07-26-1999 Council Packet - Laserfiche WebLink

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I I CITY OF ORONO, MINNESOTA Notes to Financial Statements (continued) December 31,1998 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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’ portion of the City wide cash and investment management pool is cc*! iidered to be cash equivalent. P. Risk Management 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 (LMC Trust), a public entity risk pool for its general property and casualty, workers ’ compensation, and other miscellaneous insurance coverages. The LMC Trust operates as a common risk management and insurance program for approximately 780 cities. The City pays an annual premium to the LMC Trust for insurance coverage. The LMC Trust 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 for each insured event. The City also carries commercial insurance for certain other risks of loss, including employee health insurance and liquor liability. 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 1998. NOTE 2 - DEPOSITS AND INVESTMENTS A. Deposits In accordance with applicable Minnesota Statutes, the City maintains deposits at depository banks authorized by the City Council. Minnesota Statutes require that all deposits be protected by fedeial deposit insurance, corporate surety bond, or collateral. The market value of collateial pledged must equal 110% of the deposits not covered by federal deposit insurance or corporate surety bonds. Authorized collateral includes treasury bills, notes and bonds; issues of U.S. Government agencies; general obligations rated "A" or better; revenue obligations rate "AA" or better; irrevocable standard letters of credit issued by the Federal Home Loan Bank; and certificates of deposit. Minnesota Statutes require that securities pledged as collateral be held in safekeeping in a restricted account at the Federal Reserve Bank or in an account at a trust department of a commercial bank or other financial institution that is not owned or controlled by the financial institution furnishing the collateral. -34-