07-08-1996 Council Packet - Laserfiche WebLink

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CITY OF ORONO, MINNESOTA Notes to Financial Sutements (continued) December 31, 1995 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 ’ con^nsation, 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. The major reinsurance points are generally $200,000 per occurrence for property loss or damage and $450,0(X) per occurrence for workers ’ compensation. The City also carries commercial insurance for certain other risks of loss, including employee health insurance and liquor liability. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. NOTE 2 - DEPOSITS AND IN’$’ESTMENTS 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 insurance, surety bond, or collateral. The market value of collateral pledged must equal 110% of the deposits covered by insurance or bonds (140% in the case of mortgage-backed collateral). Authorized collateral includes the legal investments described below, as well as certain first mortgage notes and certain other state or local government obligations. Minnesota Statutes require that securities pledged as collateral be held in safekeeping by the City or in a financial institution other than that furnishing the collateral. Deposits consist of checking accounts, savings accounts, and certificates of deposit held in a bank or savings institution. At year-end, the cariying amount of the City's deposits was $433,985, while the balance on the bank records was $507,779. At December 31, 1995, all deposits for the City were insured or collateralized by securities held by the City's agent in the City's name. B. Cash on Hand Cash in the possession of the City, consisting of petty cash and change funds, at year-end totaled $760. -37- » J J