6.1. SR 06-03-2013 - Laserfiche WebLink

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i CITY OF ELIC RIVER,MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2012 Note 4: OTHER INFORMATION—CONTINUED B. Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies,principally the federal government. Any disallowed claims,including amounts already collected,may constitute a liability of the applicable funds. The amount,if any,of expenditures that may be disallowed by the grantor cannot be determined at this time,although the government expects such amounts,if any,to be immaterial. The City's tax increment districts are subject to review by the State of Minnesota Office of the State Auditor(OSA). Any disallowed claims or misuse of tax increments could become a liability of the applicable fund. The City's management is not aware of any instances of noncompliance which would have a material effect on the financial statements. C. Territorial Acquisition Agreement The Utilities has entered into an agreement to transfer ownership of electric plant and electric service to customers in certain areas currently receiving electric service from Connexus Energy. The cost of property purchased from Connexus Energy will be net book value. The Utilities will also pay for loss of j revenue for each area acquired based on a formula outlined in the agreement. In addition,the Utilities will compensate Connexus Energy for the loss of revenue from the future sale of electricity to electric customers in the areas acquired from Connexus Energy for a period of ten years from the date of sale of each individual area. The Utilities paid$3,948 and$8,114 in 2012 and 2011,respectively,for loss of revenues under this agreement. All amounts paid are included in property and equipment. D. Pension Plans i 1. Public Employees Retirement Association a. Plan Description All full-time and certain part-time employees of the City of Elk River are covered by defined benefit pension plans administered by the Public Employees Retirement Association of Minnesota(PERA). PERA administers the General Employees Retirement Fund(GERF)and the Public Employees Police and Fire Fund(PEPFF) which are cost-sharing,multiple-employer retirement plans. These plans are established and administered in accordance with Minnesota Statutes,Chapters 353 and 356. GERF 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,fire fighters and peace officers who qualify for membership by statute are covered by the PEPFF. i 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. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula(Method 1)or a level accrual formula (Method 2). Under Method 1,the annuity accrual rate for a Basic Plan member is 2.2 percent of average salary for each of the first 10 years of service and 2.7 percent for each remaining year. The annuity accrual rate for a Coordinated Plan member is 1.2 percent of average salary for each of the first. 10 years and 1.7 percent for each 55