Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1986 

                        CHAPTER 359-H.F.No. 2035 
           An act relating to retirement; police and 
          firefighters' relief associations; standardizing 
          auditing requirements; clarifying various duties and 
          responsibilities in the management of local 
          associations; auditing, financial reporting, and state 
          aid for the Winona police relief association; amending 
          Minnesota Statutes 1984, sections 3.85, subdivision 6; 
          6.72, subdivision 2; 69.011, subdivision 2; 69.021, 
          subdivisions 4 and 7; 69.051; 69.77; 69.773, 
          subdivision 2; 69.775; 69.80; and 424A.001, 
          subdivision 4, and by adding a subdivision; Minnesota 
          Statutes 1985 Supplement, sections 69.011, subdivision 
          1; 69.031, subdivision 1; 356.216; and 423A.02, 
          subdivision 1; Laws 1984, chapter 564, section 48; 
          proposing coding for new law in Minnesota Statutes, 
          chapters 6 and 423A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1984, section 3.85, 
subdivision 6, is amended to read: 
    Subd. 6.  [ASSISTANCE OF OTHER AGENCIES.] The commission 
may request information from any state officer or agency or any 
public pension fund or plan as defined in section 356.61, 
including any volunteer firefighters' relief association to 
which sections 69.771 to 69.776 applies, in order to assist in 
carrying out the terms of this section and such the officer or , 
agency, or public pension fund or plan, is authorized and 
directed to promptly furnish any data requested.  
     Sec. 2.  [6.495] [EXAMINATION OF FIRE AND POLICE RELIEF 
ASSOCIATIONS.] 
     Subdivision 1.  [AUDIT AND EXAMINATIONS.] All powers and 
duties conferred and imposed upon the state auditor with respect 
to state, county, and first-class city officers, institutions, 
and property are hereby extended to the various fire and police 
relief associations in the state.  The state auditor shall 
annually audit the special and general funds of the relief 
association or, at the request of the board of trustees or the 
municipality, the state auditor may contract for an annual audit 
by a certified public accountant.  The state auditor may 
determine that an annual audit is not necessary, in which case 
the state auditor shall develop a plan for examination of 
unaudited relief associations, and shall prescribe suitable 
systems of accounts and budgeting, and forms, books, and 
instructions concerning the same. 
     Copies of the written report of the state auditor on the 
financial condition and accounts of the relief association shall 
be filed with the board of trustees of the relief association 
and the governing body of the municipality associated with the 
relief association.  If the report discloses malfeasance, 
misfeasance, or nonfeasance with regard to relief association 
funds, copies thereof shall be filed with the city attorney or 
county attorney in the city or county in which the relief 
association is located, and these officials of the law shall 
institute proceedings, civil or criminal, as the law and public 
interest require. 
     Subd. 2.  [COSTS AND FEES.] The relief association 
receiving the audit or examination shall pay to the state 
auditor's revolving fund the total costs and expenses of the 
audit or examination, including the salaries paid to the 
auditors while actually engaged in making the audit or 
examination. 
    Subd. 3. [REPORT TO COMMISSIONER OF REVENUE.] The state 
auditor shall file with the commissioner of revenue a financial 
compliance report certifying for each relief association: 
     (1) the completion of the annual financial report required 
pursuant to section 69.051 and the auditing or certification of 
those financial reports pursuant to subdivision 1; and 
    (2) the receipt of any actuarial valuations required 
pursuant to section 69.77 or 69.773. 
    Sec. 3.  Minnesota Statutes 1984, section 6.72, subdivision 
2, is amended to read: 
    Subd. 2.  [CONTENTS OF REPORT.] The report shall include 
the aggregate totals for all volunteer firefighters' relief 
associations directly associated with the municipal fire 
departments and all volunteer firefighters' relief associations 
subsidiary to independent nonprofit firefighting corporations, 
the aggregate totals by the various benefit types and the 
individual results for each volunteer firefighters' relief 
association listed by various benefit types specified in 
subdivision 3.  The following items shall be reported in each 
instance:  
    (1) amount of accrued liability, 
    (2) amount of assets, 
    (3) amount of surplus or unfunded accrued liability, 
    (4) funding ratio, 
    (5) amount of annual accruing liability or normal cost, 
    (6) amount of annual required contribution to amortize the 
unfunded accrued liability, 
    (7) amount of total required contribution, 
    (8) amount of fire state aid, 
    (9) amount of any municipal contributions, 
    (10) amount of administrative expenses, 
    (11) amount of service pension disbursements, 
    (12) amount of other retirement benefit disbursements, 
    (13) number of active members, 
    (14) number of retired members, 
    (15) number of deferred members, 
    (16) amount of fidelity bond of secretary and treasurer, 
    (17) amount of lump sum or monthly service pension accrued 
per year of service credit, 
    (18) minimum retirement age required for commencement of a 
service pension, 
    (19) minimum years of active service credit required for 
commencement of service pension, 
    (20) minimum years of active membership credit required for 
commencement of service pension, 
    (21) type and amount of other retirement benefits. 
     Sec. 4.  Minnesota Statutes 1985 Supplement, section 
69.011, subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] Unless the language or 
context clearly indicates that a different meaning is intended, 
the following words and terms shall for the purposes of this 
chapter and chapters 423, 423A, 424 and 424A have the meanings 
ascribed to them: 
    (a) "Commissioner" means the commissioner of revenue. 
    (b) "Municipality" means any home rule charter or statutory 
city, organized town or park district subject to chapter 398, 
and the University of Minnesota.  
    (c) "Minnesota Firetown Premium Report" means a form 
prescribed by the commissioner containing space for reporting by 
insurers of fire, lightning, sprinkler leakage and extended 
coverage premiums received upon risks located or to be performed 
in this state less return premiums and dividends. 
    (d) "Firetown" means the area serviced by any municipality 
having a qualified fire department or a qualified incorporated 
fire department having a subsidiary volunteer firefighters 
relief association. 
    (e) "Assessed property valuation" means latest available 
assessed value of all property in a taxing jurisdiction, whether 
the property is subject to taxation, or exempt from ad valorem 
taxation obtained from information which appears on abstracts 
filed with the commissioner of revenue or equalized by the state 
board of equalization. 
    (f) "Minnesota Aid to Police Premium Report" means a form 
prescribed by the commissioner for reporting by each fire and 
casualty insurer of all premiums received upon direct business 
received by it in this state, or by its agents for it, in cash 
or otherwise, during the preceding calendar year, with reference 
to insurance written for insuring against the perils contained 
in auto liability-bodily injury, auto liability-property damage, 
and auto physical damage as reported in the Minnesota business 
schedule of the fire and casualty insurance companies annual 
financial statement which each insurer is required to file with 
the commissioner in accordance with the governing laws or 
regulations less return premiums and dividends. 
     (g) "Peace officer" means any person: 
     (1) whose primary source of income derived from wages is 
from direct employment by a municipality or county as a law 
enforcement officer on a full-time basis of not less than 30 
hours per week; 
     (2) who has been employed for a minimum of six months prior 
to December 31 preceding the date of the current year's 
certification pursuant to subdivision 2, clause (b); 
     (3) who is sworn to enforce the general criminal laws of 
the state and local ordinances; 
     (4) who is licensed by the peace officers standards and 
training board and is authorized to arrest with a warrant; and 
     (5) who is a member of a local police relief association to 
which section 69.77 applies or the public employees police and 
fire fund. 
    (h) "Full-time equivalent number of peace officers 
providing contract service" means the integral or fractional 
number of peace officers which would be necessary to provide the 
contract service if all peace officers providing service were 
employed on a full-time basis as defined by the employing unit 
and the municipality receiving the contract service. 
    (i) "Retirement benefits other than a service pension"  
means any disbursement authorized pursuant to section 424.05 
424A.05, subdivision 3, clauses (2), (3) and (4).  
    (j) "Municipal clerk, municipal clerk-treasurer or county 
auditor" means the person who was elected or appointed to the 
specified position or, in the absence of the person, another 
person who is designated by the applicable governing body.  In a 
park district the clerk is the secretary of the board of park 
district commissioners.  In the case of the University of 
Minnesota, the clerk is that official designated by the board of 
regents.  
     Sec. 5.  Minnesota Statutes 1984, section 69.011, 
subdivision 2, is amended to read: 
    Subd. 2.  [QUALIFICATION FOR FIRE OR POLICE STATE AID.] (a) 
In order to qualify to receive fire state aid, on or before June 
July 1, annually, in conjunction with the financial report 
required pursuant to section 69.051, subdivision 1 or 3, the 
clerk of each municipality having a duly organized fire 
department as provided in subdivision 4, or the secretary of 
each independent nonprofit firefighting corporation having a 
subsidiary incorporated firefighter's relief association 
whichever is applicable, and the secretary and the treasurer of 
the firefighter's relief association, shall jointly certify the 
existence of the municipal fire department or of the independent 
nonprofit firefighting corporation, whichever is applicable, 
which meets the minimum qualification requirements set forth in 
this subdivision, and the fire personnel and equipment of the 
municipal fire department or the independent nonprofit 
firefighting corporation as of the preceding December 31.  
Certification shall be made to the commissioner on a form 
prescribed by the commissioner and shall include any other facts 
the commissioner may require.  The certification shall be made 
to the commissioner in duplicate.  Each copy of the certificate 
shall be duly executed and deemed an original.  The commissioner 
shall forward one copy to the auditor of the county wherein the 
fire department is located and retain one copy. 
    (b) On or before June July 1 annually the clerk of each 
municipality having a duly organized police department and 
having a duly incorporated relief association shall certify that 
fact to the county auditor of the county where the police 
department is located and to the commissioner on a form 
prescribed by him together with the other facts the commissioner 
or auditor may require. 
    On or before June July 1 annually, the clerk of each 
municipality and the auditor of each county employing one or 
more peace officers as defined in subdivision 1, clause (h), 
shall certify the number of such peace officers to the 
commissioner on forms prescribed by him.  Credit for officers 
employed less than a full year shall be apportioned.  Each full 
month of employment of a qualifying officer during the calendar 
year shall entitle the employing municipality or county to 
credit for one-twelfth of the payment for employment of a peace 
officer for the entire year.  For purposes of sections 69.011 to 
69.051, employment of a peace officer shall commence when the 
peace officer is entered on the payroll of the respective 
municipal police department or county sheriff's department.  No 
peace officer shall be included in the certification of the 
number of peace officers by more than one municipality or county 
for the same month. 
     Sec. 6.  Minnesota Statutes 1984, section 69.021, 
subdivision 4, is amended to read: 
    Subd. 4.  [DETERMINATION OF QUALIFIED STATE AID RECIPIENTS; 
CERTIFICATION TO COMMISSIONER OF FINANCE.] The commissioner 
shall determine which municipalities and independent nonprofit 
firefighting corporations are qualified to receive fire state 
aid and which municipalities and counties are qualified to 
receive police state aid.  Any municipality, independent 
nonprofit firefighting corporation or county which received 
state aid for the year immediately previous shall be presumed to 
be qualified to receive state aid for the year in question.  If 
subsequent examination reveals that the state aid recipient was 
not in fact qualified to receive state aid for any year, the 
commissioner shall retroactively disqualify the recipient and 
shall take any necessary steps to recover the state aid payments 
which had been made for the years of disqualification, plus 
interest at a rate equal to the maximum lawful interest rate for 
a state bank pursuant to section 48.195, as of the date of 
disqualification, compounded annually from the date on which the 
state aid payment was made until the date on which the payment 
is recovered.  The determination of qualification by the 
commissioner shall be based on information contained 
in determine qualification upon receipt of (1) the fire 
department, personnel and equipment certification or the police 
department and qualified peace officers certificate, whichever 
is applicable, required pursuant to section 69.011, (2) the 
annual financial compliance report required pursuant to section 
69.051 2, any actuarial valuation or experience study report 
required pursuant to sections 69.77 or 69.773, any audits 
conducted by the state auditor or an independent auditor, and 
(3) any other relevant information which comes to the attention 
of the commissioner.  Upon completion of the determination, on 
or before June September 1, the commissioner shall calculate 
pursuant to subdivision 6 the amount of fire state aid and 
police state aid which each county is to receive for subsequent 
apportionment pursuant to subdivision 7 and shall certify to the 
commissioner of finance the name of each county in which are 
located one or more qualified state aid recipients and the 
amount of state aid which each county is to receive for 
subsequent apportionment.  The commissioner shall also certify 
to each county auditor the name of each qualified state aid 
recipient located in the county and any other information deemed 
necessary for the county auditor to make the subsequent 
apportionment of state aid.  
     Sec. 7.  Minnesota Statutes 1984, section 69.021, 
subdivision 7, is amended to read: 
    Subd. 7.  [APPORTIONMENT OF AID TO MUNICIPALITIES AND 
FIREFIGHTER'S RELIEF ASSOCIATIONS BY COUNTY AUDITOR.] (1) The 
county auditor shall apportion the state aid received by him 
relative to the premiums reported on the Minnesota Firetown 
Premium Reports filed pursuant to this chapter to each 
municipality and/or firefighter's relief association certified 
to him by the commissioner in the same manner that state aid is 
apportioned to the counties, one-half in proportion to the 
population and one-half in proportion to the assessed property 
valuation of the fire towns in the county for which aid is 
proportioned.  Necessary adjustments shall be made to subsequent 
apportionments.  
    In the case of municipalities or independent fire 
departments qualifying for the aid the county auditor shall 
calculate the state aid for the municipality or relief 
association on the basis of the population and the property 
valuation of the area furnished fire protection service by the 
fire department as evidenced by duly executed and valid fire 
service agreements filed with him.  If one or more fire 
departments are furnishing contracted fire service to a city, 
town or township only the population and valuation of the area 
served by each fire department shall be considered in 
calculating the state aid and the fire departments furnishing 
service shall enter into an agreement apportioning among 
themselves the percent of the population and the assessed 
property valuation of each service area.  Agreement shall be in 
writing and filed with the commissioner in duplicate.  The 
commissioner shall forward one copy of the agreement to the 
county auditor of the county wherein the fire department is 
located and retain one copy. 
    In the case of cities of the first and second class the 
state aid calculated shall be paid directly to the treasurer of 
the relief association.  In the case of all other municipalities 
and independent fire department relief associations or 
retirement plans The aid shall be paid to the treasurer of the 
municipality where the fire department is located and the 
treasurer of the municipality shall within 30 days transmit the 
aid to the relief association if the relief association has 
filed a financial report with the treasurer of the municipality 
and has met all other statutory provisions pertaining to the aid 
apportionment. 
    The county auditor and commissioner are hereby empowered to 
make rules and regulations to permit the administration of the 
provisions of this section. 
    (2) The county auditor shall apportion the state police aid 
received by him to each municipality and to the county in the 
following manner: 
    (a) For all municipalities maintaining police departments 
and the county, the state aid shall be distributed by the county 
auditor in proportion to the total number of peace officers, as 
determined pursuant to section 69.011, subdivision 1, clause 
(g), and subdivision 2, clause (b), employed by each 
municipality and by the county for 12 calendar months and the 
proportional or fractional number who were employed less than 12 
months; 
     (b) For each municipality which contracts with the county 
for police service, a proportionate amount of the state aid 
distributed to the county based on the full time equivalent 
number of peace officers providing contract service shall be 
credited against the municipality's contract obligation; 
     (c) For each municipality which contracts with another 
municipality for police service, a proportionate amount of the 
state aid distributed to the municipality providing contract 
service based on the full time equivalent number of peace 
officers providing contract service on a full time equivalent 
basis shall be credited against the contract obligation of the 
municipality receiving contract service; 
     (d) No municipality entitled to receive police state aid 
shall be apportioned less police state aid for any year under 
Laws 1976, Chapter 315, than the amount which was apportioned to 
it for calendar year 1975 based on premiums reported to the 
commissioner for calendar year 1974; provided, the amount of 
police state aid to other municipalities within the county and 
to the county shall be adjusted in proportion to the total 
number of peace officers in the municipalities and the county, 
so that the amount of police state aid apportioned shall not 
exceed the amount of police state aid available for 
apportionment. 
     The county auditor and commissioner are hereby empowered to 
make rules and regulations to permit the administration of the 
provisions of this section. 
     Sec. 8.  Minnesota Statutes 1985 Supplement, section 
69.031, subdivision 1, is amended to read: 
    Subdivision 1.  [COMMISSIONER OF FINANCE'S WARRANT.] The 
commissioner of finance shall issue to the auditor of each 
county certified to him by the commissioner his warrant for an 
amount equal to the amount certified to by the commissioner 
pursuant to section 69.021.  The amount due to a county and not 
paid by September 1 accrues interest at the rate of one percent 
for each month or part of a month the amount remains unpaid, 
beginning the preceding June July 1. 
    Sec. 9.  Minnesota Statutes 1984, section 69.051, is 
amended to read: 
    69.051 [FINANCIAL REPORT, BOND, EXAMINATION.] 
    Subdivision 1.  [FINANCIAL REPORT OF ASSOCIATION AND 
AUDIT.] The secretary and the treasurer board of each salaried 
firefighters relief association or and police relief association 
and of each volunteer firefighters' relief association with 
assets of at least $200,000 or liabilities of at least $200,000, 
according to the most recent actuarial valuation or financial 
report if no valuation is required, shall, in conjunction with 
the fire department personnel and equipment certificate required 
pursuant to section 69.011, subdivision 2, clause (a), or the 
police department and qualified peace officers certificate 
required pursuant to section 69.011, subdivision 2, clause (b), 
whichever is applicable, annually:  
     (a) Prepare and sign jointly a detailed financial report 
of the receipts of, disbursements from and balances in covering 
the special and general funds of the relief association for the 
preceding calendar fiscal year ending December 31, on a form 
prescribed by the commissioner state auditor.  The financial 
report shall contain any information financial statements and 
disclosures which the commissioner deems necessary to 
reveal 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 of the relief association with the regulatory, 
financing and funding provisions of this chapter and any other 
applicable laws.  The financial report shall 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 relief association is a 
subsidiary of an independent nonprofit firefighting corporation. 
The financial report shall be filed by the municipal clerk or 
clerk-treasurer with the commissioner on or before June 1 
annually.  The commissioner shall forward one copy to the county 
auditor of the county wherein the municipality is located.  
    The relief association financial report shall 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 
audit 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 shall have at least five years of public accounting, 
auditing or similar experience, and shall not be an active, 
inactive or retired member of the relief association or the fire 
or police department; 
    (b) 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 shall be 
furnished to the state auditor after the close of the fiscal 
year; and 
    (c) 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, except that the state 
auditor may upon request of a city and a showing of inability to 
conform, extend the deadline.  The state auditor may accept this 
report in lieu of the report required in clause (b) above. 
    Subd. 1a.  [FINANCIAL STATEMENT.] The board of each 
volunteer firefighters' relief association and each independent 
nonprofit firefighting corporation with assets of less than 
$200,000 and liabilities less than $200,000, according to the 
most recent financial report, shall: 
     (a) Prepare a detailed statement of the financial affairs 
of the relief association's special and general funds in the 
style and form prescribed by the state auditor, for the 
preceding fiscal year showing all money received, with the 
sources, and respective amounts thereof; all disbursements for 
which orders have been drawn upon the treasurer; all accounts 
payable; all 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 shall 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 shall have at least five years of public 
accounting, auditing, or similar experience, and shall not be an 
active, inactive, or retired member of the relief association or 
the fire or police department;  
    (c) The statement shall 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) File the statement 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 
    (e) Submit within 90 days after the close of the fiscal 
year a copy of the statement to the state auditor. 
    Subd. 1b.  [QUALIFICATION.] A municipality or police or 
firefighters relief association shall not qualify initially to 
receive, or be entitled subsequently to retain, state aid 
pursuant to this chapter if the financial reporting requirement 
or the applicable requirements of this chapter or any other 
statute or special law have not been complied with or are not 
fulfilled.  
    Subd. 2.  [TREASURERS BOND.] No treasurer of a relief 
association governed by section 69.77 shall enter upon his 
duties until he has given the association a good and sufficient 
bond in an a reasonable amount set by the association acceptable 
to the municipality for the faithful discharge of his duty 
according to law.  No treasurer of a relief association governed 
by sections 69.771 to 69.776 shall enter upon the duties of the 
office until the treasurer has given the association a good and 
sufficient bond in an amount equal to at least ten percent of 
the assets of the relief association; however, the amount of the 
bond need not exceed $500,000. 
    Subd. 3.  [REPORT BY CERTAIN MUNICIPALITIES.] Each 
municipality which has an organized fire department but which 
does not have a firefighter's relief association shall annually 
prepare a detailed financial report of the receipts and 
disbursements by the municipality for fire protection service 
during the preceding calendar year, on a form prescribed by the 
commissioner state auditor.  The financial report shall contain 
any information which the commissioner state auditor deems 
necessary to disclose the sources of receipts and the purpose of 
disbursements for fire protection service.  The financial report 
shall be signed by the municipal clerk or clerk treasurer of the 
municipality.  The financial report shall be filed by the 
municipal clerk or clerk-treasurer with the commissioner state 
auditor on or before June July 1 annually.  The commissioner 
state auditor shall forward one copy to the county auditor of 
the county wherein the municipality is located.  The 
municipality shall not qualify initially to receive, or be 
entitled subsequently to retain, state aid pursuant to this 
chapter if the financial reporting requirement or the applicable 
requirements of this chapter or any other statute or special law 
have not been complied with or are not fulfilled. 
    Subd. 4.  [EXAMINATION NOTIFICATION BY COMMISSIONER AND 
STATE AUDITOR.] The detailed financial report of relief 
associations and municipal financial reports for fire protection 
may be examined by the commissioner, and when he finds that it 
appears the money, or any part thereof, paid under the 
provisions of this chapter or chapter 424 has been or is being 
expended for an unauthorized purpose, he state auditor in 
performing an audit or examination shall notify the state 
auditor of the fact.  The state auditor may examine the 
financial reports and records of the firefighter's relief 
association and municipality and when he finds that the money, 
or any part thereof, paid under the provisions of this chapter 
or chapter 424, has been or is being expended for an 
unauthorized purpose he shall order the funds restored and take 
whatever steps he deems necessary to assure restoration.  No 
further aid shall be paid to the municipality until the funds 
are restored.  The relief association shall be liable to the 
state for the total cost and expenses of such examination 
legislative commission on pensions and retirement if the audit 
or examination reveals malfeasance, misfeasance, or nonfeasance 
in office. 
    The commissioner shall notify the legislative commission on 
pensions and retirement if the state auditor has not filed the 
required financial compliance reports by July 1. 
     Sec. 10.  Minnesota Statutes 1984, section 69.77, is 
amended to read: 
     69.77 [POLICE AND FIREFIGHTERS' RELIEF ASSOCIATION 
GUIDELINES ACT.] 
    Subdivision 1.  [AUTHORIZED EMPLOYER SUPPORT FOR A RELIEF 
ASSOCIATION.] Notwithstanding any law to the contrary, a 
municipality may contribute public funds, including any 
applicable police or fire state aid, or levy property taxes for 
the support of a police or firefighters' relief association, 
enumerated in subdivision 1a, however organized, which provides 
retirement coverage or pays a service pension to a retired 
police officer or firefighter or a retirement benefit to a 
surviving dependent of either an active or retired police 
officer or fire fighter, for the operation and maintenance of 
the relief association only if the municipality and the relief 
association comply with the provisions of this section.  The 
commissioner of commerce shall not include in the apportionment 
of police or fire state aid to the county auditor pursuant to 
section 69.021, subdivision 6, any municipality in which there 
exists a local police or salaried firefighters relief 
association as enumerated in subdivision 1a which does not 
comply with the provisions of this section or the provisions of 
any applicable special law relating to the funding or financing 
of the association and that municipality shall not qualify 
initially to receive, or be entitled subsequently to retain, 
state aid pursuant to sections 69.011 to 69.051 until the reason 
for disqualification is remedied, whereupon the municipality, if 
otherwise qualified, shall be entitled to again receive state 
aid for the year occurring immediately subsequent to the year in 
which the disqualification is remedied.  The state auditor and 
commissioner of commerce shall determine if a municipality with 
a local police or salaried firefighters relief association fails 
to comply with the provisions of this section or the funding or 
financing provisions of any applicable special law. 
    Subd. 1a.  The provisions of this section shall apply to 
the following retirement funds: 
     (1) Any police pension fund or relief association which is 
established pursuant to chapter 423; 
     (2) Any salaried firefighters pension fund or relief 
association which is established pursuant to chapter 424; 
     (3) Any pension fund or relief association which is 
established pursuant to this chapter which has five or more 
members who receive compensation for services rendered in the 
employment covered by the pension fund or relief association and 
which provides for retirement coverage or a service pension 
based on the compensation paid to members for that service; 
     (4) Any pension fund or relief association which is 
established and operates in whole or in part pursuant to special 
legislation and which provides for retirement coverage or a 
service pension based on the compensation paid to members for 
service as police officers or firefighters or which provides for 
retirement coverage or a service pension to volunteer 
firefighters based on the compensation paid to or the service 
pension provided by a pension fund or relief association located 
in the same municipality for police officers employed by the 
municipality but not covered by clauses (1), (2) or (3); and 
    (5) Any governmental subdivision retirement fund 
established pursuant to any law providing for retirement 
coverage to police officers or salaried firefighters or a 
retirement benefit to their dependents and not otherwise 
described in this subdivision. 
    Subd. 2.  The penalty provided for in subdivision 1 shall 
not apply to a relief association enumerated in subdivision 1a 
if the following requirements of subdivisions 2a to 2h are met 
:. 
    (1) Subd. 2a.  Each member of the relief association pays 
shall pay into the special fund of the association during a year 
of covered service, a contribution for retirement coverage 
including survivorship benefits of not less than eight percent 
of the maximum rate of salary upon which retirement coverage is 
credited and service pension and retirement benefit amounts are 
determined.  The member contributions shall be made by payroll 
deduction from the salary of the member by the municipality, and 
shall be transmitted by the municipality to the relief 
association as soon as practical.  The relief association shall 
deposit the member contribution to the credit of the special 
fund of the relief association.  The member contribution 
requirement specified in this clause shall not apply to any 
members who are volunteer firefighters. 
    (2) Subd. 2b.  The officers of the relief association shall 
determine the financial requirements of the relief association 
and minimum obligation of the municipality for the following 
calendar year in accordance with the requirements of this 
clause.  The financial requirements of the relief association 
and the minimum obligation of the municipality shall be 
determined on or before the submission date established by the 
municipality pursuant to clause (3) subdivision 2c. 
    The financial requirements of the relief association for 
the following calendar year shall be based on the most recent 
actuarial valuation or survey prepared in accordance with 
sections 356.215, subdivision 4 and 356.216, as required 
pursuant to clause (8) subdivision 2h.  In the event that an 
actuarial estimate is prepared by the actuary of the relief 
association as part of obtaining a modification of the benefit 
plan of the relief association and the modification is 
implemented, the actuarial estimate shall be used in calculating 
the financial requirements of the relief association. 
    If the relief association has an unfunded accrued liability 
as reported in the most recent actuarial valuation or survey, 
the total of the amounts calculated pursuant to clauses (a) and 
(b) shall constitute the financial requirements of the relief 
association for the following year.  If the relief association 
does not have an unfunded accrued liability as reported in the 
most recent actuarial valuation or survey the amount calculated 
pursuant to subclause (a) shall constitute the financial 
requirements of the relief association for the following year. 
    (a) The normal level cost requirement for the following 
year, expressed as a dollar amount, which shall be determined by 
applying the normal level cost of the relief association as 
reported in the actuarial valuation or survey and expressed as a 
percentage of covered payroll to the estimated covered payroll 
of the active membership of the relief association, including 
any projected increase in the active membership, for the 
following year. 
    (b) To the dollar amount of normal cost thus determined 
shall be added an amount equal to the level annual dollar amount 
which is sufficient to amortize the unfunded accrued liability 
by December 31, 2010, as determined from the actuarial valuation 
or survey of the fund, using an interest assumption set at the 
rate specified in section 356.215, subdivision 4, clause (4) 4d. 
The amortization date specified in this subclause shall apply to 
all local police or salaried firefighters relief associations 
and shall supersede any amortization date specified in any 
applicable special law. 
    The minimum obligation of the municipality shall be an 
amount equal to the financial requirements of the relief 
association reduced by the estimated amount of member 
contributions from covered salary anticipated for the following 
calendar year and the estimated amounts from the applicable 
state aid program established pursuant to sections 69.011 to 
69.051 anticipated as receivable by the relief association after 
any allocation pursuant to section 69.031, subdivision 5, clause 
(2), subclause (c) or 423A.01, subdivision 2, clause (6), and 
from the local police and salaried firefighters' relief 
association amortization aid program established pursuant to 
section 423A.02 anticipated for the following calendar year. 
    (3) Subd. 2c.  The officers of the relief association shall 
submit determination of the financial requirements of the relief 
association and of the minimum obligation of the municipality to 
the governing body on or before the date established by the 
municipality which shall not be earlier than August 1 and shall 
not be later than September 1 of each year.  The governing body 
of the municipality shall ascertain whether or not the 
determinations were prepared in accordance with law. 
    (4) Subd. 2d.  The municipality shall provide for and shall 
pay each year at least the amount of the minimum obligation of 
the municipality to the relief association.  If there is any 
deficiency in the municipal payment to meet the minimum 
obligation of the municipality as of the end of any calendar 
year, the amount of the deficiency shall be added to the minimum 
obligation of the municipality for the following year calculated 
pursuant to clause (2) subdivision 2b and shall include interest 
at the rate of six percent per annum compounded from the date 
that the municipality was required to make payment pursuant to 
this clause until the date that the municipality actually makes 
the required payment. 
    (5) Subd. 2e.  The municipality shall provide in the annual 
municipal budget for at least the minimum obligation of the 
municipality calculated pursuant to clause (2) subdivision 2b.  
The municipality may levy taxes for the payment of the minimum 
obligation of the municipality without any limitation as to rate 
or amount and irrespective of limitations imposed by other 
provisions of law upon the rate or amount of taxation when the 
balance of the special fund or any fund of the relief 
association has attained a specified minimum asset level.  In 
addition, any taxes levied pursuant to this section shall not 
cause the amount or rate of 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.  If 
the municipality does not include the full amount of the minimum 
obligation of the municipality in the levy that the municipality 
certified to the county auditor in any year, the officers of the 
relief association shall certify the amount of any deficiency to 
the county auditor.  Upon verifying the existence of any 
deficiency in the levy certified by the municipality, the county 
auditor shall spread a levy over the taxable property of the 
municipality in the amount of the deficiency certified to by the 
officers of the relief association. 
    (6) Subd. 2f.  Any sums of money paid by the municipality 
to the relief association in excess of the minimum obligation of 
the municipality in any year shall be used to amortize any 
unfunded liabilities of the relief association. 
    (7) Subd. 2g.  The funds of the association shall be 
invested in securities which are proper investments pursuant to 
section 11A.24, except that up to $10,000 may be invested in the 
stock of any one corporation in any account of such small size 
that the five percent stock limitation specified in section 
11A.24, subdivision 5 would necessitate a lesser investment.  
Notwithstanding the foregoing, up to 75 percent of the market 
value of the assets of the fund 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 by section 11A.24, subdivisions 2 to 
5.  The association may also invest funds in Minnesota situs 
nonfarm real estate ownership interests or loans secured by 
mortgages or deeds of trust, provided that the amount of all 
investments in real property shall not exceed ten percent of the 
market value of the association's fund.  Securities held by the 
association before July 1, 1971 the effective date of this act, 
which do not meet the requirements of this paragraph may be 
retained after that date if they were proper investments for the 
association on April 28, 1969 that date.  
     The governing board of the association may select and 
appoint investment agencies to act for and in its behalf or may 
certify funds for investment by the state board under the 
provisions of section 11A.17, provided that there be no limit to 
the amount which may be invested in the income share account, in 
the bond account, or in the fixed-return account, and that up to 
20 percent of that portion of the assets of the association 
invested in the Minnesota supplemental investment fund may be 
invested in the growth share account.  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 pursuant to section 11A.04, clause (11). 
    (8) Subd. 2h.  The association shall procure an actuarial 
valuation showing the condition of the special fund of the 
relief association pursuant to sections 356.215 and 356.216 as 
of December 31 of every year.  A copy of the actuarial survey 
shall be filed with the director of the legislative reference 
library, the governing body of the municipality in which the 
association is organized, the executive secretary director of 
the legislative commission on pensions and retirement, and 
the commissioner of commerce state auditor, not later than June 
July 1 of the following year. 
    Subd. 2a 2i.  Any amendment to the bylaws or articles of 
incorporation of a relief association which increases or 
otherwise affects the retirement coverage provided by or the 
service pensions or retirement benefits payable from any police 
or firefighters relief association enumerated in subdivision 1a 
shall not be effective until it is ratified by the municipality 
in which the relief association is located.  The officers of the 
relief association shall not seek municipal ratification prior 
to obtaining either an updated actuarial valuation including the 
proposed amendment or an estimate of the expected actuarial 
impact of the proposed amendment prepared by the actuary of the 
relief association and submitting that actuarial valuation or 
estimate to the clerk of the municipality. 
    Subd. 3.  This section may be cited as "The Police and 
Firefighters' Relief Associations Guidelines Act of 1969." 
    Sec. 11.  Minnesota Statutes 1984, section 69.773, 
subdivision 2, is amended to read: 
    Subd. 2.  [DETERMINATION OF ACTUARIAL CONDITION AND FUNDING 
COSTS.] Each relief association to which this section applies 
shall procure an actuarial valuation showing the condition of 
the special fund of the relief association as of December 31, 
1978 and at least as of December 31 every four years 
thereafter.  The valuation shall be prepared in accordance with 
the provisions of section 356.216, except that the figure for 
normal cost shall be expressed as a level dollar amount, and the 
amortization contribution shall be the level dollar amount 
calculated to amortize any current unfunded accrued liability by 
at least the date of full funding specified in subdivision 4, 
clause (b).  Each valuation shall be filed with the governing 
body of the municipality in which the relief association is 
located and with the commissioner of commerce state auditor, not 
later than June July 1 of the year next following the date as of 
which the actuarial valuation is prepared.  Any relief 
association which is operating under a special law which 
requires that actuarial valuations be procured at least every 
four years and be prepared in accordance with applicable 
actuarial standards set forth in statute may continue to have 
actuarial valuations made according to the time schedule set 
forth in the special legislation subject to the provisions of 
subdivision 3.  The relief association shall also procure a 
quadrennial experience study pursuant to section 356.216 to 
accompany the actuarial valuation every four years.  With the 
permission of the commissioner of commerce, a relief association 
may have their quadrennial experience study prepared by a 
qualified actuary jointly with the experience studies of other 
relief associations and reported to the commissioner as part of 
a joint report by the qualified actuary not later than December 
1 of the year next following the date as of which the actuarial 
valuation is prepared.  
    Sec. 12.  Minnesota Statutes 1984, section 69.775, is 
amended to read: 
    69.775 [INVESTMENTS.] 
    The special fund assets of the relief associations governed 
by sections 69.771 to 69.776 shall be invested in securities 
which are proper investments pursuant to section 11A.24, except 
that up to five percent of the special fund assets, or a minimum 
of $10,000, may be invested in the stock of any one 
corporation.  Notwithstanding the foregoing, up to 75 percent of 
the market value of the assets of the fund 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 by section 11A.24, subdivisions 2 to 
5.  Securities held by the associations before January 1, 1972 
the effective date of this act, which do not meet the 
requirements of this section may be retained after that date if 
they were proper investments for the association on May 14, 1971 
that date.  The governing board of the association may select 
and appoint investment agencies to act for and in its behalf or 
may certify funds for investment by the state board under the 
provisions of section 11A.17, provided that there be no limit to 
the amount which may be invested in the income share account, in 
the bond account, or in the fixed-return account, and that up to 
20 percent of that portion of the assets of the association 
invested in the Minnesota supplemental investment fund may be 
invested in the growth share account. 
    Sec. 13.  Minnesota Statutes 1984, section 69.80, is 
amended to read: 
    69.80 [AUTHORIZED ADMINISTRATIVE EXPENSES.] 
    Notwithstanding any provision of law to the contrary, the 
payment of the following necessary, reasonable and direct 
expenses of maintaining, protecting and administering the 
special fund, when provided for in the bylaws of the association 
and approved by the board of trustees, shall constitute 
authorized administrative expenses of a police, salaried 
firefighters or volunteer firefighters relief association 
organized under any law of this state: 
    (a) Office expense including but not limited to rent, 
utilities, equipment, supplies, postage, periodical 
subscriptions, furniture, fixtures and salaries of 
administrative personnel; 
    (b) Salaries and itemized expenses of the president, 
secretary and treasurer of the association, or their designees, 
incurred as a result of fulfilling their responsibilities as 
administrators of the special fund; 
    (c) Tuition, registration fees, organizational dues and 
other authorized expenses of the officers or members of the 
board of trustees incurred in attending educational conferences, 
seminars or classes relating to the administration of the relief 
association; 
    (d) Audit, actuarial, medical, legal and investment and 
performance evaluation expenses; 
    (e) Reimbursement to the officers and members of the board 
of trustees, or their designees, for reasonable and necessary 
expenses actually paid and incurred in the performance of their 
duties as officers or members of the board; and 
    (f) Premiums on fiduciary liability insurance and official 
bonds for the officers, members of the board of trustees and 
employees of the relief association. 
    Any other expenses of the relief association shall be paid 
from the general fund of the association, if one exists.  If a 
relief association has only one fund, that fund shall be deemed 
to be the special fund for purposes of this section.  If a 
relief association has a special fund and a general fund, and 
any expense of the relief association is directly related to the 
purposes for which both funds were established, the payment of 
that expense shall be apportioned between the two funds on the 
basis of the benefits derived by each fund. 
    Sec. 14.  Minnesota Statutes 1985 Supplement, section 
356.216, is amended to read: 
    356.216 [CONTENTS OF ACTUARIAL VALUATIONS FOR LOCAL POLICE 
AND FIRE FUNDS.] 
    The provisions of section 356.215, governing the contents 
of actuarial valuations and experience studies shall apply to 
any local police or fire pension fund or relief association 
required to make an actuarial report under this section except 
as follows: 
    (1) in calculating normal cost and other requirements 
expressed as a level percentage of covered payroll, the salaries 
used in computing covered payroll shall be the maximum rate of 
salary from which retirement and survivorship credits and 
amounts of benefits are determined and from which member 
contributions are calculated and deducted; 
    (2) in lieu of the amortization date specified in section 
356.215, subdivision 4, clause (7), the appropriate amortization 
target date specified in section 69.77, subdivision 2, clause 
(2) 2b, or 69.773, subdivision 4, clause (b), shall be used in 
calculating the required amortization contribution; 
    (3) in addition to the tabulation of active members and 
annuitants provided for in section 356.215, subdivision 4, 
clause (10), the member contributions for active members for the 
calendar year and the prospective annual retirement annuities 
under the benefit plan for active members shall be reported;  
    (4) actuarial valuations required pursuant to section 
69.773, subdivision 2 shall be made at least every four years 
and actuarial valuations required pursuant to section 69.77 
shall be made annually; and 
     (5) the actuarial balance sheet showing accrued assets, 
accrued liabilities, and the deficit from full funding of 
liabilities (unfunded accrued liability) shall include the 
following required reserves: 
     (a) For active members 
      1.  Retirement benefits 
      2.  Disability benefits 
      3.  Refund liability due to death or withdrawal 
      4.  Survivors' benefits 
     (b) For deferred annuitants' benefits 
     (c) For former members without vested rights 
     (d) For annuitants 
      1.  Retirement annuities 
      2.  Disability annuities 
      3.  Surviving spouses' annuities 
      4.  Surviving children's annuities 
     (6) actuarial valuations shall be due not later than the 
first day of the seventh month after the end of the fiscal year 
which the valuation covers. 
     In addition to the above required reserves, separate items 
shall be shown for additional benefits, if any, which may not be 
appropriately included in the reserves listed above. 
    Sec. 15.  [423A.21] [RECORDS; BOARD REPRESENTATION; 
FIDUCIARY RESPONSIBILITY.] 
    Subdivision 1.  [RECORDS.] A local relief association is 
subject to the provisions of chapter 6 relating to audits by the 
state auditor, the provisions of chapter 13, and the provisions 
of sections 15.17, 138.163, and 138.17 relating to the creation 
and retention of official and public records.  The records of 
the special fund and the bylaws of the relief association shall 
be public and shall be open for inspection by any member of the 
relief association, any officer or employee of the state or the 
municipality, or any member of the public, at reasonable times 
and places. 
     Subd. 2.  [MUNICIPAL REPRESENTATION.] Notwithstanding any 
other law, the membership of the board of trustees shall include 
at least two members appointed by the municipality.  The members 
appointed by the municipality shall have all the rights and 
privileges of board membership including full voting powers.  No 
relief association shall reduce the number of municipal 
representatives on its board by reason of this subdivision. 
     Notwithstanding any law which designates certain officials 
as ex officio members of a board of trustees, the municipality 
may appoint the same number of members as it is authorized to 
have on the board in the laws governing the relief association 
as of the effective date of this act, but the municipality may 
appoint to those positions any individuals it so chooses. 
     Whenever the board of trustees appoints an investment 
subcommittee at least one of the municipal representatives must 
be a member of that investment subcommittee. 
     Subd. 3.  [PUBLIC OFFICERS.] The officers and trustees of a 
local relief association are public officers for purposes of 
sections 471.87 and 609.43. 
     Subd. 4.  [FIDUCIARY RESPONSIBILITY.] In the discharge of 
their respective duties, the officers and trustees shall be held 
to the standard of care enumerated in section 11A.09. 
     Each member of the board is a fiduciary.  No fiduciary of a 
relief association shall cause a relief association to engage in 
a transaction if the fiduciary knows or should know that a 
transaction constitutes one of the following direct or indirect 
transactions: 
    (1) sale or exchange or leasing of any real property 
between the relief association and a board member; 
     (2) lending of money or other extension of credit between 
the relief association and a board member or member of the 
relief association; 
    (3) furnishing of goods, services, or facilities between 
the relief association and a board member; or 
    (4) transfer to a board member, or use by or for the 
benefit of a board member, of any assets of the relief 
association.  Transfer of assets does not mean the payment of 
relief association benefits or administrative expenses permitted 
by law.  
    Sec. 16.  [423A.22] [REPORTS; FINANCIAL TRANSACTIONS.] 
    Subdivision 1.  [REPORTS.] The board shall report to the 
municipality at least annually regarding each of the following: 
    (1) the required municipal support for the relief 
association required pursuant to section 69.77; 
    (2) the financial condition of the relief association 
according to the audited financial statements required pursuant 
to section 69.051; 
    (3) investment objectives and performance; 
    (4) surety bond amounts for its secretary and treasurer 
required pursuant to section 69.051, subdivision 4; and 
    (5) the annual administrative budget for relief 
associations. 
    Subd. 2.  [RELIEF ASSOCIATION RECEIPTS AND 
DISBURSEMENTS.] An official designated by the municipality shall 
receive and deposit all money received for the special fund of 
the relief association and may countersign all disbursements 
from the accounts of the special fund of the relief association, 
but must countersign all disbursements of at least $5,000.  If 
an institution with trustee powers is hired to administer the 
financial affairs of the relief association, an official 
designated by the muncipality must approve the trustee agreement 
and shall countersign authorizations for disbursements of at 
least $5,000.  
    Sec. 17.  Minnesota Statutes 1985 Supplement, section 
423A.02, subdivision 1, is amended to read: 
    Subdivision 1.  Any municipality in which is located a 
local police or salaried firefighters' relief association to 
which the provisions of section 69.77, apply, unless the 
municipality has adopted a municipal resolution retaining the 
local relief association pursuant to section 423A.01, 
subdivision 1, shall be entitled upon application as required by 
the commissioner of finance revenue to receive local police and 
salaried firefighters' relief association amortization state aid 
if the municipality and the appropriate relief association both 
comply with the applicable provisions of sections 69.031, 
subdivision 5, 69.051, subdivisions 1 and 3, and 69.77.  The 
amount of amortization state aid to which a municipality is 
entitled annually shall be an amount equal to the level annual 
dollar amount required to amortize, by December 31, 2010, the 
unfunded accrued liability of the special fund of the 
appropriate relief association as reported in the December 31, 
1978, actuarial valuation of the relief association prepared 
pursuant to Minnesota Statutes, sections 356.215 and 356.216, 
reduced by the dollar amount required to pay the interest on the 
unfunded accrued liability of the special fund of the relief 
association for calendar year 1981 set at the rate specified in 
Minnesota Statutes 1978, section 356.215, subdivision 4, clause 
(4).  Payment of amortization state aid to municipalities shall 
be made directly to the municipalities involved in four equal 
installments on March 15, July 15, September 15 and November 15 
annually.  Upon receipt of amortization state aid, the municipal 
treasurer shall transmit the aid amount to the treasurer of the 
local relief association for immediate deposit in the special 
fund of the relief association.  The commissioner of finance 
revenue shall prescribe and periodically revise the form for and 
content of the application for the amortization state aid.  The 
amounts required to pay the amortization state aid are hereby 
annually appropriated from the general fund to the commissioner 
of finance revenue. 
    Sec. 18.  Minnesota Statutes 1984, section 424A.001, 
subdivision 4, is amended to read: 
    Subd. 4.  [RELIEF ASSOCIATION.] "Relief association" means 
(a) a volunteer firefighters' relief association or volunteer 
firefighters' division or account of a partially salaried and 
partially volunteer firefighters' relief association organized 
and incorporated under chapter 317 and any laws of the state, 
governed by chapters 69 and 424A, and directly associated with a 
fire department established by municipal ordinance; or (b) any 
separate incorporated volunteer firefighters' relief association 
subsidiary to and providing service pension and retirement 
benefit coverage for members of an independent nonprofit 
firefighting corporation organized under the provisions of 
chapter 317, governed by chapter 424A, and operating exclusively 
for firefighting purposes.  A relief association is a 
governmental entity that receives and manages public money to 
provide retirement benefits for individuals providing the 
governmental services of firefighting and emergency first 
response.  
    Sec. 19.  Minnesota Statutes 1984, section 424A.001, is 
amended by adding a subdivision to read: 
    Subd. 7.  [FIDUCIARY RESPONSIBILITY.] In the discharge of 
their respective duties, the officers and trustees shall be held 
to the standard of care enumerated in section 11A.09. 
    Each member of the board is a fiduciary.  No fiduciary of a 
relief association shall cause a relief association to engage in 
a transaction if the fiduciary knows or should know that a 
transaction constitutes one of the following direct or indirect 
transactions: 
    (1) sale or exchange or leasing of any real property 
between the relief association and a board member; 
    (2) lending of money or other extension of credit between 
the relief association and a board member; 
    (3) furnishing of goods, services, or facilities between 
the relief association and a board member or member of the relief 
association; or 
    (4) transfer to a board member, or use by or for the 
benefit of a board member, of any assets of the relief 
association.  Transfer of assets does not mean the payment of 
relief association benefits or administrative expenses permitted 
by law.  
     Sec. 20.  Laws 1984, chapter 564, section 48, is amended to 
read: 
    Sec. 48.  [ANNUAL APPROPRIATION.] 
    There is appropriated and transferred from the general fund 
to the commissioner of finance revenue, $1,000,000 annually for 
distribution among those local police and salaried firefighters 
relief associations that receive amortization state aid 
according to Minnesota Statutes, section 423A.02.  Distribution 
shall be made according to that proportion the unfunded accrued 
liability of each relief association bears to the total unfunded 
accrued liabilities of all relief associations as reported in 
the most recent actuarial valuations of the relief associations 
that receive amortization state aid according to section 423A.02.
Moneys shall be distributed to the relief associations at the 
same time fire and police department state aid is distributed 
according to section 69.021. 
    Sec. 21.  [AUTHORIZATION TO INCREASE BOARD SIZE.] 
    Any relief association that has a board with fewer than two 
municipal members as of the effective date of this act is 
authorized to increase the size of its board up to two positions 
to include municipal representatives.  No municipal approval of 
an amendment of the bylaws to increase the size of the board is 
required. 
    Any relief association that increases the size of its board 
pursuant to this section should send a copy of the bylaws 
amendment to the executive director of the legislative 
commission on pensions and retirement. 
    Sec. 22.  [CITY OBLIGATION TO RELIEF ASSOCIATION.] 
    Notwithstanding the provisions of section 69.77, in 1986 
the city of Winona shall contribute to the Winona police relief 
association an amount equal to the amount the city contributed 
to the relief association in 1985. 
    Sec. 23.  [STATE AUDITOR TO AUDIT RELIEF ASSOCIATION.] 
    The state auditor shall perform a comprehensive audit of 
the financial transactions and financial position of the Winona 
police relief association for the years 1984 and 1985. 
    The auditor shall determine the amount of assets held by 
the relief association and shall report the total to the actuary 
for the relief association. 
    The auditor shall send a copy of the audit report to the 
city, to the commissioner of finance, and to the legislative 
commission on pensions and retirement. 
    Sec. 24.  [ACTUARY TO DETERMINE MINIMUM OBLIGATION.] 
    The actuary for the relief association shall determine, 
according to section 69.77, the minimum obligation of the city 
for the year 1987 based on the amount of total assets certified 
by the state auditor in the examination of 1985 financial 
statements of the relief association. 
    In addition to the filing of reports required in section 
356.215, subdivision 3, the actuary for the relief association 
shall send a copy of the December 31, 1985, valuation report to 
the commissioner of finance. 
    Sec. 25.  [STATE AIDS FOR WINONA.] 
    Upon receipt of the state auditor's report of the relief 
association for calendar year 1985 and of the valuation report 
for December 31, 1985, the commissioner of finance shall issue 
warrants to the city of Winona in the amounts equal to the 
amounts of police state aid, amortization state aid, and 
supplemental amortization state aid withheld by the department 
of finance since August 26, 1985, plus interest at a rate of six 
percent per annum from the date each state aid payment was 
withheld.  
    Sec. 26.  [INSTRUCTIONS TO REVISOR.] 
    The revisor of statutes is directed to change the words 
"executive secretary of the legislative commission on pensions 
and retirement" wherever they appear in Minnesota Statutes to 
"executive director of the legislative commission on pensions 
and retirement" in Minnesota Statutes 1986 and subsequent 
editions of the statutes. 
    The revisor of statutes is directed to change the reference 
to "section 69.77, subdivision 2, clause (2)" in section 
423A.01, subdivision 2, clause (4) to "section 69.77, 
subdivision 2b." 
    Sec. 27.  [EFFECTIVE DATE.] 
    Sections 1 to 26 are effective the day following final 
enactment. 
    Approved March 19, 1986