Community Alert

Ethical expenditure?

Northfield fire fighters respond to a September blaze in Dundas. How the fire fighters' have spent their relief association money is raising questions among city leaders. (News file photo)

Donations made to Northfield Fire Relief Association aren’t public dollars, but that hasn’t extinguished city officials’ concerns over how those funds are being spent.

City officials have asked for documents showing all association accounts, income and expenditures, but Fire Department leaders have so far failed to deliver the requested paperwork, said Administrator Tim Madigan.

Madigan last week declined to detail his concerns, saying he wanted to review all pertinent information before commenting on specifics. But he and Public Safety Director Mark Taylor, who oversees the Fire Department, worry that donors who expected their money was supporting the department were unaware those dollars were going toward non-firefighting expenses, including an annual party for firefighters and their invited guests.

Fire Department officials, including Fire Chief Gerry Franek, did not respond to several requests from the News for association financial records or comment. Assistant Fire Chief Tom Nelson at an April 24 City Council meeting said documents posted on the blog Locally Grown are 2010 and 2011 relief association check registers. But those registers don’t clearly state how and where monies were spent, and are likely a listing of transactions from several accounts compiled into a single document.

In 2010, at least $1,900 of association funds paid for the banquet, a steak and lobster dinner featuring an open bar and entertainment held each February at The Grand Event Center, according to the association’s check register. Other expenditures ($2,250 in 2010 and $3,505 in 2011) labeled “dance,” may have gone toward the banquet, but also could have helped pay for the association’s annual fundraising dance, held just weeks after the banquet. Both are held at the same location.

Taylor, who attended the banquet in previous years, said he’s still “not 100 percent sure how (the banquet) is paid for.” And that concerns him.

“I think you need to know where money is being spent in your department,” he said.

Relief associations

While fire departments can’t maintain checking and savings accounts, fire relief associations — governmental entities separate from the city — can.

Fire relief associations are governed by nine-member boards of trustees, including an elected official, an elected or appointed official and the fire chief. In Northfield, Finance Director Kathleen McBride and Mayor Mary Rossing and Franek are trustees.

State law requires fire relief associations to have two separate funds — a general fund and special fund. The special fund contains firefighters’ pension benefits, while the general fund holds money that can be used “for any purpose that benefits the association and its members,” according to the Handbook for Minnesota Cities.

Both funds are audited annually; reports are sent to the Office of the State Auditor.

But while the auditor’s office reviews the multi-page pension fund reports, it does little more than check to ensure general funds are properly accounted for.

“It’s not public money,” said State Auditor Rebecca Otto of relief association general fund dollars.

An auditor’s report, presented last month to the council, gives little insight into the status of the association’s general fund.

Revenues in 2011, according to the report, were $10,250. Of that, all but $205 came from fundraisers.

Expenditures that year totaled $14,783. The largest category was fundraising at $8,034. Member appreciation accounted for $2,476.

State law allows money from the general fund to be donated to the city or — with its permission — used to purchase Fire Department equipment. Madigan, the city administrator, says he can find no evidence fundraising dollars were ever used to purchase equipment.

General fund dollars can be used for anything allowed by the association’s bylaws. New bylaws, approved recently, say general fund money can be spent “for any purpose reasonably related to the welfare of the association or its members, as authorized by a majority of its members present and voting at any annual or special meeting of its members.”

According to Franek, the fire chief, at the April 24 council meeting, general fund money is used for shirts, retirement appreciation, funeral flowers, charitable contributions to those in need, birthday parties and its bi-annual fire expo.

Gambling

Northfield’s fire association is one of 174 in the state to hold a charitable gambling license. The use of that revenue is limited by state law.

The association had a net revenue of $14,263 in 2011, according to a Gambling Control Board report to the Legislature. Of that, $4,110 was used for what’s termed lawful purpose expenditures. In 2010, its net receipts were $17,730. Of that, $8,354 was used for lawful expenditures.

Figures provided to the state Gambling Control Board don’t match the association’s 2010 tax return, a document Assistant Fire Chief Tom Nelson says he provided Locally Grown.

According to that document, the association lost $2,209 in 2010.

The association’s tax returns, normally available to the public, weren’t filed for three consecutive years, according to the Internal Revenue Service, which revoked the association’s tax-exempt status last June.

The association filed to regain that status in September, according to its check register. The IRS this week said it doesn’t provide information on the status of requests to anyone other than officers of the entity.

According to the IRS employee, requests dated in early September 2011 are now being processed.

The Minnesota Secretary of State’s website lists the Northfield Fire Relief Association as a non-profit in good standing. According to the secretary’s website, the association has filed required annual renewals. It also filed restated articles on Aug. 26, 2011.

Reach Suzanne Rook at 645-1113. Follow her on Twitter @rooksuzy.

-Reach Suzanne Rook at 645-1113. Follow her on Twitter @rooksuzy.

Reach Regional Managing Editor Suzanne Rook at 507-333-3134. Follow her on Twitter @rooksuzy

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