1995 CAFR - Laserfiche WebLink

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ACCOUNTING SYSTEM. INTERNAL AND BUDGETARY CONTROLS (continued) The internal control structure is designed to ensure that the assets of the City are protected from loss, theft or misuse, and to ensure that adequate accounting data is compiled to allow for the presentation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance, that these objectives are met. The concept of reasonable assurance recognizes that : (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgements by management. The City also maintains budgetary controls of which the objective is to ensure compliance with legal provisions embodied in the annual appropriated budget as approved by the City Council. During the year, the Council may increase the budget, but only to the extent that additional revenues have been realized. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is at the department level for budgeted funds. The City Council also adopts a five -year Capital Improvement Program as a fmancial planning document. CASH MANAGEMENT The City of Ramsey subscribes to the "pooled cash" concept of investing, which means that all funds with cash balances (except the Escrow Fund and certain other funds) participate in an investment pool. This pooled cash concept provides for investing greater amounts of money at more favorable rates. During 1995, the City earned $1,001,991 from investments in obligations issued by the United States and its agencies, bank certificates of deposits, and commercial paper. RISK MANAGEMENT The City participates in the League of Minnesota Cities Insurance Trust [LMCIT] a public entity risk pool for its general property and casualty, workers' compensation, and other miscellaneous insurance coverages. The LMCIT operates as a common risk management and insurance program for approximately 780 cities. The City pays an annual premium to the LMCIT for insurance coverage. The LMCIT agreement provides that the Trust will be self - sustaining through member premiums and will reinsure through commercial companies for claims in excess of certain limits. The City has elected higher deductibles through the LMCIT in order to keep premiums at a minimum. To supplement the commercial coverages, the City established the Self- Insurance Trust Fund. Premiums for the LMCIT policies are not paid from the the Self-Insurance Trust Fund, but rather are budgeted and paid from the respective operating funds. The City also carries commercial insurance for certain other risks of loss, including employee health insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. DEBT ADMINISTRATION Net bonded debt per capita and the percentage of net debt to the tax capacity and market value are useful indicators of the City's debt position to municipal management, citizens, and investors in city bonds. Debt statistics are listed as follows: Net Bonded Debt per Capita Ratio of Net Bonded Debt to Tax Capacity Ratio of Net Bonded Debt to Market Value vii $ 203.77 44.11% 0.67%