06-27-2016 Council Packet - Laserfiche WebLink

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CITY OF ORONO NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2015 (54) NOTE 10 COMMITMENTS AND CONTINGENCIES (CONTINUED) D. Police Services Contracts As of December 31, 2015, the City of Orono had several contracts to provide police services to neighboring cities. The most significant of those was a contract with the City of Mound, which the City entered into as of January 1, 2013 and which extends ten years to December 31, 2022. The contract also included annual payments from the City of Mound starting at $1,545,000 in 2013 and increasing between 1%-5% each year through the end of the contract. The contract also called for the City of Orono to hire previous Mound police officers as Orono employees to provide for the additional staffing needed and to recognize their years of service with Mound in determining compensation and benefits. The City also has a contract with the cities of Minnetonka Beach and Spring Park to furnish law enforcement services to each respective city. The original contract term ended December 31, 2012 and includes the option to verbally extend it each year for an additional one-year period. The contract has been extended each year through 2016. E. Fire Services Contract As of year-end, the City had committed to purchasing fire protection services from the City of Wayzata for fiscal year 2016. The annual fee is determined by the percentage of total calls which are in the Orono service area for the preceding three years and is expected to be similar to the 2015 fee of $383,856. NOTE 11 CHANGE IN ACCOUNTING PRINCIPLE During the fiscal year ended December 31, 2015, the City adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions, and the related Statement No. 71. As a result, the City’s net position as of December 31, 2014 has been restated to reflect the recognition of the city’s proportionate share of the Public Employees’ Retirement Association of Minnesota General Employees’ Retirement Fund’s (GERF) and Public Employees’ Police and Fire Fund’s (PEPFF) net pension liability. Governmental Activities Business-Type Activities Net Position, December 31, 2014, as Previously Reported 23,872,715$ 21,989,066$ Cumulative Effect of Application of GASB 68, Net Pension Liability (3,723,015) (307,923) Cumulative Effect of Application of GASB 71, Deferred Outflow of Resources for City Contributions Made to the Plan From July 1, 2014 to December 31, 2014 219,032 11,941 Net Position, December 31, 2014, as Restated 20,368,732$ 21,693,084$