Audit for Fiscal Year Ending June 30, 2017

CITY OF SPENCER NOTES TO FINANCIAL STATEMENTS - Continued JUNE 30, 2017

3. BONDS AND NOTES PAYABLE - Continued

(C) User rates shall be established which produce and maintain net receipts at a level not less than 110% of the principal and interest on the bonds falling due in the same year.

During the year ended June 30,2017, the City was in compliance with the revenue bond resolutions.

The $7,500,000 sewer revenue bonds issued December 2010 have been designated by the City as Build America Bonds. Under the terms of the Build America Bonds, it is anticipated that 35% of the interest paid on the bonds (net of the loan service fee) will be refunded to the City by the Federal government.

4. RELATED PARTY TRANSACTIONS

The City had business transactions between the City and City officials, totaling $742 during the year ended June 30,2017. See item II-D-17 in the Schedule of Findings.

5. COMPENSATED ABSENCES

City employees accumulate a limited amount of earned but unused vacation, holiday, and sick leave hours for subsequent use or for payment upon termination, retirement, or death. These accumulations are not recognized as disbursements by the City until used or paid. The City's approximate liability for earned compensated absences payable to employees at June 30,2017 is as follows:

Governmental activities: General fund ............................................................................................................

$ 534,484

Business type activities: Proprietary: Enterprise:

Solid waste ........................................................................................................ Landfill ............................................................................................................... Golf course ........................................................................................................ Total business type activities

77,600 19,915 18,444 115,959

TOTAL

$ 650.443

6. IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (IPERS)

Plan Description - IPERS membership is mandatory for employees of the City, except for those covered by another retirement system. Employees of the City are provided with pensions through a cost-sharing multiple employer defined benefit pension plan administered by Iowa Public Employees' Retirement system (IPERS). IPERS issues a stand-alone financial report which is available to the public by mail at 7401 Register Drive, PO Box 9117, Des Moines, IA 50306-9117 or at www.ipers.org. IPERS benefits are established under Iowa Code chapter 97B and the administrative rules thereunder. Chapter 97B and the administrative rules are the official plan documents. The following brief description is provided for general information purposes only. Refer to the plan documents for more information.

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