Agenda Packet 12-10-18 Meeting - REVISED

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CITY OF EUGENE, OREGON Notes to Basic Financial Statements continued (5) Other Information (A) Risk Management The City has established an internal service fund to account for and finance its risks of loss. The City has a self- insured liability program which covers personal injury, public official’s errors and omissions, law enforcement liability, automobile liability, employee benefits liability, and employment practices liability, with a maximum self-insured retention of $500,000 per occurrence for automobile liability, general liability, and $1,000,000 per occurrence for employee benefit and employment practice liability. In addition, the City has a self-insured workers’ compensation program which covers employees’ work-related illnesses and injuries, including employer’s liability, with a maximum self-insured retention of $1,000,000 per occurrence. During the previous three fiscal years, there were no liability claims that exceeded the insurance coverage levels. All regular full and part-time City employees are eligible for medical, dental, and vision insurance coverage. Employees may choose between two self-insured plans: the City Health Plan, a Preferred Provider Organization (PPO) plan or the City Managed Care Plan, a Point of Service (POS) plan. A third self-insured medical plan, the City Hybrid Plan, is available to non-represented, AFSCME and IATSE-represented employees. The City has established a self-insurance fund to pay medical, dental, and vision claims of employees and their dependents on the City Health Plan, up to the self-insurance retention limit of $250,000 per employee. Coverage for workers’ compensation, general liability, and employees’ health claims in excess of the self-insurance retention limit is purchased from commercial insurers. The City also purchases all-risk property insurance coverage from a commercial insurer. The property insurance policy has a basic $25,000 deductible, with earthquake and flood insurance coverages subject to the following deductibles: flood – $100,000 deductible per occurrence except that buildings in Flood Zones A and V have a $500,000 deductible per building; earthquake – 2% of the combined value of the property at the location, subject to a minimum deductible of $100,000 per location and the deductible applies separately to each location. At June 30, 2018, a total claims liability of $13,192,613 is reported in the Risk and Benefits Internal Service Fund. Claims liabilities reported by the City are based on an actuarial estimate of the ultimate cost of settling claims incurred, including incurred but not reported (IBNR) claims. Claims liabilities include all incremental costs incurred directly as a result of a claim, and consider estimated recoveries on both settled and unsettled claims. Claims expense has been reduced by amounts recovered, or expected to be recovered through excess insurance. The following changes occurred in the claims liability in the current and previous fiscal year: Fiscal Liability Current-year year balance at claims and Liability ended beginning changes in Claim balance at June 30 of year estimates payments end of year 2017 $ 12,566,534 26,158,038 (25,847,580) 12,876,992 2018 12,876,992 26,669,139 (26,353,518)13,192,613 (B) Joint Ventures The City is a participant with Lane County and the City of Springfield in the Metropolitan Wastewater Management Commission (MWMC), a joint venture established by intergovernmental agreement to construct, maintain, and operate regional sewerage facilities. The MWMC consists of a seven-member board to which the City appoints three voting members. The City has no explicit, measurable equity interest in the MWMC. However, the City has an ongoing financial responsibility for the operations of the MWMC in that the City is obligated to adopt disposal rates and charges not less than those adopted by the MWMC, and to forward to the MWMC, its share of the revenues as specified in the adopted financing plan, which requires that all MWMC administrative, operational, and maintenance expenses be financed through a uniform district-wide monthly fee. MWMC contracts with the City for operation of the regional sewerage facilities on a cost reimbursement basis which is accounted for in the Wastewater Utility Fund. For the fiscal year ended June 30, 2018, the City provided billable operations to MWMC costing $14,760,185 and MWMC owed the City $1,047,040 for unreimbursed costs at year-end. MWMC’s most recently published financial statement was for the year ended June 30, 2017, which reflected net income of $6,761,718 and net position of $155,785,942. Separate financial statements for MWMC can be obtained from the City of Springfield Finance Department. 68 December 10, 2018, Meeting - Item 2D