Annual Financial Report 12/31/1991

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1991 Page 14 of 18 Funding Status and Progress Pension Benefit Obligation The "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step -rate benefits, estimated to be payable in the future as a result of employee service to date. The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess PERA's funding status on a going -concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among Public Employees Retirement Systems and among employers. PERA does not make separate measurements of assets and pension benefit obligation for individual employers. The pension benefit obligations as of June 30, 1991, are shown below: (In thousands) PERF PEPFF Total pension benefit obligation $4,458,010 $732,911 Net assets available for benefits, at cost (Market Values for PERF = $3,662,769; PEPFF = $872,430) 3,524,071 823,125 Unfunded (assets in excess of) pension benefit obligation $933,939 ($90,214) The measurement of the pension benefit obligation is based on an actuarial valuation as of June 30, 1991. Net assets available to pay pension benefits were valued as of June 30, 1991. Changes in Actuarial Methods and Benefit Provisions, During the 1991 legislative session, benefit improvements were obtained for survivors of members in the Basic Plan and the Police and Fire Fund. In the Basic Plan, the maximum family death benefit was increased from $1,000 per month to 70 percent of the member's average salary. In the Police and Fire Fund, children's benefits were restored for families of disabled members who had chosen the joint and survivor annuity option before death. The effect of these changes increased the pension benefit obligation in the PERF by $4,016,869 and had essentially no effect on the pension benefit obligation in the PEPFF. These changes had no effect on the employers contribution rate which is set by Minnesota Statute sections 353.27 subd 3., subd 3a, and 353.65 subd 3. Ten -Year Historical Trend Information Ten -year historical trend information is presented in PERA's Comprehensive Annual Financial Report for the year ended June 30, 1991. This information is useful in assessing the pension plan's accumulation of sufficient assets to pay pension benefits as they become due. Related Party Investments As of June 30, 1991, and for the fiscal year then ended, PERA held no securities issued by the City or other related parties. Note 7 METROPOLITAN WASTE CONTROL COMMISSION During 1971, the Metropolitan Waste Control Commission (MWCC) was organized to provide for consolidation of the sanitary sewer collection, treatment and disposal in the seven county metropolitan area surrounding Minneapolis and St. Paul. Previously, these operations were maintained by the city governments on an individual or collective basis.