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NOTE 1— SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) <br />S. Self - Insurance Plan and Risk Management <br />The City is exposed to various risks of loss related to torts: theft of, damage to, and destruction of assets; <br />errors and omissions; and natural disasters. The City participates in the League of Minnesota Cities <br />Insurance Trust (LMCIT), a public entity risk pool for its general property and casualty, workers' <br />compensation, and other miscellaneous insurance coverages. LMCIT operates as a common risk <br />management and insurance program for a large number of cities in Minnesota. The City pays an annual <br />premium to LMCIT for insurance coverage. The LMCIT agreement provides that the trust will be <br />self - sustaining through member premiums and will reinsure through commercial companies for claims in <br />excess of certain limits. <br />The City has elected higher deductibles through LMCIT in order to keep premiums at a minimum. To <br />supplement the commercial coverages, the City established the Self- Insurance Internal Service Fund. <br />This fund is funded primarily through dividend paybacks from LMCIT. Expenditures from this fund <br />consist solely of payments of those insurance related costs that are below the individual and /or <br />commutative deductible amounts. Premiums for LMCIT policies are not paid from the Self- Insurance <br />Internal Service Fund, but rather are budgeted and paid from the respective operating funds. The City <br />does not retain significant uncovered risk. <br />The City also carries commercial insurance for certain other risks of loss. Settled claims resulting from <br />these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. There <br />were no significant reductions in the City's insurance coverage in 2010. <br />T. Loans payable to Met Council <br />The City entered into a loan agreement with the Metropolitan (Met) Council to acquire property within <br />the proposed right -of -way of highways designated as a part of the metropolitan highway system plan. <br />State Highway 10, within Ramsey, is part of that highway system plan. The loans bear no interest, and <br />are to be repaid upon the acquisition of the property by the State of Minnesota. <br />U. Use of Estimates <br />The preparation of financial statements, in accordance with accounting principles generally accepted in <br />the United States of America, requires management to make estimates that affect amounts reported in the <br />financial statements during the reporting period. Actual results could differ from such estimates. <br />NOTE 2 — DEPOSITS AND INVESTMENTS <br />A. Components of Cash and Investments <br />Cash and investments at year -end consist of the following: <br />Deposits $ 15,357,885 <br />Investments 32,997,577 <br />Cash on hand 525 <br />Total $ 48,355,987 <br />Cash and investments are presented in the financial statements as follows: <br />Cash and temporary investments - Statement of Net Assets $ 45,856,727 <br />Restricted cash and investments for debt service - Statement of Net Assets 1,708,487 <br />Cash and Investments - Statement of Fiduciary Net Assets 790,773 <br />Total $ 48,355,987 <br />- 60 - <br />