Annual Financial Report 12/31/1993

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1993 Page 14 of 19 The pension benefit obligations as of June 30, 1993, are shown below: PERF PEPFF (In thousands) Total pension benefit obligation $5,163,766 $932,333 Net assets available for benefits, at cost (Market Values for PERF = $4,515,052; PEPFF = $1,173,312) 4,304,163 1,090,857 Unfunded (assets in excess of) pension benefit obligation $859,603 ($158,524) The measurement of the pension benefit obligation is based on an actuarial valuation as of June 30, 1993. Net assets available to pay pension benefits were valued as of June 30,1993. Changes in Benefit Provisions, Three bills enacted during the 1993 legislative session improved benefits for many members without a material effect on the pension benefit obligation in the PERF or the PEPFF. The early retirement incentive bill permitted a public employer to offer PERA's Basic and Coordinated members an increase of one - fourth percent (.25%) in the formula multiplier for each year of service, up to the first 30 years, or health insurance coverage to age 65. Also, the survivor protection bill provided benefits to either a surviving spouse or children of PERF Coordinated Plan members who die before age 50. Lastly, the Police and Fire benefit increase bill, which became effective July 1,1993, permanently increased the PEPFF formula multiplier from 2.5 percent to 2.65 percent of an individual's average salary over the five highest consecutive years of earnings. Ten -Year Historical Trend Information Ten -year historical trend information is presented in PERA's Component Unit Financial Report for the year ended June 30, 1993. 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 30,1993, 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. The MWCC bills the City annually based upon estimated volume and budgeted costs. These billings are later adjusted when actual volume and actual costs are determined. The adjustment to actual is generally determined in the succeeding calendar year and payable by the City in the second succeeding calendar year. The City follows the accounting policy of recognizing these charges as an expense of the sewer utility operation in the year for which they are billed (for estimated billings) and in the year the adjustments are determined (for adjustments from estimated to actual billings).