Annual Financial Report 12/31/1994

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Imo IMPV ■ CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1994 Potential changes in the assumptions used for the PEPFF may be made in the future after completion of a special experience study for that fund. Completion of the PEPFF experience study is expected by February 1, 1995. 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, 1994. 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, 1994, and for the fiscal year then ended, PERA held no securities issued by the City or other related parties. Note 7 METROPOLITAN COUNCIL WASTEWATER 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. When the MWCC was formed, existing interceptor sewer lines and treatment facilities were transferred from the cities to the MWCC in exchange for future credits. These future credits are being remitted to the City over a 30 year period. The deferred gain on disposal of fixed assets represents the difference between the original MWCC credits for interceptor sewer lines and the book value of the sewer lines at the date of transfer. The gain is being amortized over a 30 year period. The MWCC merged with the Metropolitan Council during 1994 to form Metropolitan Council Wastewater Services (MCWS). The MCWS 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). Future credits and deferred charges are not reflected in these financial statements, as these credits will be offset by annual charges as detailed above. The amounts of these credits at December 31, 1994 and 1993 were as follows: Current value credits December 31, 1994 1993 $25,349 $27,161 33