Deposit of Municipal Funds

Below are two compliance issues the OSA has seen related to municipal funds being deposited into the affiliated relief association’s general fund, and suggestions on how to avoid them.

Reimbursements for Fire Department Expenses

Minnesota law is clear that all money a relief association receives from a city or town must be deposited into the relief association’s special fund. A relief association cannot deposit money from a city or town into the relief association’s general fund, even if the money was intended to reimburse the general fund for municipal fire department expenses paid by the relief association.

For example, some relief associations use their general fund to purchase equipment for the fire department or pay for firefighter training. If a relief association chooses to use its general fund to cover expenses that would otherwise be the city’s or town’s obligation, it must absorb those expenses as the city or town cannot reimburse the relief association’s general fund. Alternatively, the city or town can pay the expenses directly, or the firefighters themselves could pay the expenses and be reimbursed by the city or town.

Deposit of Funds Intended for the Fire Department

All funds intended for use by a municipal fire department must be controlled by the city or town. Donations made to a municipal fire department are city or town funds, which can only be expended as permitted by law. To accept such a donation, a city council or town board must pass a resolution by a two-thirds majority. Funds intended for the fire department should not be deposited into a relief association’s general fund.

See our Statements of Position for additional information on fire department funds and on fundraisers and donations.

Published last in the October 2023 Pension Newsletter