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� <br />� <br />REBECCA OTTO <br />STATE AUDITOR <br />February, 2009 <br />STATE OF MINNESOTA <br />OFFICE OF THE STATE AUDITOR <br />SLTITE 500 <br />525 PARK STREET <br />SAINT PAUL, MN 55103-2139 <br />Article for League of Minnesota Cities <br />� <br />(651)296-2551 (Voice) <br />(651)296-4755(Fax) <br />stace.auditor(u�state.mn.us (E-mail} <br />1-800-627-3529 (Relay Service) <br />Municipal Contributions to Volunteer Fire Relief Associations <br />By Rebecca Otto, State Auditor <br />Minnesota has over 700 volunteer fire relief associations, and the majority of firefighters in <br />Minnesota are volunteers. Relief associations are governmental entities that receive and <br />manage public and nonpublic money to provide retirement benefits for individuals who <br />serve as firefighters and emergency first responders. These retirement benefits are <br />firefighters' primary source of compensation. Cities may provide municipal contributions <br />to these funds. The question has arisen as to how the economic downturn and poor markets <br />may affect required municipal contributions levels. This article is an attempt to simplify <br />this complex topic. <br />The main sources of revenue for relief associarions are municipal contributions, fire state <br />aid, and investment earnings. Municipal contributions can be made voluntarily by a local <br />community or may be required, based on the relief association's financial situation. State <br />law requires a municipality to pay a minimum annual contribution to the special fund of its <br />affiliated relief association, unless the special fund is fully funded or fire state aid is <br />sufficient to cover the municipal obligation. Decreased earnings on investments generally <br />mean higher required municipal contributions, which can create challenges for a <br />municipality's budget. <br />The fictional city of Frostbite Lake is used below to illustrate how required municipal <br />contribution amounts are calculated for lump sum plans. <br />� <br />�O Office of the State Auditor 2009 <br />An Equal Opportunity Employer <br />