OPEB Schedule

CITY OF EDMOND, OKLAHOMA

ANNUAL FINANCIAL REPORT June 30, 2021

4.B. RISK MANAGEMENT

The City is exposed to various risks of loss related to torts, theft of, damage to, or destruction of assets; errors and omissions; injuries to employees; employee’s health and life; and natural disasters. The City manages these various risks of loss as follows:

Type of Loss Method Managed Risk of Loss Retained

a. General Liability: - Torts - Errors and omissions - Police liability - Vehicle City has insurance coverage for General Liability coverage. All claims are submitted to a third party administrator for determination of liability. Claims below the self-insured retention (SIR) are accounted for within the Liability Tort Claim Fund. City retains risk of losses up to $100,000 or $250,00 SIR per occurrence with excess coverage up to $5,000,000

b. Physical Property: - Theft - Damage to assets - Natural disasters City has insurance coverage for Property & Contents and Boiler & Machinery. Claims for losses are submitted to insurance provider for reimbursement of losses. City retains risk of loss up to the deductible amount of $10,000 for property and $10,000 for B & M. Coverage amounts vary by type of loss.

c. Workers Compensation: - Employee injuries Self-insured with third-party administration of the claims process. Liability Tort Claim Fund used to account for activities with participating funds charged through an estimated annual claim cost for each fund. Administered by Cannon Cochran Management Services, Inc. City retains risk of loss for first $450,000 or $750,000 of damage per occurrence depending on job classification. Stop loss insurance carried for damages above the City deductible up to a maximum aggregate of $2,000,000 per occurrence.

d. Health and Life: - Medical - Dental - Vision - Life and ADD - LTD Self-insured with City paying a portion of health care premiums, and all of life, ADD and LTD premiums. Administered by Aetna, Delta Dental, VSP and Mutual of Omaha. Claims up to $200,000 per individual self-funded with stop-loss insurance up to $1,000,000 per person.

The City maintains a stop-loss policy for plans to limit risk associated with the plans. For insured programs, there have been no significant reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage for the current year or the four prior years.

Claims Liability Analysis

The claims liabilities related to the above noted risks of loss that are retained are determined in accordance with the requirements of Statement of Financial Accounting Standards No. 5., which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that 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. The City has elected to report its estimated claim liability at the discounted net present value of future payments. For the internal service self-insurance funds, changes in the claims liability for the City from July 1, 2019 to June 30, 2021, are as follows:

CITY OF EDMOND, OKLAHOMA

ANNUAL FINANCIAL REPORT June 30, 2021

Claim liability, June 30, 2019 Claims and changes in estimates Claims payments Claim liability, June 30, 2020 Claims and changes in estimates Claims payments Claim liability, June 30, 2021

Workers' Compensation Health Care Tort Total

1,596,000$ 455,514$ 667,000$ 2,718,514$

727,214

9,704,171 84,144 10,515,529 (632,214) (9,546,208) (141,144) (10,319,566) 1,691,000$ 613,477$ 610,000$ 2,914,477$

842,397

9,292,072 (253,853) 9,880,616 (882,397) (9,181,249) 10,853 (10,052,793)

$ 1,651,000 $ 724,300 367,000$ 2,742,300$

Reconciliation to Statement of Net Position: Current portion Noncurrent portion Total 1,331,224$

1,411,076 2,742,300$

4.C. COMMITMENTS AND CONTINGENCIES

Construction Commitments

At June 30, 2021, the City had awarded construction contracts totaling $281,391,658 for various City and EPWA projects and of this amount, $101,881,773 was outstanding and payable from various funds.

Contingencies

Grant Program Involvement In the normal course of operations, the City participates in various federal or state grant/loan programs from year to year. The grant/loan programs are often subject to additional audits by agents of the granting or loaning agency to ensure compliance with specific provisions of the grant or loan. Any liability or reimbursement which may arise as a result of these audits cannot be reasonably determined at this time, although it is believed the amount, if any, would not be material.

Litigation The City is a party to various legal proceedings which normally occur in the course of governmental operations. The financial statements do not include accrual or provisions for loss contingencies that may result from these proceedings. State statutes provide for the levy of an ad valorem tax over a three-year period by a City Sinking Fund for the payment of any court assessed judgment rendered against the City. This statutory taxing ability is not available to the City’s public trusts (Authorities).

While the outcome of the above noted proceedings cannot be predicted, due to the insurance coverage maintained by the City and the State statute relating to judgments, the City feels that any settlement or judgment not covered by insurance would not have a material adverse effect on the financial condition of the City.

4.D. ECONOMIC DEVELOPMENT

The City is party to multiple agreements for the purpose of developing the Interstate 35 corridor within its city limits. In fiscal 2012, the City purchased land along the corridor for $2.2 million for the development of a hotel and conference center. Subsequently, the City entered into a development agreement and committed to lend $4.8 million towards the cost of constructing the conference center. The developer financed the cost of the related hotel and expenditures for the Conference Center that exceed $4.8 million. Rental payments to the City for the use of the underlying land are one dollar a year. The hotel is privately owned and managed. Based on terms of the contract, the developer may purchase the land and conference center from the City for $7 million at any time. If the developer elects to not purchase the land and conference center, the City will lease the land to the developer at a market based rate, including escalators. Alternatively, the City has a contractual commitment from the developer to begin paying back the loan starting in the 10th year from commencing operations of the facility over a term of 25 years. It is