§ 354A.12 — Contributions by Employee and Employer
Plain-Language Summary
This section sets the contribution rates that teachers and their employers must pay into the St. Paul Teachers Retirement Fund Association. Employee contribution rates range from about 7.5% to 11.5% of salary depending on the program and year. Employers must also contribute matching amounts. The section also covers how the state provides direct aid to the fund, rules for fixing errors in contributions, and how overpayments are recovered.
354A.12 CONTRIBUTIONS BY EMPLOYEE AND EMPLOYER.
§
Subdivision 1.Employee contributions.
(a) The contribution required to be paid by each member is the percentage of total salary specified below for the applicable program:
| Program | Percentage of Total Salary | |
|---|---|---|
| basic program after June 30, 2016, through June 30, 2023 | ||
| basic program after June 30, 2023, through June 30, 2024 | ||
| basic program after June 30, 2024, through June 30, 2025 | ||
| basic program after June 30, 2025, through June 30, 2026 | ||
| basic program after June 30, 2026 | ||
| coordinated program after June 30, 2016, through June 30, 2023 | ||
| coordinated program after June 30, 2023, through June 30, 2024 | ||
| coordinated program after June 30, 2024, through June 30, 2025 | ||
| coordinated program after June 30, 2025, through June 30, 2026 | ||
| coordinated program after June 30, 2026 |
(b) Contributions must be made by deduction from salary and must be remitted directly to the 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 applicable annual rate or rates specified in section 356.59, subdivision 5, from the date due until the date payment is received in the office of the association, compounded annually, 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 the St. Paul Teachers Retirement Fund Association, including levies for any employer Social Security taxes for teachers covered by 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 the teachers retirement fund association:
(1) for each coordinated member of the St. Paul Teachers Retirement Fund Association, the employing unit shall make a regular employer contribution to the retirement fund association in an amount equal to the designated percentage of the salary of the coordinated member as provided below:
| after June 30, 2022 | 8.8 percent | |
|---|---|---|
| after June 30, 2023 | 9 percent | |
| after June 30, 2025 | 9.75 percent |
(2) for each 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:
| after June 30, 2022 | 12.3 percent of salary | |
|---|---|---|
| after June 30, 2023 | 12.5 percent of salary | |
| after June 30, 2025 | 13.25 percent of salary |
(3) for each 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 each 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 3.84 percent of the coordinated member’s salary.
(b) The regular and additional employer contributions must be remitted directly to the St. Paul 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. 2c.
MS 2016 [Repealed, 2018 c 211 art 19 s 9] §
Subd. 2d.St. Paul Teachers Retirement Fund Association; employer contributions for reemployed annuitants.
Independent School District No. 625 shall make the regular employer contribution and additional employer contribution specified in subdivision 2a, plus a supplemental contribution equal to 2.5 percent of salary, on behalf of any retired member of the St. Paul Teachers Retirement Fund Association who is reemployed by Independent School District No. 625, including providing service to the school district as an independent contractor or as an employee of an independent contractor. §
Subd. 3.
[Repealed, 1Sp1985 c 12 art 11 s 22] §
Subd. 3a. Direct state aid to St. Paul Teachers Retirement Fund Association.
(a) The state must pay $2,827,000 to the St. Paul Teachers Retirement Fund Association.
(b) In addition to other amounts specified in this subdivision, the state must pay $7,000,000 as state aid to the St. Paul Teachers Retirement Fund Association.
(c) In addition to the amounts specified in paragraphs (a) and (b), the state must pay $5,000,000 as state aid to the St. Paul Teachers Retirement Fund Association.
(d) The aid under this subdivision is payable October 1 annually. The commissioner of management and budget must pay the aid specified in this subdivision. The amount required is appropriated annually from the general fund to the commissioner of management and budget. §
Subd. 3b.
[Repealed, 2012 c 286 art 8 s 10] §
Subd. 3c.Termination of supplemental contributions and direct matching and state aid.
The supplemental contributions payable to the St. Paul Teachers Retirement Fund Association by Independent School District No. 625 under section 423A.02, subdivision 3, and the aid under subdivision 3a, paragraphs (a) to (c), continue until the earlier of:
(1) the first day of the fiscal year following three consecutive fiscal years in which, for each fiscal year, the actuarial value of assets of the fund equals or exceeds 100 percent of the actuarial accrued liability as reported by the actuary retained under section 356.214 in the annual actuarial valuation prepared under section 356.215; or
(2) July 1, 2048. §
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 the 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) The employing unit must provide to the 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) The employing unit must provide the following data to the 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, the employing unit must report to the 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) If the employing unit does not comply with the reporting requirements under this section, the employing unit must pay a fine of $5 per calendar day until the association receives the required member data.
(e) The employing unit must remit all amounts that are due to the association and must 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 must deduct the amount from any state aid or appropriation amount applicable to the employing unit and must transmit the deducted amount to the 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 356.637, 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. If a benefit overpayment or improper payment of benefits occurred caused by a failure of the person to satisfy length of separation requirements for retirement under section 354A.011, subdivision 21, the executive director shall recover the improper payments by requiring direct repayment. The repayment must include interest at the applicable annual rate or rates specified in section 356.59, subdivision 5, from the first of the month in which a monthly benefit amount was paid to the first of the month in which the amount is repaid, with annual compounding.
(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 section 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 1,2,4; 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; 2012 c 286 art 8 s 6; 2013 c 111 art 13 s 3-9; 2014 c 296 art 6 s 19-22,49; art 7 s 1,2; 2015 c 68 art 13 s 42; 2018 c 211 art 6 s 32,33; art 7 s 13,14; art 8 s 4,5; 2021 c 22 art 5 s 1; 2023 c 45 art 5 s 1; 2023 c 64 art 14 s 6,7; 2024 c 102 art 1 s 3; art 8 s 14; art 9 s 4,5; art 11 s 11,14
History: 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 1,2,4; 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; 2012 c 286 art 8 s 6; 2013 c 111 art 13 s 3-9; 2014 c 296 art 6 s 19-22,49; art 7 s 1,2; 2015 c 68 art 13 s 42; 2018 c 211 art 6 s 32,33; art 7 s 13,14; art 8 s 4,5; 2021 c 22 art 5 s 1; 2023 c 45 art 5 s 1; 2023 c 64 art 14 s 6,7; 2024 c 102 art 1 s 3; art 8 s 14; art 9 s 4,5; art 11 s 11,14