SF 2812

as introduced - 86th Legislature (2009 - 2010) Posted on 02/23/2010 10:17am

A bill for an act
relating to retirement; lump sum volunteer firefighter relief associations;
modifying the manner for the calculation of amortization requirements; amending
Minnesota Statutes 2008, section 69.772, subdivisions 2, 2a, 3.

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

Section 1.

Minnesota Statutes 2008, section 69.772, subdivision 2, is amended to read:

Subd. 2.

Determination of accrued liability.

(a) Each firefighters' relief association
which pays a service pension when a retiring firefighter meets the minimum requirements
for entitlement to a service pension specified in section 424A.02 and which in its articles
of incorporation or bylaws requires service credit for a period of service of at least 20
years of active service for a totally nonforfeitable service pension shall determine the
accrued liability of the special fund of the firefighters' relief association relative to each
active member of the relief association, calculated individually using the following table new text begin
as of December 31 and as of an alternative calculation date specified by the applicable
municipality between January 1 and August 1 new text end :

	Cumulative Year			Accrued Liability
	.			.
	1			$	60
	2				124
	3				190
	4				260
	5				334
	6				410
	7				492
	8				576
	9				666
	10				760
	11				858
	12				962
	13				1070
	14				1184
	15				1304
	16				1428
	17				1560
	18				1698
	19				1844
	20				2000
	21	and thereafter			100	additional per year

(b) As set forth in the table the accrued liability for each member of the relief
association corresponds to the cumulative years of active service to the credit of the
member. The accrued liability of the special fund for each active member is determined
by multiplying the accrued liability from the chart by the ratio of the lump sum service
pension amount currently provided for in the bylaws of the relief association to a service
pension of $100 per year of service. If a member has fractional service as of December 31 new text begin
or as of the alternative calculation date under paragraph (a) new text end , the figure for service credit to
be used for the determination of accrued liability pursuant to this section shall be rounded
to the nearest full year of service credit. The total accrued liability of the special fund as of
December 31 deleted text begin shall be deleted text end new text begin and as of the alternative calculation date is new text end the sum of the accrued
liability attributable to each active member of the relief association.

(c) To the extent that the state auditor considers it to be necessary or practical, the
state auditor may specify and issue procedures, forms, or mathematical tables for use
in performing the calculations of the accrued liability for deferred members pursuant
to this subdivision.

Sec. 2.

Minnesota Statutes 2008, section 69.772, subdivision 2a, is amended to read:

Subd. 2a.

Determination of accrued liability for recipients of installment
payments.

(a) Each firefighters' relief association which pays a lump sum service pension
in installment payments to a retired firefighter pursuant to section 424A.02, subdivision 8,
shall determine the accrued liability of the special fund of the firefighters' relief association
relative to each retired member receiving a lump sum service pension in installment
payments calculated individually as the sum of each future installment payment discounted
at an interest rate of five percent, compounded annually, from the date the installment
payment is scheduled to be paid to December 31 new text begin or to the alternative calculation date
applicable under subdivision 2 new text end . If the bylaws of the relief association provide for the
payment of interest on unpaid installments, the amount of interest, projected to December
31 new text begin or to the alternative calculation date applicable under subdivision 2 new text end , shall be added to
the accrued liability attributable to each retired member. The sum of the accrued liability
attributable to each retired member of the relief association receiving a lump sum service
pension in installment payments shall be the total additional accrued liability of the special
fund of the relief association as of December 31 new text begin or as of the alternative calculation
date applicable under subdivision 2 new text end , and shall be added to the accrued liability of the
special fund of the relief association calculated pursuant to subdivision 2 for purposes of
calculating the financial requirements of the relief association and the minimum obligation
of the municipality pursuant to subdivision 3.

(b) To the extent that the state auditor deems it to be necessary or practical, the
state auditor may specify and issue procedures, forms, or mathematical tables for use in
performing the calculations required pursuant to this subdivision.

Sec. 3.

Minnesota Statutes 2008, section 69.772, subdivision 3, is amended to read:

Subd. 3.

Financial requirements of relief association; minimum obligation of
municipality.

(a) 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.

(b) The overall funding balance of the special fund for the current calendar year must
be determined in the following manner:

(1) 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 new text begin and as of the alternative
calculation date under subdivision 2 new text end must be calculated under subdivisions 2 and 2a,
if applicable.

(2) 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 new text begin or on or before the alternative calculation date under
subdivision 2 new text end , must 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 must 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, must be utilized in making this calculation.

(3) The amount of the total present assets of the special fund calculated under clause
(2) must be subtracted from the amount of the total accrued liability of the special fund
calculated under clause (1). If the amount of total present assets exceeds the amount of
the total accrued liability, then the special fund is 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 is 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 is considered to be fully funded.

(c) The financial requirements of the special fund for the following calendar year
new text begin and for the 12-month period following the alternative calculation date new text end must be determined
in the following manner:

(1) 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 new text begin and as of the alternative calculation date under subdivision 2 occurring 12
months later new text end must be calculated under subdivisions 2 and 2a, if applicable.

(2) The increase in the total accrued liability of the special fund for the following
calendar year new text begin and for the following 12-month period new text end over the total accrued liability of the
special fund for the current year new text begin and for the 12-month period new text end must be calculated.

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

(4) If the special fund is fully funded, the financial requirements of the special fund
for the following calendar year new text begin and for the following 12-month period new text end are the total of the
amounts calculated under clauses (2) and (3).

(5) If the special fund has a deficit from full funding, the financial requirements of the
special fund for the following calendar year new text begin and for the following 12-month period new text end are the
financial requirements of the special fund calculated as though the special fund were fully
funded under clause (4) plus an amount equal to one-tenth of the deleted text begin original deleted text end new text begin most recently
calculated new text end amount of the deficit from full funding of the special fund as determined under
clause (2) deleted text begin resulting either from an increase in the amount of the service pension occurring
in the last ten years or from a net annual investment loss occurring during the last ten years deleted text end
until deleted text begin each increase in deleted text end the deficit from full funding is fully retired. The annual amortization
contribution under this clause may not exceed the amount of the deficit from full funding.

(6) If the special fund has a surplus over full funding, the financial requirements of
the special fund for the following calendar year new text begin and for the following 12-month period new text end are
the financial requirements of the special fund calculated as though the special fund were
fully funded under clause (4) reduced by an amount equal to one-tenth of the amount of
the surplus over full funding of the special fund.

(d) The minimum obligation of the municipality with respect to the special fund is
the financial requirements of the special fund reduced by the amount of any fire state aid
payable under sections 69.011 to 69.051 reasonably anticipated to be received by the
municipality for transmittal to the special fund during the following calendar year new text begin and
during the 12-month period following the alternative calculation date under subdivision
2 new text end , an amount of interest on the assets of the special fund projected to the beginning of
the following calendar year new text begin and to the date occurring 12 months after the alternative
calculation date under subdivision 2 new text end calculated at the rate of five percent per annum, and
the amount of any contributions to the special fund required by the relief association
bylaws from the active members of the relief association reasonably anticipated to be
received during the following calendar year new text begin and during the 12-month period following the
alternative calculation date under subdivision 2 new text end . 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 new text begin or 12-month period new text end multiplied by the factor 1.035.

Sec. 4. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 3 are effective the day following final enactment and apply retroactively
with respect to funding requirements determined during calendar year 2009.
new text end