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CITY OF ROSEVILLE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2010 NOTE 5 -OTHER INFORMATION (Continued) A. Risk management (Continued) Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate. The City purchased commercial insurance for claims in excess of coverage provided by the Risk Management Fund and for all other risks of loss. Settled claims have not exceeded this coverage in any of the past three fiscal years. There were no significant reductions in the City's insurance coverage in 2010. Enterprise fund charges and the property tax levy are based on a management estimate of claims history and the amount necessary to maintain catastrophic reserves. The reserves as of December 31, 2010, were $ 1,757,117 and $ 931,804 for the Workers' Compensation Fund and Risk Management Fund, respectively. The claims liability of $ 109,235 and $71,354, respectively, reported in both funds at December 31, 2010 are based on the requirements of Governmental Accounting Standards Board Statement No. 10. This statement requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated (IBNR). Changes in the funds' claims liability amount in fiscal 2009 and 2010 were: Workers' Compensation Fund Beginning of Current Year Ending of Fiscal Year Claims and Changes Claims Fiscal Year Liability in Estimates Payments Liability 2009 $ 312,970 $ 43,239 $ 136,286 $ 219,923 2010 219,923 (86,532) 24,156 109235 Risk Management Fund Beginning of Current Year Ending of Fiscal Year Claims and Changes Claims Fiscal Year Liability in E stim at es 2009 $ 116,555 $ (48,267) $ 2010 28,906 64,996 65 Payments Liability 3%382 $ 28,906 22,548 71,354