Bill
HF 4074
HF 4074 reallocates SBI expenses across funds, modernizes retirement administration, and lets deputy fire marshals elect coverage under the State Fire Marshals Subplan.
Author/Session
- Primary author: Rep. Lillie
- Session: 2025-2026
- Introduced in House; referred to State Government Finance and Policy, then to Ways and Means
Purpose and overall intent
- Modernize and modify how expenses are apportioned among funds managed by the State Board of Investment (SBI), and implement a set of administrative changes to statutes governing Minnesota’s retirement systems.
- Clarify protections and membership rules for correctional employees, adjust enrollment procedures for the State Fire Marshals subplan, and authorize current deputy state fire marshals to elect coverage under the state fire marshals subplan.
- Include conforming changes to related retirement annuity application procedures and membership committee governance, while adjusting exemptions from certain open-meeting and agency requirements for the correctional plan membership committee.
- Effective date: July 1, 2026 (Sections 1-18), with repeals and transitional provisions as described.
Key provisions and changes
1) Expense apportionment and SBI operations (Sections 1, 2, 3)
- The SBI’s duties and powers are reaffirmed, including formulating policies, employing staff and external investment managers, and reporting requirements.
- Establishes and revises the method for allocating SBI expenses across all funds it serves (including the General Fund, Minnesota State Retirement System funds, Public Employees Retirement Association (PERA), Teachers Retirement Association (TRA), and other funds).
- Creates an annual appropriation mechanism to cover SBI expenses, with costs paid from the assets of funds for which SBI provides services.
- Details a tiered apportionment framework:
- Step 1: Allocate expenses solely attributable to a specific fund or set of funds.
- Step 2: Allocate remaining SBI expenses across funds proportionally based on weighted average assets under management (AUM), excluding the General Fund.
- Step 3: Prorate and bill retirement funds (except General Fund and certain specified retirement plans) for their share of these costs, with payment via interdepartmental procedures.
- Step 4: Use annual estimated expenses charged at the start of each fiscal year, reconciled at year-end; surpluses may be retained or rebated as described.
2) Administrative changes at the Minnesota State Retirement System (MSRS) (Sections 1, 2, 3)
- Updates to the executive director’s duties, budgeting, reporting, and recordkeeping to align with the revised expense apportionment framework.
- Ensures SBI’s operating account and related costs are properly tracked and reported, with annual reporting to the governor and legislature.
3) Correctional employees and labor organization provisions (Sections 4–9, 14)
- Clarifies that correctional employees remain in the Correctional Employees Retirement Plan (CERP) even when on leave to work for a labor organization, with corresponding conforming changes to enrollment and benefit administration.
- Subsection 2 and 2a of 352.029 clarify elections for labor organization service and limits on “covered salary” for benefits and contributions (including the cap of 75% of governor’s salary or actual salary, whichever is lesser).
- Employee/employer contribution mechanics: employee contributions require payroll deductions; labor organizations may pay employer contributions on behalf of employees covered by CERP or the General Plan.
- CERP-related membership committee: establishes that the correctional plan membership committee is not subject to open meeting laws or certain agency appointment/registration requirements (enhancing its governance flexibility).
4) Correctional plan membership committee governance (Sec. 15)
- Adds a subdivision clarifying that the correctional plan membership committee is not an agency for purposes of specified open meeting law provisions, and is not subject to certain agency appointment and registration requirements.
5) Fire marshal subplan and deputy fire marshal elections (Sections 12–18)
- Allows current deputy fire marshals to elect coverage under the State Fire Marshals Subplan (SFMS) under specified conditions and timelines.
- Sets out election procedures, retroactive effective dates, and the calculation of back contributions if retroactive coverage is elected.
- Specifies employee and employer contribution responsibilities and timing for the SFMS election.
- Repeals a predecessor provision (352.87, subd. 8) as part of harmonizing the statute.
6) Miscellaneous and effective date (Sec. 19)
- Effective date for Sections 1–18: July 1, 2026.
- Repeals and transitional language included in the Appendix to reflect updated statute structure.
Who is affected
Procedural and timeline considerations
Overall impact
HF 4074 reorganizes how SBI expenses are allocated across funds, updates retirement-plan administration and enrollment procedures, clarifies governance exemptions for the correctional plan membership committee, and provides a pathway for current deputy fire marshals to elect SFMS coverage. The measures are designed to improve administrative efficiency, transparency of SBI costs, and consistency across Minnesota’s state retirement systems, with explicit effective dates and transitional provisions.
Compiled from official sources — confirm details with the bill’s official record.
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