02-14-11 Regular Meeting of Fiscal Affairs Committee

Browse Search

CITY OF LA PORTE, TEXAS Notes to the Financial Statements September 30, 2010 8. Risk Management - Continued Included in the claims paid amount is $499,000 for incurred but not reported claims. Settled claims have not exceeded insurance coverage in any of the previous four fiscal years. Estimates of claims payable and of claims incurred but not reported at September 30, 2010 are reflected as liabilities of the Internal Service Fund. Because actual claims liabilities depend on such complex factors as inflation, changes in legal requirements and damage awards, the process used in computing claims liability is an estimate based on historical claims. Analysis of claims liability for the fiscal years 2008, 2009 and 2010 are as follows: Beginning Current Payment End of of Year Year for Year Accrual Estimates Claims Accrual Fiscal Year 2008 509,552 3,805,967 3,638,519 677,000 Fiscal Year 2009 677,000 2,308,775 2,537,775 448,000 Fiscal Year 2010 448,000 3,703,943 3,652,943 499,000 Risk Pool The City is a member of the Texas Municipal League Intergovernmental Risk Pool, an unincorporated association of 1,860 political subdivisions of the State of Texas. The Pool contracts with a third party administrator for administration, investigation and adjustment services in the handling of claims. All loss contingencies, including claims incurred but not reported, if any, are recorded and accounted for by the Pool. 9. Commitments and Contingent Liabilities From time to time, the City is a defendant in legal proceedings relating to its operations as a municipality. In the best judgment of the City's management, the outcome of any pending legal proceedings will not have an adverse effect on the accompanying general purpose financial statements. The City participates in certain federal and state assisted grant programs. These programs are subject to program compliance audits by the grantors or their representatives. Any liability for reimbursement which may arise as the result of these audits is not believed to be material. 10. Post - Employment Benefits Plan Description. In addition to pension benefits described in Note 6, employees who retire from the City and are eligible for pension benefits shall be provided medical coverage by the City to the extent and subject to the conditions of such coverage that is provided to current employees of the City. The City administers this single - employer defined benefit medical plan ( "the Retiree Medical Plan "). The plan provides medical coverage for eligible retirees and their dependents through the City's self - health insurance plan, which covers both active and retired members. Benefit provisions are established and amended by City Council. The Retiree Medical Plan does not issue a publicly available financial report. Funding Policy. This coverage for retired employees is provided at the option of City council through adoption of the annual budget. The City funds these premiums in the same manner as it funds similar premiums for current employees. Employees, who retired from the City before October 1, 1992, have 100% of their coverage paid for by the City. Employees who retired from the City in 1993 and up to December 31, 1999, with 20 or more years of service have 100% of their coverage paid for by the City. Prior to January 1, 2000, employees who have 15 years but less than 20 years of service are required to pay for 10% of the cost and employees who have 10 71