1997 CAFR - Laserfiche WebLink

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CITX OF RAMSEY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31,1997 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) M. Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns does not present financial position, results of operations, or cash flows in conformity with generally accepted accounting principles. Interfund eliminations have not been made in the aggregation of this data. N. ~mnarative Data/Reclassifications Comparative data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the City's financial position and operations. Also, certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year's presentation. O. Statement of Cash Flows For purposes of the Statement of Cash Flows, the City considers all highly liquid debt instruments with an original maturity from the time of purchase by the City of three months or less to be cash equivalents. The Proprietary Funds' equity in the City-wide cash and investment management pool is considered to be cash equivalents. P. The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. 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 major reinsurance points are generally $200,000 per occurrence for properly loss or damage and $450,000 per occurrence for workers' compensation. 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-Funding Insurance Expendable Trust Fund. This fund is funded primarily through dividend paybacks from the LMCIT. Expenditures from this fund consist solely of payments of those insurance related costs that are below the individual and/or cummulative deductible amounts. Premiums for the LMCIT policies are not paid from the Self-Insurance Trust Fund, but rather are budgeted and paid from the respective operating funds. The City does not retain significant uncovered risk. 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. There were no significant reductions in the City's insurance coverage in 1997. -15-