VLAWMO Annual Financial Report 2007

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VADNAIS LAKE AREA WATER MANAGEMENT ORGANIZATION VADNAIS HEIGHTS, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE - CONTINUED B. Funding Policy Minnesota statutes, chapter 353 sets the rates for employer and employee contributions. These statutes are established and amended by the State legislature. The Organization makes annual contributions to the pension plans equal to the amount required by Minnesota statutes. PERF Basis Plan members and Coordinated Plan members are required to contribute 9.10 percent and 5.75 percent, respectively, of their annual covered salary in 2007. Contribution rates in the Coordinated Plan will increase in 2008 to 6.0 percent. The Organization is required to contribute the following percentages of annual covered payroll: 11.78 percent for Basic Plan PERF members and 6.25 percent for Coordinated Plan PERF members. Employer contribution rates for the Coordinated Plan will increase to 6.5 percent, effective January 1, 2008. The Organization's contributions to the PERF for the years ended December 31, 2007, 2006 and 2005 were $4,817, $2,860, and $2,926, respectively. The Organization's contributions were equal to the contractually required contributions for each year as set by Minnesota statute. Note 5: OTHER INFORMATION Risk Management The Organization is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the Organization carries insurance. The Organization pays annual premiums for its workers compensation and property and casualty insurance. Settled claims have not exceeded the Organization's coverage in any of the past three fiscal years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported (IBNRs). The Organization's management is not aware of any incurred but not reported claims. -17-