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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 1997 <br />The MCES bills the City annually based upon estimated volume and budgeted costs. These billings are later <br />adjusted when actual volume and actual costs are determined. The adjustment to actual is generally determined <br />in the succeeding calendar year and payable by the City in the second succeeding calendar year. The City <br />follows the accounting policy of recognizing these charges as an expense of the sewer utility operation in the <br />year for which they are billed (for estimated billings) and in the year the adjustments are determined (for <br />adjustments from estimated to actual billings). <br />Note 8 RECONCILIATION OF CONTRIBUTED CAPITAL <br />Changes to contributed capital during the year are as follows: <br />Depreciation <br />Beginning Capital on Contributed Ending <br />Balance Contributions Assets Balance <br />Water $6,047,749 $25,484 ($137,569) $5,935,664 <br />Sewer 8,733,933 26,817 (196,639) 8,564,111 <br />Total $14,781,682 $52,301 ($334,208) $14,499,775 <br />Note 9 DEFERRED COMPENSATION PLAN <br />The City offers its employees deferred compensation plans created in accordance with Internal Revenue Code <br />Section 457. The plans, available to all employees, permit them to defer a portion of their salary until future <br />years. The deferred compensation is not available to the employees until termination, retirement, death or <br />unforeseeable emergency. <br />On August 20, 1996 the provisions of Internal Revenue Code Section 457 were amended to enable plans to <br />hold all assets and income of the plan in trust for the exclusive benefit of participants and their beneficiaries. <br />These assets were previously required to be held as property of the City. The Govemmental Accounting <br />Standards Board (GASB) issued Statement 32 in October 1997. This Statement rescinds GASB Statement 2 <br />which required deferred compensation plans to be presented as Agency Funds within the City's fmancial <br />statements. GASB 32 is effective for the year ended December 31, 1999 or on the date (if earlier) that the plan <br />changes its trust provisions. In 1997, all City plan's were amended to hold the plan assets in trust for the plan <br />participants and their beneficiaries. The deferred compensation Agency Fund is therefore closed at December <br />31, 1997. <br />Mow <br />45 <br />