Report examines finances of volunteer fire relief associations

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State Auditor Rebecca Otto today released the

2011 Financial and Investment Report on Volunteer Fire Relief

Associations.

The report summarizes and evaluates the finances, basic

benefit structure, and investment performance of Minnesota’s volunteer

fire relief associations for the year ended December 31, 2011. This

report includes information on 691 of the 701 relief associations that

were in existence during 2011.

Relief associations are governmental entities that receive and manage

public money to provide retirement benefits for individuals providing

the governmental services of firefighting and emergency first response.

Custom benchmark rates of return, calculated by the Office of the State

Auditor for each relief association for this report, provide a standard

against which investment performance may be measured for this group.

Highlights from the report include:

Current Trends

-- A total of $29.8 million in service pensions was paid out by 399

different relief associations in 2011. The $29.8 million paid out in

2011 represents a 7.2 percent increase from the $27.8 million paid in

2010.

-- Relief associations held $428.4 million in net assets at the end of

2011, representing accrued benefits for 20,183 firefighters.

-- In 2011, relief associations received $17.2 million in fire state

aid, a 0.6 percent increase from the amount received in 2010.

-- Relief associations received $12.1 million in municipal

contributions in 2011, an 8.3 percent decrease from the $13.2 million

received in 2010. Of the $12.1 million received in municipal

contributions, $8.2 million was required to be contributed by statute.

This required municipal contribution amount was roughly $1.6 million

less than was required in 2010.

-- Investment losses totaled $3.3 million in 2011, a significant change

from the investment gains of $40.5 million earned in 2010.

-- In 2011, relief associations had an average rate of return of

negative 0.5 percent. Investment returns decreased from the 8.7 percent

average rate of return in 2010.

-- Rates of return for 220 relief associations, or 31.7 percent,

matched or exceeded their calculated custom benchmark rates of return

during 2011. This is down from the

69.5 percent of relief associations that matched or exceeded their

benchmark return in 2010.

Long-Term Trend

-- The average rate of return for relief associations over the past ten

years was 3.4 percent, below the statutory interest rate assumption of

five percent.

To view the complete report, which includes an Executive Summary,

tables and graphs, go to:

https://www.auditor.state.mn.us/default.aspx?page=20130313.003.

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