5.3. ERMUSR 04-12-2016 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER,MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2015 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 has two items,a deferred charge on refunding and deferred pension resources,which qualify for reporting in this category. 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. Deferred pension resources result from actuarial calculation and current year pension contributions subsequent to the measurement date. 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. Pensions For purposes of measuring the net pension liability,deferred outflows/inflows of resources,and pension expense, information about the fiduciary net position of the Public Employees Retirement Association(PERA)and additions to/deductions from PERA's fiduciary net position have been determined on the same basis as they are reported by PERA except that PERA's fiscal year end is June 30. For this purpose,plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 129