CAFR 2016

38ii

Bonding in the following amounts is held for City employees involved in financial transactions: Finance Officer, $100,000,

Tax Collector, $100,000, and Employee Blanket Bond, $75,000.

All operating funds of the City participate in the risk management program and make payments to the Employee Risk

Retention Fund and the General Risk Retention Fund based on the funds’ historical claims experience. Payments are for

prior and current year claims and to establish a reserve for catastrophic losses.

Claims liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably

estimated. Liabilities include an amount for claims that have been incurred but are not reported (IBNR’s), based on actuarial

computations. Settled claims have not exceeded self–retained or purchased insurance coverage in any of the past three fiscal

years.

Employee Risk Retention

The City provides for health, dental, life and workers’ compensation benefits in its Employee Risk Retention Fund.

The City’s health plan currently offers two plan options through a self-funded program, and a dental plan and vision plan is

administered for employees and their covered dependents, supplemented by employee contributions.

Term life insurance for employees is provided by the City for the term of employment, at no cost to the employee. The

amount of coverage is based on salary. For those dependents covered by the health plan, the City also provides a reduced

coverage term life insurance policy at no cost to the employee. For the life plan, the City pays its contribution directly to the

insurer.

The City is self-funded for workers’ compensation for claims up to $1,000,000 per occurrence. Claims in excess of the

retention are covered through a combination of purchased insurance and self-funding participation.

The City’s contributions toward employee costs are accounted for as expenditures when the funds are contributed to the

Employee Risk Retention Fund.

General Risk Retention

The City’s General Risk Retention Fund includes five separate funds in the Local Government Excess Liability Fund, Inc.

(ELF) to self-fund certain types of liability claims. Up until December 31, 1999, the ELF was structured to provide varying

tiers of funding, with pre-determined contribution rates, limits of coverage, repayment schedules and certain levels of transfer

of risk from the five local governments and school members represented by the ELF. Annual contributions by members are

periodically reviewed by the Board of Directors and the Executive Director of the ELF.

Effective January 1, 2000, the ELF was reorganized and the resulting structure provides for no transfer of risk from any of

the member units to the ELF. Fund balances are segregated by member and in the event of loss, those amounts are available

for claims payment by the respective member, on either a loan or withdrawal basis. The new structure of the ELF is

considered to be similar to a claims-servicing arrangement. The ELF Revolving Fund – Primary Liability Coverage pays

amounts in excess of $100,000 up to $5,000,000 per occurrence, with an aggregated available for the City of $9,076,625 as

of June 30, 2016. Additional amounts of $3,232,437 are recorded in the ELF for payment of City claims.

In addition, a new tier of coverage was established in the ELF in April 2007, to replace purchased Excess Liability coverage

and to support General Liability claims. The balance on deposit as of June 30, 2016 is $4,678,667 which includes

$1,011,046 transferred in Fiscal Year 2011 due to a distribution of funds from a previous member-shared “run-off” account

following settlement of all related claims. Accordingly, including these balances, a total of $16,987,729 is included in the

City’s General Risk Retention Fund as insurance deposits. In addition, the City recorded $1,153,637 in deposits in the

Employee Risk Retention Fund to reflect amounts held by the ELF to pay employer’s liability and workers’ compensation

claims.

The City is also a member of the Local Government Property Insurance Deductible Fund, Inc. The City purchases

Replacement Cost property insurance with a $100,000 deductible for most losses. Property losses up to $100,000 per

occurrence are paid by the Fund after application of a $10,000 deductible requirement.