5.5. SR 06-02-2008 - Laserfiche WebLink

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CITY OF ELK RIVER, MINNESOTA ' NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2007 Note 4: OTHER INFORMATION -CONTINUED , 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 ' 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 yeazs from the date of sale of each individual area. During 2DD7 and 2006, the Utilities paid 5546,086 and $31,510, respectively, under this agreement, including $36,747 ' and $31,510 in 2007 and 2006, respectively, for loss of revenues. All amounts paid aze included in property and equipment. D. Pension Plans I. Public Employees Retirement Association a. Plan Description ' Al] 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 Public Employees Retirement Fund (PERF) 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 Statures, Chapters 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, fire fighters 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. Two methods are used to compute benefits for PERA's Coordinated and Basic Plan members. The retiring member receives the higher of 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 remaining year. Under Method 2, the annuity accrual rate is 2.7 percent of average salary for Basic Plan members and 1.7 percent for Coordinated Plan members for each year of service. For PEPFF members, the ' annuity accrual rate is 3.0 percent for each year of service. For alt PEPFF and PERF members hired prior to July 1, 1989 whose annuity is calculated using Method 1, a full annuity is available when age plus years of service equal 90. Normal retirement age is 55 for PEPFF members and 65 for Basic and Coordinated members hired prior to July 1, 1989. Normal retirement age is the age for unreduced Social Security benefits capped at ' 66 for Coordinated members hired on or after July 1, 1989. A reduced retirement annuity is also available to eligible members seeking early retirement. 58 '