C.A.F.R., FY 2005-06 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2006 V. Other Information A. 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; injuries to employees; and natural disasters. The City purchases insurance coverage from commercial insurers and participates in risk pools to limit risk of loss in these areas. The risk pools maintain adequate protection from catastrophic losses to protect their financial integrity. Aggregate protection is also maintained to ensure that the City shall at no time be assessed. The City's contributions are limited to the rates calculated under the agreement. There has been no significant reduction in insurance coverage during the year ended September 30, 2006. There have been no settlements in excess of insurance coverage in any of the prior three fiscal years. In past years, the City operated a self-funded benefits pool for employees which was replaced May 1, 2006, by coverage provided through an inter-local agreement with TML Intergovernmental Employees Benefits Pool. The City has a claims liability until all claims incurred under the self-funded pool have been liquidated. The claims liability is based on the requirements of Governmental Accounting Standards Board Statement No.1 0, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the fmancial statements and the amount of the loss can be reasonably estimated. For the fiscal years ended September 30, 2005 and 2006, changes on unpaid claims liability are as follows: 2005 2006 Balance at Beginning of Year $ 324,787 $ 439,949 Claims Incurred During the Year 2,540,077 1,840,755 Payments on Claims (2,424,915) (2,244,704) Balance at End of Year $ 439,949 $ 36,000 B. Related Party The City Council appoints the governing board of an entity which is legally separate from the City. The City is not able to impose its will on this entity, and a financial benefit/burden relationship is not present; therefore, it is considered a related organization. c. Water Storage Commitments A contract with the United States of America for water storage space in Pat Mayse Lake entitles the City to utilize one hundred percent of the storage space between elevations 451.0 and 415.0 feet above sea level. Forty percent (43,800 acre-feet) is for present storage and the remaining sixty percent (65,800 acre-feet) is for future water storage. The City is to repay the government the entire amount of construction costs allocated to the water storage right acquired by the City. The City is obligated to pay 9.46% of the ordinary operation and maintenance cost of the project annually and 4.22% of major capital replacements when incurred. 46