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ELK RIVER MUNICIPAL UTxLITIES
<br />ELK RIVER, MINNESOTA
<br />NOTES TC FINANCIAL STATEMENTS
<br />DECEMBER 31, 2009 AND 2008
<br />Note 3: DE~'~NED BENE~'~T PENSION PLANS - STATEwD]E w C~NT~NUEI~
<br />B. ~`unding Policy
<br />Minnesota statutes, chapter 353 sets the rates for enaployer and employee cont~•ibutions, These statutes are
<br />established and amended by the State legislature. The Utilities makes annual contributions to the pension plans
<br />equal to the amount requhed by Minnesota statutes, PERF Basic Plan members and Caordirlated Plan members
<br />were required to contribute 9,1 percent and 6.0 percent, respectively, of their annual covered salary in 2009. The
<br />Utilities is requhed to contribute the following percentages of annual covered payroll; 11,78 percent far Basic Plan
<br />PERF members and 6,75 percent of Coordinated Plan PERF members. Employer contribution rates for the
<br />Coordinated Plan will increase to 7.00 percent, effective January 1, 2010• The Utilities' contributions to the PERF
<br />for the years ending December 31, 2009, 2008 and 2007 were $145,592, $151,416, and $136,713, respectively. The
<br />Utilities' cont~;ibutions were equal to the eont~•actually required contributions for each year as set by Minnesota
<br />statute,
<br />Nate 4: ®THER INF~R.I~ATI®N
<br />A. Territorial Acquisition Agreement
<br />The Utilities has entered into an agreement to transfer ownership of electric plant and electric service to customers in
<br />certain areas currently receiving electric service fiom Anoka Electric Cooperative, Inc, (AEC},
<br />The cost of prope~•ty purchased from AEC will be net book value, The Utilities will also pay AEC far lass of
<br />revenue for each area acquired based on a fol~nula outlined in the agreement,
<br />In addition, the Utilities will compensate AEC for the loss of revenue from the future sale of electricity to elect~•ic
<br />customers i~7 the areas acquired from AEC for a period of ten years from the date of sale of each h~dividual area,
<br />Durilag 2009 and 20o8, the Utilities paid $9,469 and $248,976, respectively, under this agreement, including $9,469
<br />and $32,835 in 2009 and 2008, respectively, far lass of revenues. All amounts paid are included in property and
<br />equipment,
<br />la. Risk l~[anagement
<br />The Utilities is exposed to various risks of loss related to torts; theft of, damage to and destz•uction of assets; errors
<br />and omissions; injuries to employees; and natural disasters for which the Utilities carries commercial insurance, The
<br />Utilities obtains insurance through pa~•ticipation in the League of Minnesota Cities Insurance Trust (LMCIT}, which
<br />is a risk sharing pool with approximately 500 other governmental units, The Utilities pays an annual premium to
<br />LMCIT for its workers compensation and property and casualty insurance, The LMCIT is self sustaining through
<br />member premiums and will reinsure for claims above a prescribed dollaa• amount for each insurance event, Settled
<br />claims have not exceeded the Utilities' coverage in any of the past three fiscal years.
<br />Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably
<br />estimated, Liabilities, if any, include an amount for clallr~s that have been incurred but not reported ~IBNRs}, The
<br />Utilities' znanagement is not aware of any incurred but not reported claims.
<br />C. Prior Period Adjustments
<br />During the year ended December 31, 2045, the Utilities recorded prior period adjustments h.~ the Electric and water
<br />funds for $108,417 and $8,560, respectively, to co~~ect accumulated depreciation,
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