Authorized Administrative Expenses

As a reminder, Special Fund assets may be disbursed only for purposes expressly authorized under Minnesota law. Authorized Special Fund disbursements include retirement benefits, disability and survivor benefit payments, and certain authorized administrative expenses. Administrative expenses that may be paid from the Special Fund include office expenses, officer salaries, training fees, and professional expenses. Two common compliance issues that occur with Special Fund disbursements relate to salaries and professional fees.

State law allows salaries to be paid from the Special Fund to the officers of a relief association, or their designees. Salaries to other trustees of the board may be paid from the Special Fund only if the salary amounts are approved by the governing body of the entity that is responsible for meeting any minimum financial obligation to the relief association. For example, if a relief association is affiliated with a city fire department, salary amounts for non-officer trustees must be approved by the city council before they may be paid from the Special Fund.

The Office of the State Auditor’s Bylaw Guides provide sample language for relief associations wishing to pay Special Fund salaries, and include an attachment to list salary amounts.

Members of the board of trustees may be reimbursed from the Special Fund for reasonable and necessary expenses actually paid and incurred in the performance of their duties as members of the board. All other non-salary payments (such as per diems) to board members should be paid from the relief association’s General Fund.

The professional expenses that a relief association may pay from the Special Fund are limited to authorized “audit and audit-related services, accounting and accounting-related services, actuarial, medical, legal, and investment and performance evaluation expenses.” Authorized legal fees are reasonable fees paid directly to an attorney or a law firm for work necessary for maintaining, protecting, or administering the Special Fund. See our Statement of Position on this topic for additional information.

Published last in the April 2024 Pension Newsletter