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7.1.A. - Page 94 , <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2014 <br /> NOTE 9 — EMPLOYEE BENEFITS (CONTINUED) <br /> To obtain reimbursement of expenses incurred within a plan year within the spending accounts (items 2 <br /> or 3), employees must submit claims within 90 days of the end of the plan year or separation of service <br /> from the City, whichever occurs first. Funds unclaimed after 90 days of the close of the plan year are <br /> then remitted to the City. <br /> D. Deferred Compensation Plans <br /> City employees may defer a portion of their compensation under four separate, optional City- sponsored <br /> deferred compensation plans created in accordance with Internal Revenue Code Section 457. Under <br /> these plans, participants are not taxed on the deferred portion of their compensation until distributed <br /> to them; distributions may be made only at termination, retirement, death, or in an emergency as <br /> defined by the plans. <br /> Effective January 1, 1998, the City signed new deferred compensation plan administration agreements <br /> with the deferred compensation providers to provide for the administration and management of <br /> employees' deferred compensation plan assets. These agreements incorporate changes in the law <br /> governing deferred compensation plan assets which now require plan assets to be held for the exclusive <br /> benefit of plan participants and their beneficiaries. Since the assets held under these new plans are not <br /> the City's property and are not subject to claims by general creditors of the City, they have been <br /> excluded from these financial statements. <br /> Effective January 28, 2003, the City implemented a retirement enhancement plan (401 -A defined <br /> contribution plan) for certain executive management employees. In February 2005, a plan amendment <br /> was adopted to extend the 401 -A plan to all members of the executive management employee <br /> classification. Under this plan, the City contributes 2% of the employees' compensation into the 401 -A <br /> plan. <br /> Effective October 1, 2002 for the Redwood City Management Employees Association, the City <br /> contributes an amount equal to 2% of the base monthly salary to a deferred compensation plan offered <br /> by the City to members of the Association. <br /> NOTE 10 - NET POSITION AND FUND BALANCES <br /> GASB Statement No. 63 adds the concept of net position, which is measured on the full accrual basis, to <br /> the concept of fund balance, which is measured on the modified accrual basis. <br /> A. Net Position <br /> Net position is the excess of all the City's assets over all its liabilities, regardless of fund. Net position is <br /> divided into three captions. These captions apply only to net position, which is determined only at the <br /> government -wide level and are described below: <br /> Net investment in capital assets describes the portion of net position which is represented by the current <br /> net book value of the City's capital assets, less the outstanding balance of any debt issued to finance these <br /> assets. <br /> 66 <br />