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Volunteer Fire Relief Association Report from the Minnesota Office of the State Auditor The primary sources of revenue for relief associations are fire state aid, municipal contributions, and investment earnings. Fire state aid is derived from a two percent tax on insurance premiums and is allocated based on the market value of real property in the fire district and on the population of each fire district. State law requires that fire state aid be used for pension purposes when the firefighters are covered by a pension plan. When a municipality approves a relief association's benefit level,the municipality assumes responsibility for ensuring that the relief association Special Fund has sufficient assets to cover approved benefit levels. Contributions can be made voluntarily by a local municipality or may be required by law based in part on a relief association's financial situation. Relief associations exist to pay retirement, survivor, and disability benefits to members and their beneficiaries. These benefits compensate volunteer firefighters for their service to the community and assist in the recruitment and retention of volunteers.Nearly 84 percent of relief associations in Minnesota are lump sum plans,meaning that they pay benefits as a one-time lump sum payment to members upon their retirement. In lump sum plans, benefits are paid to members based on an annual benefit level in effect at the time of the member's separation from active service and membership. Lump sum plans are the most common plan type because they are generally easier to administer and have fewer associated administrative costs. Comparison of the New Brighton Firefighters' Relief Association to other Metro Area lump sum plans: Required Municipal Municipal Pension Funding Contribution (due following Relief Association Contributions Amount Ratio year) Cottage Grove - $4,346 $3,600 115% - _ Golden Valley $152,825 $6,700 107% $97,604 Hopkins $117,582 $5,300 115% - Inver Grove Heights - $5,000 131% - Little Canada $37,066 $3,100 101% $36,952 Maplewood $263,007 $5,500 97% $222,110 North St. Paul $58,086 $3,400 96% $55,207 Oakdale $48,532 $4,900 100% $60,690 Rosemount $161,200 $6.900 90% $116,467 St. Anthony $6,000 $2,600 114% - Stillwater - $5,000 111% - Vadnais Heights $66,128 $3,600 89% $63,380 Woodbury $202,634 $6,720 101% $143.189 Neighboring Relief Associations with Other Plan Types: Required Municipal Relief Municipal Yearly Monthly Funding Contribution (due following Association Contributions Benefit Benefit Ratio year) Lake Johanna _ $80,897 $5,600 $34 100% 43,124 Roseville $216,500 $3,000 $30 _ 87% 210,031 Spring Lake Park $270,750 - $34 107% - I:\COUNCIL\REPORTS\2012\Public Safety\FireReliefBenefitLevel.doc