Financial Report - Moreno Valley

City of Moreno Valley
Notes to Financial Statements
Year Ended June 30, 2011 (Continued)
Note 13: Commitments and Contingencies (Continued)
The fund establishes claims liabilities based on estimates of the ultimate cost of claims
(including future claim adjustment expenses) that have been reported but not settled, and of
claims that have been incurred but not reported. The City has accrued for its anticipated
liability with respect to claims filed and claims incurred but not reported to the City as of
year-end. The accruals are in the amounts of $1,983,000 and $1,444,000 for the workers'
compensation claims and general liability claims, respectively, for a total of $3,427,000. Of
these amounts, the current year’s adjustment is a decrease of $193,000.
A reconciliation of changes in aggregate liabilities for claims for the current fiscal year and the
prior fiscal year is as follows:
General Liability
Workers'
Compensation Total
Amount of accrued claims at June 30, 2009 $ 1,218,000 $ 2,315,000 $ 3,533,000
Incurred claims, representing the total of a
provision for events for the current fiscal year
and any changes (increase or decrease) in the
provision for events of prior fiscal years and
adjustments to estimates. 615,334
Payments on claims attributable to events of
both the current fiscal year and prior fiscal
years. (401,334)
378,889
(505,889)
994,223
(907,223)
Amount of accrued claims at June 30, 2010 $ 1,432,000 $ 2,188,000 $ 3,620,000
Incurred claims, representing the total of a
provision for events for the current fiscal year
and any changes (increase or decrease) in the
provision for events of prior fiscal years and
adjustments to estimates. $ 692,596 $ 330,091 $ 1,022,687
Payments on claims attributable to events of
both the current fiscal year and prior fiscal
years. (680,596)
(535,091)
(1,215,687)
Amount of accrued claims at June 30, 2011 $ 1,444,000 $ 1,983,000 $ 3,427,000
Litigation
There are several lawsuits pending against the City. The outcome and eventual liability of the
City, if any, in these cases is not known at this time. Management estimates that the potential
claims against the City, not covered by insurance or self-insurance reserves, resulting from
such litigation would not materially affect the financial statements of the City.
Note 14: California Redevelopment Agency Dissolution
On July 18, 2011, the California Redevelopment Association (“CRA”) and the League of
California Cities (“League”) filed a petition for writ of mandate with the California Supreme
Court, requesting the Court to declare unconstitutional two bills that were passed as part of
the 2011-12 State Budget, ABX1 26 and 27 (California Redevelopment Association v.
Matosantos). ABX1 26 dissolves redevelopment agencies effective October 1, 2011.
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