Comprehensive Annual Financial Report 12/31/2003

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2003 Note 4 CITY INDEBTEDNESS (CONTINUED) Liability for Compensated Absences — This liability represents vested benefits earned by governmental fund employees through the end of the year which will be paid or used in future periods. The liability for Proprietary Fund employees is included in the accrued liabilities of those funds. Note 5 LEGAL DEBT MARGIN The City is subject to a statutory limitation by the State of Minnesota for bonded indebtedness payable principally from property taxes. The City of Lino Lake's legal debt margin for 2003 and 2002 is computed as follows: December 31, Market value 2003 1,251,221,800 2002 1,034,432,100 Applicable percentage 2 % 2 % Debt Limit 25,024,436 20,688,642 Amount of debt applicable to debt limit: Total bonded debt 21,840,000 21,104,450 Less: Special assessment bonds (12,840,000) (11,640,000) Public project revenue bonds (680,000) (765,000) Revenue bonds (2,970,000) (3,220,000) Total debt applicable to debt limit 5,350,000 5,479,450 Legal debt margin 19,674,436 15,209,192 Note 6 DEFINED BENEFIT PENSION PLANS - STATEWIDE A. PLAN DESCRIPTION All full -time and certain part-time employees of the City of Lino Lakes are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF) which is a cost - sharing, multiple - employer retirement plan. This plan is established and administered in accordance with Minnesota Statutes, Chapter 353 and 356. PERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. All new members must participate in the Coordinated Plan. All police officers, firefighters and peace officers who qualify for membership by statute are covered by the PEPFF. PERA provides retirement benefits as well as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by State Statute, and vest after three years of credited service. The defined retirement benefits are based on a member's highest average salary for any five successive years of allowable service, age, and years of credit at termination of service.