MILLE LACS SOIL AND WATER CONSERVATION DISTRICT

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2006

Vacation and Sick Leave

Under the District's personnel policies, employees are granted vacation leave in varying amounts based

on their length of service. Vacation leave accrual varies from 4 to 9 hours per 80 hours worked. Sick

leave accrual is 4 hours per 80 hours worked. The limit on the accumulation of annual leave is 240 hours

and the limit on sick leave is 960 hours. Upon termination of employment from the district, employees are

paid accumulated annual leave and up to 50% of accrued sick leave based on years of service.

Risk Manaqement

The District is exposed to various risks of loss related to tort; theft of, damage to, and destruction of

assets; errors and omissions; injuries to employees; worker's compensation claims; and natural disasters.

Property and casualty liabilities and workers' compensation are insured through Minnesota Counties

Insurance Trust. The District retains risk for the deductible portion of the insurance. The amounts of

these deductibles are considered immaterial to the financial statements.

The Minnesota Counties Insurance Trust is a public entity risk pool currently operated as a common risk

management and insurance program for its members. The District pays an annual premium based on its

annual payroll. There were no significant increases or reductions in insurance from the previous year or

settlements in excess of insurance coverage for any of the past three fiscal years.

Note 2 - Detailed Notes on All Funds and Account Groups

Changes in Capital Assets, Asset Capitalization and Depreciation.

Beginning

Equipment $38,447

Less: Accumulated Depreciation 37.887

Net Capital Assets

$

Addition

$ 0

72

Deletion

$ 0

0

Ending

$38,447

37.959

The cost of property, plant and equipment is depreciated over the estimated useful lives of the related

assets. Leasehold improvements are depreciated over the lesser of the term of the related lease or the

estimated useful lives of the assets. Depreciation is computed on the straight-line method. The useful

lives of property, plant and equipment for the purpose of computing depreciation are Machinery and

equipment 5 to 10 years. Current year depreciation is $72.

Deferred Revenue

Deferred revenue represents unearned advances from the Minnesota Board of Water and Soil Resources

(BWSR) for administrative service grants and for the cost-share program. Revenues will be recognized

when the related program expenditures are recorded. Deferred revenue for the year ended December 31,

2006, consists of the following: BWSR Service Grant, $11,624; BWSR Cost Share Programs, $12,276;

County WCA Funds, $633; County Water Plan Funds, $1,570; Feedlot Challenge Grant, $8,498; Water

Challenge Grant, $3,000; Drought Disaster Assistance, $17,807; Total, $55,408.

Lonq-Term Liabilities - Compensated Absences Pavable

Changes in long-term liabilities for the period ended December 31, 2006 are:

Balance January 1, 2006

Net Change in Compensated Absences

Balance December 31, 2006

$1,808

4.336

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