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NOTE 7 — COMMITMENTS AND CONTINGENCIES <br />A. Legal Claims <br />The City has the usual and customary type of miscellaneous legal claims pending at year-end. Although <br />the outcome of these lawsuits is not presently determinable, the City's management believes that the City <br />will not incur any material monetary loss resulting from these claims. No loss has been recorded on the <br />City's financial statements relating to these claims. <br />B. Federal and State Funds <br />Amounts recorded or receivable from federal and state agencies are subject to agency audit and <br />adjustment. Any disallowed claims, including amounts already collected, may constitute a liability of the <br />applicable funds. The amount, if any, of claims which may be disallowed by the grantor agencies cannot <br />be determined at this time, although the City expects such amounts, if any, to be immaterial. <br />-31- <br />