HF 1706

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to retirement; implementing the
recommendations of the Volunteer Firefighter Relief
Association working group of the state auditor;
modifying the trigger date for filing financial
reports; revising the per firefighter financing
requirements for monthly benefit service pensions;
modifying the options for crediting interest on
deferred service pensions; clarifying the deferred
service pension options available to defined
contribution plans; providing for the crediting of
service during military service leaves; requiring the
amortization of experience losses; clarifying the
compliance requirements for the qualification for fire
state aid; modifying a limit on mutual fund
investments; clarifying corporate stock and
exchange-traded funds investment authority; modifying
the municipal representation requirements on relief
association governing boards; amending Minnesota
Statutes 2004, sections 69.051, subdivisions 1, 1a;
69.771; 69.772, subdivisions 3, 4; 69.773,
subdivisions 4, 5; 69.775; 356A.06, subdivision 7;
424A.02, subdivisions 3, 4, 7; 424A.04, subdivision 1;
proposing coding for new law in Minnesota Statutes,
chapter 424A.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 69.051,
subdivision 1, is amended to read:

Subdivision 1.

Financial report and audit.

The board of
each salaried firefighters' relief association, police relief
association, and volunteer firefighters' relief association as
defined in section 424A.001, subdivision 4, with assets of at
least $200,000 or liabilities of at least $200,000 new text begin in the prior
year or in any previous year new text end , according to the deleted text begin most recent
deleted text end new text begin applicable new text end actuarial valuation or financial report if no
valuation is required, shall:

(1) prepare a financial report covering the special and
general funds of the relief association for the preceding fiscal
year on a form prescribed by the state auditor. The financial
report deleted text begin shall deleted text end new text begin must new text end contain financial statements and disclosures
which present the true financial condition of the relief
association and the results of relief association operations in
conformity with generally accepted accounting principles and in
compliance with the regulatory, financing and funding provisions
of this chapter and any other applicable laws. The financial
report deleted text begin shall deleted text end new text begin must new text end be countersigned by the municipal clerk or
clerk-treasurer of the municipality in which the relief
association is located if the relief association is a
firefighters' relief association which is directly associated
with a municipal fire department or is a police relief
association, or countersigned by the secretary of the
independent nonprofit firefighting corporation and by the
municipal clerk or clerk-treasurer of the largest municipality
in population which contracts with the independent nonprofit
firefighting corporation if the new text begin Volunteer Firefighter new text end Relief
Association is a subsidiary of an independent nonprofit
firefighting corporation;

(2) file the financial report in its office for public
inspection and present it to the city council after the close of
the fiscal year. One copy of the financial report deleted text begin shall deleted text end new text begin must new text end be
furnished to the state auditor after the close of the fiscal
year; and

(3) submit to the state auditor audited financial
statements which have been attested to by a certified public
accountant, public accountant, or the state auditor within 180
days after the close of the fiscal year. The state auditor may
accept this report in lieu of the report required in clause (2).

Sec. 2.

Minnesota Statutes 2004, section 69.051,
subdivision 1a, is amended to read:

Subd. 1a.

Financial statement.

(a) The board of each
volunteer firefighters' relief association, as defined in
section 424A.001, subdivision 4, deleted text begin with assets of less than
$200,000 and liabilities less than $200,000, according to the
most recent financial report, shall deleted text end new text begin that is not required to file
a financial report and audit under subdivision 1 must new text end prepare a
detailed statement of the financial affairs for the preceding
fiscal year of the relief association's special and general
funds in the style and form prescribed by the state auditor.
The detailed statement must show the sources and amounts of all
money received; all disbursements, accounts payable and accounts
receivable; the amount of money remaining in the treasury; total
assets including a listing of all investments; the accrued
liabilities; and all items necessary to show accurately the
revenues and expenditures and financial position of the relief
association.

(b) The detailed financial statement required under
paragraph (a) must be certified by an independent public
accountant or auditor or by the auditor or accountant who
regularly examines or audits the financial transactions of the
municipality. In addition to certifying the financial condition
of the special and general funds of the relief association, the
accountant or auditor conducting the examination shall give an
opinion as to the condition of the special and general funds of
the relief association, and shall comment upon any exceptions to
the report. The independent accountant or auditor deleted text begin shall deleted text end new text begin must
new text end have at least five years of public accounting, auditing, or
similar experience, and deleted text begin shall deleted text end new text begin must new text end not be an active, inactive,
or retired member of the relief association or the fire or
police department.

(c) The detailed statement required under paragraph (a)
must be countersigned by the municipal clerk or clerk-treasurer
of the municipality, or, where applicable, by the secretary of
the independent nonprofit firefighting corporation and by the
municipal clerk or clerk-treasurer of the largest municipality
in population which contracts with the independent nonprofit
firefighting corporation if the relief association is a
subsidiary of an independent nonprofit firefighting corporation.

(d) The volunteer firefighters' relief association board
must file the detailed statement required under paragraph (a) in
the relief association office for public inspection and present
it to the city council within 45 days after the close of the
fiscal year, and must submit a copy of the detailed statement to
the state auditor within 90 days of the close of the fiscal year.

Sec. 3.

Minnesota Statutes 2004, section 69.771, is
amended to read:

69.771 VOLUNTEER FIREFIGHTERS' RELIEF ASSOCIATION
FINANCING GUIDELINES ACT; APPLICATION.

Subdivision 1.

Covered relief associations.

The
applicable provisions of sections 69.771 to 69.776 deleted text begin shall deleted text end apply
to any firefighters' relief association other than a relief
association enumerated in section 69.77, subdivision 1a, which
is organized under any laws of this state, which is composed of
volunteer firefighters or new text begin is new text end composed partially of volunteer
firefighters and partially of salaried firefighters with
retirement coverage provided by the public employees police and
fire fund and which new text begin , in either case, new text end operates subject to the
service pension minimum requirements for entitlement and
maximums contained in section 424A.02, or new text begin subject to new text end a special
law modifying those requirements or maximums.

Subd. 2.

Authorized employer support for a relief
association.

Notwithstanding any law to the contrary, a
municipality may lawfully contribute public funds, including new text begin the
transfer of new text end any applicable fire state aid, or new text begin may new text end levy property
taxes for the support of a firefighters' relief association
specified in subdivision 1, however organized, which provides
retirement coverage or pays a service pension to retired
firefighter or a retirement benefit to a disabled firefighter or
a surviving dependent of either an active or retired firefighter
for the operation and maintenance of the relief association only
if the municipality and the relief association new text begin both new text end comply with
the new text begin applicable new text end provisions of sections 69.771 to 69.776.

Subd. 3.

Remedy for noncompliance; determination.

deleted text begin Any deleted text end new text begin (a) A new text end municipality in which there exists a firefighters'
relief association as specified in subdivision 1 which does not
comply with the applicable provisions of sections 69.771 to
69.776 or the provisions of any applicable special law relating
to the funding or financing of the association deleted text begin shall deleted text end new text begin does new text end not
qualify initially to receive, deleted text begin or be deleted text end new text begin and is not new text end entitled
subsequently to retain, fire state aid deleted text begin pursuant to deleted text end new text begin under
new text end sections 69.011 to 69.051 until the reason for new text begin the
new text end disqualification new text begin specified by the state auditor new text end is remedied,
whereupon the municipality or relief association, if otherwise
qualified, deleted text begin shall be deleted text end new text begin is new text end entitled to again receive fire state aid
for the year occurring immediately subsequent to the year in
which the disqualification is remedied.

new text begin (b) new text end The state auditor shall determine if a municipality to
which a firefighters' relief association is directly associated
or a firefighters' relief association fails to comply with the
provisions of sections 69.771 to 69.776 or the funding or
financing provisions of any applicable special law based upon
the information contained in the annual financial report of the
firefighters' relief association required deleted text begin pursuant to deleted text end new text begin under
new text end section 69.051 deleted text begin . deleted text end new text begin , the actuarial valuation of the relief
association, if applicable, the relief association officers'
financial requirements of the relief association and minimum
municipal obligation determination documentation under section
69.772, subdivisions 3 and 4; 69.773, subdivisions 4 and 5; or
69.774, subdivision 2, if requested to be filed by the state
auditor, the applicable municipal or nonprofit firefighting
corporation budget, if requested to be filed by the state
auditor, and any other relevant documents or reports obtained by
the state auditor.
new text end

new text begin (c) The municipality or nonprofit firefighting corporation
and the associated relief association are not eligible to
receive or to retain fire state aid if:
new text end

new text begin (1) the relief association fails to prepare or to file the
financial report or financial statement under section 69.051;
new text end

new text begin (2) the relief association treasurer is not bonded in the
manner and in the amount required by section 69.051, subdivision
2;
new text end

new text begin (3) the relief association officers fail to determine or
improperly determine the accrued liability and the annual
accruing liability of the relief association under section
69.772, subdivisions 2, 2a, and 3, paragraph (c), clause (2), if
applicable;
new text end

new text begin (4) if applicable, the relief association officers fail to
obtain and file a required actuarial valuation or the officers
file an actuarial valuation that does not contain the special
fund actuarial liability calculated under the entry age normal
actuarial cost method, the special fund current assets, the
special fund unfunded actuarial accrued liability, the special
fund normal cost under the entry age normal actuarial cost
method, the amortization requirement for the special fund
unfunded actuarial accrued liability by the applicable target
date, a summary of the applicable benefit plan, a summary of the
membership of the relief association, a summary of the actuarial
assumptions used in preparing the valuation, and a signed
statement by the actuary attesting to its results and certifying
to the qualifications of the actuary as an approved actuary
under section 356.215, subdivision 1, paragraph (c);
new text end

new text begin (5) the municipality failed to provide a municipal
contribution, or the nonprofit firefighting corporation failed
to provide a corporate contribution, in the amount equal to the
minimum municipal obligation if the relief association is
governed under section 69.772, or the amount necessary, when
added to the fire state aid actually received in the plan year
in question, to at least equal in total the calculated annual
financial requirements of the special fund of the relief
association if the relief association is governed under section
69.773, and, if the municipal or corporate contribution is
deficient, the municipality failed to include the minimum
municipal obligation certified under section 69.772, subdivision
3, or 69.773, subdivision 5, in its budget and tax levy or the
nonprofit firefighting corporation failed to include the minimum
corporate obligation certified under section 69.774, subdivision
2, in the corporate budget;
new text end

new text begin (6) the relief association did not receive municipal
ratification for the most recent plan amendment when municipal
ratification was required under section 69.772, subdivision 6;
69.773, subdivision 6; or 424A.02, subdivision 10;
new text end

new text begin (7) the relief association invested special fund assets in
an investment security that is not authorized under section
69.775;
new text end

new text begin (8) the relief association had an administrative expense
that is not authorized under section 69.80 or 424A.05,
subdivision 3, or the municipality had an expenditure that is
not authorized under section 424A.08;
new text end

new text begin (9) the relief association officers fail to provide a
complete and accurate public pension plan investment portfolio
and performance disclosure under section 356.219;
new text end

new text begin (10) the relief association fails to obtain the
acknowledgment from a broker of the statement of investment
restrictions under section 356A.06, subdivision 8b;
new text end

new text begin (11) the relief association officers permitted to occur a
prohibited transaction under section 356A.06, subdivision 9, or
424A.001, subdivision 7, or failed to undertake correction of a
prohibited transaction that did occur; or
new text end

new text begin (12) the relief association pays a defined benefit service
pension in an amount that is in excess of the applicable service
pension maximum under section 424A.02, subdivision 3.
new text end

Sec. 4.

Minnesota Statutes 2004, section 69.772,
subdivision 3, is amended to read:

Subd. 3.

Financial requirements of relief association;
minimum obligation of municipality.

new text begin (a) new text end During the month of
July, the officers of the relief association shall determine the
overall funding balance of the special fund for the current
calendar year, the financial requirements of the special fund
for the following calendar year and the minimum obligation of
the municipality with respect to the special fund for the
following calendar year in accordance with the requirements of
this subdivision.

deleted text begin (1) deleted text end new text begin (b) new text end The overall funding balance of the special fund for
the current calendar year deleted text begin shall deleted text end new text begin must new text end be determined in the
following manner:

deleted text begin (a) deleted text end new text begin (1) new text end The total accrued liability of the special fund for
all active and deferred members of the relief association as of
December 31 of the current year deleted text begin shall deleted text end new text begin must new text end be calculated
deleted text begin pursuant to deleted text end new text begin under new text end subdivisions 2 and 2a, if applicable.

deleted text begin (b) deleted text end new text begin (2) new text end The total present assets of the special fund
projected to December 31 of the current year, including receipts
by and disbursements from the special fund anticipated to occur
on or before December 31 deleted text begin shall deleted text end new text begin , must new text end be calculated. To the
extent possible, for those assets for which a market value is
readily ascertainable, the current market value as of the date
of the calculation for those assets deleted text begin shall deleted text end new text begin must new text end be utilized in
making this calculation. For any asset for which no market
value is readily ascertainable, the cost value or the book
value, whichever is applicable, deleted text begin shall deleted text end new text begin must new text end be utilized in making
this calculation.

deleted text begin (c) deleted text end new text begin (3) new text end The amount of the total present assets of the
special fund calculated deleted text begin pursuant to deleted text end new text begin under new text end clause deleted text begin (b) shall deleted text end new text begin (2)
must new text end be subtracted from the amount of the total accrued
liability of the special fund calculated deleted text begin pursuant to deleted text end new text begin under
new text end clause deleted text begin (a) deleted text end new text begin (1) new text end . If the amount of total present assets exceeds
the amount of the total accrued liability, then the special fund
deleted text begin shall be deleted text end new text begin is new text end considered to have a surplus over full funding. If
the amount of the total present assets is less than the amount
of the total accrued liability, then the special fund deleted text begin shall be
deleted text end new text begin is new text end considered to have a deficit from full funding. If the
amount of total present assets is equal to the amount of the
total accrued liability, then the special fund deleted text begin shall be deleted text end new text begin is
new text end considered to be fully funded.

deleted text begin (2) deleted text end new text begin (c) new text end The financial requirements of the special fund for
the following calendar year deleted text begin shall deleted text end new text begin must new text end be determined in the
following manner:

deleted text begin (a) deleted text end new text begin (1) new text end The total accrued liability of the special fund for
all active and deferred members of the relief association as of
December 31 of the calendar year next following the current
calendar year deleted text begin shall deleted text end new text begin must new text end be calculated deleted text begin pursuant to deleted text end new text begin under
new text end subdivisions 2 and 2a, if applicable.

deleted text begin (b) deleted text end new text begin (2) new text end The increase in the total accrued liability of the
special fund for the following calendar year over the total
accrued liability of the special fund for the current year deleted text begin shall
deleted text end new text begin must new text end be calculated.

deleted text begin (c) deleted text end new text begin (3) new text end The amount of anticipated future administrative
expenses of the special fund deleted text begin shall deleted text end new text begin must new text end be calculated by
multiplying the dollar amount of the administrative expenses of
the special fund for the most recent new text begin prior calendar new text end year by the
factor of 1.035.

deleted text begin (d) deleted text end new text begin (4) new text end If the special fund is fully funded, the financial
deleted text begin requirement deleted text end new text begin requirements new text end of the special fund for the following
calendar year deleted text begin shall be deleted text end new text begin are new text end the deleted text begin figure which represents the
increase in the deleted text end total deleted text begin accrued liability deleted text end of the deleted text begin special fund as
deleted text end new text begin amounts new text end calculated deleted text begin pursuant to subclause (b) deleted text end new text begin under clauses (2)
and (3) new text end .

deleted text begin (e) deleted text end new text begin (5) new text end If the special fund has a deficit from full
funding, the financial requirements of the special fund for the
following calendar year deleted text begin shall be deleted text end new text begin are new text end the financial requirements
of the special fund calculated as though the special fund were
fully funded deleted text begin pursuant to subclause (d) deleted text end new text begin under clause (4) new text end plus an
amount equal to one-tenth of the new text begin original new text end amount of the deficit
from full funding of the special fund as determined deleted text begin pursuant to
this section for the calendar year 1971 until that deficit from
full funding is fully retired, and plus an amount equal to
one-tenth of the increase in the deficit from full funding of
the special fund deleted text end new text begin under clause (2) new text end resulting new text begin either new text end from an
increase in the amount of the service pension deleted text begin accruing after
December 31, 1971 deleted text end new text begin occurring in the last ten years or from a net
annual investment loss occurring during the last ten years new text end until
each increase in the deficit from full funding is fully
retired. new text begin The annual amortization contribution under this clause
may not exceed the amount of the deficit from full funding.
new text end

deleted text begin (f) deleted text end new text begin (6) new text end If the special fund has a surplus over full
funding, the financial requirements of the special fund for the
following calendar year deleted text begin shall be deleted text end new text begin are new text end the financial requirements
of the special fund calculated as though the special fund were
fully funded deleted text begin pursuant to subclause (d) deleted text end new text begin under clause (4) new text end reduced
by an amount equal to one-tenth of the amount of the surplus
over full funding of the special fund.

deleted text begin (3) deleted text end new text begin (d) new text end The minimum obligation of the municipality with
respect to the special fund deleted text begin shall be deleted text end new text begin is new text end the financial
requirements of the special fund reduced by the amount of any
fire state aid payable deleted text begin pursuant to deleted text end new text begin under new text end sections 69.011 to
69.051 new text begin reasonably new text end anticipated to be received by the municipality
for transmittal to the special fund during the following
calendar year, an amount of interest on the assets of the
special fund projected to the beginning of the following
calendar year calculated at the rate of five percent per annum,
and the amount of any deleted text begin anticipated deleted text end contributions to the special
fund new text begin required new text end by the new text begin relief association bylaws from the active
new text end members of the relief association new text begin reasonably anticipated to be
received new text end during the following calendar year. new text begin A reasonable
amount of anticipated fire state aid is an amount that does not
exceed the fire state aid actually received in the prior year
multiplied by the factor 1.035.
new text end

Sec. 5.

Minnesota Statutes 2004, section 69.772,
subdivision 4, is amended to read:

Subd. 4.

Certification of financial requirements and
minimum municipal obligation; levy.

new text begin (a) new text end The officers of the
relief association shall certify the financial requirements of
the special fund of the relief association and the minimum
obligation of the municipality with respect to the special fund
of the relief association as determined deleted text begin pursuant to deleted text end new text begin under
new text end subdivision 3 to the governing body of the municipality on or
before August 1 of each year. new text begin The financial requirements of the
relief association and the minimum municipal obligation must be
included in the financial report or financial statement under
section 69.051.
new text end

new text begin (b) new text end The municipality shall provide for at least the minimum
obligation of the municipality with respect to the special fund
of the relief association by tax levy or from any other source
of public revenue.

new text begin (c) new text end The municipality may levy taxes for the payment of the
minimum municipal obligation without any limitation as to rate
or amount and irrespective of any limitations imposed by other
provisions of law upon the rate or amount of taxation until the
balance of the special fund or any fund of the relief
association has attained a specified level. In addition, any
taxes levied deleted text begin pursuant to deleted text end new text begin under new text end this section deleted text begin shall deleted text end new text begin must new text end not cause
the amount or rate of any other taxes levied in that year or to
be levied in a subsequent year by the municipality which are
subject to a limitation as to rate or amount to be reduced.

new text begin (d) new text end If the municipality does not include the full amount of
the minimum municipal obligations in its levy for any year, the
officers of the relief association shall certify that amount to
the county auditor, who shall spread a levy in the amount of the
new text begin certified new text end minimum municipal obligation new text begin on the taxable property
of the municipality new text end .

new text begin (e) If the state auditor determines that a municipal
contribution actually made in a plan year was insufficient under
section 69.771, subdivision 3, paragraph (c), clause (5), the
state auditor may request a copy of the certifications under
this subdivision from the relief association or from the city.
The relief association or the city, whichever applies, must
provide the certifications within 14 days of the date of the
request from the state auditor.
new text end

Sec. 6.

Minnesota Statutes 2004, section 69.773,
subdivision 4, is amended to read:

Subd. 4.

Financial requirements of special fund.

deleted text begin Prior
to deleted text end new text begin (a) On or before new text end August 1 of each year, the officers of the
relief association shall determine the financial requirements of
the special fund of the relief association in accordance with
the requirements of this subdivision.

new text begin (b) new text end The financial requirements of the relief
association deleted text begin shall deleted text end new text begin must new text end be based on the most recent actuarial
valuation of the special fund prepared in accordance with
subdivision 2. If the relief association has an unfunded
actuarial accrued liability as reported in the most recent
actuarial valuation, the financial requirements deleted text begin shall deleted text end new text begin must new text end be
determined by adding the figures calculated deleted text begin pursuant to deleted text end new text begin under
paragraph (d), new text end clauses deleted text begin (a) deleted text end new text begin (1) new text end , deleted text begin (b) deleted text end new text begin (2) new text end , and deleted text begin (c) deleted text end new text begin (3) new text end . If
the relief association does not have an unfunded actuarial
accrued liability as reported in the most recent actuarial
valuation, the financial requirements deleted text begin shall deleted text end new text begin must new text end be an amount
equal to the figure calculated deleted text begin pursuant to deleted text end new text begin under paragraph (d),
new text end clauses deleted text begin (a) deleted text end new text begin (1) new text end and deleted text begin (b) deleted text end new text begin (2) new text end , reduced by an amount equal to
one-tenth of the amount of any assets in excess of the actuarial
accrued liability of the relief association.

new text begin (c) new text end The determination of whether or not the relief
association has an unfunded actuarial accrued liability
deleted text begin shall deleted text end new text begin must new text end be based on the current market value of assets for
which a market value is readily ascertainable and the cost or
book value, whichever is applicable, for assets for which no
market value is readily ascertainable.

deleted text begin (a) deleted text end new text begin (d) The components of the financial requirements of the
relief association are the following:
new text end

new text begin (1) new text end The normal level cost requirement for the following
year, expressed as a dollar amount, deleted text begin shall be deleted text end new text begin is new text end the figure for
the normal level cost of the relief association as reported in
the actuarial valuation.

deleted text begin (b) deleted text end new text begin (2) new text end The amount of anticipated future administrative
expenses of the special fund deleted text begin shall deleted text end new text begin must new text end be calculated by
multiplying the dollar amount of the administrative expenses of
the special fund for the most recent new text begin prior calendar new text end year by the
factor of 1.035.

deleted text begin (c) deleted text end new text begin (3) new text end The amortization contribution requirement to retire
the current unfunded actuarial accrued liability by the
established date for full funding deleted text begin shall be deleted text end new text begin is new text end the figure for the
amortization contribution as reported in the actuarial
valuation. If there has not been a change in the actuarial
assumptions used for calculating the actuarial accrued liability
of the special fund, a change in the bylaws of the relief
association governing the service pensions, retirement benefits,
or both new text begin , new text end payable from the special fund new text begin , new text end or a change in the
actuarial cost method used to value all or a portion of the
special fund which change or changes, which by themselves new text begin ,
new text end without inclusion of any other items of increase or decrease,
produce a net increase in the unfunded actuarial accrued
liability of the special fund deleted text begin since December 31, 1970 deleted text end , the
established date for full funding deleted text begin shall be deleted text end new text begin is the new text end December 31 deleted text begin ,
1990 deleted text end new text begin occurring ten years later new text end . If there has been a change in
the actuarial assumptions used for calculating the actuarial
accrued liability of the special fund, a change in the bylaws of
the relief association governing the service pensions,
retirement benefits, or both payable from the special fund or a
change in the actuarial cost method used to value all or a
portion of the special fund and the change or changes, by
themselves and without inclusion of any other items of increase
or decrease, produce a net increase in the unfunded actuarial
accrued liability of the special fund deleted text begin since December 31, 1970,
but prior to January 1, 1979 deleted text end new text begin within the past 20 years new text end , the
established date for full funding deleted text begin shall be December 31, 1998,
and if there has been a change since December 31, 1978, the
established date for full funding shall deleted text end new text begin must new text end be determined using
the following procedure:

(i) new text begin the unfunded actuarial accrued liability of the special
fund attributable to experience losses that have occurred since
the most recent prior actuarial valuation must be determined and
the level annual dollar contribution needed to amortize the
experience loss over a period of ten years ending on the
December 31 occurring ten years later must be calculated;
new text end

new text begin (ii) new text end the unfunded actuarial accrued liability of the
special fund deleted text begin shall deleted text end new text begin must new text end be determined in accordance with the
provisions governing service pensions, retirement benefits, and
actuarial assumptions in effect before an applicable change;

deleted text begin (ii) deleted text end new text begin (iii) new text end the level annual dollar contribution needed to
amortize this unfunded actuarial accrued liability amount by the
date for full funding in effect deleted text begin prior to deleted text end new text begin before new text end the change deleted text begin shall
deleted text end new text begin must new text end be calculated using the interest assumption specified in
section 356.215, subdivision 8, in effect before any applicable
change;

deleted text begin (iii) deleted text end new text begin (iv) new text end the unfunded actuarial accrued liability of the
special fund deleted text begin shall deleted text end new text begin must new text end be determined in accordance with any new
provisions governing service pensions, retirement benefits, and
actuarial assumptions and the remaining provisions governing
service pensions, retirement benefits, and actuarial assumptions
in effect before an applicable change;

deleted text begin (iv) deleted text end new text begin (v) new text end the level annual dollar contribution needed to
amortize the difference between the unfunded actuarial accrued
liability amount calculated deleted text begin pursuant to subclause (i) deleted text end new text begin under item
(ii) new text end and the unfunded actuarial accrued liability amount
calculated deleted text begin pursuant to subclause (iii) deleted text end new text begin under item (iv) new text end over a
period of 20 years starting December 31 of the year in which the
change is effective deleted text begin shall deleted text end new text begin must new text end be calculated using the interest
assumption specified in section 356.215, subdivision 8, in
effect after any applicable change;

deleted text begin (v) deleted text end new text begin (vi) new text end the annual amortization contribution calculated
deleted text begin pursuant to subclause (iv) shall deleted text end new text begin under item (v) must new text end be added to
the annual amortization contribution calculated deleted text begin pursuant to
subclause (ii) deleted text end new text begin under items (i) and (iii) new text end ;

deleted text begin (vi) deleted text end new text begin (vii) new text end the period in which the unfunded actuarial
accrued liability amount determined in deleted text begin subclause (iii) deleted text end new text begin item (iv)
new text end will be amortized by the total annual amortization contribution
computed deleted text begin pursuant to subclause (v) shall deleted text end new text begin under item (vi) must new text end be
calculated using the interest assumption specified in section
356.215, subdivision 8, in effect after any applicable change,
rounded to the nearest integral number of years, but which deleted text begin shall
deleted text end new text begin must new text end not exceed a period of 20 years from the end of the year in
which the determination of the date for full funding using this
procedure is made and which deleted text begin shall deleted text end new text begin must new text end not be less than the
period of years beginning in the year in which the determination
of the date for full funding using this procedure is made and
ending by the date for full funding in effect before the change;

deleted text begin (vii) deleted text end new text begin (viii) new text end the period determined deleted text begin pursuant to subclause
(vi) shall deleted text end new text begin under item (vii) must new text end be added to the date as of
which the actuarial valuation was prepared and the resulting
date deleted text begin shall be deleted text end new text begin is new text end the new date for full funding.

Sec. 7.

Minnesota Statutes 2004, section 69.773,
subdivision 5, is amended to read:

Subd. 5.

Minimum municipal obligation.

new text begin (a) new text end The officers
of the relief association shall determine the minimum obligation
of the municipality with respect to the special fund of the
relief association for the following calendar year deleted text begin prior to deleted text end new text begin on
or before new text end August 1 of each year in accordance with the
requirements of this subdivision.

new text begin (b) new text end The minimum obligation of the municipality with respect
to the special fund deleted text begin shall be deleted text end new text begin is new text end an amount equal to the financial
requirements of the special fund of the relief association
determined deleted text begin pursuant to deleted text end new text begin under new text end subdivision 4, reduced by the
estimated amount of any fire state aid payable deleted text begin pursuant to deleted text end new text begin under
new text end sections 69.011 to 69.051 new text begin reasonably new text end anticipated to be received
by the municipality for transmittal to the special fund of the
relief association during the following year and the amount of
any anticipated contributions to the special fund new text begin required new text end by
the new text begin relief association bylaws from the active new text end members of the
relief association new text begin reasonably anticipated to be received new text end during
the following calendar year. new text begin A reasonable amount of anticipated
fire state aid is an amount that does not exceed the fire state
aid actually received in the prior year multiplied by the factor
1.035.
new text end

new text begin (c) new text end The officers of the relief association shall certify
the financial requirements of the special fund of the relief
association and the minimum obligation of the municipality with
respect to the special fund of the relief association as
determined deleted text begin pursuant to deleted text end new text begin under new text end subdivision 4 and this subdivision
to the governing body of the municipality by August 1 of each
year. new text begin The financial requirements of the relief association and
the minimum municipal obligation must be included in the
financial report or financial statement under section 69.051.
new text end

new text begin (d) new text end The municipality shall provide for at least the minimum
obligation of the municipality with respect to the special fund
of the relief association by tax levy or from any other source
of public revenue. The municipality may levy taxes for the
payment of the minimum municipal obligation without any
limitation as to rate or amount and irrespective of any
limitations imposed by other provisions of law or charter upon
the rate or amount of taxation until the balance of the special
fund or any fund of the relief association has attained a
specified level. In addition, any taxes levied deleted text begin pursuant to
deleted text end new text begin under new text end this section deleted text begin shall deleted text end new text begin must new text end not cause the amount or rate of
any other taxes levied in that year or to be levied in a
subsequent year by the municipality which are subject to a
limitation as to rate or amount to be reduced.

new text begin (e) new text end If the municipality does not include the full amount of
the minimum municipal obligation in its levy for any year, the
officers of the relief association shall certify that amount to
the county auditor, who shall spread a levy in the amount of the
minimum municipal obligation new text begin on the taxable property of the
municipality new text end .

new text begin (f) If the state auditor determines that a municipal
contribution actually made in a plan year was insufficient under
section 69.771, subdivision 3, paragraph (c), clause (5), the
state auditor may request from the relief association or from
the city a copy of the certifications under this subdivision.
The relief association or the city, whichever applies, must
provide the certifications within 14 days of the date of the
request from the state auditor.
new text end

Sec. 8.

Minnesota Statutes 2004, section 69.775, is
amended to read:

69.775 INVESTMENTS.

new text begin (a) new text end The special fund assets of deleted text begin the deleted text end new text begin a new text end relief deleted text begin associations
deleted text end new text begin association new text end governed by sections 69.771 to 69.776 must be
invested in securities that are authorized investments under
section 356A.06, subdivision 6 or 7.

new text begin (b) new text end Notwithstanding the foregoing, up to 75 percent of the
market value of the assets of the new text begin special new text end fund new text begin , not including
any money market mutual funds, new text end may be invested in open-end
investment companies registered under the federal Investment
Company Act of 1940, if the portfolio investments of the
investment companies comply with the type of securities
authorized for investment under section 356A.06, subdivision 7.

new text begin (c) new text end Securities held by the associations before June 2,
1989, that do not meet the requirements of this section may be
retained after that date if they were proper investments for the
association on that date.

new text begin (d) new text end The governing board of the association may select and
appoint investment agencies to act for and in its behalf or may
certify special fund assets for investment by the State Board of
Investment under section 11A.17.

new text begin (e) new text end The governing board of the association may certify
general fund assets of the relief association for investment by
the State Board of Investment in fixed income pools or in a
separately managed account at the discretion of the State Board
of Investment as provided in section 11A.14.

new text begin (f) new text end The governing board of the association may select and
appoint a qualified private firm to measure management
performance and return on investment, and the firm shall use the
formula or formulas developed by the state board under section
11A.04, clause (11).

Sec. 9.

Minnesota Statutes 2004, section 356A.06,
subdivision 7, is amended to read:

Subd. 7.

Expanded list of authorized investment
securities.

(a) [AUTHORITY.] Except to the extent otherwise
authorized by law or bylaws, a covered pension plan not
described by subdivision 6, paragraph (a), may invest its assets
only in accordance with this subdivision.

(b) [SECURITIES GENERALLY.] The covered pension plan has
the authority to purchase, sell, lend, or exchange the
securities specified in paragraphs (c) to deleted text begin (g) deleted text end new text begin (h) new text end , including
puts and call options and future contracts traded on a contract
market regulated by a governmental agency or by a financial
institution regulated by a governmental agency. These
securities may be owned as units in commingled trusts that own
the securities described in paragraphs (c) to deleted text begin (g) deleted text end new text begin (h) new text end .

(c) [GOVERNMENT OBLIGATIONS.] The covered pension plan may
invest funds in governmental bonds, notes, bills, mortgages, and
other evidences of indebtedness provided the issue is backed by
the full faith and credit of the issuer or the issue is rated
among the top four quality rating categories by a nationally
recognized rating agency. The obligations in which funds may be
invested under this paragraph include guaranteed or insured
issues of (1) the United States, its agencies, its
instrumentalities, or organizations created and regulated by an
act of Congress; (2) Canada and its provinces, provided the
principal and interest is payable in United States dollars; (3)
the states and their municipalities, political subdivisions,
agencies, or instrumentalities; (4) the International Bank for
Reconstruction and Development, the Inter-American Development
Bank, the Asian Development Bank, the African Development Bank,
or any other United States government sponsored organization of
which the United States is a member, provided the principal and
interest is payable in United States dollars.

(d) [CORPORATE OBLIGATIONS.] The covered pension plan may
invest funds in bonds, notes, debentures, transportation
equipment obligations, or any other longer term evidences of
indebtedness issued or guaranteed by a corporation organized
under the laws of the United States or any state thereof, or the
Dominion of Canada or any province thereof if they conform to
the following provisions:

(1) the principal and interest of obligations of
corporations incorporated or organized under the laws of the
Dominion of Canada or any province thereof must be payable in
United States dollars; and

(2) obligations must be rated among the top four quality
categories by a nationally recognized rating agency.

(e) [OTHER OBLIGATIONS.] (1) The covered pension plan may
invest funds in bankers acceptances, certificates of deposit,
deposit notes, commercial paper, mortgage participation
certificates and pools, asset backed securities, repurchase
agreements and reverse repurchase agreements, guaranteed
investment contracts, savings accounts, and guaranty fund
certificates, surplus notes, or debentures of domestic mutual
insurance companies if they conform to the following provisions:

(i) bankers acceptances and deposit notes of United States
banks are limited to those issued by banks rated in the highest
four quality categories by a nationally recognized rating
agency;

(ii) certificates of deposit are limited to those issued by
(A) United States banks and savings institutions that are rated
in the highest four quality categories by a nationally
recognized rating agency or whose certificates of deposit are
fully insured by federal agencies; or (B) credit unions in
amounts up to the limit of insurance coverage provided by the
National Credit Union Administration;

(iii) commercial paper is limited to those issued by United
States corporations or their Canadian subsidiaries and rated in
the highest two quality categories by a nationally recognized
rating agency;

(iv) mortgage participation or pass through certificates
evidencing interests in pools of first mortgages or trust deeds
on improved real estate located in the United States where the
loan to value ratio for each loan as calculated in accordance
with section 61A.28, subdivision 3, does not exceed 80 percent
for fully amortizable residential properties and in all other
respects meets the requirements of section 61A.28, subdivision
3;

(v) collateral for repurchase agreements and reverse
repurchase agreements is limited to letters of credit and
securities authorized in this section;

(vi) guaranteed investment contracts are limited to those
issued by insurance companies or banks rated in the top four
quality categories by a nationally recognized rating agency or
to alternative guaranteed investment contracts where the
underlying assets comply with the requirements of this
subdivision;

(vii) savings accounts are limited to those fully insured
by federal agencies; and

(viii) asset backed securities must be rated in the top
four quality categories by a nationally recognized rating agency.

(2) Sections 16A.58, 16C.03, subdivision 4, and 16C.05 do
not apply to certificates of deposit and collateralization
agreements executed by the covered pension plan under clause
(1), item (ii).

(3) In addition to investments authorized by clause (1),
item (iv), the covered pension plan may purchase from the
Minnesota Housing Finance Agency all or any part of a pool of
residential mortgages, not in default, that has previously been
financed by the issuance of bonds or notes of the agency. The
covered pension plan may also enter into a commitment with the
agency, at the time of any issue of bonds or notes, to purchase
at a specified future date, not exceeding 12 years from the date
of the issue, the amount of mortgage loans then outstanding and
not in default that have been made or purchased from the
proceeds of the bonds or notes. The covered pension plan may
charge reasonable fees for any such commitment and may agree to
purchase the mortgage loans at a price sufficient to produce a
yield to the covered pension plan comparable, in its judgment,
to the yield available on similar mortgage loans at the date of
the bonds or notes. The covered pension plan may also enter
into agreements with the agency for the investment of any
portion of the funds of the agency. The agreement must cover
the period of the investment, withdrawal privileges, and any
guaranteed rate of return.

(f) [CORPORATE STOCKS.] The covered pension plan may
invest funds in stocks or convertible issues of any corporation
organized under the laws of the United States or the states
thereof, new text begin any corporation organized under the laws of new text end the
Dominion of Canada or its provinces, or any corporation listed
on deleted text begin the New York Stock Exchange or the American Stock Exchange deleted text end new text begin an
exchange regulated by an agency of the United States or of the
Canadian national government new text end , if they conform to the following
provisions:

(1) the aggregate value of corporate stock investments, as
adjusted for realized profits and losses, must not exceed 85
percent of the market or book value, whichever is less, of a
fund, less the aggregate value of investments according to
deleted text begin subdivision 6 deleted text end new text begin paragraph (h) new text end ;

(2) investments must not exceed five percent of the total
outstanding shares of any one corporation.

(g) [EXCHANGE TRADED FUNDS.] new text begin The covered pension plan may
invest funds in exchange traded funds, subject to the maximums,
the requirements, and the limitations set forth in paragraph
(d), (e), (f), or (h), whichever applies.
new text end

new text begin (h) new text end [OTHER INVESTMENTS.] (1) In addition to the
investments authorized in paragraphs (b) to deleted text begin (f) deleted text end new text begin (g) new text end , and subject
to the provisions in clause (2), the covered pension plan may
invest funds in:

(i) venture capital investment businesses through
participation in limited partnerships and corporations;

(ii) real estate ownership interests or loans secured by
mortgages or deeds of trust through investment in limited
partnerships, bank sponsored collective funds, trusts, and
insurance company commingled accounts, including separate
accounts;

(iii) regional and mutual funds through bank sponsored
collective funds and open-end investment companies registered
under the Federal Investment Company Act of 1940;

(iv) resource investments through limited partnerships,
private placements, and corporations; and

(v) international securities.

(2) The investments authorized in clause (1) must conform
to the following provisions:

(i) the aggregate value of all investments made according
to clause (1) may not exceed 35 percent of the market value of
the fund for which the covered pension plan is investing;

(ii) there must be at least four unrelated owners of the
investment other than the state board for investments made under
clause (1), item (i), (ii), (iii), or (iv);

(iii) covered pension plan participation in an investment
vehicle is limited to 20 percent thereof for investments made
under clause (1), item (i), (ii), (iii), or (iv); and

(iv) covered pension plan participation in a limited
partnership does not include a general partnership interest or
other interest involving general liability. The covered pension
plan may not engage in any activity as a limited partner which
creates general liability.

Sec. 10.

Minnesota Statutes 2004, section 424A.02,
subdivision 3, is amended to read:

Subd. 3.

Flexible service pension maximums.

(a) Annually
on or before August 1 as part of the certification of the
financial requirements and minimum municipal obligation
determined under section 69.772, subdivision 4, or 69.773,
subdivision 5, as applicable, the secretary or some other
official of the relief association designated in the bylaws of
each relief association shall calculate and certify to the
governing body of the applicable qualified municipality the
average amount of available financing per active covered
firefighter for the most recent three-year period. The amount
of available financing shall include any amounts of fire state
aid received or receivable by the relief association, any
amounts of municipal contributions to the relief association
raised from levies on real estate or from other available
revenue sources exclusive of fire state aid, and one-tenth of
the amount of assets in excess of the accrued liabilities of the
relief association calculated under section 69.772, subdivision
2; 69.773, subdivisions 2 and 4; or 69.774, subdivision 2, if
any.

(b) The maximum service pension which the relief
association has authority to provide for in its bylaws for
payment to a member retiring after the calculation date when the
minimum age and service requirements specified in subdivision 1
are met must be determined using the table in paragraph (c) or
(d), whichever applies.

(c) For a relief association where the governing bylaws
provide for a monthly service pension to a retiring member, the
maximum monthly service pension amount per month for each year
of service credited that may be provided for in the bylaws is
the maximum service pension figure corresponding to the average
amount of available financing per active covered firefighter:

Minimum Average Amount of Maximum Service Pension
Available Financing per Amount Payable per Month
Firefighter for Each Year of Service

$... $ .25
deleted text begin 42 deleted text end new text begin 41 new text end .50
deleted text begin 84 deleted text end new text begin 81 new text end 1.00
deleted text begin 126 deleted text end new text begin 122 new text end 1.50
deleted text begin 168 deleted text end new text begin 162 new text end 2.00
deleted text begin 209 deleted text end new text begin 203 new text end 2.50
deleted text begin 252 deleted text end new text begin 243 new text end 3.00
deleted text begin 294 deleted text end new text begin 284 new text end 3.50
deleted text begin 335 deleted text end new text begin 324 new text end 4.00
deleted text begin 378 deleted text end new text begin 365 new text end 4.50
deleted text begin 420 deleted text end new text begin 405 new text end 5.00
deleted text begin 503 deleted text end new text begin 486 new text end 6.00
deleted text begin 587 deleted text end new text begin 567 new text end 7.00
deleted text begin 672 deleted text end new text begin 648 new text end 8.00
deleted text begin 755 deleted text end new text begin 729 new text end 9.00
deleted text begin 839 deleted text end new text begin 810 new text end 10.00
deleted text begin 923 deleted text end new text begin 891 new text end 11.00
deleted text begin 1007 deleted text end new text begin 972 new text end 12.00
deleted text begin 1090 deleted text end new text begin 1053 new text end 13.00
deleted text begin 1175 deleted text end new text begin 1134 new text end 14.00
deleted text begin 1259 deleted text end new text begin 1215 new text end 15.00
deleted text begin 1342 deleted text end new text begin 1296 new text end 16.00
deleted text begin 1427 deleted text end new text begin 1377 new text end 17.00
deleted text begin 1510 deleted text end new text begin 1458 new text end 18.00
deleted text begin 1594 deleted text end new text begin 1539 new text end 19.00
deleted text begin 1677 deleted text end new text begin 1620 new text end 20.00
deleted text begin 1762 deleted text end new text begin 1701 new text end 21.00
deleted text begin 1845 deleted text end new text begin 1782 new text end 22.00
deleted text begin 1888 deleted text end new text begin 1823 new text end 22.50
deleted text begin 1929 deleted text end new text begin 1863 new text end 23.00
deleted text begin 2014 deleted text end new text begin 1944 new text end 24.00
deleted text begin 2098 deleted text end new text begin 2025 new text end 25.00
deleted text begin 2183 deleted text end new text begin 2106 new text end 26.00
deleted text begin 2267 deleted text end new text begin 2187 new text end 27.00
deleted text begin 2351 deleted text end new text begin 2268 new text end 28.00
deleted text begin 2436 deleted text end new text begin 2349 new text end 29.00
deleted text begin 2520 deleted text end new text begin 2430 new text end 30.00
deleted text begin 2604 deleted text end new text begin 2511 new text end 31.00
deleted text begin 2689 deleted text end new text begin 2592 new text end 32.00
deleted text begin 2773 deleted text end new text begin 2673 new text end 33.00
deleted text begin 2857 deleted text end new text begin 2754 new text end 34.00
deleted text begin 2942 deleted text end new text begin 2834 new text end 35.00
deleted text begin 3026 deleted text end new text begin 2916 new text end 36.00
deleted text begin 3110 deleted text end new text begin 2997 new text end 37.00
deleted text begin 3194 deleted text end new text begin 3078 new text end 38.00
deleted text begin 3278 deleted text end new text begin 3159 new text end 39.00
deleted text begin 3362 deleted text end new text begin 3240 new text end 40.00
deleted text begin 3446 deleted text end new text begin 3321 new text end 41.00
deleted text begin 3530 deleted text end new text begin 3402 new text end 42.00
deleted text begin 3614 deleted text end new text begin 3483 new text end 43.00
deleted text begin 3698 deleted text end new text begin 3564 new text end 44.00
deleted text begin 3782 deleted text end new text begin 3645 new text end 45.00
deleted text begin 3866 deleted text end new text begin 3726 new text end 46.00
deleted text begin 3950 deleted text end new text begin 3807 new text end 47.00
deleted text begin 4034 deleted text end new text begin 3888 new text end 48.00
deleted text begin 4118 deleted text end new text begin 3969 new text end 49.00
deleted text begin 4202 deleted text end new text begin 4050 new text end 50.00
deleted text begin 4286 deleted text end new text begin 4131 new text end 51.00
deleted text begin 4370 deleted text end new text begin 4212 new text end 52.00

Effective beginning December 31, 2003:

deleted text begin 4454 deleted text end new text begin 4293 new text end 53.00
deleted text begin 4538 deleted text end new text begin 4374 new text end 54.00
deleted text begin 4622 deleted text end new text begin 4455 new text end 55.00
deleted text begin 4706 deleted text end new text begin 4536 new text end 56.00

(d) For a relief association in which the governing bylaws
provide for a lump sum service pension to a retiring member, the
maximum lump sum service pension amount for each year of service
credited that may be provided for in the bylaws is the maximum
service pension figure corresponding to the average amount of
available financing per active covered firefighter for the
applicable specified period:

Minimum Average Amount Maximum Lump Sum Service
of Available Financing Pension Amount Payable
per Firefighter for Each Year of Service

$.. $10
11 20
16 30
23 40
27 50
32 60
43 80
54 100
65 120
77 140
86 160
97 180
108 200
131 240
151 280
173 320
194 360
216 400
239 440
259 480
281 520
302 560
324 600
347 640
367 680
389 720
410 760
432 800
486 900
540 1000
594 1100
648 1200
702 1300
756 1400
810 1500
864 1600
918 1700
972 1800
1026 1900
1080 2000
1134 2100
1188 2200
1242 2300
1296 2400
1350 2500
1404 2600
1458 2700
1512 2800
1566 2900
1620 3000
1672 3100
1726 3200
1753 3250
1780 3300
1820 3375

1834 3400
1888 3500

1942 3600
1996 3700
2023 3750

2050 3800
2104 3900
2158 4000

2212 4100
2265 4200
2319 4300
2373 4400
2427 4500
2481 4600
2535 4700
2589 4800
2643 4900
2697 5000
2751 5100
2805 5200
2859 5300
2913 5400
2967 5500

3021 5600

3075 5700

3129 5800

3183 5900

3237 6000

3291 6100

3345 6200

3399 6300

3453 6400

3507 6500

3561 6600

3615 6700

3669 6800

3723 6900

3777 7000

Effective beginning December 31, 2003:

3831 7100

3885 7200

3939 7300

3993 7400

4047 7500

(e) For a relief association in which the governing bylaws
provide for a monthly benefit service pension as an alternative
form of service pension payment to a lump sum service pension,
the maximum service pension amount for each pension payment type
must be determined using the applicable table contained in this
subdivision.

(f) If a relief association establishes a service pension
in compliance with the applicable maximum contained in paragraph
(c) or (d) and the minimum average amount of available financing
per active covered firefighter is subsequently reduced because
of a reduction in fire state aid or because of an increase in
the number of active firefighters, the relief association may
continue to provide the prior service pension amount specified
in its bylaws, but may not increase the service pension amount
until the minimum average amount of available financing per
firefighter under the table in paragraph (c) or (d), whichever
applies, permits.

(g) No relief association is authorized to provide a
service pension in an amount greater than the largest applicable
flexible service pension maximum amount even if the amount of
available financing per firefighter is greater than the
financing amount associated with the largest applicable flexible
service pension maximum.

Sec. 11.

Minnesota Statutes 2004, section 424A.02,
subdivision 4, is amended to read:

Subd. 4.

Defined contribution lump sum service
pensions.

new text begin (a) new text end If the bylaws governing the relief association so
provide exclusively, the relief association may pay a defined
contribution lump sum service pension in lieu of any defined
benefit service pension governed by subdivision 2.

new text begin (b) new text end An individual account for each firefighter who is a
member of the relief association deleted text begin shall deleted text end new text begin must new text end be established. To
each individual new text begin active new text end member account deleted text begin shall deleted text end new text begin must new text end be credited deleted text begin a
right to deleted text end an equal share of: deleted text begin (a) deleted text end new text begin (1) new text end any amounts of fire state
aid received by the relief association; deleted text begin (b) deleted text end new text begin (2) new text end any amounts of
municipal contributions to the relief association raised from
levies on real estate or from other available revenue sources
exclusive of fire state aid; and deleted text begin (c) deleted text end new text begin (3) new text end any amounts equal to
the share of the assets of the special fund to the credit
of: deleted text begin (1) deleted text end new text begin (i) new text end any former member who terminated active service
with the fire department to which the relief association is
associated deleted text begin prior to deleted text end new text begin before new text end meeting the minimum service
requirement provided for in subdivision 1 and has not returned
to active service with the fire department for a period no
shorter than five years; or deleted text begin (2) deleted text end new text begin (ii) new text end any retired member who
retired deleted text begin prior to deleted text end new text begin before new text end obtaining a full nonforfeitable interest
in the amounts credited to the individual member
account deleted text begin pursuant to deleted text end new text begin under new text end subdivision 2 and any applicable
provision of the bylaws of the relief association. In addition,
any deleted text begin interest or deleted text end investment deleted text begin income earned deleted text end new text begin return new text end on the assets of
the special fund deleted text begin shall deleted text end new text begin must new text end be credited in proportion to the
share of the assets of the special fund to the credit of each
individual new text begin active new text end member account new text begin through the date on which the
investment return is recognized by and credited to the special
fund new text end .

new text begin (c) new text end At the time of retirement deleted text begin pursuant to deleted text end new text begin under new text end subdivision
1 and any applicable provision of the bylaws of the relief
association, a retiring member deleted text begin shall be deleted text end new text begin is new text end entitled to that
portion of the assets of the special fund to the credit of the
member in the individual member account which is
nonforfeitable deleted text begin pursuant to deleted text end new text begin under new text end subdivision 2 and any
applicable provision of the bylaws of the relief association
based on the number of years of service to the credit of the
retiring member.

Sec. 12.

Minnesota Statutes 2004, section 424A.02,
subdivision 7, is amended to read:

Subd. 7.

Deferred service pensions.

(a) A member of a
relief association deleted text begin to which this section applies deleted text end is entitled to
a deferred service pension if the member:

(1) has completed the lesser of the minimum period of
active service with the fire department specified in the bylaws
or 20 years of active service with the fire department;

(2) has completed at least five years of active membership
in the relief association; and

(3) separates from active service and membership before
reaching age 50 or the minimum age for retirement and
commencement of a service pension specified in the bylaws
governing the relief association if that age is greater than age
50.

(b) The deferred service pension deleted text begin starts deleted text end new text begin is payable new text end when the
former member reaches age 50 new text begin , new text end or the minimum age specified in
the bylaws governing the relief association if that age is
greater than age 50 new text begin , new text end and when the former member makes a valid
written application.

(c) A relief association that provides a lump sum service
pension new text begin governed by subdivision 3 new text end may, when its governing bylaws
so provide, pay interest on the deferred lump sum service
pension during the period of deferral. If provided for in the
bylaws, interest must be paid in one of the following manners:

(1) at the investment performance rate actually earned on
that portion of the assets if the deferred benefit amount is
invested by the relief association in a separate account
established and maintained by the relief association or if the
deferred benefit amount is invested in a separate investment
vehicle held by the relief association;

(2) at deleted text begin the deleted text end new text begin an new text end interest rate of new text begin up to new text end five percent,
compounded annually new text begin as set by the board of directors and
approved as provided in subdivision 10 new text end ; or

(3) at a rate equal to the actual time weighted total rate
of return investment performance of the special fund as reported
by the Office of the State Auditor under section 356.219, up to
five percent, compounded annually, and applied consistently for
all deferred service pensioners.

deleted text begin (d) deleted text end A relief association may not use the method provided
for in deleted text begin paragraph (c), deleted text end clause (3), until it has modified its
bylaws to be consistent with that clause.

new text begin (d) Interest under paragraph (c), clause (2) or (3), is
payable from the first day of the month next following the date
on which the municipality has approved the deferred service
pension interest rate established by the board of trustees or
from the first day of the month next following the date on which
the member separated from active fire department service and
relief association membership, whichever is later, to the last
day of the month immediately before the month in which the
deferred member becomes eligible to begin receipt of the service
pension and applies for the deferred service pension.
new text end

(e) new text begin A relief association that provides a defined
contribution service pension may, if its governing bylaws so
provide, credit interest or additional investment performance on
the deferred lump sum service pension during the period of
deferral. If provided for in the bylaws, the interest must be
paid in one of the manners specified in paragraph (c) or
alternatively the relief association may credit any investment
return on the assets of the special fund of the defined
contribution volunteer firefighter relief association in
proportion to the share of the assets of the special fund to the
credit of each individual deferred member account through the
date on which the investment return is recognized by and
credited to the special fund.
new text end

new text begin (f) new text end For a deferred service pension that is transferred to a
separate account established and maintained by the relief
association or separate investment vehicle held by the relief
association, the deferred member bears the full investment risk
subsequent to transfer and in calculating the accrued liability
of the volunteer firefighters relief association that pays a
lump sum service pension, the accrued liability for deferred
service pensions is equal to the separate relief association
account balance or the fair market value of the separate
investment vehicle held by the relief association.

deleted text begin (f) deleted text end new text begin (g) new text end The deferred service pension is governed by and
must be calculated under the general statute, special law,
relief association articles of incorporation, and relief
association bylaw provisions applicable on the date on which the
member separated from active service with the fire department
and active membership in the relief association.

Sec. 13.

new text begin [424A.021] CREDIT FOR BREAK IN SERVICE TO
PROVIDE UNIFORMED SERVICE.
new text end

new text begin Subdivision 1. new text end

new text begin Authorization. new text end

new text begin Subject to restrictions
stated in this section, a volunteer firefighter who is absent
from firefighting service due to service in the uniformed
services, as defined in United States Code, title 38, section
4303(13), may obtain service credit for the period of the
uniformed service, not to exceed five years, unless a longer
period is required under United States Code, title 38, section
4312.
new text end

new text begin Subd. 2. new text end

new text begin Limitations. new text end

new text begin (a) To be eligible for service
credit under this section, the volunteer firefighter must return
to firefighting service with coverage by the same relief
association or by the successor to that relief association upon
discharge from service in the uniformed service within the time
frame required in United States Code, title 38, section 4312(e).
new text end

new text begin (b) Service credit is not authorized if the firefighter
separates from uniformed service with a dishonorable or bad
conduct discharge or under other than honorable conditions.
new text end

new text begin (c) Service credit is not authorized if the firefighter
fails to provide notice to the fire department that the
individual is leaving to provide service in the uniformed
service, unless it is not feasible to provide that notice due to
the emergency nature of the situation.
new text end

Sec. 14.

Minnesota Statutes 2004, section 424A.04,
subdivision 1, is amended to read:

Subdivision 1.

Membership.

(a) deleted text begin Every deleted text end new text begin A new text end relief
association new text begin that is new text end directly associated with a municipal fire
department deleted text begin shall deleted text end new text begin must new text end be managed by a board of trustees
consisting of nine members. Six trustees deleted text begin shall deleted text end new text begin must new text end be elected
from the membership of the relief association and three trustees
deleted text begin shall deleted text end new text begin must new text end be drawn from the officials of the municipalities
served by the fire department to which the relief association is
directly associated. The bylaws of a relief association new text begin which
provides a monthly benefit service pension new text end may provide that one
of the six trustees elected from the relief
association new text begin membership new text end may be a retired member receiving a
monthly pension who is elected by the membership of the relief
association. The three deleted text begin ex officio deleted text end new text begin municipal new text end trustees deleted text begin shall be
the mayor, the clerk, clerk-treasurer or finance director, deleted text end new text begin must
be one elected municipal official and one elected or appointed
municipal official who are designated as municipal
representatives by the municipal governing board annually new text end and
the chief of the municipal fire department.

(b) deleted text begin Every deleted text end new text begin A new text end relief association that is a subsidiary of an
independent nonprofit firefighting corporation deleted text begin shall deleted text end new text begin must new text end be
managed by a board of trustees consisting of deleted text begin ten deleted text end new text begin nine new text end members.
Six trustees deleted text begin shall deleted text end new text begin must new text end be elected from the membership of the
relief association, deleted text begin three deleted text end new text begin two new text end trustees deleted text begin shall deleted text end new text begin must new text end be drawn from
the officials of the municipalities served by the fire
department to which the relief association is directly
associated, and one trustee shall be the fire chief new text begin serving with
the independent nonprofit firefighting corporation new text end . The bylaws
of a relief association may provide that one of the six trustees
elected from the relief association new text begin membership new text end may be a retired
member receiving a monthly pension who is elected by the
membership of the relief association. The deleted text begin three ex officio deleted text end new text begin two
municipal new text end trustees who are the elected officials deleted text begin shall deleted text end new text begin must
new text end be new text begin elected or appointed municipal officials, new text end selected as follows:

(1) if only one municipality contracts with the independent
nonprofit firefighting corporation, the deleted text begin ex officio deleted text end new text begin municipal
new text end trustees deleted text begin shall deleted text end new text begin must new text end be deleted text begin three elected deleted text end new text begin two new text end officials of the
contracting municipality who are designated new text begin annually new text end by the
governing body of the municipality;

deleted text begin (2) if two municipalities contract with the independent
nonprofit firefighting corporation, the ex officio trustees
shall be two elected officials of the largest municipality in
population and one elected official of the next largest
municipality in population who are designated by the governing
bodies of the applicable municipalities; deleted text end or

deleted text begin (3) deleted text end new text begin (2) new text end if deleted text begin three deleted text end new text begin two new text end or more municipalities contract with
the independent nonprofit corporation, the deleted text begin ex officio deleted text end new text begin municipal
new text end trustees deleted text begin shall deleted text end new text begin must new text end be one deleted text begin elected deleted text end official deleted text begin of deleted text end new text begin from new text end each of
the deleted text begin three deleted text end new text begin two new text end largest municipalities in population who are
designated new text begin annually new text end by the governing bodies of the applicable
municipalities.

(c) new text begin The municipal trustees for a relief association that is
directly associated with a fire department operated as or by a
joint powers entity must be designated annually by the joint
powers board. The municipal trustees for a relief association
that is directly associated with a fire department service area
township must be designated by the township board.
new text end

new text begin (d) new text end If a relief association lacks the deleted text begin ex officio deleted text end new text begin municipal
new text end board members provided for in paragraph (a) new text begin , (b), new text end or deleted text begin (b) deleted text end new text begin (c)
new text end because the fire department is not located in or associated with
an organized municipality, new text begin joint powers entity, or township, new text end the
deleted text begin ex officio deleted text end new text begin municipal new text end board members must be appointed from the
fire department service area by the board of commissioners of
the applicable county.

new text begin (e) new text end The term of these appointed deleted text begin ex officio deleted text end new text begin municipal new text end board
members is deleted text begin three years deleted text end new text begin one year new text end or until the person's successor
is qualified, whichever is later.

deleted text begin (d) An ex officio deleted text end new text begin (f) A municipal new text end trustee under paragraph
(a), (b), deleted text begin or deleted text end (c) deleted text begin shall have deleted text end new text begin , or (d) has new text end all the rights and
duties accorded to any other trustee new text begin , new text end except the right to be an
officer of the new text begin relief association new text end board of trustees.

deleted text begin (e) deleted text end new text begin (g) new text end A board deleted text begin shall deleted text end new text begin must new text end have at least three officers,
deleted text begin which shall be deleted text end new text begin who are new text end a president, a secretary and a treasurer.
These officers deleted text begin shall deleted text end new text begin must new text end be elected from among the elected
trustees by either the full board of trustees or by the
membership, as specified in the bylaws deleted text begin , and deleted text end new text begin . new text end In no event deleted text begin shall
deleted text end new text begin may new text end any trustee hold more than one officer position at any one
time. The terms of the elected trustees and of the officers of
the board deleted text begin shall deleted text end new text begin must new text end be specified in the bylaws of the relief
association, but deleted text begin shall deleted text end new text begin may new text end not exceed three years. If the term
of the elected trustees exceeds one year, the election of the
various trustees elected from the membership deleted text begin shall initially and
shall thereafter continue to deleted text end new text begin must new text end be staggered on as equal a
basis as is practicable.

Sec. 15. new text begin EFFECTIVE DATE.
new text end

new text begin (a) Sections 1 to 12 and 14 are effective on July 1, 2005.
new text end

new text begin (b) Section 13 is effective on July 1, 2005, and applies to
breaks in service that end on or after that date.
new text end