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CITY OF ROSEVILLE, MINNESOTA NOTES TO FINANClAL STATEMENTS December 31, 2014 factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including frequency and amount of pay-outs), and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Estimated recoveries, far 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 2014. 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, 2014, were $1,284,508 and $985,674 for the Workers' Compensation Fund and Risk Management Fund, respectively. The claims liability of $141,594 and $563,913, respectively, reported in both funds at December 31, 2014 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 �'inancial statements and the amount of the loss can be reasonably estimated (IBNR). Changes in the funds' claims liability amount in fiscal 2013 and 2014 were: Workers' Compensation Fund Beginnulg of Current Year Ending of Fiscal Year Claims and Changes Claims Fiscal Year Liability 2013 $ 99,305 $ 2014 224,774 in Estimates 348,186 12,396 Payments $ 222,717 95,576 Liabiliry $ 224,774 141,594 Risk Management Fund Beginnuig of Current Year Ending of Fiscal Year Claims and Changes Claims Fiscal Year Liability 2013 $ 16,030 $ 2014 205,239 in Estm�ates 432,008 779,847 Payments Liability $ 242,799 $ 205,239 421,173 563,913