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CITY OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 1993 Note 12. FLEXIBLE BENEFIT PLAN (Continued) The City serves as trustee and handles all plan record keeping. The plan is included in the financial statements as an Expendable Trust Fund. All plan property and income attributable to that property is solely the property of the City, subject to the claims of the City's general creditors. Participants' rights under the plan are equal to those of general creditors of the City in an amount equal to eligible expenses incurred by the participants. The City believes that it is unlikely that it will use the assets to satisfy the claims of general creditor's in the future. Note 13. RESERVES AND DESIGNATED FUND EQUITY Fund balance or retained earnings in various funds has been reserved or designated. The following reservations of the fund equity have been made at December 31, 1993: General Fund - Fund balance reserved for prepaid expenses $ 49,134 Water and Sewer Fund - Contributed capital reserved for future construction The General Fund reservation for prepaid expenses is made because prepayments, which are included in other assets, are not current financial resources. The Water and Sewer Fund reservation for future construction is from assessments for elevated water storage and future oversizing of water and sewer lines. The following designations of unreserved fund equity have been made at December 31, 1993: General Fund - Compensated absences $ 123,078 Working capital 1,349,113 $ 1,472,191 Debt Service Funds - Debt service $ 3,839,022 General Fund - Compensated absences designation for $123,078 represents the estimated long -term liability for compensated absences. -31- $ 271,976