2007 Minnesota Statutes

69.773 RELIEF ASSOCIATIONS PAYING MONTHLY SERVICE PENSIONS.
    Subdivision 1. Application. (a) This section applies to any firefighters relief association
specified in section 69.771, subdivision 1, which pays or allows for an option of a monthly
service pension to a retiring firefighter when at least the minimum requirements for entitlement
to a service pension specified in section 424A.02, any applicable special legislation and the
articles of incorporation or bylaws of the relief association have been met. Each firefighters relief
association to which this section applies shall determine the actuarial condition and funding
costs of the special fund of the relief association in accordance with subdivisions 2 and 3, the
financial requirements of the special fund of the relief association in accordance with subdivision
4 and the minimum obligation of the municipality with respect to the special fund of the relief
association in accordance with subdivision 5.
(b) If a firefighters relief association that previously provided a monthly benefit service
pension discontinues that practice and either replaces the monthly benefit amount with a lump
sum benefit amount consistent with section 424A.02, subdivision 3, or purchases an annuity in
the same amount as the monthly benefit from an insurance company licensed to do business in
this state, the actuarial condition and funding costs, financial, and minimum municipal obligation
requirements of section 69.772 apply rather than this section.
    Subd. 2. Determination of actuarial condition and funding costs. A relief association to
which this section applies shall obtain 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 sections
356.215, subdivision 8, and 356.216 and any applicable standards for actuarial work established
by the Legislative Commission on Pensions and Retirement, 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 state auditor, not
later than 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 obtained 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.
    Subd. 3. Valuation requirement upon benefit change. The officers of the relief association
shall not seek municipal ratification of any amendments to the articles of incorporation or bylaws
which increase or otherwise affect the retirement coverage provided by or the service pensions
or retirement benefits payable from any relief association pursuant to subdivision 6 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.
    Subd. 4. Financial requirements of special fund. (a) On or before 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.
(b) The financial requirements of the relief association must 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 must be determined by adding the figures calculated under
paragraph (d), clauses (1), (2), and (3). If the relief association does not have an unfunded
actuarial accrued liability as reported in the most recent actuarial valuation, the financial
requirements must be an amount equal to the figure calculated under paragraph (d), clauses (1)
and (2), 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.
(c) The determination of whether or not the relief association has an unfunded actuarial
accrued liability must 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.
(d) The components of the financial requirements of the relief association are the following:
(1) The normal level cost requirement for the following year, expressed as a dollar amount, is
the figure for the normal level cost of the relief association as reported in the actuarial valuation.
(2) 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.
(3) The amortization contribution requirement to retire the current unfunded actuarial accrued
liability by the established date for full funding is 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, payable from
the special fund, 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, without inclusion of any other
items of increase or decrease, produce a net increase in the unfunded actuarial accrued liability
of the special fund, the established date for full funding is the December 31 occurring ten years
later. 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 within the past 20 years, the
established date for full funding must be determined using the following procedure:
(i) 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;
(ii) the unfunded actuarial accrued liability of the special fund must be determined in
accordance with the provisions governing service pensions, retirement benefits, and actuarial
assumptions in effect before an applicable change;
(iii) the level annual dollar contribution needed to amortize this unfunded actuarial accrued
liability amount by the date for full funding in effect before the change must be calculated
using the interest assumption specified in section 356.215, subdivision 8, in effect before any
applicable change;
(iv) the unfunded actuarial accrued liability of the special fund must 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;
(v) the level annual dollar contribution needed to amortize the difference between the
unfunded actuarial accrued liability amount calculated under item (ii) and the unfunded actuarial
accrued liability amount calculated under item (iv) over a period of 20 years starting December
31 of the year in which the change is effective must be calculated using the interest assumption
specified in section 356.215, subdivision 8, in effect after any applicable change;
(vi) the annual amortization contribution calculated under item (v) must be added to the
annual amortization contribution calculated under items (i) and (iii);
(vii) the period in which the unfunded actuarial accrued liability amount determined in item
(iv) will be amortized by the total annual amortization contribution computed under item (vi)
must 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
must 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 must 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;
(viii) the period determined under item (vii) must be added to the date as of which the
actuarial valuation was prepared and the resulting date is the new date for full funding.
    Subd. 5. Minimum municipal obligation. (a) 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 on or before August 1 of each year in accordance with
the requirements of this subdivision.
(b) The minimum obligation of the municipality with respect to the special fund is an amount
equal to the financial requirements of the special fund of the relief association determined under
subdivision 4, reduced by the estimated 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 of the relief association during the following year and the amount of any anticipated
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. 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.
(c) 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 under subdivision 4 and this subdivision to the
governing body of the municipality by August 1 of each year. 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.
(d) 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 under this section must 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.
(e) 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 on the
taxable property of the municipality.
(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.
    Subd. 6. Municipal ratification for plan amendments. If the special fund of the relief
association does not have a surplus over full funding pursuant to subdivision 4, or if the
municipality is required to provide financial support to the special fund of the relief association
pursuant to this section, the adoption of or any amendment to the articles of incorporation or
bylaws of a relief association which increases or otherwise affects the retirement coverage
provided by or the service pensions or retirement benefits payable from the special fund of any
relief association to which this section applies shall not be effective until it is ratified by the
governing body of the municipality in which the relief association is located. If the special fund
of the relief association has a surplus over full funding pursuant to subdivision 4, and if the
municipality is not required to provide financial support to the special fund of the relief association
pursuant to this section, the relief association may adopt or amend its articles of incorporation
or bylaws which increase or otherwise affect the retirement coverage provided by or the service
pensions or retirement benefits payable from the special fund of the relief association which
shall be effective without municipal ratification so long as this does not cause the amount of the
resulting increase in the accrued liability of the special fund of the relief association to exceed 90
percent of the amount of the prior surplus over full funding and this does not result in the financial
requirements of the special fund of the relief association exceeding the expected amount of the
future fire state aid to be received by the relief association as determined by the board of trustees
following the preparation of an updated actuarial valuation including the proposed change or an
estimate of the expected actuarial impact of the proposed change prepared by the actuary of the
relief association. If a relief association adopts or amends its articles of incorporation or bylaws
without municipal ratification pursuant to this subdivision, and, subsequent to the amendment
or adoption, the financial requirements of the special fund of the relief association pursuant to
this section are such so as to require financial support from the municipality, the provision which
was implemented without municipal ratification shall no longer be effective without municipal
ratification and any service pensions or retirement benefits payable after that date shall be paid
only in accordance with the articles of incorporation or bylaws as amended or adopted with
municipal ratification.
History: 1971 c 261 s 3; 1977 c 429 s 63; 1978 c 563 s 4; 1979 c 201 s 9; 1981 c 224 s
29; 1982 c 421 s 2; 1983 c 289 s 114 subd 1; 1984 c 655 art 1 s 92; 1Sp1985 c 7 s 35; 1986 c
359 s 11; 1987 c 259 s 9,10; 1994 c 541 s 1; 2000 c 461 art 15 s 3; 2002 c 392 art 11 s 52;
1Sp2005 c 8 art 9 s 6,7

NOTE: Subdivision 4 was also amended by Laws 2005, First Special Session chapter 8,
article 10, section 6, to read as follows:
"Subd. 4. Financial requirements of special fund. Before 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. The financial
requirements of the relief association must 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 must be determined by adding the figures calculated under clauses (a), (b), and (c).
If the relief association does not have an unfunded actuarial accrued liability as reported in the
most recent actuarial valuation, the financial requirements must be an amount equal to the figure
calculated under clauses (a) and (b), 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. The determination of
whether or not the relief association has an unfunded actuarial accrued liability must 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.
(a) The normal level cost requirement for the following year, expressed as a dollar amount, is
the figure for the normal level cost of the relief association as reported in the actuarial valuation.
(b) 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 year by the factor of 1.035.
(c) The amortization contribution requirement to retire the current unfunded actuarial accrued
liability by the established date for full funding is the figure for the amortization contribution as
reported in the actuarial valuation. 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, the
established date for full funding must be determined using the following procedure:
(i) the unfunded actuarial accrued liability of the special fund must be determined in
accordance with the provisions governing service pensions, retirement benefits, and actuarial
assumptions in effect before an applicable change;
(ii) the level annual dollar contribution needed to amortize this unfunded actuarial accrued
liability amount by the date for full funding in effect before the change must be calculated
using the interest assumption specified in section 356.215, subdivision 8, in effect before any
applicable change;
(iii) the unfunded actuarial accrued liability of the special fund must 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;
(iv) the level annual dollar contribution needed to amortize the difference between the
unfunded actuarial accrued liability amount calculated under subclause (i) and the unfunded
actuarial accrued liability amount calculated under subclause (iii) over a period of 20 years starting
December 31 of the year in which the change is effective must be calculated using the interest
assumption specified in section 356.215, subdivision 8, in effect after any applicable change;
(v) the annual amortization contribution calculated under subclause (iv) must be added to the
annual amortization contribution calculated under subclause (ii);
(vi) the period in which the unfunded actuarial accrued liability amount determined in
subclause (iii) will be amortized by the total annual amortization contribution computed under
subclause (v) must 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 does 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 is not 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;
(vii) the period determined under subclause (vi) must be added to the date as of which the
actuarial valuation was prepared and the resulting date is the new date for full funding."