Many volunteer, or combination, fire companies across the Commonwealth of Pennsylvania rely on Relief Association funding to sustain their operations. Additionally, some of this funding is used to fund the pensions of career firefighters. It is key to have a basic understanding of (1) where this money comes from, (2) how it is allocated and (3) how it is regulated. The use of Relief Association funding is a more complex topic and subject to wide discretion by state auditors.
(1) Where does Relief Association funding come from?
The money comes from a PA state tax. The tax is placed on insurance policies which are sold within the state by out of state insurance companies. This tax money is collected by the state and placed in a fund for distribution. The money is first distributed to municipalities as a "pass-through" which must then distribute the money to the fire companies who serve their residents.
(2) How is the funding allocated?
The formula for distribution of Relief funding from the state to the municipalities is fairly simple:
50% of the funding is distributed based on population of each municipalities in proportion to the state.
50% of the funding is distributed based on the market value of the real estate of each municipality as compared to the overall value in the state.
So, quite simply - the more populated and higher property value areas will see the larger amount of Relief funding.
(3) How are Relief Associations regulated?
Generally, the PA's Office of Auditor General has the authority to audit all Relief Associations. If there are findings of improper use of funds, the Auditor will notify the Governor and all further distributions are to be stopped until the money has been repaid. Obviously, if there are extreme findings and criminal activities then the attorney general or local authorities could become involved.
Ultimately, your Relief Association should make sure that you have adequate by laws, policies and procedures and understand how this money can be spent. Contact your counsel, or if you do not have one feel free to reach out to Valocchi Law to assist with your Relief Association questions.