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CITY OF CENTERVILLE, MINNESOTA NOTES TOFINANClALSTATEMENTS DECEMBER 31, 2004 Note 3: DETAILED NOTES ON ALL FUNDS - CONTINUED G. Fund Equity Reservations and Designations The components of fund equity are described in Note I. Certain reservations and designations have been made in the foliowing funds: Fund Net assets - Reserved Enterprise Sewer Purpose Amonnt Senior housing project connnitment $ 71,631 Fund balance - Reserved Debt Service General Debt service on bonds issued Prepaids $ 2,909,195 18,149 Total reserved fund balance $ 2,927,344 Fund balance - Unreserved - Designated General Working capital $ 1,297,954 Note 4: DEFINED BENEFIT PENSION PLANS - STATEWIDE A. Plan Description All full-time and certain part-time employees ofthe City are covered by defmed benefit plans administered by the Public Employees Retirement Association of Minnesota (PERA). PERA administers the Public Employees Retirement Fund (PERF), which is a cost-sharing, multiple-employer retirement plan. The plan is established and administered in accordance with Minnesota statutes, 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. Ali new members must participate in the Coordinated Plan. PERA provides retirement benefits as weli as disability benefits to members, and benefits to survivors upon death of eligible members. Benefits are established by Minnesota statute, and vest after three years of credited service. The defmed retirement benefits are based on a member's highest average salary fOI any five successive years of aliowable service, age and years of credit at terraination of service. Two methods are used to compute benefits for PERF's Coordinated and Basic Plan members. The retiring member receives the higher of a step-rate benefit accrual formula (Method I) or a level accrual formula (Method 2). Under Method I, 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 accmal 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 ali PERF members whose annuity is calculated using Method I, a fuli annuity is available when age plus years of service equal 90. A reduced retirement annuity is also available to eligible members seeking early retirement. -32-