1.1                          A bill for an act 
  1.2             relating to retirement; Crystal volunteer 
  1.3             firefighters' relief association and New Hope 
  1.4             volunteer firefighters' relief association; 
  1.5             authorizing a consolidated volunteer firefighters' 
  1.6             relief association for a joint powers fire department 
  1.7             servicing the cities of Crystal and New Hope; 
  1.8             authorizing a conversion of existing defined benefit 
  1.9             plans to a defined contribution plan; ratifying prior 
  1.10            benefit plans and related actions; repealing Laws 
  1.11            1969, chapter 1088; Laws 1971, chapter 114; Laws 1978, 
  1.12            chapters 562, section 32, and 753; Laws 1979, chapters 
  1.13            97, and 201, section 27; and Laws 1981, chapter 224, 
  1.14            sections 250 and 254. 
  1.15  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.16     Section 1.  [CONSOLIDATED CRYSTAL-NEW HOPE VOLUNTEER 
  1.17  FIREFIGHTERS' RELIEF ASSOCIATION; CREATION.] 
  1.18     Notwithstanding any provision of law to the contrary, if 
  1.19  the cities of Crystal and New Hope enter into a joint powers 
  1.20  agreement under Minnesota Statutes, section 471.59, to establish 
  1.21  and operate a joint powers fire department, the Crystal 
  1.22  volunteer firefighters' relief association and the New Hope 
  1.23  volunteer firefighters' relief association shall consolidate 
  1.24  into a single volunteer firefighters' relief association.  The 
  1.25  consolidated volunteer firefighters' relief association must be 
  1.26  governed by sections 1 to 7 and the applicable provisions of 
  1.27  Minnesota Statutes, chapters 69, 356, 356A, and 424A. 
  1.28     Sec. 2.  [CONSOLIDATED VOLUNTEER FIREFIGHTERS' RELIEF 
  1.29  ASSOCIATION.] 
  1.30     Subdivision 1.  [ESTABLISHMENT.] The consolidated volunteer 
  2.1   firefighters' relief association for the joint powers fire 
  2.2   department serving the cities of Crystal and New Hope must be 
  2.3   incorporated under Minnesota Statutes, chapter 317A.  The 
  2.4   incorporators of the consolidated relief association must 
  2.5   include at least one board member of the Crystal volunteer 
  2.6   firefighters' relief association and at least one board member 
  2.7   of the former New Hope volunteer firefighters' relief 
  2.8   association.  The consolidated relief association must be 
  2.9   incorporated within 90 days of the establishment of the joint 
  2.10  powers fire department.  The joint powers fire department is 
  2.11  established on the date specified in the joint powers agreement. 
  2.12     Subd. 2.  [GOVERNANCE OF CONSOLIDATED VOLUNTEER 
  2.13  FIREFIGHTERS' RELIEF ASSOCIATION.] (a) Notwithstanding Minnesota 
  2.14  Statutes, section 424A.04, subdivision 1, the consolidated 
  2.15  volunteer firefighters' relief association is governed by a 
  2.16  board of trustees consisting of nine members, as provided in the 
  2.17  bylaws of the consolidated relief association, composed of: 
  2.18     (1) six firefighters in the joint fire department elected 
  2.19  by the membership of the consolidated relief association; and 
  2.20     (2) three appointed members, including the fire chief of 
  2.21  the joint fire department, one member appointed by the city 
  2.22  council of the city of New Hope, and one member appointed by the 
  2.23  city council of the city of Crystal. 
  2.24     (b) The board must have three officers, including a 
  2.25  president, a secretary, and a treasurer.  The membership of the 
  2.26  consolidated volunteer firefighters' relief association must 
  2.27  elect the three officers from the nine board members.  A board 
  2.28  of trustees member may not hold more than one officer position 
  2.29  at the same time. 
  2.30     (c) The elected and appointed board members have a term of 
  2.31  three years. 
  2.32     (d) The board of trustees must administer the affairs of 
  2.33  the relief association consistent with sections 1 to 7 and the 
  2.34  applicable provisions of Minnesota Statutes, chapters 69, 356A, 
  2.35  and 424A. 
  2.36     Subd. 3.  [SPECIAL AND GENERAL FUNDS.] (a) The consolidated 
  3.1   volunteer firefighters' relief association may establish and 
  3.2   maintain a special fund and a general fund. 
  3.3      (b) The special fund must be established and maintained as 
  3.4   provided in Minnesota Statutes, section 424A.05. 
  3.5      (c) The general fund must be established and maintained as 
  3.6   provided in Minnesota Statutes, section 424A.06. 
  3.7      Sec. 3.  [CONSOLIDATION OF FORMER RELIEF ASSOCIATIONS.] 
  3.8      Subdivision 1.  [EFFECTIVE DATE OF CONSOLIDATION.] On the 
  3.9   first business day occurring 30 days after the establishment of 
  3.10  the consolidated volunteer firefighters' relief association 
  3.11  under section 2, which is the effective date of consolidation, 
  3.12  the administration, records, assets, and liabilities of the 
  3.13  prior Crystal volunteer firefighters' relief association and of 
  3.14  the prior New Hope volunteer firefighters' relief association 
  3.15  transfer to the consolidated volunteer firefighters' relief 
  3.16  association and the Crystal volunteer firefighters' relief 
  3.17  association and the New Hope volunteer firefighters' relief 
  3.18  association cease to exist as legal entities. 
  3.19     Subd. 2.  [TRANSFER OF ADMINISTRATION.] On the effective 
  3.20  date of consolidation, the administration of the prior relief 
  3.21  associations is transferred to the board of trustees of the 
  3.22  consolidated volunteer firefighters relief association. 
  3.23     Subd. 3.  [TRANSFER OF RECORDS.] On the effective date of 
  3.24  consolidation, the secretary and the treasurer of the Crystal 
  3.25  volunteer firefighters' relief association and the secretary and 
  3.26  the treasurer of the New Hope volunteer firefighters' relief 
  3.27  association shall transfer all records and documents relating to 
  3.28  the prior relief associations to the secretary and the treasurer 
  3.29  of the consolidated volunteer firefighters' relief association. 
  3.30     Subd. 4.  [TRANSFER OF SPECIAL FUND ASSETS AND 
  3.31  LIABILITIES.] (a) On the effective date of consolidation, the 
  3.32  secretary and the treasurer of the Crystal volunteer 
  3.33  firefighters' relief association and the secretary and the 
  3.34  treasurer of the New Hope volunteer firefighters' relief 
  3.35  association shall cause to occur the transfer of the assets of 
  3.36  the special fund of the applicable relief association to the 
  4.1   special fund of the consolidated relief association.  Unless the 
  4.2   applicable secretary and treasurer decide otherwise, the assets 
  4.3   may be transferred as investment securities rather than as 
  4.4   cash.  The transfer must include any accounts receivable.  The 
  4.5   applicable secretary shall settle any accounts payable from the 
  4.6   special fund of the relief association before the effective date 
  4.7   of consolidation. 
  4.8      (b) Upon the transfer of the assets of the special fund of 
  4.9   a prior relief association, the pension liabilities of that 
  4.10  special fund become the obligation of the special fund of the 
  4.11  consolidated volunteer firefighters' relief association. 
  4.12     (c) Upon the transfer of the prior relief association 
  4.13  special fund assets, the board of trustees of the consolidated 
  4.14  volunteer firefighters' relief association has legal title to 
  4.15  and management responsibility for the transferred assets as 
  4.16  trustees for persons having a beneficial interest in those 
  4.17  assets arising out of the benefit coverage provided by the prior 
  4.18  relief association. 
  4.19     (d) The consolidated volunteer firefighters' relief 
  4.20  association is the successor in interest for all claims for and 
  4.21  against the special funds of the prior Crystal volunteer 
  4.22  firefighters' relief association and the prior New Hope 
  4.23  volunteer firefighters' relief association, or the cities of 
  4.24  Crystal and New Hope with respect to the special funds of the 
  4.25  prior relief associations.  The status of successor in interest 
  4.26  does not apply to any claim against a prior relief association, 
  4.27  the city in which that relief association is located, or any 
  4.28  person connected with the prior relief association or the city, 
  4.29  based on any act or acts that were not done in good faith and 
  4.30  that constituted a breach of fiduciary responsibility under 
  4.31  common law or Minnesota Statutes, chapter 356A. 
  4.32     Subd. 5.  [DISSOLUTION OF PRIOR GENERAL FUND 
  4.33  BALANCES.] Before the effective date of consolidation, the 
  4.34  secretary of the Crystal volunteer firefighters' relief 
  4.35  association and the secretary of the New Hope volunteer 
  4.36  firefighters' relief association shall settle any accounts 
  5.1   payable from the respective general fund or any other relief 
  5.2   association fund in addition to the relief association special 
  5.3   fund.  Any investments held by a fund of the prior relief 
  5.4   associations in addition to the special fund must be liquidated 
  5.5   before the effective date of consolidation as the bylaws of the 
  5.6   relief association provide.  Before consolidation, the 
  5.7   respective relief associations shall pay all applicable general 
  5.8   fund expenses from their respective general funds and any 
  5.9   balance remaining in the general fund or in a fund other than 
  5.10  the relief association special fund as of the effective date of 
  5.11  consolidation must be paid to the new general fund of the 
  5.12  consolidated volunteer relief association. 
  5.13     Subd. 6.  [TERMINATION OF PRIOR RELIEF 
  5.14  ASSOCIATIONS.] Following the transfer of administration, 
  5.15  records, special fund assets, and special fund liabilities from 
  5.16  the prior relief associations to the consolidated volunteer 
  5.17  firefighters' relief association, the Crystal volunteer 
  5.18  firefighters' relief association and the New Hope volunteer 
  5.19  firefighters' relief association cease to exist as legal 
  5.20  entities.  The city manager of the city of Crystal and the city 
  5.21  manager of the city of New Hope must notify the following 
  5.22  government officials of the termination of the respective relief 
  5.23  associations and of the establishment of the consolidated 
  5.24  volunteer firefighters' relief association: 
  5.25     (1) Minnesota secretary of state; 
  5.26     (2) Minnesota state auditor; 
  5.27     (3) Minnesota commissioner of revenue; and 
  5.28     (4) commissioner of the federal Internal Revenue Service. 
  5.29     Sec. 4.  [EFFECT ON PREVIOUS BENEFIT PLAN COVERAGE.] 
  5.30     Subdivision 1.  [BENEFIT COVERAGE FOR CURRENT RETIRED 
  5.31  MEMBERS.] (a) A person who is receiving a monthly service 
  5.32  pension, a monthly disability benefit, or a monthly survivorship 
  5.33  benefit from the Crystal volunteer firefighters' relief 
  5.34  association or from the New Hope volunteer firefighters' relief 
  5.35  association on the effective date of consolidation is entitled 
  5.36  to a continuation of that pension or benefit from the 
  6.1   consolidated volunteer firefighters' relief association.  Unless 
  6.2   paragraph (b) applies, the amount of the pension or benefit 
  6.3   payable after the effective date of consolidation must be 
  6.4   identical to the amount payable before the effective date of 
  6.5   consolidation.  The pension or benefit payable after the 
  6.6   effective date of consolidation is subject to the same terms, 
  6.7   conditions, and qualifications as were in effect before the 
  6.8   effective date of consolidation. 
  6.9      (b) If the board of trustees of the consolidated volunteer 
  6.10  firefighters' relief association establishes the option, a 
  6.11  pension or benefit recipient to whom paragraph (a) applies is 
  6.12  entitled to elect an alternative pension or benefit amount as 
  6.13  offered by the relief association board.  To provide this 
  6.14  alternative pension or benefit, the relief association board may 
  6.15  arrange for a lump-sum payment or the purchase of an annuity 
  6.16  contract for the pension or benefit recipient in place of a 
  6.17  direct payment from the relief association to the person.  The 
  6.18  annuity contract may be purchased only from an insurance company 
  6.19  that is licensed to do business in this state, regularly 
  6.20  undertakes life insurance and annuity business, and is rated by 
  6.21  a recognized national rating agency or organization as being 
  6.22  among the top 25 percent of all insurance companies undertaking 
  6.23  life insurance and annuity business.  The alternative pension or 
  6.24  benefit payable monthly may be in an amount greater than the 
  6.25  pension or benefit payable before the effective date of 
  6.26  consolidation, but may not exceed the maximum service pension or 
  6.27  benefit payable under Minnesota Statutes, chapter 424A.  In 
  6.28  electing the alternative pension or benefit payable under an 
  6.29  annuity contract from a qualified insurance company, the 
  6.30  affected person must waive in writing the person's eligibility 
  6.31  and entitlement to any direct future pension or benefit payments 
  6.32  from the consolidated volunteer firefighters' relief association.
  6.33     Subd. 2.  [BENEFIT COVERAGE FOR CURRENT DEFERRED 
  6.34  MEMBERS.] (a) A person who is not an active member of the 
  6.35  Crystal volunteer firefighters' relief association or an active 
  6.36  member of the New Hope volunteer firefighters' relief 
  7.1   association but who has sufficient service credit with one of 
  7.2   the relief associations to be entitled to a future service 
  7.3   pension from the appropriate relief association remains entitled 
  7.4   to the receipt of that service pension, upon application, when 
  7.5   the person attains at least the minimum age for receipt of a 
  7.6   service pension unless the person elects an alternative service 
  7.7   pension under paragraph (b).  A deferred member may transfer the 
  7.8   member's current service pension to a member's individual 
  7.9   account established under subdivision 3, paragraph (c), subject 
  7.10  to the same conditions of individual accounts for active 
  7.11  members, and remain entitled to receipt of a service pension 
  7.12  when the member reaches the normal retirement age. 
  7.13     (b) If the board of trustees of the consolidated volunteer 
  7.14  firefighters' relief association establishes the option for 
  7.15  benefit recipients under subdivision 1, the deferred service 
  7.16  pensioner described in paragraph (a) may elect the same 
  7.17  alternative service pension as established under subdivision 1, 
  7.18  paragraph (b), except that the deferred service pensioner may 
  7.19  not receive the alternative service pension at an age younger 
  7.20  than the normal retirement age in effect for the prior 
  7.21  applicable relief association. 
  7.22     Subd. 3.  [BENEFIT COVERAGE FOR NEW FIREFIGHTERS' AND 
  7.23  CURRENT VESTED AND NONVESTED ACTIVE MEMBERS.] (a) The benefit 
  7.24  coverage for persons who become firefighters for the joint fire 
  7.25  department for the first time after the effective date of 
  7.26  consolidation and for persons who are active members of the 
  7.27  consolidated volunteer firefighters' relief association as of 
  7.28  the effective date of consolidation is a defined contribution 
  7.29  plan governed under this subdivision and Minnesota Statutes, 
  7.30  section 424A.02, subdivision 4. 
  7.31     (b) For an active member of the consolidated volunteer 
  7.32  firefighters' relief association as of the effective date of 
  7.33  consolidation, that member's prior service as a firefighter in 
  7.34  the prior Crystal fire department or the prior New Hope fire 
  7.35  department must be converted into a dollar accumulation by 
  7.36  multiplying each full year of prior service as a firefighter in 
  8.1   the prior fire department of Crystal or the prior fire 
  8.2   department of New Hope by not less than $3,000.  A member's 
  8.3   prior service of a partial year will be converted into a dollar 
  8.4   accumulation by prorating the $3,000 yearly amount by the number 
  8.5   of months served in the partial year.  The total calculated 
  8.6   dollar accumulation must be credited to the member's individual 
  8.7   account established under paragraph (c). 
  8.8      (c) For each active member of the consolidated volunteer 
  8.9   firefighters' relief association covered by the defined 
  8.10  contribution plan, an individual account must be established, as 
  8.11  provided in Minnesota Statutes, section 424A.02, subdivision 4, 
  8.12  with an initial balance based on the conversion accumulation 
  8.13  determined under paragraph (b), if applicable.  Notwithstanding 
  8.14  Minnesota Statutes, section 424A.02, subdivision 4, the amount 
  8.15  of fire state aid and the amount of regular municipal 
  8.16  contributions must be credited to individual active firefighter 
  8.17  accounts as specified in section 6, subdivision 4. 
  8.18     Sec. 5.  [ACTUARIAL VALUATIONS REQUIRED.] 
  8.19     (a) Unless all benefit recipients and deferred service 
  8.20  pensioners elect alternative pensions or benefits under section 
  8.21  4, subdivisions 1, paragraph (b); and 2, paragraph (b), a 
  8.22  special actuarial valuation of the consolidated volunteer 
  8.23  firefighters' relief association must be prepared as soon as 
  8.24  practicable following the benefit selection under section 4, 
  8.25  subdivision 1.  The actuarial valuation must be prepared under 
  8.26  the applicable provisions of Minnesota Statutes, sections 
  8.27  356.215 and 356.216. 
  8.28     (b) Subsequent actuarial valuations must be prepared as 
  8.29  required under Minnesota Statutes, section 69.773, subdivisions 
  8.30  2 and 3, if any person is entitled or is reasonably anticipated 
  8.31  to be entitled to a direct future monthly benefit from the 
  8.32  consolidated relief association. 
  8.33     Sec. 6.  [ANNUAL RELIEF ASSOCIATION FUNDING.] 
  8.34     Subdivision 1.  [SOURCES.] In addition to investment income 
  8.35  earned by the special fund, the sources of the annual funding of 
  8.36  the consolidated volunteer firefighters' relief association are 
  9.1   the fire state aid received by the city of Crystal, the fire 
  9.2   state aid received by the city of New Hope, the regular 
  9.3   municipal contribution from the city of Crystal, and the regular 
  9.4   municipal contribution from the city of New Hope. 
  9.5      Subd. 2.  [FIRE STATE AID.] The fire state aid received by 
  9.6   the city of Crystal and the fire state aid received by the city 
  9.7   of New Hope must be deposited in the special fund of the 
  9.8   consolidated volunteer firefighters' relief association, for 
  9.9   allocation as provided in subdivision 4. 
  9.10     Subd. 3.  [REGULAR MUNICIPAL CONTRIBUTION.] (a) Annually, 
  9.11  as part of the municipal budget setting process, the city 
  9.12  council of the city of Crystal and the city council of the city 
  9.13  of New Hope must jointly establish the amount of the regular 
  9.14  municipal contribution by each city to the consolidated 
  9.15  volunteer firefighters' relief association. 
  9.16     (b) The regular municipal contribution in total must be at 
  9.17  least equal to (1) the amount of the fire state aid received by 
  9.18  the city of Crystal and the fire state aid received by the city 
  9.19  of New Hope, plus (2) whatever additional amount is needed to 
  9.20  equal the sum determined by multiplying $1,811 by the total of 
  9.21  the number of active firefighters' who are members of the 
  9.22  consolidated volunteer firefighters' relief association. 
  9.23     (c) The established amount for each city must be included 
  9.24  in the budget of the respective city, and, if not payable from a 
  9.25  municipal revenue source other than the city's property tax levy 
  9.26  or fire state aid, must be included in the property tax levy of 
  9.27  the respective city.  The regular municipal contribution must be 
  9.28  allocated in the manner specified in subdivision 4. 
  9.29     (d) If a direct service pension or entitlement is payable 
  9.30  under section 4, subdivision 1, paragraph (a); or subdivision 2, 
  9.31  paragraph (a), to a retiree or deferred retiree, the applicable 
  9.32  city remains responsible for any amount of service pension that 
  9.33  is payable beyond the relief association assets allocated for 
  9.34  the retiree or deferred retiree.  Following any actuarial 
  9.35  valuation of the consolidated relief association, if there is a 
  9.36  net mortality loss attributable to the applicable city, the city 
 10.1   shall make a contribution in addition to the regular municipal 
 10.2   contribution under paragraphs (a) to (c) equal to the amount of 
 10.3   that net mortality loss.  The municipal contribution under this 
 10.4   paragraph is payable on or before the last business day of the 
 10.5   month next following the completion of the actuarial valuation. 
 10.6      Subd. 4.  [ALLOCATION OF FUNDING AMOUNTS.] (a) The annual 
 10.7   fire state aid and the regular municipal contribution, after 
 10.8   deduction for payment of administrative expenses as specified in 
 10.9   subdivision 5, must be allocated to individual active 
 10.10  firefighter accounts based on the level of firefighting services 
 10.11  rendered by the individual active firefighter as stated in the 
 10.12  bylaws of the consolidated volunteer firefighters' relief 
 10.13  association. 
 10.14     (b) Investment income earned by the special fund of the 
 10.15  consolidated relief association must be allocated to each 
 10.16  individual account based on the proportion of the total assets 
 10.17  of the special fund represented by the account. 
 10.18     Subd. 5.  [PAYMENT OF RELIEF ASSOCIATION ADMINISTRATIVE 
 10.19  EXPENSES.] (a) The payment of authorized administrative expenses 
 10.20  of the consolidated volunteer firefighters' relief association 
 10.21  shall be from the special fund of the relief association 
 10.22  according to Minnesota Statutes, section 69.80, and as provided 
 10.23  for in the bylaws of the consolidated relief association and 
 10.24  approved by the board of trustees of the consolidated relief 
 10.25  association.  The allocation of these administrative expenses to 
 10.26  the individual member accounts must occur as provided in the 
 10.27  bylaws of the consolidated relief association. 
 10.28     (b) The payment of any other expenses of the consolidated 
 10.29  relief association shall be from the general fund of the 
 10.30  consolidated relief association according to Minnesota Statutes, 
 10.31  section 69.80, and as provided for in the bylaws of the 
 10.32  consolidated relief association and approved by the board of 
 10.33  trustees of the consolidated relief association. 
 10.34     Sec. 7.  [VALIDATION OF CURRENT BENEFIT PLANS AND PRIOR 
 10.35  ACTIONS.] 
 10.36     Notwithstanding any provisions of Laws 1969, chapter 1088, 
 11.1   as amended by Laws 1978, chapters 562, section 32, and 753; Laws 
 11.2   1979, chapter 201, section 44; or Laws 1981, chapter 224, 
 11.3   section 250; or Laws 1971, chapter 114, as amended by Laws 1979, 
 11.4   chapters 97, and 201, sections 27 and 44; and Laws 1981, chapter 
 11.5   224, section 254, the benefit plans of the Crystal volunteer 
 11.6   firefighters' relief association and of the New Hope volunteer 
 11.7   firefighters' relief association as reflected in each relief 
 11.8   association's articles of incorporation and bylaws as of 
 11.9   December 15, 1993, are hereby ratified and validated.  Any acts 
 11.10  previously taken by the Crystal volunteer firefighters' relief 
 11.11  association and by the New Hope volunteer firefighters' relief 
 11.12  association with those ratified articles of incorporation and 
 11.13  bylaws are also ratified and validated. 
 11.14     Sec. 8.  [REPEALER OF PRIOR SPECIAL LAWS.] 
 11.15     Laws 1969, chapter 1088; Laws 1971, chapter 114; Laws 1978, 
 11.16  chapters 562, section 32, and 753; Laws 1979, chapters 97, and 
 11.17  201, section 27; and Laws 1981, chapter 224, sections 250 and 
 11.18  254, are repealed. 
 11.19     Sec. 9.  [EFFECTIVE DATE.] 
 11.20     Sections 1 to 7 are effective on the day following final 
 11.21  approval by the city council of the city of Crystal and by the 
 11.22  city council of the city of New Hope and compliance with 
 11.23  Minnesota Statutes, section 645.021, subdivision 3.  Section 8 
 11.24  is effective on the effective date of consolidation of the 
 11.25  Crystal volunteer firefighters' relief association and the New 
 11.26  Hope volunteer firefighters' relief association.