CR2002-024 Internal Service Fund
CITY OF"
.
. February 5, 2002 HOPKINS Council Report 02-024
Establish New Internal Service Fund
Proposed Action
Staff recommends adoption of the following motion: Move to approve the creation of a new
Internal Service fund using the 2001 premium reimbursement.
Adoption of this motion will result in creation of a new Insurance internal service fund.
Overview
In 2001 finance analyzed the general liability and property insurance deduction and determined
that we may save some money over the long run with a higher deductible. The deductible was
increased from $2,500 to $20,000 with a maximum payout of $40,000 in given year. In 2001 we
received a premium reimbursement of $43,389.
Finance is recommended that we use this reimbursement to establish and internal service fund to
pay for deductions that occur in the future and to possibly help reduce the premium payments
annually from individual funds. The City of Hopkins Charter states that the city council may
establish new funds for special purposes as necessary.
. Primary Issues to Consider
. The city could designate this reimbursement to offset premiums paid in 2001 to
reduce expenditures in that year.
. The city may incur deductions of up to $40,000 a year in the future. This fund
would pay for those deductions ifthey should occur.
Recommendation
Finance recommends establislunent of a insurance internal service fund with the reimbursed
insurance premium received in 2001. The fund will start with $43,389 in 2002 and will earn
interest and pay any general liability and property insurance deductions and premiums as
necessary .
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Lori K. Yager
. Finance Director