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TO: Mayor and City Council <br /> <br />FROM: Jim Nystrom, President of the Elk River Fire Relief Association <br /> <br />Background of the Association <br /> <br />The ERFD Relief Association is made up of the active paid-on-call members <br />of the ERFD. The purpose of the association is to provide retirement, <br />disability and death benefits to the members or beneficiaries of members of <br />the department. <br /> <br />The State of Minnesota provides the basic funding for the association <br />through distribution of money collected from a gross earnings tax on fire <br />insurance premiums sold in the state. The funds are allocated to the <br />departments based on the population and property values in the area served <br />by that department. <br /> <br />Beginning in the mid 80s and as late as 1994, the City Council supplemented <br />the state funds with an annual contribution that was approximately 50 <br />percent of the state-aid funding. <br /> <br />The ERFD Relief Association has invested and reinvested the funds until, <br />when taken over a long term, the interest and increases in share value <br />comprise the largest portion of yearly income. <br /> <br />The ERFD Relief Association is directed by six trustees elected by members <br />of the ERFD, the fire chief, the city Finance Director, and the Mayor. A <br />minimum of four meetings are held each year to oversee the management of <br />the association's funds. <br /> <br />Proposal <br /> <br />The ERFD Relief Association is requesting that the City contribution of <br />$17,500 budgeted for each of the years 1995 and 1996 be released to the <br />association and that the Council approve an increase in the yearly benefit <br />rate from $2,350 to $2,500 per year of service. <br /> <br />Since the State of Minnesota provides the basic funding for relief <br />associations, the State Auditor maintains strict oversight of the management <br />of funds through reporting and statutes. By August 1st each year, all <br />associations must file reports that estimate the income from the prior year <br />and compare the income to the accrued liability of the fund. Based on our <br />1996 report to the State Auditor, the increase in the fund value is anticipated <br />to be large enough to support an increase in yearly benefits from $2,350 to <br /> <br /> <br />