08039  as introduced
2.1      (b) For fiscal year 2025, the state total pension adjustment revenue under paragraph (a),
2.2  clause (2), must not exceed the amount calculated under paragraph (a), clause (2), for fiscal
2.3  year 2024. The commissioner must prorate the pension adjustment revenue under paragraph
2.4  (a), clause (2), so as not to exceed the maximum.
2.5      (c) For fiscal year 2026 and fiscal year 2027, the state total pension adjustment revenue
2.6  under paragraph (a), clause (2), must not be prorated.
2.7      (d) For fiscal year 2028 and later, the state total pension adjustment revenue under
2.8  paragraph (a), clause (2), must not exceed the amount calculated under paragraph (a), clause
2.9  (2), for fiscal year 2027. The commissioner must prorate the pension adjustment revenue
2.10 under paragraph (a), clause (2), so as not to exceed the maximum.
2.11     (e) Notwithstanding section 123A.26, subdivision 1, a cooperative unit, as defined in
2.12 section 123A.24, subdivision 2, qualifies for pension adjustment revenue under paragraph
2.13 (a), clause (2), as if it was a district, and the aid generated by the cooperative unit shall be
2.14 paid to the cooperative unit.
2.15   Sec. 2. Minnesota Statutes 2025 Supplement, section 354.42, subdivision 3, is amended
2.16 to read:
2.17     Subd. 3. Employer. (a) The regular employer contribution to the fund by Special School
2.18 District No. 1, Minneapolis, is an amount equal to the applicable following percentage of
2.19 salary of each coordinated member and the applicable percentage of salary of each basic
2.20 member specified in paragraph (c).
2.21     The additional employer contribution to the fund by Special School District No. 1,
2.22 Minneapolis, is an amount equal to 3.64 percent of the salary of each teacher who is a
2.23 coordinated member or who is a basic member.
2.24     (b) The regular employer contribution to the fund by Independent School District No.
2.25 709, Duluth, is an amount equal to the applicable percentage of salary of each old law or
2.26 new law coordinated member specified for the coordinated program in paragraph (c).
2.27     (c) The employer contribution to the fund for every other employer is an amount equal
2.28 to 9.81 percent of the salary of each coordinated member and 13.81 percent of the salary
2.29 of each basic member ........
2.30     (d) When an employer contribution rate changes for a fiscal year, the new contribution
2.31 rate is effective for the entire salary paid for each employer unit with the first payroll cycle
2.32 reported.
 Sec. 2.  2
 03/18/26  REVISOR  TW/BH  26-08039  as introduced
3.1    Sec. 3. Minnesota Statutes 2025 Supplement, section 354.44, subdivision 6, is amended
3.2  to read:
3.3Subd. 6. Computation of formula program retirement annuity. (a) The formula
3.4  retirement annuity must be computed in accordance with the applicable provisions of the
3.5  formulas stated in paragraph (b) or (d) on the basis of each member's average salary under
3.6  section 354.05, subdivision 13a, for the period of the member's formula service credit.
3.7(b) This paragraph, in conjunction with paragraph (c), applies to a person who first
3.8  became a member of the association or a member of a pension fund listed in section 356.30,
3.9  subdivision 3, before July 1, 1989, unless paragraph (d), in conjunction with paragraph (e),
3.10 produces a higher annuity amount, in which case paragraph (d) applies. The average salary
3.11 as defined in section 354.05, subdivision 13a, multiplied by the following percentages per
3.12 year of formula service credit shall determine the amount of the annuity to which the member
3.13 qualifying therefor is entitled for service rendered before July 1, 2006:
3.14Period  Coordinated Member  Basic Member
3.15     Each year of service  1.2 percent per year  2.2 percent per year
3.16     during first ten
3.17     Each year of service  1.7 percent per year  2.7 percent per year
3.18     thereafter
3.19For service rendered on or after July 1, 2006, by a member other than a member who
3.20 was a member of the former Duluth Teachers Retirement Fund Association between January
3.21 1, 2006, and June 30, 2015, and for service rendered on or after July 1, 2013, by a member
3.22 who was a member of the former Duluth Teachers Retirement Fund Association between
3.23 January 1, 2013, and June 30, 2015, the average salary as defined in section 354.05,
3.24 subdivision 13a, multiplied by the following percentages per year of service credit, determines
3.25 the amount the annuity to which the member qualifying therefor is entitled:
3.26Period  Coordinated Member  Basic Member
3.27     Each year of service  1.4 percent per year  2.2 percent per year
3.28     during first ten
3.29     Each year of service after      1.9 percent per year  2.7 percent per year
3.30     ten years of service
3.31(c)(1) This paragraph applies only to a person who first became a member of the
3.32 association or a member of a pension fund listed in section 356.30, subdivision 3, before
3.33 July 1, 1989, and whose annuity is higher when calculated under paragraph (b), in conjunction
3.34 with this paragraph than when calculated under paragraph (d), in conjunction with paragraph
3.35 (e).
 Sec. 3.  3
 03/18/26  REVISOR  TW/BH  26-08039  as introduced
4.1      (2) Where any member retires prior to normal retirement age under a formula annuity,
4.2  the member shall be paid a retirement annuity in an amount equal to the normal annuity
4.3  provided in paragraph (b) reduced by one-quarter of one percent for each month that the
4.4  member is under normal retirement age at the time of retirement except that for any member
4.5  who has 30 or more years of allowable service credit, the reduction shall be applied only
4.6  for each month that the member is under age 62.
4.7      (3) Any member whose attained age plus credited allowable service totals 90 years is
4.8  entitled, upon application, to a retirement annuity in an amount equal to the normal annuity
4.9  provided in paragraph (b), without any reduction by reason of early retirement.
4.10     (d) This paragraph applies to a member who has become at least 55 years old and first
4.11 became a member of the association after June 30, 1989, and to any other member who has
4.12 become at least 55 years old and whose annuity amount when calculated under this paragraph
4.13 and in conjunction with paragraph (e), is higher than it is when calculated under paragraph
4.14 (b), in conjunction with paragraph (c).
4.15     (1) For a basic member, the average salary, as defined in section 354.05, subdivision
4.16 13a, multiplied by 2.7 percent for each year of service for a basic member determines the
4.17 amount of the retirement annuity to which the basic member is entitled. The annuity of a
4.18 basic member who was a member of the former Minneapolis Teachers Retirement Fund
4.19 Association as of June 30, 2006, must be determined according to the annuity formula under
4.20 the articles of incorporation of the former Minneapolis Teachers Retirement Fund Association
4.21 in effect as of that date.
4.22     (2) For a coordinated member, the average salary, as defined in section 354.05,
4.23 subdivision 13a, multiplied by 1.7 percent for each year of service rendered before July 1,
4.24 2006, and by 1.9 percent for each year of service rendered on or after July 1, 2006, for a
4.25 member other than a member who was a member of the former Duluth Teachers Retirement
4.26 Fund Association between January 1, 2006, and June 30, 2015, and by 1.9 percent for each
4.27 year of service rendered on or after July 1, 2013, for a member of the former Duluth Teachers
4.28 Retirement Fund Association between January 1, 2013, and June 30, 2015, determines the
4.29 amount of the retirement annuity to which the coordinated member is entitled.
4.30     (e) This paragraph applies to a person who has become at least 55 years old and first
4.31 becomes a member of the association after June 30, 1989, and to any other member who
4.32 has become at least 55 years old and whose annuity is higher when calculated under
4.33 paragraph (d) in conjunction with this paragraph than when calculated under paragraph (b)
4.34 in conjunction with paragraph (c). An employee who retires under the formula annuity
 Sec. 3.  4
 03/18/26  REVISOR  TW/BH  26-08039  as introduced
5.1  before the normal retirement age is entitled to receive an the normal annuity under provided
5.2  in paragraph (d), reduced as described in clause (1) or (2), as applicable.
5.3      (1) For a member who is at least age 60 and has at least 30 years of service, the annuity
5.4  is the normal annuity provided in paragraph (d) reduced by an early reduction factor of five
5.5  percent for each year that the member's age of retirement precedes the normal retirement
5.6  age. The resulting reduced annuity shall be further adjusted to take into account the increase
5.7  in the monthly amount that would have occurred had the member retired early and deferred
5.8  receipt of the annuity until normal retirement age and the annuity was augmented during
5.9  the deferral period at 2.5 percent, if the member commenced employment after June 30,
5.10 2006, or at three percent, if the member commenced employment before July 1, 2006,
5.11 compounded annually.
5.12     (2) For a member who has not attained age 60 or has fewer than 30 years of service, the
5.13 annuity is the normal annuity provided in paragraph (d) reduced for each year that the
5.14 member's age of retirement precedes normal retirement age by the following early reduction
5.15 factors:
5.16     (i) for the period during which the member is age 55 through age 58, the factor is four
5.17 percent; and
5.18     (ii) for the period during which the member is at least age 59 but not yet normal retirement
5.19 age, the factor is seven percent.
5.20     The resulting annuity shall be further adjusted to take into account the increase in the
5.21 monthly amount that would have occurred had the member retired early and deferred receipt
5.22 of the annuity until normal retirement age and the annuity was augmented during the deferral
5.23 period at the applicable annual rate, compounded annually. The applicable annual rate is
5.24 the rate in effect for the month that includes the member's effective date of retirement and
5.25 must be considered as fixed for the member for the period until the member reaches normal
5.26 retirement age. The applicable annual rate for June 2019 is 2.5 percent, if the member
5.27 commenced employment after June 30, 2006, or three percent, if the member commenced
5.28 employment before July 1, 2006, compounded annually, and decreases each month beginning
5.29 July 2019 in equal monthly increments over the five-year period that begins July 1, 2019,
5.30 and ends June 30, 2024, to zero percent effective for July 2024 and thereafter.
5.31     After June 30, 2024, the reduced annuity commencing before normal retirement age
5.32 under this clause shall not take into account any augmentation.
5.33     (f) No retirement annuity is payable to a former employee with a salary that exceeds 95
5.34 percent of the governor's salary unless and until the salary figures used in computing the
 Sec. 3.  5
03/18/26  REVISOR  TW/BH  26-08039  as introduced
6.1 highest five successive years average salary under paragraph (a) have been audited by the
6.2 Teachers Retirement Association and determined by the executive director to comply with
6.3 the requirements and limitations of section 354.05, subdivisions 35 and 35a.
Sec. 3.  6