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Staff believes this is an opportune time to establish an Internal Service Fund for insurance <br />and related risk activities through a transfer from the General Fund. The purpose of tlie <br />fund is to purchase all liability insurance, municipal package, umbrella, liquor, bonds, <br />and worker compensation policies, and to pay for all claim deductibles and other <br />reimbursements required under the policies. The Insurance Fund will generate revenues <br />through a charge back to the various other city funds based on the amount budgeted <br />within each department for that year, through future dividends deposited in the fund, and <br />through investment earnings. There will be years in which the budgets of individual <br />departments will be insufTicient to cover the actual cost of insurance due to higher than <br />anticipated rate increases. The Insurance Fund will be able to absorb those differences as <br />well as the deductible costs. Each year the results will be reviewed during the budget <br />process to determine what adjustments are required for each participating fund. <br />It is requested that Council authorize the City to establish an Internal Service Fund, <br />effective January 1, 2000, to be identified as the Insurance Fund. The Insurance Fund is <br />to be funded initially by a transfer from the General Fund in an amount equal to the 1999 <br />premium total for all insurance, or $123,900. <br />Adjustments are required in the 2000 budgets as follows; General Fund transfer out <br />budget increase of $123,900; Insurance Fund transfer in budget increase in the amount of <br />$123,900. <br />The Insurance Fund also needs 2000 budgets established for the various insurance <br />expenditure amounts and revenue amounts as follows: <br />Expenditure Budaet Revenue Budget <br />Liability Insurance $ 97,425 <br />Worker Compensation 38.260 <br />Premium Charges to Other Funds _______ $135,685 <br />Totals $135.685 $135,685 <br />COUNCIL ACTION REQUESTED; <br />(1) Adopt Resolution to establish Insurance Fund, an Internal Service Fund, as of <br />January 1 ,2000; <br />(2) Authorize operating transfer of $123,900 from the General Fund to the Insurance <br />Fund, and amend the corresponding transfer in or out budget of each fund by a like <br />amount, effective January 1,2000; <br />(3) Establish the Insurance Fund 2000 budget for expenditures of $135,685, and for <br />revenues of $135,685.