1.1 	A bill for an act
1.2 	relating to retirement; volunteer firefighter relief associations; requiring 
1.3 	misconduct reporting by public accountants; authorizing brokers to hold relief 
1.4 	association assets; clarifying certain authorized investment limitations; requiring 
1.5 	broker certification of sufficient securities investor protection corporation 
1.6 	insurance for broker-held assets; adding ancillary benefit definition; revising 
1.7 	surviving spouse definition; modifying interest crediting for deferred service 
1.8 	pensions; clarifying the limitation on ancillary benefits; disallowing special fund 
1.9 	payment of funeral benefits; amending Minnesota Statutes 2006, sections 6.67; 
1.10 	69.011, subdivision 1; 356A.06, subdivisions 1, 7, 8b; 424A.001, subdivision 6, 
1.11 	by adding a subdivision; 424A.02, subdivisions 7, 9; 424A.05, subdivision 3.
1.12 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.13 	Section 1. Minnesota Statutes 2006, section 6.67, is amended to read:
1.14 	6.67 PUBLIC ACCOUNTANTS; REPORT OF EVIDENCE POINTING TO 
1.15 	MISCONDUCT.
1.16 	Whenever a public accountant in the course of auditing the books and affairs of a 
1.17 	county, city, town, school district, ~~or~~ other public ~~corporations, shall discover~~corporation, 
1.18 	or local public pension plan governed by section 69.77, sections 69.771 to 69.775, or 
1.19 	chapter 354A, 422A, 423B, 423C, or 424A, discovers evidence pointing to nonfeasance, 
1.20 	misfeasance, or malfeasance, on the part of an officer or employee in the conduct of duties 
1.21 	and affairs, the public accountant shall promptly make a report of such discovery to the 
1.22 	state auditor and the county attorney of the county in which the governmental unit is 
1.23 	situated and the public accountant shall also furnish a copy of the report of audit upon 
1.24 	completion to said officers. The county attorney shall act on such report in the same 
1.25 	manner as required by law for reports made to the county attorney by the state auditor.

1.26 	EFFECTIVE DATE. This section is effective the day following final enactment.

2.1 	Sec. 2. Minnesota Statutes 2006, section 69.011, subdivision 1, is amended to read:
2.2 		Subdivision 1.Definitions. Unless the language or context clearly indicates that a 
2.3 	different meaning is intended, the following words and terms shall for the purposes of this 
2.4 	chapter and chapters 423, 423A, 424 and 424A have the meanings ascribed to them:
2.5 	(a) "Commissioner" means the commissioner of revenue.
2.6 	(b) "Municipality" means:
2.7 	(1) a home rule charter or statutory city;
2.8 	(2) an organized town;
2.9 	(3) a park district subject to chapter 398;
2.10 	(4) the University of Minnesota;
2.11 	(5) for purposes of the fire state aid program only, an American Indian tribal 
2.12 	government entity located within a federally recognized American Indian reservation;
2.13 	(6) for purposes of the police state aid program only, an American Indian tribal 
2.14 	government with a tribal police department which exercises state arrest powers under 
2.15 	section 626.90, 626.91, 626.92, or 626.93; 
2.16 	(7) for purposes of the police state aid program only, the Metropolitan Airports 
2.17 	Commission with respect to peace officers covered under chapter 422A; and
2.18 	(8) for purposes of the police state aid program only, the Department of Natural 
2.19 	Resources and the Department of Public Safety with respect to peace officers covered 
2.20 	under chapter 352B.
2.21 	(c) "Minnesota Firetown Premium Report" means a form prescribed by the 
2.22 	commissioner containing space for reporting by insurers of fire, lightning, sprinkler 
2.23 	leakage and extended coverage premiums received upon risks located or to be performed 
2.24 	in this state less return premiums and dividends.
2.25 	(d) "Firetown" means the area serviced by any municipality having a qualified fire 
2.26 	department or a qualified incorporated fire department having a subsidiary volunteer 
2.27 	firefighters' relief association.
2.28 	(e) "Market value" means latest available market value of all property in a taxing 
2.29 	jurisdiction, whether the property is subject to taxation, or exempt from ad valorem 
2.30 	taxation obtained from information which appears on abstracts filed with the commissioner 
2.31 	of revenue or equalized by the State Board of Equalization.
2.32 	(f) "Minnesota Aid to Police Premium Report" means a form prescribed by the 
2.33 	commissioner for reporting by each fire and casualty insurer of all premiums received 
2.34 	upon direct business received by it in this state, or by its agents for it, in cash or otherwise, 
2.35 	during the preceding calendar year, with reference to insurance written for insuring against 
2.36 	the perils contained in auto insurance coverages as reported in the Minnesota business 
3.1 	schedule of the annual financial statement which each insurer is required to file with 
3.2 	the commissioner in accordance with the governing laws or rules less return premiums 
3.3 	and dividends.
3.4 	(g) "Peace officer" means any person:
3.5 	(1) whose primary source of income derived from wages is from direct employment 
3.6 	by a municipality or county as a law enforcement officer on a full-time basis of not less 
3.7 	than 30 hours per week;
3.8 	(2) who has been employed for a minimum of six months prior to December 31 
3.9 	preceding the date of the current year's certification under subdivision 2, clause (b);
3.10 	(3) who is sworn to enforce the general criminal laws of the state and local 
3.11 	ordinances;
3.12 	(4) who is licensed by the Peace Officers Standards and Training Board and is 
3.13 	authorized to arrest with a warrant; and
3.14 	(5) who is a member of a local police relief association to which section 69.77
3.15 	applies, the State Patrol retirement plan, the public employees police and fire fund, or the 
3.16 	Minneapolis Employees Retirement Fund. 
3.17 	(h) "Full-time equivalent number of peace officers providing contract service" means 
3.18 	the integral or fractional number of peace officers which would be necessary to provide 
3.19 	the contract service if all peace officers providing service were employed on a full-time 
3.20 	basis as defined by the employing unit and the municipality receiving the contract service.
3.21 	(i) "Retirement benefits other than a service pension" means any disbursement 
3.22 	authorized under section 424A.05, subdivision 3, clauses (2)~~,~~and (3)~~, and (4)~~. 
3.23 	(j) "Municipal clerk, municipal clerk-treasurer, or county auditor" means the person 
3.24 	who was elected or appointed to the specified position or, in the absence of the person, 
3.25 	another person who is designated by the applicable governing body. In a park district, 
3.26 	the clerk is the secretary of the board of park district commissioners. In the case of the 
3.27 	University of Minnesota, the clerk is that official designated by the Board of Regents. 
3.28 	For the Metropolitan Airports Commission, the clerk is the person designated by the 
3.29 	commission. For the Department of Natural Resources or the Department of Public Safety, 
3.30 	the clerk is the respective commissioner. For a tribal police department which exercises 
3.31 	state arrest powers under section 626.90, 626.91, 626.92, or 626.93, the clerk is the person 
3.32 	designated by the applicable American Indian tribal government. 

3.33 	EFFECTIVE DATE. This section is effective January 1, 2009.

3.34 	Sec. 3. Minnesota Statutes 2006, section 356A.06, subdivision 1, is amended to read:
4.1 		Subdivision 1.Authorized holder of assets; title to assets. (a) Assets of a covered 
4.2 	pension plan may be held only by the plan treasurer~~,~~; the State Board of Investment~~,~~; the 
4.3 	depository agent of the plan~~,~~; a security broker with both insurance from the nonprofit 
4.4 	corporation created by the Securities Investor Protection Act, as amended, and appropriate 
4.5 	excess coverage, or the broker's agent; or of the State Board of Investment. 
4.6 	(b) Legal title to plan assets must be vested in the plan, the State Board of 
4.7 	Investment, the governmental entity that sponsors the plan, the nominee of the plan, or 
4.8 	the depository agent. The holder of legal title shall function as a trustee for a person or 
4.9 	entity with a beneficial interest in the assets of the plan.

4.10 	EFFECTIVE DATE. This section is effective the day following final enactment.

4.11 	Sec. 4. Minnesota Statutes 2006, section 356A.06, subdivision 7, is amended to read:
4.12 		Subd. 7.Expanded list of authorized investment securities. (a) Authority. 
4.13 	 Except to the extent otherwise authorized by law, a covered pension plan not described by 
4.14 	subdivision 6, paragraph (a), shall invest its assets only in accordance with this subdivision.
4.15 	(b) Securities generally. The covered pension plan has the authority to purchase, 
4.16 	sell, lend, or exchange the securities specified in paragraphs (c) to (i), including puts and 
4.17 	call options and future contracts traded on a contract market regulated by a governmental 
4.18 	agency or by a financial institution regulated by a governmental agency. These securities 
4.19 	may be owned as units in commingled trusts that own the securities described in 
4.20 	paragraphs (c) to (i), including real estate investment trusts and insurance company 
4.21 	commingled accounts, including separate accounts.
4.22 	(c) Government obligations. The covered pension plan may invest funds in 
4.23 	governmental bonds, notes, bills, mortgages, and other evidences of indebtedness if the 
4.24 	issue is backed by the full faith and credit of the issuer or the issue is rated among the top 
4.25 	four quality rating categories by a nationally recognized rating agency. The obligations in 
4.26 	which funds may be invested under this paragraph include guaranteed or insured issues 
4.27 	of (1) the United States, its agencies, its instrumentalities, or organizations created and 
4.28 	regulated by an act of Congress; (2) Canada and its provinces, provided the principal and 
4.29 	interest is payable in United States dollars; (3) the states and their municipalities, political 
4.30 	subdivisions, agencies, or instrumentalities; (4) the International Bank for Reconstruction 
4.31 	and Development, the Inter-American Development Bank, the Asian Development Bank, 
4.32 	the African Development Bank, or any other United States government sponsored 
4.33 	organization of which the United States is a member, provided the principal and interest is 
4.34 	payable in United States dollars.
5.1 	(d) Corporate obligations. The covered pension plan may invest funds in bonds, 
5.2 	notes, debentures, transportation equipment obligations, or any other longer term 
5.3 	evidences of indebtedness issued or guaranteed by a corporation organized under the laws 
5.4 	of the United States or any state thereof, or the Dominion of Canada or any province 
5.5 	thereof if they conform to the following provisions:
5.6 	(1) the principal and interest of obligations of corporations incorporated or organized 
5.7 	under the laws of the Dominion of Canada or any province thereof must be payable in 
5.8 	United States dollars; and
5.9 	(2) obligations must be rated among the top four quality categories by a nationally 
5.10 	recognized rating agency.
5.11 	(e) Other obligations. (1) The covered pension plan may invest funds in 
5.12 	bankers acceptances, certificates of deposit, deposit notes, commercial paper, mortgage 
5.13 	participation certificates and pools, asset backed securities, repurchase agreements and 
5.14 	reverse repurchase agreements, guaranteed investment contracts, savings accounts, and 
5.15 	guaranty fund certificates, surplus notes, or debentures of domestic mutual insurance 
5.16 	companies if they conform to the following provisions:
5.17 	(i) bankers acceptances and deposit notes of United States banks are limited to those 
5.18 	issued by banks rated in the highest four quality categories by a nationally recognized 
5.19 	rating agency;
5.20 	(ii) certificates of deposit are limited to those issued by (A) United States banks and 
5.21 	savings institutions that are rated in the highest four quality categories by a nationally 
5.22 	recognized rating agency or whose certificates of deposit are fully insured by federal 
5.23 	agencies; or (B) credit unions in amounts up to the limit of insurance coverage provided 
5.24 	by the National Credit Union Administration;
5.25 	(iii) commercial paper is limited to those issued by United States corporations or 
5.26 	their Canadian subsidiaries and rated in the highest two quality categories by a nationally 
5.27 	recognized rating agency;
5.28 	(iv) mortgage participation or pass through certificates evidencing interests in pools 
5.29 	of first mortgages or trust deeds on improved real estate located in the United States where 
5.30 	the loan to value ratio for each loan as calculated in accordance with section 61A.28, 
5.31 	subdivision 3, does not exceed 80 percent for fully amortizable residential properties and 
5.32 	in all other respects meets the requirements of section 61A.28, subdivision 3;
5.33 	(v) collateral for repurchase agreements and reverse repurchase agreements is 
5.34 	limited to letters of credit and securities authorized in this section;
5.35 	(vi) guaranteed investment contracts are limited to those issued by insurance 
5.36 	companies or banks rated in the top four quality categories by a nationally recognized 
6.1 	rating agency or to alternative guaranteed investment contracts where the underlying 
6.2 	assets comply with the requirements of this subdivision;
6.3 	(vii) savings accounts are limited to those fully insured by federal agencies; and
6.4 	(viii) asset backed securities must be rated in the top four quality categories by a 
6.5 	nationally recognized rating agency.
6.6 	(2) Sections 16A.58, 16C.03, subdivision 4, and 16C.05 do not apply to certificates 
6.7 	of deposit and collateralization agreements executed by the covered pension plan under 
6.8 	clause (1), item (ii).
6.9 	(3) In addition to investments authorized by clause (1), item (iv), the covered 
6.10 	pension plan may purchase from the Minnesota Housing Finance Agency all or any part of 
6.11 	a pool of residential mortgages, not in default, that has previously been financed by the 
6.12 	issuance of bonds or notes of the agency. The covered pension plan may also enter into 
6.13 	a commitment with the agency, at the time of any issue of bonds or notes, to purchase 
6.14 	at a specified future date, not exceeding 12 years from the date of the issue, the amount 
6.15 	of mortgage loans then outstanding and not in default that have been made or purchased 
6.16 	from the proceeds of the bonds or notes. The covered pension plan may charge reasonable 
6.17 	fees for any such commitment and may agree to purchase the mortgage loans at a price 
6.18 	sufficient to produce a yield to the covered pension plan comparable, in its judgment, 
6.19 	to the yield available on similar mortgage loans at the date of the bonds or notes. The 
6.20 	covered pension plan may also enter into agreements with the agency for the investment 
6.21 	of any portion of the funds of the agency. The agreement must cover the period of the 
6.22 	investment, withdrawal privileges, and any guaranteed rate of return.
6.23 	(f) Corporate stocks. The covered pension plan may invest funds in stocks or 
6.24 	convertible issues of any corporation organized under the laws of the United States or the 
6.25 	states thereof, any corporation organized under the laws of the Dominion of Canada or its 
6.26 	provinces, or any corporation listed on an exchange regulated by an agency of the United 
6.27 	States or of the Canadian national government, if they conform to the following provisions:
6.28 	(1) the aggregate value of investments under this paragraph, plus paragraphs (g) and 
6.29 	(k), plus equity investments under paragraphs (h), (i), and (j), as adjusted for realized 
6.30 	gains and losses, must not exceed 85 percent of the market or book value, whichever is 
6.31 	less, of a fund; and
6.32 	(2) investments must not exceed five percent of the total outstanding shares of 
6.33 	any one corporation.
6.34 	(g) Developed market foreign stocks investments. In addition to investments 
6.35 	authorized under paragraph (f), the covered pension fund may invest in foreign stock sold 
7.1 	on an exchange in any developed market country that is included in the Europe, Australia, 
7.2 	and Far East Index.
7.3 	(h) Commingled or mutual investments. The covered pension plan may invest 
7.4 	in index funds or mutual funds, including index mutual funds, through bank-sponsored 
7.5 	collective funds and shares of open-end investment companies registered under the 
7.6 	Federal Investment Company Act of 1940, ~~if the investments of the index or of the mutual~~ 
7.7 	~~fund~~to the extent that these funds comply with paragraphs (c) to (j).
7.8 	(i) Real estate investment trust; related investments. The covered pension plan 
7.9 	may invest in real estate investment trusts secured by mortgages or deeds of trust and 
7.10 	sold on an exchange, and insurance company commingled accounts, including separate 
7.11 	accounts, of a debt or equity nature.
7.12 	(j) Exchange traded funds. The covered pension plan may invest funds in exchange 
7.13 	traded funds, subject to the maximums, the requirements, and the limitations set forth in 
7.14 	paragraphs (c) to (i), as applicable.
7.15 	(k) Other investments. (1) In addition to the investments authorized in paragraphs 
7.16 	(b) to (j), and subject to the provisions in clause (2), the covered pension plan may invest 
7.17 	funds in:
7.18 	(i) venture capital investment businesses through participation in limited partnerships 
7.19 	and corporations;
7.20 	(ii) real estate ownership interests or loans secured by mortgages or deeds of trust 
7.21 	through investment in limited partnerships or bank sponsored collective funds;
7.22 	(iii) regional and mutual funds through bank sponsored collective funds and 
7.23 	open-end investment companies registered under the Federal Investment Company Act 
7.24 	of 1940 ~~which do~~to the extent that a fund or a portion of a fund does not qualify under 
7.25 	paragraph (h);
7.26 	(iv) resource investments through limited partnerships, private placements, and 
7.27 	corporations; and
7.28 	(v) international debt securities and emerging market equity securities.
7.29 	(2) The investments authorized in clause (1) must conform to the following 
7.30 	provisions:
7.31 	(i) the aggregate value of all investments made according to clause (1), including 
7.32 	allocated amounts of index and mutual funds, may not exceed 20 percent of the market 
7.33 	value of the fund for which the covered pension plan is investing;
7.34 	(ii) there must be at least four unrelated owners of the investment other than the 
7.35 	covered pension plan for investments made under clause (1), item (i), (ii), (iii), or (iv);
8.1 	(iii) covered pension plan participation in an investment vehicle is limited to 20 
8.2 	percent thereof for investments made under clause (1), item (i), (ii), (iii), or (iv); and
8.3 	(iv) covered pension plan participation in a limited partnership does not include a 
8.4 	general partnership interest or other interest involving general liability. The covered 
8.5 	pension plan may not engage in any activity as a limited partner which creates general 
8.6 	liability.

8.7 	EFFECTIVE DATE. This section is effective the day following final enactment.

8.8 	Sec. 5. Minnesota Statutes 2006, section 356A.06, subdivision 8b, is amended to read:
8.9 		Subd. 8b.Disclosure of investment authority; receipt of statement. (a) For 
8.10 	this subdivision, the term "broker" means a broker, broker-dealer, investment advisor, 
8.11 	investment manager, or third party agent who transfers, purchases, sells, or obtains 
8.12 	investment securities for, or on behalf of, a covered pension plan.
8.13 	(b) Before a covered pension plan may complete an investment transaction with or 
8.14 	in accord with the advice of a broker, the covered pension plan shall provide annually to 
8.15 	the broker a written statement of investment restrictions applicable under state law to the 
8.16 	covered pension plan or applicable under the pension plan governing board investment 
8.17 	policy.
8.18 	(c) A broker must acknowledge in writing annually the receipt of the statement of 
8.19 	investment restrictions and must agree to handle the covered pension plan's investments 
8.20 	and assets in accord with the provided investment restrictions. A covered pension plan 
8.21 	may not enter into or continue a business arrangement with a broker until the broker has 
8.22 	provided this written acknowledgment to the chief administrative officer of the covered 
8.23 	pension plan.
8.24 	(d) If any portion of the plan's assets are held by a security broker or its agent, the 
8.25 	security broker or its agent must acknowledge in writing annually that sufficient insurance 
8.26 	has been obtained from the Securities Investor Protection Corporation, supplemented by 
8.27 	additional insurance, if necessary, to cover the full amount of covered pension plan assets 
8.28 	held by the security broker or its agent. Uniform acknowledgment forms prepared by the 
8.29 	state auditor shall be used by covered pension plans and brokers to meet the requirements 
8.30 	of this subdivision.

8.31 	EFFECTIVE DATE. This section is effective the day following final enactment.

8.32 	Sec. 6. Minnesota Statutes 2006, section 424A.001, is amended by adding a 
8.33 	subdivision to read:
9.1 		Subd. 1a.Ancillary benefit. "Ancillary benefit" means a benefit other than a service 
9.2 	pension that is permitted by law and that is provided for in the relief association bylaws.

9.3 	EFFECTIVE DATE. This section is effective January 1, 2009.

9.4 	Sec. 7. Minnesota Statutes 2006, section 424A.001, subdivision 6, is amended to read:
9.5 		Subd. 6.Surviving spouse. For purposes of this chapter, and the governing bylaws 
9.6 	of any relief association to which this chapter applies, the term "surviving spouse" means 
9.7 	~~any person who was the dependent spouse of a deceased active member or retired former~~ 
9.8 	~~member living with the member at the time of the death of the active member or retired~~ 
9.9 	~~former member for at least one year prior to the date on which the member terminated~~ 
9.10 	~~active service and membership~~ the spouse of a deceased member who was legally married 
9.11 	to the member either at the time of separation from active service with the fire department 
9.12 	or at death, as specified by the governing bylaws, or, if the governing bylaws do not 
9.13 	specify, at the time of death.

9.14 	EFFECTIVE DATE. This section is effective January 1, 2009.

9.15 	Sec. 8. Minnesota Statutes 2006, section 424A.02, subdivision 7, is amended to read:
9.16 		Subd. 7.Deferred service pensions. (a) A member of a relief association is entitled 
9.17 	to a deferred service pension if the member:
9.18 	(1) has completed the lesser of the minimum period of active service with the fire 
9.19 	department specified in the bylaws or 20 years of active service with the fire department;
9.20 	(2) has completed at least five years of active membership in the relief association; 
9.21 	and
9.22 	(3) separates from active service and membership before reaching age 50 or the 
9.23 	minimum age for retirement and commencement of a service pension specified in the 
9.24 	bylaws governing the relief association if that age is greater than age 50.
9.25 	(b) The deferred service pension is payable when the former member reaches age 
9.26 	50, or the minimum age specified in the bylaws governing the relief association if that age 
9.27 	is greater than age 50, and when the former member makes a valid written application.
9.28 	(c) A relief association that provides a lump sum service pension governed by 
9.29 	subdivision 3 may, when its governing bylaws so provide, pay interest on the deferred 
9.30 	lump sum service pension during the period of deferral. If provided for in the bylaws, 
9.31 	interest must be paid in one of the following manners:
9.32 	(1) at the investment performance rate actually earned on that portion of the assets 
9.33 	if the deferred benefit amount is invested by the relief association in a separate account 
10.1 	established and maintained by the relief association or if the deferred benefit amount is 
10.2 	invested in a separate investment vehicle held by the relief association; or
10.3 	(2) at an interest rate of up to five percent, compounded annually, as set by the board 
10.4 	of directors and approved as provided in subdivision 10~~; or~~.
10.5 	~~(3) at a rate equal to the actual time weighted total rate of return investment~~ 
10.6 	~~performance of the special fund as reported by the Office of the State Auditor under~~ 
10.7 	~~section 356.219, up to five percent, compounded annually, and applied consistently for~~ 
10.8 	~~all deferred service pensioners.~~
10.9 	~~A relief association may not use the method provided for in clause (3), until it has~~ 
10.10 	~~modified its bylaws to be consistent with that clause.~~
10.11 	(d) Interest under paragraph (c), clause (2) ~~or (3)~~, is payable ~~from the first day of~~ 
10.12 	~~the month next~~ following the date on which the municipality has approved the deferred 
10.13 	service pension interest rate established by the board of trustees ~~or from the first day of the~~ 
10.14 	~~month next following the date on which the member separated from active fire department~~ 
10.15 	~~service and relief association membership, whichever is later, to the last day of the month~~ 
10.16 	~~immediately before the month in which the deferred member becomes eligible to begin~~ 
10.17 	~~receipt of the service pension and applies for the deferred service pension~~.
10.18 	(e) A relief association that provides a defined contribution service pension may, 
10.19 	if its governing bylaws so provide, credit interest or additional investment performance 
10.20 	on the deferred lump sum service pension during the period of deferral. If provided for 
10.21 	in the bylaws, the interest must be paid in one of the manners specified in paragraph 
10.22 	(c) or alternatively the relief association may credit any investment return on the assets 
10.23 	of the special fund of the defined contribution volunteer firefighter relief association in 
10.24 	proportion to the share of the assets of the special fund to the credit of each individual 
10.25 	deferred member account through the date on which the investment return is recognized 
10.26 	by and credited to the special fund.
10.27 	(f) For a deferred service pension that is transferred to a separate account established 
10.28 	and maintained by the relief association or separate investment vehicle held by the relief 
10.29 	association, the deferred member bears the full investment risk subsequent to transfer and 
10.30 	in calculating the accrued liability of the volunteer firefighters relief association that pays 
10.31 	a lump sum service pension, the accrued liability for deferred service pensions is equal 
10.32 	to the separate relief association account balance or the fair market value of the separate 
10.33 	investment vehicle held by the relief association.
10.34 	(g) The deferred service pension is governed by and must be calculated under 
10.35 	the general statute, special law, relief association articles of incorporation, and relief 
11.1 	association bylaw provisions applicable on the date on which the member separated from 
11.2 	active service with the fire department and active membership in the relief association.

11.3 	EFFECTIVE DATE. This section is effective the day following final enactment.

11.4 	Sec. 9. Minnesota Statutes 2006, section 424A.02, subdivision 9, is amended to read:
11.5 		Subd. 9.Limitation on ancillary benefits. Any relief association, including 
11.6 	any volunteer firefighters relief association governed by section   69.77 or any volunteer 
11.7 	firefighters division of a relief association governed by chapter 424, may only pay 
11.8 	ancillary benefits which would constitute an authorized disbursement as specified in 
11.9 	section   424A.05 subject to the following requirements or limitations: 
11.10 	(1) with respect to a relief association in which governing bylaws provide for a 
11.11 	lump sum service pension to a retiring member, no ancillary benefit may be paid to any 
11.12 	former member or paid to any person on behalf of any former member after the former 
11.13 	member (i) terminates active service with the fire department and active membership 
11.14 	in the relief association; and (ii) commences receipt of a service pension as authorized 
11.15 	under this section; and
11.16 	(2) with respect to any relief association, no ancillary benefit paid or payable to any 
11.17 	member, to any former member, or to any person on behalf of any member or former 
11.18 	member, may exceed in amount the total earned service pension of the member or former 
11.19 	member. The total earned service pension must be calculated ~~using~~by multiplying 
11.20 	the service pension amount specified in the bylaws of the relief association ~~and~~at the 
11.21 	time of death or disability, whichever applies, by the years of service credited to the 
11.22 	member or former member. The years of service must be determined as of (i) the date 
11.23 	the member or former member became entitled to the ancillary benefit; or (ii) the date 
11.24 	the member or former member died entitling a survivor or the estate of the member or 
11.25 	former member to an ancillary benefit. The ancillary benefit must be calculated ~~(i)~~ without 
11.26 	regard to whether the member ~~or former member~~ had attained the minimum amount of 
11.27 	service and membership credit specified in the governing bylaws~~; and (ii) without regard~~ 
11.28 	~~to the percentage amounts specified in subdivision 2;~~. For active members, the amount 
11.29 	of a permanent disability benefit or a survivor benefit must be equal to the member's 
11.30 	total earned service pension except that the bylaws of any relief association may provide 
11.31 	for the payment of a survivor benefit in an amount not to exceed five times the yearly 
11.32 	service pension amount specified in the bylaws on behalf of any member who dies before 
11.33 	having performed five years of active service in the fire department with which the relief 
11.34 	association is affiliated.

12.1 	EFFECTIVE DATE. This section is effective January 1, 2009.

12.2 	Sec. 10. Minnesota Statutes 2006, section 424A.05, subdivision 3, is amended to read:
12.3 		Subd. 3.Authorized disbursements from the special fund. (a) Disbursements 
12.4 	from the special fund are not permitted to be made for any purpose other than one of 
12.5 	the following:
12.6 	(1) for the payment of service pensions to retired members of the relief association if 
12.7 	authorized and paid under law and the bylaws governing the relief association;
12.8 	(2) for the payment of temporary or permanent disability benefits to disabled 
12.9 	members of the relief association if authorized and paid pursuant to law and specified in 
12.10 	amount in the bylaws governing the relief association;
12.11 	(3) for the payment of survivor benefits to surviving spouses and surviving children, 
12.12 	or if none, to designated beneficiaries, of deceased members of the relief association, 
12.13 	and if survivors and if no designated beneficiary, for the payment of a death benefit to 
12.14 	the estate of the deceased active firefighter, if authorized by and paid pursuant to law and 
12.15 	specified in amount in the bylaws governing the relief association;
12.16 	(4) ~~for the payment of any funeral benefits to the surviving spouse, or if no surviving~~ 
12.17 	~~spouse, the estate, of the deceased member of the relief association if authorized by law~~ 
12.18 	~~and specified in amount in the bylaws governing the relief association;~~
12.19 	~~(5)~~ for the payment of the fees, dues and assessments to the Minnesota State Fire 
12.20 	Department Association, to the Minnesota Area Relief Association Coalition, and to 
12.21 	the state Volunteer Firefighters Benefit Association in order to entitle relief association 
12.22 	members to membership in and the benefits of these associations or organizations; and
12.23 	~~(6)~~(5) for the payment of administrative expenses of the relief association as 
12.24 	authorized under section 69.80. 
12.25 	(b) For purposes of this chapter, a designated beneficiary must be a natural person.

12.26 	EFFECTIVE DATE. This section is effective January 1, 2009.