During Minnesota's 2026 legislative session, lawmakers approved two omnibus bills that local government finance, payroll, HR, and public safety leaders should understand. House File (HF) 4074 became Chapter 106, making numerous changes to Minnesota's public retirement systems and payroll administration. Senate File (SF) 4760 became Chapter 97, expanding survivor benefits for firefighters and peace officers in certain line-of-duty situations.
Here's a practical look at what these new laws require and the steps local governments should consider taking before the changes take effect.
HF 4074 was the retirement omnibus bill approved by the Legislature and later enacted as Chapter 106. While the legislation includes numerous administrative and technical pension updates, several provisions directly affect local government payroll, finance, and HR operations.
One of the most practical changes affects employers participating in the Public Employees Retirement Association (PERA).
Chapter 106 updates the statutory definition of salary by excluding payments made from the Minnesota Paid Leave insurance account while revising how employer-provided supplemental compensation during an authorized leave is treated for retirement purposes.
Beginning July 1, 2026, employers that allow employees to supplement Minnesota Paid Leave benefits with accrued paid leave no longer need to determine PERA eligibility based on whether the leave is medical or nonmedical. Instead, payroll staff can follow one consistent reporting process for employer-provided supplemental pay during authorized leave.
Beginning with payroll periods starting on or after January 1, 2027, employers must make retirement contributions for certain employees who return to work after retirement, even though those employees generally do not earn additional retirement service credit or make employee retirement contributions.
For finance and payroll departments, this means reviewing payroll configurations, budgeting for employer retirement costs, and confirming that contribution calculations align with the updated law before implementation.
Chapter 106 also establishes additional reporting responsibilities for governmental subdivisions that participate in phased retirement agreements.
Beginning January 1, 2027, employers must report:
Employee salary
Compensated hours worked
Pay period information
These reports must be submitted to PERA within 14 calendar days after the end of each pay period using the reporting method prescribed by the executive director.
Organizations with phased retirement employees should review their reporting workflows now to determine whether payroll or HR processes need to be updated.
The legislation also establishes the Local Government Probation and Telecommunicator Retirement Plan within PERA.
Local governments employing eligible probation officers or emergency telecommunicators should review:
Employee classifications
Retirement enrollment procedures
Payroll deduction setup
Employer contribution requirements
While not every organization will be affected, those with eligible employees should coordinate with PERA before implementation.
Chapter 106 also contains numerous retirement system updates that may affect certain governmental employers, including:
Reduced employee and employer contribution rates for some retirement plans.
Changes to post-retirement adjustment waiting periods.
Administrative updates affecting multiple Minnesota retirement systems.
Technical revisions to retirement statutes and pension administration.
Although many of these provisions are administered by the retirement systems themselves, finance and HR professionals should remain aware of the changes when reviewing payroll procedures and employee retirement benefits.
Separate from the retirement legislation, Chapter 97 expands survivor benefits for firefighters and peace officers who die because of qualifying line-of-duty injuries or occupational exposures.
The law creates new definitions for nonroutine strenuous and stressful physical activities.
If a firefighter or peace officer dies from a heart attack, stroke, or vascular rupture within 24 hours after qualifying line-of-duty activities, the death is presumed to have resulted from a line-of-duty injury, allowing eligible survivors to receive public safety officer benefits. These provisions apply retroactively to February 1, 2020.
Chapter 97 also expands survivor benefits for firefighters and peace officers who die from qualifying cancers linked to occupational carcinogen exposure.
To qualify, an officer generally must have:
At least five years of service.
A qualifying cancer diagnosis within 15 years after active service.
An eligible exposure-related cancer identified in the law.
The cancer provisions apply retroactively to January 1, 2020.
The legislation also expands survivor benefits for deaths related to certain contagious diseases contracted through line-of-duty exposure.
Although these provisions don't require routine payroll changes, they may affect benefit administration, recordkeeping, and coordination between finance, HR, risk management, and public safety leadership when a qualifying claim arises.
Several provisions in these new laws require finance, payroll, and HR departments to review existing procedures before the effective dates arrive.
Consider taking these steps:
Update payroll procedures for Minnesota Paid Leave.
Review PERA retirement reporting processes.
Budget for new employer retirement contribution requirements beginning in 2027.
Evaluate phased retirement reporting procedures.
Determine whether the new probation and telecommunicator retirement plan applies to your organization.
Coordinate with HR and public safety leadership regarding the expanded survivor benefit provisions.
Monitor guidance from PERA and other Minnesota retirement systems as implementation continues.
Taking time to review these requirements now can help reduce administrative work and avoid reporting issues during future payroll cycles.
Keeping pace with legislative changes is easier when your payroll and financial software are designed specifically for local governments.
VIP Payroll & HR and VIP Talent Management help organizations streamline payroll processing, employee record management, leave administration, retirement reporting, and compliance activities from one integrated system. Combined with VIP Accounting, your finance team can access the payroll and financial information needed to make informed decisions while reducing manual processes.
As payroll and retirement requirements continue to evolve, having software built for the public sector can help your team spend less time adapting to legislative changes and more time serving your community.
Want to learn how SSI's solutions can simplify payroll, retirement reporting, and financial management?
Contact us to schedule a personalized demonstration.