The $100K Problem: Why Your City Requires a Fidelity Bond (and What Happens if You Don't Have One)

You have accepted a public responsibility. You may be an elected city treasurer, an appointed clerk, or a public employee trusted to handle public funds.

That responsibility comes with more than an oath. It may also come with a fidelity bond, public official bond, or faithful performance bond.

You may have heard that your city requires a $100,000 bond. But what does that number mean? What does the bond protect? And what happens if you do not have one before taking office?

The answers matter because a bond can be a legal prerequisite to serving. It also protects the public’s money when one person has access to it.

> Important: Bond requirements depend on your position, municipality, charter, ordinance, and applicable Minnesota law. This article is educational. Confirm your specific requirements with your city clerk, city attorney, governing body, or insurance professional.

What Is a Fidelity Bond?

A fidelity bond protects an organization against financial losses caused by dishonest acts.

For a city or municipality, that may include losses resulting from:

• Employee theft

• Embezzlement

• Fraud

• Forgery

• Misappropriation of public funds

• Dishonest handling of money or securities

A fidelity bond is not traditional liability insurance. It does not primarily protect you from a visitor slipping at city hall or a vehicle accident involving a municipal vehicle.

Instead, it protects the city, municipality, school district, county, or other public organization from losses caused by dishonesty committed by a covered employee or official.

Why does this matter?

You may be trustworthy. Your city may have confidence in you. The bond is not automatically an accusation or a sign that the city doubts your character.

It is a financial control.

✔ It protects public funds.
✔ It supports accountability.
✔ It helps the municipality recover after a covered dishonest act.
✔ It may satisfy a statutory or local bonding requirement.
✔ It protects taxpayers from absorbing the full loss.

Public money requires public safeguards. A fidelity bond is one of those safeguards.

Why Cities Require Bonds for Public Officials

Cities and municipalities place public funds in the hands of people who may:

• Receive tax payments

• Sign checks

• Deposit municipal revenue

• Approve disbursements

• Maintain financial records

• Handle payroll

• Manage accounts

• Collect fees

• Transfer money between public accounts

That access creates a risk. Even strong internal controls cannot eliminate every possibility of theft, fraud, or error.

For that reason, Minnesota law and local requirements may call for bonding certain public officials and employees. Positions commonly affected include:

• City treasurers

• City clerks

• Town treasurers

• Town clerks

• County officers

• School district employees who receive or handle district funds

• Economic development authority treasurers

• Port authority treasurers

• Fire relief association treasurers

• Other appointed or public employees with financial responsibilities

The Minnesota Office of the State Auditor explains bonding requirements for public employees and officers. The exact requirement depends on your position and the entity you serve.

What Does the $100,000 Amount Mean?

The $100,000 figure is common. It may appear in a city ordinance, municipal resolution, bond schedule, insurance program, or appointment requirement.

However, Minnesota does not impose one universal $100,000 bond requirement for every city treasurer or clerk.

Your required amount may be established by:

• State statute

• Your city charter

• A city ordinance

• A city council resolution

• Your employer’s bonding program

• The governing body’s risk assessment

• The amount of public money you may access

For example, Minnesota statutes address bonding requirements for certain municipal positions. You can review Minnesota Statute § 412.111 and Minnesota Statute § 412.151 for statutory city requirements.

The practical point is simple: do not assume that $100,000 is either automatically required or automatically sufficient.

Your city may require $100,000. It may require more. It may use a blanket bond that covers multiple employees. Or it may require a specific bond for your position.

✔ Check your city’s ordinance.
✔ Ask what bond form is required.
✔ Confirm whether the limit applies per person or in the aggregate.
✔ Verify whether the bond must be filed or approved before you begin your duties.
✔ Confirm that the bond covers the duties you will actually perform.

A $100,000 limit may be a starting point. It is not a substitute for reviewing the actual requirement.

Fidelity Bond vs. Public Official Bond

These terms are related. They are not always interchangeable.

Fidelity bond

A fidelity bond generally focuses on losses caused by dishonest acts.

It may respond when a covered employee or official steals money, commits fraud, forges a document, or embezzles funds.

The focus is dishonesty.

Public official bond

A public official bond is usually a surety bond required for a specific office.

It guarantees that you will perform the duties of your office honestly and according to the law. It may also require the proper handling and application of money you receive in your official capacity.

The focus is the obligations of your office.

Faithful performance bond

A faithful performance bond is broader than a pure employee dishonesty bond.

It may address your failure to faithfully perform the duties assigned to you. Depending on the bond form, it may include neglect, improper performance, or failure to follow legal duties.

That distinction matters.

A fidelity bond that covers dishonesty only may not satisfy a requirement for faithful performance. Conversely, a public official bond may include faithful performance language that goes beyond theft or fraud.

The bond wording matters as much as the dollar amount.

Ask for the exact bond form. Do not rely only on a certificate or a verbal description.

What Happens If You Do Not Have the Required Bond?

You may face serious consequences if your position requires a bond and you do not obtain it.

1. You may not be able to take office

Many public officials must complete certain requirements before exercising the powers of office.

Those requirements may include:

• Taking the oath of office

• Providing the required bond

• Obtaining approval from the appropriate authority

• Filing the bond with the required public office

If your bond is required for qualification, you may not be properly qualified to begin serving until the bond is issued and approved.

2. You may not be allowed to handle public money

Your city may restrict your access to municipal accounts, checks, deposits, or financial systems until your bond is in place.

That restriction protects you and the public. It prevents you from performing duties before the required protection exists.

3. You may face personal liability

A bond does not necessarily eliminate your personal responsibility.

If you cause a loss through theft, fraud, improper conduct, or failure to perform your legal duties, you may still face personal liability under applicable law. A surety that pays a valid claim may also seek reimbursement from the responsible party under the terms of the bond and any applicable indemnity agreement.

The bond protects the public entity first. It is not a personal guarantee that every action you take will be covered.

4. Your appointment or service may be delayed

An elected or appointed position can involve strict deadlines. If your bond is not arranged promptly, your swearing-in or start date may be delayed.

You have already earned the opportunity to serve. Do not let an avoidable paperwork issue prevent you from beginning your duties.

Your Practical Minnesota Bond Checklist

If you are running for office, accepting an appointment, or starting a public job, use this checklist:

✔ Identify your exact position. A city treasurer, clerk, deputy, and bookkeeping employee may have different requirements.

✔ Ask who requires the bond. The requirement may come from state law, a city council, a charter, or an employer.

✔ Confirm the bond type. Determine whether you need a fidelity bond, public official bond, faithful performance bond, or a combination.

✔ Confirm the bond amount. Find out whether $100,000 is required and whether it applies per position or collectively.

✔ Review the bond wording. Make sure the bond covers the duties and risks associated with your role.

✔ Confirm the effective date. The bond should be active before you begin handling public funds.

✔ Ask about approval and filing. Some official bonds must be formally approved or filed.

✔ Keep your records. Save the bond, application, approval, and renewal information.

✔ Review changes in responsibility. Request a review if your authority, access, or financial duties expand.

You can also review the broader Minnesota bonding framework in Minnesota Statutes Chapter 574.

A Bond Protects More Than a Balance Sheet

Your public service affects your community. A fidelity or public official bond helps demonstrate that the municipality takes its financial responsibilities seriously.

It protects more than an account balance. It protects taxpayer confidence, institutional stability, and the integrity of your office.

Your public bond is also only one part of your overall protection plan. If your public role creates additional personal exposure, review your auto, homeowners, renters, umbrella, life, and final expense coverage as well.

Your professional and public responsibilities may change. Your personal insurance should keep pace.

You can learn more about personal protection in The 4 Pillars of Personal Insurance: Are You Really Covered?.

Protect the Public’s Money. Protect Your Ability to Serve.

You have invested time, credibility, and effort into serving your community. A required bond helps you meet the standard your position demands.

Do you know whether your city requires a $100,000 fidelity bond, a public official bond, or broader faithful performance coverage? The answer should come from your actual municipal requirement and the bond form: not an assumption.

Shady Oak Insurance Agency can help you understand the difference, identify the information needed, and coordinate the appropriate surety bond for your Minnesota public position.

✔ Confirm your required bond.
✔ Verify the limit.
✔ Review the coverage language.
✔ Avoid delays before taking office.
✔ Protect the public funds entrusted to you.

Call Shady Oak Insurance Agency at 612-361-9717 to discuss your bond requirements and next steps.