5.1. ERMUSR 04-14-2015 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER,MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2014 Note 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Deferred outflows of resources In addition to assets,the statement of financial position will sometimes report a separate section for deferred outflows of resources.This separate financial statement element,deferred outflows of resources,represents a consumption of net position that applies to a future period(s)and so will not be recognized as an outflow of resources(expense/expenditure) until then.The Utility only has one item that qualifies for reporting in this category,which is a deferred charge on refunding reported in the government-wide statement of net position.A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price.This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. Long-term obligations Long-term debt is reflected as a liability in the fund issuing the obligation.Bond premiums and discounts are amortized over the life of the bonds using the straight-line method. Bond issuance costs are reported as an expense in the period incurred. Compensated absences Vacation:All vacation benefits can be carried over from year to year and will be payable upon termination.Unused vacation carryover is limited to the number of hours accrued during the previous year. Sick Leave: Sick leave can be accumulated to a maximum of 960 hours from year to year.Upon termination or retirement,employees will have 50 percent of unused sick leave,up to a maximum of 960 hours,converted to cash and deposited into their Post Health Care Savings account. The liability for vacation and sick pay is reported as a liability in the respective funds at year end. Postemployment Benefits Other Than Pensions Under Minnesota statute 471.61,subdivision 2b.,public employers must allow retirees and their dependents to continue coverage indefinitely in an employer-sponsored health care plan,under the following conditions: 1)Retirees must be receiving(or eligible to receive)an annuity from a Minnesota public pension plan,2)Coverage must continue in group plan until age 65,and retirees must pay no more than the group premium,and 3)Retirees may obtain dependent coverage immediately before retirement.All premiums are funded on a pay-as-you-go basis.The liability was actuarially determined,in accordance with GASB Statement 45,at January 1,2014. Performance Metrics and Incentive Compensation Through Utilities Performance Metric-based Incentive Compensation system(UPMIC)the Utilities employees will have an opportunity,as a group,to each earn a maximum of 2 percent of their total gross wage paid during the Measurement Period.The percentage of UMPIC is calculated using a Score Card.The Score Card has three categories: Safety, Reliability and Quality of Utility Services which are divided into various weighted factors.This incentive was created to help the Utilities to become more efficient and successful in meeting strategic goals and mission and deliver improved value to the Utilities customers.The liability at year end is recorded as part of accrued wages. Net position Net position represents the difference between assets and liabilities and deferred inflows.Net position is displayed in three components: a. Net investment in capital assets-Consists of capital assets,net of accumulated depreciation reduced by any outstanding debt attributable to acquire capital assets. b. Restricted net position-Consists of net position restricted when there are limitations imposed on their use through external restrictions imposed by creditors,grantors,laws or regulations of other governments. 84