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CITY OF RAMSEY Notes to Financial Statements (continued) December 31, 2001 NOTE 1— SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Long -Term Obligations For long-term obligations, only that portion expected to be financed from expendable available resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is reported in the General Long -Term Debt Account Group. Long-term obligations financed by Proprietary Funds are reported as liabilities in the appropriate fund. M. Compensated Absences The City compensates employees upon termination for unused vacation leave at the current rate of pay times the employee's unused vacation leave. City employees are entitled to sick leave at a rate of one day for each calendar month of full-time service, to a cumulative total determined by the applicable labor agreement or the City Code. Terminating employees are paid for unused sick leave in accordance with the prevailing agreement or code up to a maximum of one-third of their unused sick leave at their current rate of pay. All compensated absences are paid out of the General Fund and the Economic Development Authority Fund. Employee compensation for vacation and sick leave accrued through December 31, that is payable from available expendable resources, is shown as an expenditure and established as a short-term liability. Long-term liabilities for compensated absences are recorded in the General Long -Term Debt Account Group. N. Budgets and Budgetary Accounting The City follows the following procedures in establishing the budgetary data reflected in the financial statements. 1. The City Administrator submits to the City Council proposed operating budgets for the following fiscal year beginning on January 1. The operating budgets include proposed expenditures and the means of financing them. The Council is provided with budgets that set forth the total for each budgeted fund and each department, function or program, with segregation as to objects and purpose of expenditures. 2. Public hearings are conducted to obtain public comments. 3. The budgets are legally enacted through passage of a resolution. 4. After the budget resolution has been adopted, the Council may, by a resolution approved by a 4/5 vote of its members, reduce the sums appropriated for any purpose by the budget resolution, or authorize the transfer of sums from unencumbered balances of appropriations in the budget resolution to other purposes. However, the Council may not increase the amounts fixed in the resolution beyond the estimated funds available except to the extent that actual receipts exceed the estimated funds available. -16-