tf 518-783-6915800-742-1409 Email: info@penflexinc.com

penflexinc.com

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Dp Ee N - | i X U) SERVICE AWARDS FOR FIRE & EMS ----- End of picture text -----

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Latham, New York 12110 50 Century Hill Drive, Suite [3] ----- End of picture text -----

October 2025

Ms. Marybeth De Filippis Village of Red Hook 7467 South Broadway Red Hook, NY 12571

Re: Service Fee Agreement for the 2025-2026 Service Award Program Administration

Dear Ms. De Filippis:

As 2025 draws to a close, Penflex Actuarial Services is celebrating the significant milestone of its 35th anniversary in business! This achievement would not have been possible without the loyalty and trust of clients like you. We are sincerely grateful for your continued partnership, which has been instrumental in establishing our reputation as a recognized leader in LOSAP administration and actuarial services.

Enclosed is our Service Fee Agreement for the upcoming administration year. If applicable, an invoice for our base fee is also enclosed. To ensure a seamless transition into the new year, please return the signed agreement to Penflex by January 9, 2026. You may submit it via fax at (518) 783-6915, email at info@penflexinc.com, or mail to our Latham office. If you would like us to prepare the optional financial statement disclosure package, please review your auditor's information and make any necessary updates to the agreement. Recent New York State audits have shown an increased focus on LOSAP compliance, particularly on proper documentation, updated plan documents, and financial records. As your trusted partner, we want to ensure you are fully prepared for potential audits and regulatory reviews. If your program has recently increased or otherwise changed its benefits, it is essential that the original plan document be formally updated to reflect these changes, in addition to having an approved board resolution and public voter proposition.

Penflex offers comprehensive support to help your program, whether it is a government entity, fire district, or EMS company, meet audit requirements. Our services include restating plan documents, updating points system documents, and preparing complete financial audit packages. Please contact us at (518)-783-6933 or at info@penflexinc.com to discuss how we can assist you.

We sincerely value the trust you place in Penflex. Our team remains dedicated to providing exceptional service to both your participants and your organization. Thank you for allowing us to continue serving as your trusted LOSAP administrator.

Sincerely,

Paul A. Cognetta Vice President of Operations pcognetta@penflexinc.com

Penflex Actuarial Services, LLC. Client Copy 11/1/2025-10/31/2026 Service Fee Agreement RED HOOK FIRE COMPANY SERVICE AWARD PROGRAM 1SSSee ee eT Standard Services Fee Schedule

Base Fee: $2,470

Per-Participant Fee: $22

Payment certification and trustee directive letters: $100 per letter

Fee charged to prepare and mail each form 1099 issued and to file forms electronically with the IRS and applicable State: $28 per each form (minimum charge $50 per client). This service is performed only if your investment provider does not provide it.

Total Estimated Standard and Distribution Services Fees: $3,900

Optional Preparation of Financial Statement Disclosures (For Additional Fee) Disclosure Packages Provided For Program Year 2024: NYS LOSAP Audit Package: YES Auditing Firm: -eRAEEP Contact Name: MattVanderBeek Email Address: ravanderbeck@uhy-us.cont

Please Check 'Yes' Or 'No' For Program Year 2025: Complete the NYS LOSAP Audit Package for a fee of $495:

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N\ Yes No ----- End of picture text -----

Please refer to the enclosed newsletter titled 'NYS Volunteer Firefighter LOSAP Audit Requirement’ for more information.

All other services are optional and are billed only when requested. Please call for fee estimates and purchase order arrangements. Optional services include additional client meetings, drafting of special correspondence and documents, and performing cost estimate calculations for proposed program amendments. Plan transfers have a $1,000 processing fee, while plan consolidations or terminations fee will be determined by the complexity of the work upon request.

To authorize Penflex Actuarial Services, LLC. to begin providing these services in accordance with this fee schedule, please have the Mayor of Village of Red Hook and the Supervisor of the Town of Red Hook sign and return this Service Fee Agreement. Keep a copy for your records.

Print Name Mayor Village of Red Hook

Signature & Date

Paul A. Cognetta Vice President of Operations Penflex Actuarial Services, LLC.

Email Address

SERVICE AWARDS FOR FIRE & EMS

SERVICE AWARD PROGRAM STANDARD SERVICES

1. Prepare an annual Service Award Program statement for each Service Award Program participant, including those who are in payment status.

2. Prepare for the record and for audit purposes an annual Service Award Program report which:

   • a. shows and completely documents the calculation (defined benefit plans) or allocation (defined contribution plans) of the annual Program cost.

   • b. | accounts for changes in the Program's assets. C. lists the earned Service Awards (defined benefit plans) or accounts for changes in the Program account (defined contribution plans) for each participant.

   • d. | summarizes the major provisions of the Program.

   • e. lists current payment recipients. f. includes a service credit listing for current participants. g. _ includes a written description of the actuarial methods and assumptions used to calculate the annual program costs (defined benefit plans).

   • h. | For members of the Sponsor's Governing Board or Officials, prepare: i. “Fact Sheet” which includes current year important information about their Program. ii. “Annual Report Commentary” correspondence which alerts officials about emerging issues and/or explains changes in the Program (such as increase/decrease in Program funding costs).

3. One meeting upon request, first with officials and then with volunteers to review the Annual Report, to answer questions from volunteers about their annual statements, and to provide updates on Service Award Program related legislation and on their own Program.

• 4, Provide pertinent forms for participants to apply for payment upon eligibility, elect or change beneficiaries, etc.

• 5. At year-end, provide written instructions about how to prepare the required certified listings to be approved by the Sponsor's Governing Board and Department/Company officials, posted by the Department/Company, and sent to Penflex Actuarial Services, LLC.

6. Project the Program’s cash flow needs in order to plan and formulate investment strategy.

7. Prepare written notification/explanation to be sent to persons who cease to participate in the Program.

8. During normal business hours, have trained staff available to answer questions from officials and designated client contact persons.

9. Throughout the year, receive, review and reconcile financial statements from custodian and/or investment and/or insurance providers.

10. Process Service Award payment applications, certify payment amounts and eligibility, prepare payment directives and communicate directly with the payment recipient and/or custodian and/or paying agent when necessary.

11. Answer routine questions from Sponsor's auditors about the Program and the Annual Report. 12. When required, prepare vouchers for payments to the Program Trust Fund.

Penflex Actuarial Services, LLC

50 Century Hill Drive, Suite #3 Latham, NY 12110 800-742-1409 , accounting@menei andcompany.com www.penflexinc.com

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SERVICE AWARDS FOR FIRE & EMS BY ® McNeil&Co. ----- End of picture text -----

SERVICE AWARDS FOR FIRE & EMS

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New York State Volunteer Firefighter LOSAP Audit Requirement ----- End of picture text -----

Background

In November 2005 and May 2006, the Long Island-based newspaper Newsday published articles about Length of Service Award Programs (LOSAPs), in particular, their relatively poor funded status. Partly in reaction to these articles, a bill was introduced in 2006 that was eventually signed into law. This new legislation, GML §219-a(3) required a LOSAP to be audited annually by an independent certified public accountant (CPA). The justification for the bill stated, in part, the following:

‘Annual audits wil hejp ensure thatprograms are adequately funded, allowprogram sponsors lo adjust contributions and increase transparency.”

The new statute required the audits to commence effective with the program sponsor’s fiscal year ending on/after June 30, 2007. Although the original deadline for the completion of the audit was 90 days, it was subsequently increased to 270 days. However, for reasons discussed below, the deadline for fire districts that prepare audited financial statements is 180 days. The audit report must be submitted to the Office of the State Comptroller (OSC).

Our observation is that the audit requirement has made LOSAP sponsors generally more educated about the financial state of their program, but more progress must still be made. Penflex is proactively working with CPAs, statewide associations, and other professionals serving LOSAP sponsors to increase awareness about the need to more closely monitor these programs.

Compliance & ModelFootnote

The text of the statute is somewhat vague and open ended. To clarify how a LOSAP sponsor is to comply with this requirement, the OSC established guidelines in a 2008 memorandum which outlined two options. The first option is aimed towards LOSAP sponsors that already have their financial statements audited by an independent CPA. These sponsors can include a footnote of information about the LOSAP in its financial statements. The CPA will then audit the footnote and LOSAP as part of the overall financial statement audit. The second option is to engage a CPA to perform a LOSAP-only audit in compliance with the AICPA Audit and Accounting Guide for Employee Benefit Plans. With either option, the LOSAP information is to be presented using the model footnote format and submitted to the OSC. Note that fire districts that are required to have their financial statements audited must submit the financial statements to the OSC by June 30", making the effective filing date for these fire districts 180 days, not 270.

The footnote is to state basic program provisions and benefits provided. It must describe how the program assets are managed and what vendors have been hired to assist the sponsor in its fiduciary role, including asset management and third-party administration. It also requires disclosure of the financial condition of the program, which includes the investment allocation of the program assets and changes in the assets during the year, liabilities, contributions required and made during the year, fees paid to vendors for administration, actuarial and/or investment management services, and actuarial assumptions (for defined benefit programs).

info@penfiexinc.com

50 Century Hill Dr., Suite 3, Latham, NY 12110

(800) 742-1409

The LOSAP audit must be filed with the OSC by the required deadline. Based on our discussions with OSC staff and information we requested on LOSAP audits reported to the OSC, it/‘appears that LOSAP audits are not being transmitted to the OSC even though they are likely being completed by the CPA. Based on information obtained through a Freedom of Information request, it appears that the number of submissions has increased from 306 in 2013 to 353 in 2016 (the most recent year available). Although information about the LOSAP (i.e., LOSAP footnote) is submitted with the Annual Update Document (AUD), this submission does not satisfy the LOSAP audit requirement because it is not one of the two compliance options outlined above.

Based on municipal spending data available on the OSC website, there are about 510 municipalities that report an annual expenditure for LOSAP. However, this data does not include many towns, since the LOSAP cost is often rolled into fire protection contract costs. Knowing this, we estimate that 353 LOSAP audits likely represents a filing compliance rate of 50% to 60% of all LOSAP sponsors. Although we believe that the LOSAP statute requires the CPA to file the audit report with the OSC directly, we understand in speaking to CPAs that there are certain restrictions that do not always make this a practical procedure. We recommend that each sponsor work with its CPA to ensure that the audit is being filed with the OSC, either by the CPA or the sponsor. It can be electronically filed to afrfile@osc.state.ny.us. In addition, we suggest that the sponsor review the results of the audit with the CPA and ask to be alerted of any problems or concerns. If the CPA ever has questions about actuarial or administrative work performed by Penflex, the CPA is encouraged to contact us directly to have these questions answered.

PentfiexLOSAPAudit Package

To assist our clients in complying with the audit requirement, Penflex developed an optional LOSAP Audit Package service. After consulting with several CPAs, the LOSAP Audit Package was modeled to provide all the necessary information to fulfill the audit requirements for the sponsor. Essentially, Penflex completes the mode! footnote on behalf of the sponsor and provides the necessary documentation for the CPA to verify its accuracy — annual report, asset statements, fees paid, and other supporting materials. The LOSAP Audit Package is emailed to the CPA and sponsor. Penflex answers any questions from the CPA about the LOSAP or the package. Most CPAs find this package helpful in that it gives them direct access to the necessary information from Penflex rather than having to piece it together from multiple sources. Our clients benefit from a more streamlined process that reduces their effort and improves the accuracy of the disclosures. However, before asking Penflex to prepare the LOSAP Audit Package, please discuss it with the CPA to determine if the goal of the package will be achieved.

While our LOSAP audit package is comprehensive in its content, it cannot function as the audit itself. The audit must be performed by the CPA, and the results of the audit must be submitted to the OSC.

Whatyou need to know...

• « The LOSAP audit is an annual requirement that must be filed with the OSC within 270 days of the end of the sponsor’s fiscal year (180 days for most fire districts).

• « The Penflex LOSAP Audit Package is an optional service and provides the necessary disclosures but does not satisfy the audit disclosure requirements.

• « The sponsor must retain an independent CPA to perform the annual audit. « There are two audit options — the CPA can help the sponsor determine which approach is best. « Attaching the footnote to the AUD does not satisfy the audit requirement. info@penflexinc.com—«50 Century Hill Dr.,LaSui t eham,NY12110 3, =———«((800) 742-1409