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Kansas Insurance Department
2014 Firefighter Relief Act Seminar
Agenda
• Contact Information/Background/Training Schedule
• Important dates
• Qualification
• Redetermination
• Updates
• FRA Program Totals
•
•
•
Receipts
Expenditures
Assets
• FRA Program Basics
•
•
•
Relief
Insurance
Annuities/Pensions
• Best Practices
•
•
•
Governing Body
Board of Directors
Operational Protocols
• IRS Tax Exempt Status
My Contact Information
Steve Lehwald
FRA Administrator
Kansas Insurance Department
420 SW 9th St
Topeka, Ks 66612
Website:
www.ksinsurance.org
[email protected]
Phone # (785) 296-7831
FAX # (785) 291-3673
Background
•
•
•
•
•
•
Born and raised in Sabetha, KS
College (2005): Kansas State University (Finance)
Law School (2008): University of Pittsburgh
Police Officer: Lawrence Police Dept. (3 years)
Summer 2013: Passed the Kansas Bar Exam
Fall 2013: Hired by KID
FRA Training Schedule for CY2015
July 11, 2015
Hiawatha
KSFFA Fire School
December 5, 2015
Goodland
KSFFA Fire School
April 23-25, 2015
KSFFA Conference
Junction City
Jan 17, 2015
FRA
Annual Seminar
Salina
May 2, 2015
Meade
KSFFA Fire School
October 3, 2015
Mt. Hope
KSFFA Fire School
March 18-22, 201
SCAFFA
Topeka
May 28-30, 2015
Labette CountyParsons
KSFFA Fire School
KID Website
Online Program page
What is the Firefighter Relief Act?
• Establishes a Firefighters Relief Fund for
firefighters injured or killed in the line of duty.
• 2 states have a firefighter relief act:
 Kansas
 570 FRAs
 $12 Million fund
 2 Employees to manage & administer the fund
 Pennsylvania:
 2,000 FRAs
 $70 Million fund
 45 Employees to manage & administer the fund
Where do we get the money to fund the
Firefighter Relief Act?
• From all Fire and Lightning Insurance
written in the state for the previous
year.
• 2% tax on premiums of fire and
lightning insurance written in the state.
• This 2% tax funds the Kansas
Firefighter Relief Act
How are the Funds Distributed?
• The funds are distributed to each FRA
based on the population and valuation
of the geographical area served by the
fire department.
• 50% of the distribution is based on the
population
• 50% of the distribution is based on the
assessed tangible property valuation
Two Important FRA Dates
• April 1: Financial Statements
• October 1: Redetermination Requests
Late/Incorrect submissions
and qualification issues
Due by April 1 of every year {K.S.A. 40-1706(a)}
• Failure to submit by that time automatically
renders the FRA “not qualified” to receive funds
under the Act
• 1 month late: Notification letter to FRA treasurer
• 3 months: Notification letter to Fire Chief
• 6 months: Notification letter to governing body
• 1 year: Notification letter to county attorney
• 2 years: FRA is Deactivated
• County attorney directed to remit all funds from
FRA and return them to KID {K.S.A. 40-1706(d)}
Redetermination
• Submit request (online) from January 1 to September 31
{K.S.A. 40-1706(d)(6)}
• Can NOT request from October 1 to December 31
• “Changed circumstances”
• Population/Valuation
• Hearing (before December 1)
• Shall be heard and may present information
• Attendance is not required
• May apply for redetermination once every 3 years
Updates to the online program
• Financial Statement comparison
• Helps to compare current year to what you
have done in previous years
• Annuity/Pension e-file
• Similar to TurboTax
• Fire District Information Screen
New Feature Provided in FRA Online
Program
Annual Financial Statement Reports
Description
Statement Submitted
FD Information
# Volunteer FFs
# Paid FFs
Apparatus Value
Receipts
KID check
Government/Municipal Bond/Warrant Interest
Other Investment Interest
Bank Account Interest
Refund of Insurance Premium Overpayment
Proceeds Received from Insurance Policies
Annuity/Pension Gain or Loss
Firefighters portion of insurance premium
Other income
Total Receipts
CY2009
CY2010
CY2011
CY2012
Yes
Yes
Yes
Yes
11
15
16
15
2
2
2
2
$291,400.34 $251,090.29 $225,981.26 $205,642.94
$0.00
$0.00
$0.00
$80.59
$0.00
$0.00
$0.00
$392.93
$24,603.63
$25,077.15
$3,520.71
$0.00
$0.00
$62.29
$992.90
$0.00
($1,204.66)
$392.93
$6,797.44
$10,561.61
$3,381.84
$0.00
$0.00
$51.85
$642.82
$0.00
$825.35
$230.03
$1,202.63
$6,334.52
$3,477.86
$0.00
$0.00
$16.32
$0.00
$0.00
$644.20
$230.63
$18,092.29
$22,461.30
Expenditures
Relief to Firefighters
Gratuities to Spouse/Dependents
Funeral Expenses
Insurance Premiums Paid
Pensions to Retired FFs
Annuities to Retired Volunteer FFs
Premium for Annuity Contract
Treasurers Bond
Other Expenses
Total Expenditures
Assets/Investments
City Bond
County Bond
Township Bond
Fire District Bond
United States Bond
Kansas Municipal Bond
Checking Account
Certificate of Deposit
Repurchase Agreement
Time Certificate of Deposit
United States Treasury Bill
Warrants Held
Annuity Program
Pension Program
Savings Account
Other Assets/Investments
Total Assets/Investments
$0.00
$0.00
$0.00
$2,619.52
$0.00
$0.00
$0.00
$138.00
$0.00
$2,757.52
$0.00
$0.00
$0.00
$3,612.42
$3,010.78
$0.00
$0.00
$135.00
$145.00
$6,903.20
$0.00
$0.00
$0.00
$4,606.06
$0.00
$10,682.28
$0.00
$325.00
$2,684.61
$18,297.95
$0.00
$0.00
$0.00
$1,414.00
$0.00
$2,455.81
$18,092.29
$135.00
$6.00
$22,103.10
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$24,603.63
$0.00
$16,059.40
$0.00
$40,663.03
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$20,388.19
$0.00
$23,933.25
$0.00
$44,321.44
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$7,813.27
$0.00
$24,544.74
$0.00
$32,358.01
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$24,093.95
$0.00
$8,622.26
$0.00
$32,716.21
Financial Statement Screen
Annuity/Pension Screen Selection
Annuity/Pension Screen
The data that you enter on this screen will
automatically populate the appropriate
blocks in the Receipts, Expenditures and
Assets
Fire District Information Screen
This is automatically populated from the
previous year’s financial report, if different just
edit the appropriate blocks
CY2013 Financial Statement Submission Results
2013 Financial Statements Submitted
Description
600
Year
500
516
# Statements Submitted
400
CY2010
CY2011
CY2012
577 of 577
578 of 578
574 of 577
12,658
13,002
12,286
53 3,236
30 3,298
3,178
FD Information
300
# Volunteer
FFs
200
100 FFs
# Paid
0
FRAs Reporting
FRAs Not
Reporting
Manual
submissions
CY2013 Financial Statement Submission
• Almost 500 FRAs submitted
their statements on time
• For those of you who have not submitted
them yet, please do so immediately
• Should only take you 10 minutes
maximum to complete
Relief Fund Totals
$14,000,000
$12,700,440
$11,950,727
$12,000,000
$10,000,000
$11,078,373
$9,134,481
$9,373,953
$10,291,526
$10,523,333
2009
2010
$9,678,728
$8,000,000
$6,000,000
$4,000,000
$2,000,000
$0
2006
2007
2008
2011
2012
2013
Kansas Firefighter Relief Act Distribution
Last year over $11 mil. was
distributed to 577 FRAs
across the state.
The Distribution Must Funds
• Each FRA receives a “base” distribution
of $1,000
• The KSFFA receives 3% of the premium
tax collected
• $100,000 goes to the KSFFA for a
statewide insurance policy
CY2014 Distribution
$100,000
KSFFA
Death
Benefit Policy
$381,013
KSFFA
$12,700,440
FRA
Premium
Tax CY2013
$569,000
Base
Distribution
to all FRAs
Kansas Firefighter Relief Act
$100,000 is paid to the
Kansas State Firefighters
Association to be set aside
as a death benefit fund,
$45,000 benefit for
Firefighter LODD
(currently)
2013 FRA Receipts
KID Check
•$10.8 Million
$12,000,000
$10,000,000
Insurance
$6,000,000 Proceeds
$8,000,000
•$1.9 Million
$4,000,000
Annuities
$0
Pensions
$2,000,000
Bank Interest
•$3.6 Million
•$105 Thousand
$21,299,476
CY2013 FRA Expenditures
Relief to
Firefighters
$8,000,000
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
•$1.26 Million
Insurance
Premiums
•$7.89 Million
Annuities
Pensions
•$1.94 Million
Other
•$446 Thousand
$14,574,890
CY2013 Assets/Investments
$35,000,000
$30,000,000
$25,000,000
$20,000,000
Bank
Accounts
Annuities
Pensions
$28.3 Million
$40.9 Million
• Interest
$107 Thousand
• Gain
$3.6 Million
$15,000,000
$10,000,000
$5,000,000
$0
$71,310,047
Asset Class Comparison
Asset Type
CY2011
CY2012
CY2013
Annuity Program
$26,426,465
$28,174,364
$31,004,152
Pension Program
$5,924,288
$9,152,275
$9,862,069
$32,350,753
$37,326,639
$40,866,221
Checking Account
$11,581,652
$12,304,192
$12,471,435
Certificate of Deposit
$12,337,708
$11,175,416
$10,135,800
Time Certificate of Deposit
$1,790,733
$779,156
$463,133
Savings Account
$4,231,016
$4,852,650
$5,199,653
$29,941,109
$29,111,414
$28,270,021
Value
Value
Kansas FRA Fund Summary
Description
2011
2012
2013
Receipts
$13,720,422
$20,964,232
$21,299,476
Expenditures
$13,651,490
$16,183,551
$14,574,890
Assets
$64,604,694
$69,166,795
$71,310,048
$4,562,101
$2,143,253*
Overall Net
Change
* This number will
increase once all
FRAs report
FRA Online Facelift
• Your FRA Online Page has been
updated for ease of use.
• We are continually looking for ways
to improve it and make it more user
friendly.
• If you have any suggestions for the
page, please let me know.
FRA Home Page
Navigation and Home Page
Home: Takes you to the KID-FRA Online home page.
Financial Statement: Takes you to a page to view current and prior year financial
statements.
Redetermination: Takes you to a page to make and maintain a redetermination
request.
FRA/User Information: Takes you to the page to view your FRA information, as
well as the ability to view and edit your online user information.
FRA Documents: Takes you to a page to view scanned historical documents
pertaining to the FRA.
Contact KID: Provides contact information for the Kansas Insurance Department as
well as a web form.
Log out (right side of the page, next to the User name): Click to leave the KID-FRA
Online system.
FRA Information
Click this link to update your
contact information
Treasurer Change Form
Checks and Balances
• The Online
Program will not
allow “unbalanced”
statement
submissions
Balanced Financial
Statement
5% Deviation
• A loss or gain of
5% in net assets will
be flagged
• Must be specific
and included in the
line item block
“Other”
Expenditures,
Receipts, Assets
CY2013 Redetermination
• We had 24 FRAs apply for Redetermination
last year.
• Several FRAs based their request for
Redetermination on incorrect or inaccurate
data received from their County Elected
Officials.
• Hearing is held in November
• Actual order is not issued until spring
Request for Redetermination
• The procedure for Redetermination has changed.
• You now just apply for redetermination using your
FRA Online Page.
• You will not have to submit any documentation or go
to the County Clerk unless I specifically require it.
• There is no “withdrawal” provision in the Relief Act
• The Commissioner of Insurance may Redetermine
applicants based on information that is presented and
or otherwise made available and may make a finding of
“Changed Circumstances.”
Redetermination
 Requirements for Requesting a Redetermination:
What
changeif inmy FRA is
How
doisIaknow
circumstances?
eligible
for Redetermination?
 You must have a “change in circumstances” in order to apply.
 Apply to the Commissioner of Insurance prior to October 1 (of any year) but not more
than once every 3 years.
 Redetermination is now “Web” based and you can
• +Population
do
the
entire
process
by going
to the
• The
FRA
Online online
Program
will tell
youFRA
if
Webpage.
you
areFire
eligible
• +Department Coverage
 The
Redetermination
Hearing
will
be
conducted
•
At
the
Financial/Redetermination
page
Area
rd
usually during the 3 week of November, but in all
• •AtitMerger
the be
FRA/User
Information
cases
will
prior to December
1, inpage
accordance
with Statute.
 You may be present during the redetermination
hearing if you desire.
You must first log into your
FRA
FRARedetermination
page in the OnlinePage
Program
Click on this block
for Redetermination
Online Redetermination
Your current
FRA
Give me a call and I will research
your latest
Population/Valuation and Redetermination
provide you with an
estimated distribution. data will be entered
automatically
Click the box
Enter your FRA Number
Your Name
Phone Number
Click
Submit
Mailing
Address
Redetermination Continued
I will contact you when I receive your
Application and determine if I need
more evidence or documentation
Fire Department Coverage Area
• Your FRA distribution is based on the population
and valuation of the geographic area serviced by
the Fire Department.
• It is highly recommended that you maintain the
most recent legal description of your fire district in
your FRA files.
• You can check your legal description currently on
file in the FRA Online Program.
• You can submit your latest legal description to me
and I will upload it into your document files.
Purpose of the Relief Act
For the “Relief ” of any member that is injured in the “Line of
Duty”
1. For the “Relief ” of any member that
For is
theinjured
payment in
of athe
death
benefitofwhen
a member is killed in
“Line
Duty”
the “Line of Duty”
2.
the payment
of aFuneral
deathExpenses”
benefit
For For
the payment
of “Necessary
when a member is killed in the
Dutyto members of a full paid Fire Department
For“Line
paying aof
pension
For the purchase of insurance for any of the above mentioned
For the purchase of an annuity to members of a Volunteer Fire
Department
What does “Relief” Mean?
• How much $ is enough?
• Who determines this?
• What can we pay for?
• How/when do we report it?
• When does it stop?
Attorney General Opinion “Relief”
• Removal in whole or in part of the
financial burden, hardship or distress
of a fireman, his widow or dependents,
resulting from injury or physical
disability to a fireman in the discharge of
his duties.
Attorney General Opinion “FRA
Discretionary Power”
• Within reasonable limits, depending on the
funds available and the circumstances of
financial need resulting from such injury or
physical disability to a fireman, the amount of
financial assistance to be paid as relief to such
fireman, his widow or dependents, falls within
the discretionary power of the FRA to
administer the fund.
Who Deserves FRA Benefits?
All members of the Fire
Department that have the duties
and functions of a firefighter.
If you think there is a Firefighter
that does not deserve FRA
benefits, then what are they doing
on your Fire Department!
You have an internal Fire
Department issue and not a FRA
problem
Firefighter Relief Act Coverage
A member of a fire department is protected by the
Firefighter Relief Act from the first day of service
with such department,
There
“Opt
• regardless ofis
anyno
probation
status. Out”
provision
inmustthe
ReliefwithAct
Association Bylaws
be consistent
the
statutory purpose
• and can not define a “member” in a way that would
categorically exclude a firefighter.
You can not deny benefits to firefighters
• based on length of service unless it is covered by statute.
Member of the FRA
• KSA 40-1707 sets specific prerequisites for any relief
or benefit to be available to the members of the
firefighters relief association who is injured, physically
disabled or killed in or by reason of the discharge of
such member's duties as a firefighter.
• The entitlement of relief or benefit under the Relief
Act is exclusively determined upon the function and
duties of the intended recipient as a
firefighter. The function of the individual as a
firefighter is essential in qualifying for any relief
under the relief act.
Non Members or Members with no
FF Duties
• There is no entitlement to benefits for “Non
Members” or Members with no Firefighting
duties.
• There is no authorized purpose for these people
to receive any benefits under the provisions of the
Relief Act.
• If I have information that this situation exists
within your FRA, I will notify the County
Attorney to take action to rectify the situation and
your FRA will be suspended from distribution
payments.
Non Members of the FRA Board of
Directors
• The FRA is composed of “members of a fire
department” (K.S.A. 40-1701(a)
• An FRA Board of Directors Member (or Officer
of the Corporation) may be a “non-member” if:
• The FRA Bylaws allow for the inclusion of non-members to be
included in the FRA Board of Directors.
• Any non-member officer on the FRA Board of
Directors is not authorized to receive any FRA
benefits.
Member of the FRA
Two pronged test
Examples of
personnel not covered
under the Relief Act
Member of the
Fire Department
Fire Department
Chaplain (no FF
duties)
And have the
duties and
functions of a
FF
Secretary (no FF
duties)
Auxiliary (no FF
duties)
EMS personnel
(no FF duties)
FRA Members Providing Service to
Multiple Fire Departments
• Firefighters may belong to several Fire Districts
and there is no conflict with the Relief Act when
this occurs.
• Any Firefighter that is a member of any Fire
District or Department in the state of Kansas is
entitled to receive the same benefits that any
other member of “the” Department receives.
• Service time remains with each Department
separately and can not be combined unless there
is a merger of FRAs.
Benefits:
Insurance, Annuities, Pensions
On Duty
• Limited to On Duty Death or
Injury
24 Hour
• Coverage for On and Off Duty
Injury and Death
10/5 Rule
• Policy transfer at Termination
Annuities
• For Volunteer Fire Departments
Pensions
• For Fully Paid Fire Departments
Types of Insurance your FRA can Purchase
On Duty (paid 100% with FRA funds)
• Policy is limited to cover only accidental injuries, diseases, or death resulting from duties as a
member of the fire department
• Group Term
• Group Permanent
• Individual Permanent Life
24 Hour Coverage (FRA pays 85%, FF pays 15%)
• Policy may cover non duty related accident, injury and or death
• Each member shall pay that portion of the cost (premium) which is beyond “on duty”
coverage.
• The contribution by the member shall not be less than 15 percent of the total premium for
this coverage
Conditions of the Policy (FRA owns the Policy)
• Each policy shall be purchased, owned and held by the firefighter’s relief association
• Each policy shall name the firefighter’s relief association as the beneficiary
• Each indemnity shall be paid to the firefighter’s relief association
Cities of the 2nd Class
• In any city of the second class which maintains a
fire department consisting of both salaried and
volunteer firefighters, such moneys may be
expended for the purchase or payment of
premiums on:
• Policies of life, accident, or accident and health
insurance
• Policy Premiums may be 100% paid by the FRA
• Policies may be owned either by the firefighters
relief association or by the individual members
By State law, cities in Kansas are divided into
three classes.
• Cities of the 3rd Class - To
incorporate, a city must generally
have either 300 inhabitants or 300 or
more platted lots served by water and
sewer lines. (Shawnee incorporated
as a city of the 3rd class on June 10,
1922.)
Cities of the 2nd Class
• Cities of the 2nd Class - A city may
petition to become a city of the 2nd class
when its population is more than 2,000 but
less than 15,000. (Shawnee became a city
of the 2nd class on January 29, 1957.)
Cities of the 1st Class
• Cities of the 1st Class - A city may petition
to become a city of the 1st class when its
population reaches 15,000. A city whose
population is between 15,000 and 25,000
may elect to remain a city of the 2nd class
but must become a city of the 1st class when
it reaches 25,000 population. (Shawnee
became a city of the 1st class on October 22,
1971).
On Duty Coverage Only
$100 Annual Premium
FRA
Pays
100%
• The FRA Pays
$100
The FF
pays
“0”
• The FF is not
required to
contribute any
portion of the
premium
On Duty Policy Only
24 Hour Coverage (policy)
$100 Annual Premium
FRA
pays
85%
The FRA
FRA Pays
• The
pays a
$85
maximum
of
85% of the total
premium
24 hour coverage
policy
•
FF
pays15%
The Firefighter
contributes
$15
The
Firefighter
contributes a
minimum of
15% of the total
premium
FFs that Refuse to Contribute 15%
If a member refuses to pay his/her
share (15%) then the FRA will pay
for an "On Duty" policy only in an
amount equal to 85% that is
contributed to all the other policies.
So, if a 24 hour policy has a total
premium of $100, then the FRA
would purchase an "On Duty" only
policy for whatever you can
provide for $85.
FFs that are Denied Insurance
You must provide benefits to FFs that are denied
insurance coverage for what ever reason.
What you can not do,
You can provide other equivalent benefits based on
issame
write
out
a check
the
contribution
that other
members areto
receiving.
FFs that terminate from
The benefits can be term insurance and or an annuity
product
your department
Important to Remember
• It is the “contribution” by the
FRA that must be fair and
equitable
• Not necessarily the benefit
amount
Life Insurance 10/5 Rule
• To summarize, those FFs who meet the 10 years of
service with 5 years coverage under the same policy
are authorized, at termination, for transfer of ownership
of the policy. There is no requirement for the FF to
purchase the FRA's share of the benefits.
• If the FF does not meet the 10/5 requirement they are
authorized to receive only the 15% (or more if they
paid more than the 15%) that they contributed to the
premiums. The cash value (if any) remains in
possession of the FRA, however the FF can pay the
cash value amount to the FRA and can then be eligible
for transfer of ownership of the policy.
10/5 Rule Cash Value at Termination
FRA
maintains
85% of cash
value if 10/5
rule not met
$1,000 Cash Value in
Insurance Policy
• The FRA
keeps $850
FF is eligible
for his portion
of the cash
value (15%) if
10/5 rule not
met
FF is eligible
for 100% of
cash value if
10/5 rule is
met
• The
Firefighter
receives $150
• The
Firefighter
receives
$1,000
Annuities and Pensions
• Annuities are for Volunteer Fire
Departments
• Pensions are for fully paid Fire
Departments
Annuities
20 years of
service
• With such
department, does
not have to be
continuous
Annuities must be approved
• Which the FF
was available to
attend as verified
Annuity
by the
Governing Body Designated
by the governing
body
Attorney prior to purchase
75% of
fire calls
Deferred or
Immediate
• The Annuity may
be Deferred or
Immediate as
determined by the
FRA Bylaws
Annuity Contributions
• The FRA may contribute funds to the
annuity at any time
• A FRA can setup a FF contribution option
with the following in mind:
• The annuity contract must allow it
• The FRA contribution and the FF contribution must be
tracked and identified
• If the FF terminates prior to 20 years of service, only
eligible for FF contribution
Paying out Annuities
• Some FRAs do not take money out of
their annuities, because of the interest
they are receiving.
• Instead, they purchase an “Immediate”
annuity using FRA funds in the
checking account.
• This is not in conflict with the statute.
Pensions full-paid Fire Departments
Unfit
Pensions
• For Service
Not less
than 20
Years
Not to
Exceed
• With
Department
• ½ of
monthly
Salary
How can FRAs (in Fully Paid
Departments) Pay Out Pensions?
1. FRAs with Fully Paid Fire
Departments may pay pensions
directly out of their own accounts
The
Pension
can
not
exceed
without “purchasing” a pension
a vendor.
½from
of the
monthly salary at
2.the
FRAs
may
purchase
a
pension
from
date of retirement
a vendor and then payout.
Appropriate Investments
Temporary Notes are to be approved
Investments
or No Fund
Warrants
by the
Governing Body
• Issued by such investing governmental unit
Time Deposit
Open Accounts
CDs, Time CDs
• In banks, savings and loan associations which have offices located in
such investing governmental unit
• If no office in such investing governmental unit then in banks
which have offices in the county or counties in which all/or part of
such investing governmental unit is located
Repurchase
Agreements
• In banks, savings and loan associations which have offices located in
such investing governmental unit
• If no office in such investing governmental unit then in banks
which have offices in the county or counties in which all/or part of
such investing governmental unit is located
• Or the state of Kansas if greater interest rate
US Treasury bills
or notes
• Not to exceed 2 years maturity
• In banks, savings and loan associations, the federal reserve bank of
Kansas City or with primary government securities dealers
Appropriate Investments Cont’
Municipal
Investment Pool
• Managed by trust departments of banks which have offices
located in the county
Multiple
Municipal Client
Investment Pool
• office in such investing governmental unit then in banks which
have offices in the county or counties in which all/or part of
such investing governmental unit is located
Treasury Bills
Municipal
Investment Pools
• Shall be utilized only if the banks, savings and loan associations
and savings banks eligible for investments cannot or will not
make the investments authorized at equal to or greater than the
investing governmental unit interest rates.
Inappropriate Investments
• You can NOT take your FRA funds to a
local investment firm and have them play
the stock market
• You can NOT have a local investment
firm obtain a mutual fund using your
FRA $
• You CAN take your FRA funds to a
local investment firm and have them
establish an annuity
Authorized Expenditures of FRA Funds
Authorized
For the “Relief ” of any member that is injured in the “Line of Duty”
Authorized
Authorized
For the payment of “Necessary Funeral Expenses”
Authorized
For paying a pension to members of a full paid Fire Department
Authorized
Authorized
For the payment of a death benefit when a member is killed in the
“Line of Duty”
For the purchase of insurance for any of the above mentioned
For the purchase of an annuity to members of a Volunteer Fire
Department
Appropriate Loans of FRA Funds
• Any such firefighters relief association is hereby authorized
to loan part or all of such funds to the:
Get
your Governing Body
• city,
• township, Involved early on
Attorney
• county or
during
the process. There is
• fire district
• to be used for:
a Loan
Warrant
Contract
• improvement of its fire department
• and equipment
thereof,FRA Handbook
sample
in the
• A warrant bearing interest payable semiannually, at a rate not
onto exceed
page6%49
per annum.
Merging FRAs
FRAs may not merge unless there is a consolidation of the corresponding fire districts.
The attorney(s) for the governing bodies will determine whether the FRAs should merge or if one
should transfer funds and obligations to the other FRA and then dissolve.
Remember, when two FRAs merge then only one $1,000 base payment is authorized.
Any members of the dissolving association will then be eligible to become members of the surviving
FRA and maintain their “service time.”
Any “reasonable” benefits that the dissolving FRA members had prior to the merger will be continued
in the surviving FRA unless there is some agreement or contractual language in place.
Consolidating Fire Districts
• K.S.A. 12-3910 & 11 allows the
governing bodies of cities and townships
to consolidate fire districts.
• K.S.A. 19-212d allows the county
commissioners to establish fire districts
and/or enter into contracts for fire
protection services.
Fire Protection Coverage Area
• K.S.A. Chapter 19, Article 36 deals with fire protection districts
• “No such plat shall include any part of any area served by another
fire department” K.S.A. 40-1702(b)
• For FRA purposes, it all depends on who gets credit in the tax
rolls. (Ask your county/city clerk)
• If you are not getting credit in the tax rolls and believe you
should, you need to discuss that with the governing body that
“owns” the property
• “Mutual-aid” agreements and fire protection contracts, by
themselves, are NOT proof that your department is credited with
an area in a district
• A copy of a resolution or ordinance from the governing body for
the area in question, however, is helpful
• County property (resolution)
• City property (ordinance)
Merging FRAs
Service Time transfers
with FFs into Surviving
FRA
The surviving FRA will
then
be
Redetermined
to
1 Fire District
Fire District “A”
Fire District “B”
1 FRA
include the most recent
Population/Valuation
Service Time
• “Service Time” relates to the time on
“such” department. “Such” means your
department only.
• Service time from another department is not
counted unless it is the result of a merger of
FRAs.
• Service time is “cumulative” with such
department and stays with the FF
throughout their career.
Attorney’s Letter of Certification for
Expenditures, Payments and Annuities
Expenditures over $1,500
• In all cases involving expenditures or payments in an
amount of $1,500 or more, prior certification shall
be obtained from an attorney designated by the
governing body (K.S.A. 40-1706(g).)
Annuity Contracts
• The purchase of an annuity contract shall be
approved by the attorney of the governing body
prior to purchase (K.A.R. 40-10-5(b).)
Attorney Certification Language
• After reviewing the ----------- Firefighters Relief
Association insurance and annuity programs (if the FRA
has an annuity program,) they appear to meet the
guidelines found in K.S.A. 40-1707(a)(4) and (c)(l). Any
future payments or expenditures into the annuity program
are approved as long as they meet the requirements
previously mentioned in K.S.A. 40-1707(a)(4) and (c)(1).
• In accordance with K.S.A. 40-1706(g), I have reviewed all
expenditures over $1,500.00 and they do appear to
comply with the requirements of the Firefighter Relief
Act.
Attorney Language Continued
• The owner and beneficiary of the insurance policies and
annuity contracts is the ------------ Firefighters Relief
Association. The annuity program applies to all members
fairly and equally with a benefit calculation that appears fair
and equal for all eligible members.
• This letter may be photocopied and reused for continuing
certification of future annual premiums or payments in the
annuity program and insurance policies, provided the
structure of the policy, coverage or other aspects of these
programs do not change from the date of this initial
approval.
Administrative Expenses
• The cost of the bond for the treasurer of a
firefighter's relief association
• Stamps, stationery, safe deposit box rent,
the expense of having the funds of the
association audited,
• and other similar expenses, shall be
Reasonable Administrative
permissible disbursements from the
firefighter's relief funds.
Expenses to be determined
at the discretion of the
• Each expenditure shall be itemized in the
financial statement.
Commissioner of Insurance
Purchase of Computers
“REASONABLE”
Purchase of a computer will be
reviewed when the FRA submits
their financial statement.
On a case by case basis I will
determine if the purchase of a
computer is reasonable and/or
authorized.
Treasurer Compensation
“REASONABLE”
Compensating Treasurers will be
reviewed when the FRA submits their
financial statement and indicates this
activity in their financial details.
On a case by case basis I will determine
if the compensation is reasonable.
Inappropriate Expenditures
The statute and administrative regulation
only describes expenditures that are
authorized.
Examples of
unauthorized
expenditures:
• Banquets
• Flowers (unless associated with funerals for
line of duty deaths)
• Expenses for attending training or
conventions (exception FRA training only)
• Personal Loans
• Dues to the KSFFA
• Magazines or Periodicals
• Equipment
FRA Bylaws
Bylaws
You
can
check
to
Bylaws
onsee
File if your
Each firefighter's relief
association shall adopt bylaws A copy of the bylaws and the
hasof thefiledprocedures
bylaws
by
to FRA
cover all activities
shall be filed with
association and shall set forth the Commissioner of
the procedures for disbursing Insurance
visiting
your
FRA
Online
funds for the payment of
benefits provided by the
association.
Page
FRA Records and Meetings
FRA Documentation and Files
• How long do you keep files?
• Who can have access?
Kansas Open Records Act
• Does it apply to an FRA?
Kansas Open Meetings Act
• Does it apply to an FRA?
Local FRA Files
As a Tax Exempt Corporation it is
necessary for your FRA to maintain
certain financial statements and other
documents as a general rule because you
receive and expend public funds.
The type of documents and specific time
that these are maintained on file should be
in line with that of your local jurisdiction
policies.
These documents are public and may be
requested by anyone under the Freedom
of Information Act or KORA.
Kansas Opens Records Act (KORA)
It is the public policy of Kansas that public records shall be open for inspection by any
person.
The Act applies to public records (not to private records): Public records are defined as
"any recorded information, regardless of form or characteristics, which is made,
maintained or kept by or is in the possession of any public agency.
Public Agency: the state or any political or taxing subdivision, or any office, officer, or
agency thereof, or any other entity, receiving or expending and supported in whole or
part by public funds.
KORA continued
All records are open for inspection except personnel
records.
Any person may make abstracts or obtain copies of a public
record.
If copies cannot be made in the place where the records are
kept, the custodian shall allow arrangements to be made for
use of other copying facilities.
Members of the public cannot remove a record without
written permission of the custodian. K.S.A. 45-218(a).
KORA continued
The public agency must have a Public
Records Custodian and procedure.
KORA only applies to records as they exist at the
time they are asked for them.
If a requestor is asking for information, analysis or
an explanation, KORA does not require an agency
to do research or provide written answers to
questions.
An agency must act upon a request as soon as possible,
but not more than three business days, beginning the day
after the request was received.
The agency must communicate with the requestor
within those three days.
Kansas Open Meetings Act
Who is subject to KOMA?
All legislative and administrative bodies, agencies of
the state, political and taxing subdivisions and
subordinate groups that receive, expend or be
supported, in whole or in part, by public funds.
Kansas Open Meetings Act
What is a meeting?
• A gathering or assembly in person, through the use of
a telephone, or any other medium for interactive
communication
• By a majority of the membership of an agency or
body subject to this act
• For the purpose of discussing the business or affairs
of the body or agency
Kansas Open Meetings Act
Serial communications – discussion
outside of a noticed meeting
Interactive communications that collectively involve a
majority of the membership, share a common topic of
discussion, and are intended to reach an agreement on a
matter that requires binding action of the agency or body.
FRA Best Practices
• The firefighter relief association and the fire
department are two separate legal entities.
• The firefighters’ relief association records may
not be incorporated with those of the fire
department.
• Relief association funds must be maintained in
separate relief association account(s), and
investments purchased with relief association
funds must be issued solely in the name of the
relief association.
Not for Profit Corporation
• A firefighter relief association must be
incorporated and maintain bylaws that
address the purpose, structure, and benefits
of the organization.
• The articles of incorporation are maintained
on record in each FRA online page and are
available for download.
Governing Body
• The governing body of any FRA is composed of public
officials (elected or appointed) of an incorporated city,
township, county or fire district who are in charge of the fire
department.
• The governing body’s duties concerning matters related to the
FRA include the following:
1. Approve investments authorized by K.S.A. 12-1675.
2. Verify that a firefighter has served not less than 20 years
of service with such fire department and fought not less
than 75 percent of the fires which the member was
available to attend for annuities.
3. Designate an attorney for the FRA.
Conduct and Behavior
• When dealing with members of your
governing body, fire board or the general
public on matters related to your FRA, always
present your self in a professional manner
with courtesy and respect.
• Always be responsive to requests for
information and or documents directly
related to FRA matters.
Governing Body Designated Attorney
• The designated governing body attorney has
an important role in the normal business of a
FRA.
• The function of the attorney includes the
following:
1. Certifying all expenditures and payments of $1,500
or more prior to transaction.
2. Approving annuity contracts prior to purchase.
3. Being available for consultation to review FRA
bylaws and to provide other legal services.
FRA Board of Directors
• Generally there are no less than 3 officers on the
board: president, vice president/secretary, treasurer.
• For larger FRAs there may be 5 or more members
serving on the board because of the size of the
membership and related FRA activity.
• It is recommended that the department fire chief
not serve in any board position (if at all possible) to
reduce any appearances of a conflict of interest.
Board of Director Duties
• The FRA board of directors must be instrumental
in determining what policies and procedures are
established, implemented and used for formally
approving all new policies and any changes to
policy approved by the membership.
• The primary responsibility of relief association
officers is to make sure that proper procedural
controls are maintained in order to help protect
relief association assets from fraud, waste, abuse,
and possible misappropriation of funds.
Board of Director Duties
• President: The president shall preside at all meetings of
the association, sign all orders to the treasurer, appoint
committees, call special meetings when deemed necessary
or when requested by a majority of members in writing.
The president may designate a member to fill a temporary
board member vacancy until such elections are conducted.
• Vice-President: The vice-president shall perform all duties
of the president in his absence.
• Secretary: The secretary shall maintain records and the
minutes of any FRA meetings. Often this position will be
combined with the treasurer’s duties.
Treasurer Duties
• Treasurer: The treasurer shall keep a complete and accurate record of all
transactions of association funds, shall receive all FRA funds and shall
expend them as the association may direct in compliance with the Relief
Act.
• The treasurer shall keep the FRA funds separate from all other funds and
make an itemized statement to be submitted to the association at each
meeting.
• The treasurer should normally be the person that files the annual financial
statement to the Kansas Insurance Department on or before April 1 of
each year; however, other persons may be entrusted to complete this task
on behalf of the treasurer.
• The relief association may require its treasurer to prepare financial
statements on a monthly, quarterly, or annual basis to keep the
membership informed as to the financial position of the association and to
aid the membership in decision making.
Treasurer’s Bond
• The treasurer of the firefighters relief
association must be bonded.
• While the statute does not specify the
amount of the bond, it should be as great as
the maximum cash balance held by the
association.
• The relief association may also bond its
other officers for the faithful performance
of their duties.
Signature Authority
• The signature of at least two relief association
officials should appear on all negotiable instruments
such as checks and drafts payable from relief
association funds.
• Checking, savings, money market and other
similar accounts must be maintained such that
two relief association officers’ signatures are
needed for any withdrawals or transfers of funds.
• Certificates of deposit and any similar relief
association assets should also bear two relief
association officers' signatures.
Co-mingling of Funds
• The Relief Act requires that FRA funds be “set apart”
and used solely for the purposes of the Relief Act.
• Since the fire department and the relief association are
separate legal entities, the co-mingling of the two entities'
monetary assets is not authorized in the Relief Act as per
K.S.A. 40-1706(g).
• The co-mingling of funds causes confusion in the financial
record keeping, and increases the chance of errors.
• Co-mingling of funds in income-generating accounts and
investments creates a greater difficulty in determining the
income earned by each entity.
FRA Audit Requirements
• There is no requirement in the Relief Act to perform an
audit of FRA funds.
• The Statute requires that you submit a “verified account”
by April 1 of each year showing in full the receipt,
disbursements and general condition of your FRA fund.
• It is recommended that FRAs conduct an audit under
certain conditions:
• Whenever there is a new treasurer appointed
• Whenever there are questions or concerns regarding the status of
FRA funds
• Medium to Large size FRAs should consider as normal business
Audit Types
• Independent Annual Audit: This type of audit is conducted by a
CPA who is licensed in the state of Kansas who gives a written
expression of an opinion that the financial statements are presented in
conformity with “Generally Accepted Accounting Principles”
(GAAP)
• Annual Agreed Upon Procedures: This type of audit must be
conducted by a CPA who is licensed in the state of Kansas who does
not give an opinion on the financial statements but renders a
statement of the present condition of funds maintained. Much less
scope of work and less cost.
• Internal/External Review: This is a review of the financial records
conducted by an internal appointed committee and the financial
statement is also reviewed by the FRA Administrator at KID.
Audit Thresholds
Annual Audit
Agreed Upon
Procedures
For those FRAs that
have total assets
greater than $100,000
and receipts greater
than $25,000
For those FRAs that
have less than
$100,000 in total
assets and receipts
greater than $25,000
No External
Audit
For those FRAs that
have total assets less
than $50,000 and
receipts less than
$25,000.
Election of Board Members
• The FRA board members should be elected
by ballot (or by count as directed by the local
FRA bylaws) at a regular meeting of the
association.
• The term of each board member should not
be less than one year and may be longer if the
bylaws allow it or there is a special election
due to resignation, etc.
FRA Meetings
• The frequency of FRA meetings is a matter of local
concern due to the size, activity and availability of the
membership.
• For smaller FRAs it may be reasonable to conduct one
meeting per year, and larger FRAs may conduct monthly
meetings in order to properly administer the program.
• The Relief Act does not set a minimum or maximum
meeting requirement.
• Remember, FRA meetings are for FRA matters.
• Fire Department meetings are for Fire Department
matters. Do not use one against the other.
Meeting Agenda
• The agenda items will also reflect the size and activity of the
local FRA, but any meeting should include as a minimum all of
the following:
• Old Business
• Treasurer’s Report
• Statement of Financial Position
• Total Assets (Checking, Savings and other Investments)
o Liabilities
o Receipts & Expenses
o Disbursements
• New Business
• Any other unresolved issues
IRS Tax Exempt Status
FRA – IRS issues – 501 (c)(3)
• There are lots of 501(c)(3) organizations in
the United States
• Firefighter Relief Associations often have
gotten this tax status
• Two prong – 501(c)(3)’s don’t pay income
tax and contributors can deduct their
contributions
FRA – IRS issues - 501(c)(3)
• Most 501(c)(3)’s have to file a 990
form
• Some can be complicated
• Many are simple 990 N’s
• 990 N can be filed if receipts are
typically less than $50,000
FRA – IRS issues - 501(c)(3)
• Typically FRA’s are getting different
types of correspondence from the
IRS about their 990 filing or their
501(c)(3) status
FRA – IRS issues - 501(c)(3)
FRA – IRS issues - 501(c)(3)
FRA – IRS issues - 501(c)(3)
FRA – IRS issues - 501(c)(3)
FRA – IRS issues - 501(c)(3)
•
•
•
•
•
•
•
•
IRS Revenue Procedure (Rev. Proc. 95-48) 11-20-95
Exempts 990’s for any governmental unit or affiliate
TESTS:
Created by a governmental unit
Support comes from taxes
Financially accountable to another governmental unit
Another governmental unit oversees finances
If dissolved, the assets would go to another
governmental unit
• http://www.irs.gov/pub/irs-tege/rp1995-48.pdf
FRA – IRS issues - 501(c)(3)
• For this reason it does not appear that a
Firefighter Relief Association would be
required to file a 990
• However IF you have 501(c)(3) status (not
all FRA’s have that – they would have had
to have applied for it) – you may want to
keep filing a 990 to keep the IRS happy
FRA – IRS issues - 501(c)(3)
• Filing a 990 can range from simple to
complex
• If annual receipts are less than $50,000 file it
on a 990 N
• http://epostcard.form990.org/
• If annual receipts are more than $50,000 it
will probably take an accountant to file a 990
form with the IRS
FRA – IRS issues - 501(c)(3)
• Bottom Line
• FRA most likely NOT required to file a 990
• If you want to though – you can certainly do
so
• I will be glad to write to the IRS for you, but
don’t hold your breath for a response
A Few Things to Consider
1. If you do it for one, you need to do it for all.
2. You should submit an NFIRS Incident Report
on any injury, even if it is a “Non-Fire” event.
3. If it is a duty related injury, report it to your
Workers Comp Coordinator.
4. If you write a check for over $1,500 you must
first obtain certification from your governing
body attorney.
Line of Duty Death
• If you have a Firefighter that dies in the
line of duty you need to do the following:
1. Call the Fire Marshal’s Office at (785) 207-2194
2. Call the Kansas State Firefighters Association at
(785) 470-7120
• You need to generate and submit a
NFIRS report to the Fire Marshal’s
Office.
My Contact Information
Steve Lehwald
[email protected]
FRA Administrator
Phone # (785) 296-7831
Kansas Insurance Department
FAX # (785) 291-3673
420 SW 9th St
Topeka, Ks 66612
Website:
www.ksinsurance.org