Sec. 3.02. AUTHORITY OF MUNICIPALITY. The municipality has the authority and power to:

(1) contract with the board, as described in Section 3.01(b) of this Act;

(2) provide services through a subcontractor in a contract under Section 3.01(b) of this Act;

(3) take any action necessary to ensure that contributions to the fund and benefits received from the fund are exempt from federal taxes and excluded from a beneficiary's taxable income; and

(4) control the internal functions of the municipality relating to the municipality's interactions with or activities on behalf of the fund.