Comprehensive Annual Financial Report 12/31/1996

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1996 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 City makes annual contributions to the pension plans equal to the amount required by state statutes. PERF Basic Plan members and Coordinated Plan members are required to contribute 8.23% and 4.23 %, respectively, of their annual covered salary. PEPFF members are required to contribute 7.60% of their annual covered salary. The City of Lino Lakes is required to contribute the following percentages of annual covered payroll: 10.73% for Basic Plan PERF members, 4.48% for Coordinated Plan PERF members, and 11.40% for PEPFF members. The City's contributions for the years ending June 30, 1996, 1995, and 1994 were $124,930, S112,780 and $102, 333, respectively, equal to the contractually required contributions for each year as set by state statute. Note 7 METROPOLITAN COUNCIL ENVIRONMENTAL SERVICES 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 merged with the Metropolitan Council during 1994 to form Metropolitan Council Wastewater Services (MCWS) and is now called the Metropolitan Council Environmental Services (MCES). The MCES 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). Note 8 RECONCILIATION OF CONTRIBUTED CAPITAL Changes to contributed capital during the year are as follows: Depreciation Beginning Capital on Contributed Ending Balance Contributions Assets Balance Water $5,220,943 $942,649 ($115,843) $6,047,749 Sewer 8,287,068 630,886 (184,021) 8,733,933 Total $13,508,011 $1,573,535 ($299,864) $14,781,682 YAM 45