Help Financial Statements For Year Ended April 30, 20090
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High -Level Excess
Liability Pool
Basic Financial Statements
and Independent Auditors' Report
April 30, 2009 and 2008
MILLER COOPER & CO., LTD.
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CONTENTS
PRINCIPAL OFFICIALS
INDEPENDENT AUDITORS' REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
BASIC FINANCIAL STATEMENTS
Balance Sheets
Statements of Revenues, Expenses, and Changes in Retained Earnings - Budget
and Actual
Statements of Cash Flows
Notes to the Financial Statements
REQUIRED SUPPLEMENTARY INFORMATION
SUPPLEMENTARY INFORMATION
MILLER COOPER & CO., LTD.
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Mark Horton, Wheaton
High -Level Excess Liability Pool
PRINCIPAL OFFICIALS
April 30, 2009
Chairman
41 Thomas Kuehne, Arlington Heights Vice - Chairman
Christine Tromp, Elk Grove Village
David Erb, Mount Prospect
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MILLER COOPER & CO., LTD.
Secretary
Treasurer
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MILLER
CODPER
&Co.)Ltd
ACCOUNTANTS AND CONSULTANTS
INDEPENDENT AUDITORS' REPORT
Members of the Board of Directors
High -Level Excess Liability Pool
Mount Prospect, Illinois
We have audited the accompanying basic financial statements of the High -Level Excess Liability Pool as
of and for the years ended April 30, 2009 and 2008, as listed in the table of contents. These financial
statements are the responsibility of the Pool's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable
• basis for our opinion.
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In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the High -Level Excess Liability Pool as of April 30, 2009 and 2008, and the changes
in its financial position and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
The management's discussion and analysis on pages 6 through 8 and ten -year claims development
information on pages 19 through 21 are not a required part of the basic financial statements but are
supplementary information required by accounting principles generally accepted in the United States of
America. We have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
1751 Lake Cook Road, Suite 400, Deerfield, IL 60015 ■ 500 West Madison Street, Suite 3350, Chicago, IL 60661
847.205.5000 ■ Fax 847.205.1400 ■ www.millercooper.com INTERNATIONAL
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Members of the Board of Directors
• High -Level Excess Liability Pool
Mount Prospect, Illinois (Continued)
Our audit was conducted for the purpose of forming opinions on the financial statements that
• collectively comprise the High -Level Excess Liability Pool's basic financial statements. The individual
fund statements are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The individual fund statements have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
MILLER, COOPER & CO., LTD.
• Certified Public Accountants
Deerfield, Illinois
December 15, 2009
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MILLER COOPER & CO., LTD.
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Management's Discussion and Analysis
FOR THE YEAR ENDED APRIL 30, 2009
Management of the High -Level Excess Liability Pool (HELP) offers this narrative overview and analysis
of the financial activities of HELP for the fiscal year ended April 30, 2009. We encourage readers to
consider the information presented here in conjunction with HELP financial statements and notes to the
financial statements to enhance their understanding of HELP's financial performance.
• HIGH -LEVEL EXCESS LIABILITY POOL - OVERVIEW
HELP is a public entity risk pool established by fifteen municipalities in Illinois to provide excess
liability coverage ($10,000,000 of coverage after a $2,000,000 self - insured retention). HELP was
organized on April 1, 1987 with an initial term of eleven years through April 30, 1998. A third term was
• approved to further extend the agreement through April 30, 2018. Thirteen municipalities make up the
pool's membership for Term III. The purpose of the pool is to act as a joint self - insurance pool for the
purpose of seeking the prevention or lessening of liability claims for injuries to persons or property or
claims for errors and omissions made against the members.
HELP is governed by a Board of Directors which consists of one appointed representative from each
• member municipality. Each Director has an equal vote. The officers of HELP are appointed by the
Board of Directors. The Board of Directors determines the general policies of HELP; makes all
appropriations; approves contracts; adopts resolutions providing for the issuance of debt by HELP; adopts
bylaws, rules, and regulations; and exercises such powers and performs such duties as may be prescribed
in the Agency Agreement or the bylaws.
• During this fiscal year, there were thirteen member municipalities taking part in Term III: Village of
Arlington Heights, Village of Deerfield, City of Des Plaines, Elk Grove Village, Village of Glenview,
Village of Hoffman Estates, Village of Lincolnshire, Village of Mount Prospect, City of Park Ridge,
Village of Skokie, Village of Streamwood, City of Wheaton, and the Village of Winnetka. Two
additional members who terminated their memberships at the conclusion of Term II, the Village of
• Chicago Ridge and the Village of Oak Lawn, are still liable for any claims that arose during the Term II
period.
The following discussion provides an assessment by management of the current financial position, results
of operations, cash flows and liquidity, and changes in financial position for HELP. Information
presented in this discussion supplements the financial statements, schedules, and exhibits of the 2009
• Annual Report.
FINANCIAL POSITION
Total assets for HELP increased by $120,051, from $13,487,284 in 2008 to $13,607,335 in 2009. Assets
• are made up entirely of cash, cash equivalents, and investments.
The HELP investment portfolio consists of $1,001,169 of common stocks held in the form of an equity
index fund and $12,606,166 invested in money market funds held through The Illinois Funds and the
Illinois Metropolitan Investment Fund.
• The liability for a claims reserve remained at $2,000,000 in 2009. Accounts payable for estimated unpaid
legal bills remain at $4,000.
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Fund equity in the form of retained earnings increased $120,051 from $11,483,284 to 11,603,335.
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Management's Discussion and Analysis
FOR THE YEAR ENDED APRIL 30, 2009
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} "BalanceSh'eets ''`�;
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2009 2008
Total Assets $13,607,335 $13,487,284
Total Liabilities $2,004,000 $2,004,000
Total Fund Equity 11,603,335 11,483,284
Total Liabilities and
Fund Equity $13,607,335 $13,487,284
RESULTS OF OPERATIONS
Total operating revenues for 2009 were $893,099. This is a decrease of 11.7% from the prior year.
Operating revenues consisted solely of member assessments. The amount of the member assessments
from year to year is determined annually at a regular Board of Directors meeting. The decline in revenues
is the result of two municipalities terminating their memberships in the pool.
Total operating expenses decreased by $47,340. Excess insurance coverage premiums for 2009 were
$51,128 lower than the prior year. Nonoperating income decreased by $769,642, due to a decline in
interest rates and unrealized losses in investments.
HELP net income for 2009 was $120,051, down from $960,396 realized in the prior year.
'4 � Cfiifio6s inxRetain d E ngs , N_ww ,
2009 2008
Total Operating Revenues $893,099 $1,011,142
Total Operating Expenses 378,492 425,832
Total Nonoperating
Revenue /(Expense) (394,556 ) 375,086
Net Income $120,051 $960,396
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Management's Discussion and Analysis
FOR THE YEAR ENDED APRIL 30, 2009
CASH FLOW AND LIQUIDITY
HELP generated net positive cash flows from operating and investing activities. For year the ended April
30, 2009, cash and cash equivalents were $12,606,166 versus $11,940,858 in 2008.
0 REQUEST FOR INFORMATION
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This financial report is designed to provide a general overview of HELP's finances for all those with an
interest. Questions concerning any of the information provided in this report or requests for additional
financial information should be addressed to David O. Erb, Treasurer, c/o Village of Mount Prospect, 50
South Emerson Street, Mount Prospect, Illinois 60056.
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BASIC FINANCIAL STATEMENTS
MILLER COOPER & CO., LTD.
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High -Level Excess Liability Pool
BALANCE SHEETS
April 30, 2009 and 2008
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ASSETS
2009
2008
CURRENT ASSETS
Cash, cash equivalents, and investments
$
13,607,335
$
13,487,284
Total assets
$
13,607,335
$
13,487,284
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LIABILITIES AND FUND EQUITY
CURRENT LIABILITIES
Accounts payable
$
4,000
$
4,000
Claims reserve
2,000,000
2,000,000
Total liabilities
2,004,000
2,004,000
FUND EQUITY
Retained earnings
11,603,335
11,483,284
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Total liabilities and fund equity
$
13,607,335
$
13,487,284
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The accompanying notes are an integral part of these statements.
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High -Level Excess Liability Pool
STATEMENTS OF REVENUES, EXPENSES, AND
CHANGES IN RETAINED EARNINGS - BUDGET AND ACTUAL
Years Ended April 30, 2009 and 2008
Operating revenues
Member assessments
Total operating revenues
Operating expenses
Risk management consultants
Excess insurance
Attorneys' fees
Case review
Corporate matters
Auditing fees
Surety bonds
Meeting expenses
Membership dues
Total operating expenses
Operating income
Nonoperating revenue (expense)
• Unrealized gains (loss)
Interest, dividends and
realized gains
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Total nonoperating
revenue (expense)
NET INCOME
Retained earnings
Beginning of year
End of year
2009
2008
Budget
Actual
Budget
Actual
$ 893,100 $
893,099 $
1,011,142 $
1,011,142
893,100
893,099
1,011,142
1,011,142
37,000
37,000
35,000
34,500
375,000
321,981
500,000
373,109
15,000
1,639
15,000
3,479
20,000
4,784
20,000
3,032
7,500
8,742
7,000
7,200
2,000
1,972
2,000
1,762
2,000
-
2,000
-
4,000
2,374
4,000
2,750
462,500
378,492
585,000
425,832
430,600
514,607
426,142
585,310
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(508,006)
-
40,124
-
113,450
-
334,962
500,000
(394,556)
575,000
375,086
$ 930,600
120,051 $
1,001,142
960,396
11,483,284 10,522,888
$ 11,603,335 $ 11,483,284
The accompanying notes are an integral part of these statements.
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High -Level Excess Liability Pool
• STATEMENTS OF CASH FLOWS
Years Ended April 30, 2009 and 2008
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2009
2008
Cash flows from operating activities
Cash received from members
$
893,099
$
1,011,142
Cash paid to suppliers
(378,492)
(426,515)
Net cash provided by operating activities
514,607
584,627
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Cash flows from investing activities
Sales of investments
37,251
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Purchase of investments
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(31,695)
Investment income
113,450
482,760
Net cash provided by investing activities
150,701
451,065
INCREASE IN CASH AND CASH EQUIVALENTS
665,308
1,035,692
Cash equivalents
Beginning of year
11,940,858
10,905,166
End of year
$
12,606,166
$
11,940,858
Reconciliation
Cash and cash equivalents
$
12,606,166
$
11,940,858
Investments
1,001,169
1,546,426
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Total cash, cash equivalents, and investments
$
13,607,335
$
13,487,284
Reconciliation of operating loss to net cash provided by
operating activities
Operating income
$
514,607
$
585,310
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Adjustments to reconcile operating income to net
cash provided by operating activities
Increase (decrease) in liabilities
Accounts payable
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(683)
Net cash provided by operating activities
$
514;607
$
584,627
Supplemental noncash investing activities
Change in market value of investments
$
(508,006)
$
92,112
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The accompanying notes are an integral part of these statements.
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High -Level Excess Liability Pool
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2009 and 2008
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NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of High -Level Excess Liability Pool (the Pool) have been prepared in conformity with
accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The
. Governmental Accounting Standards Board (GASB) is the accepted standard - setting body for establishing
governmental accounting and financial reporting principles. The more significant of the Pool's accounting policies are
described below.
1. Reporting Entity and its Services
• In evaluating how to define the Pool for financial reporting purposes, management has considered all potential
component units. The decision to include a potential component unit in the reporting entity was made by applying
the criteria set forth by the Governmental Accounting Standards Board (GASB). Based upon the application of
GASB criteria, there are no potential component units to be included in the Pool's reporting entity. The Pool is
. defined as a joint venture under these standards.
The Pool was organized on April 1, 1987. The Term II agreement expired on April 30, 2008, and was extended
for another ten -year term (Term III), with an expiration date of April 30, 2018. The purpose of the Pool is to act
as a joint self - insurance pool for the purpose of seeking the prevention or lessening of liability claims for injuries to
persons or property or claims for errors and omissions made against the members and other parties included within
the scope of coverage of the Pool. The initial amount of coverage provided to the members by the Pool was
$1,000,000 per occurrence and in the aggregate, with a self - insured retention of $1,000,000. The amount of
coverage provided to the members by the Pool for subsequent years is as follows:
Years ended
Member
Pool
Pool
Total
Ended
Risk
Occurrence
Excess
Risk
April 30,
Responsibility
Limit
Coverage
Financed
1988 -1994
$ 1,000,000 $
5,000,000 $
- $
6,000,000
1995 -1996
1,000,000
5,000,000
5,000,000
11,000,000
0 1997 -1999
1,000,000
2,000,000
8,000,000
11,000,000
2000
1,000,000
2,000,000
10,000,000
13,000,000
2001
1,000,000
2,000,000
12,000,000
15,000,000
2002
1,000,000
3,000,000
8,000,000
12,000,000
2003
1,000,000
3,000,000
7,000,000
11,000,000
2004
2,000,000
3,000,000
7,000,000
12,000,000
2005 -2009
2,000,000
4,000,000
6,000,000
12,000,000
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High -Level Excess Liability Pool
r NOTES TO THE FINANCIAL STATEMENTS
April 30, 2009 and 2008
0 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. Reporting Entity and its Services (Continued)
. Entities joining the new Pool must remain members for a minimum of ten years. Entities applying for membership
in the Pool may do so on approval of a two- thirds vote of the Board of the Pool. Underwriting and rate - setting
policies have been established after consultation with actuaries. Members are subject to a supplemental assessment
in the event of deficiencies.
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The following were percentages of shares and cumulative premium contributions for the members of the Pool as of
A
April 30, 2009:
% Share
Current
Assets,
Cumulative
Annual
Liabilities,
Premium
Premiums and Equity
Contributions
Village of Arlington Heights
12.90%
13.16 %
$ 2,899,558
Village of Chicago Ridge*
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600,646
Village of Deerfield
3.69
3.94
873,966
City of Des Plaines
10.78
11.15
2,462,050
Elk Grove Village
8.18
8.56
1,892,716
Village of Glenview
9.77
8.62
1,861,403
Village of Hoffman Estates
10.70
9.35
2,017,348
Village of Lincolnshire
2.19
1.93
417,795
Village of Mount Prospect
8.05
8.26
1,822,327
Village of Oak Lawn*
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2,210,513
City of Park Ridge
6.34
6.50
1,433,278
Village of Skokie
10.21
10.71
2,369,591
Village of Streamwood
5.31
5.05
1,101,923
City of Wheaton
7.84
8.32
1,842,526
Village of Winnetka
4.04
4.45
988,565
100.00%
100.00 %
$ 24,794,205
*The Vi lages have since terminated their
membership with the Pool beginning May 1, 2008 and are no longer
entitle o any share of the contributions that were previously made to the Pool.
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High -Level Excess Liability Pool
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2009 and 2008
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2. Fund Accounting
The Pool operates as a single proprietary fund, more specifically as an enterprise fund. Proprietary funds are used
to account for activities similar to those found in the private sector, where the determination of net income is
necessary or useful to sound financial administration. Services from such activities are provided to outside parties.
Its operations are such that:
• a) The Pool provides risk management services to its member municipalities,
and
b) Members fund the Pool to cover the costs of providing such services.
• 3. Basis of Accounting
The accounting and financial reporting treatment applied to a fund is determined by its measurement focus.
All proprietary funds are accounted for on a flow of economic resources measurement focus. With this
• measurement focus, all assets and all liabilities associated with the operation of these funds are included on the
balance sheet. Proprietary fund -type operating statements present increases (e.g., revenues) and decreases (e.g.,
expenses) in net total assets.
The accrual basis of accounting is utilized by proprietary fund types. Under this method, revenues are recorded
when earned and expenses are recorded at the time liabilities are incurred.
The Pool has elected to apply all applicable GASB pronouncements and all Financial Accounting Standards Board
(FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research
Bulletins (ARB) issued on or before November 30, 1989, unless they conflict with or contradict GASB
• pronouncements.
4. Budgets
Budgets are adopted on a basis consistent with GAAP. Annual budgets are adopted for the Pool. All annual
• budgets lapse at fiscal year -end.
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High -Level Excess Liability Pool
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2009 and 2008
0 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
5. Cash Equivalents
For purposes of the statement of cash flows, the Pool considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
6. Investments
. Investments are carried at fair value.
7. Claims Reserve Liabilities
The Pool establishes claims reserve liabilities based upon an estimate of the ultimate cost of claims that have been
reported but not settled and of claims that have been incurred but not reported. The length of time for which such
r costs must be estimated varies depending on the individual facts and circumstances. Adjustments to claims reserve
liabilities are charged or credited to expense in the period in which they are made. (See Note E.)
8. Use of Estimates
In preparing financial statements, management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during the reporting period. Because the
final resolution of potentially large claims against the Pool is uncertain, management believes that actual results
could differ materially from those estimates.
NOTE B - LEGAL COMPLIANCE AND ACCOUNTABILITY
Bum
• The budget is prepared by function and activity, and includes information on the past year, current year estimates, and
requested amounts for the next fiscal year.
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The proposed budget is presented to the governing body for review. The governing body may add to, subtract from, or
change amounts, but may not change the form of the budget.
The budget may be amended by a majority vote of the governing body. No amendments were passed for 2009 and
2008.
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High -Level Excess Liability Pool
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2009 and 2008
0 NOTE C - DEPOSITS AND INVESTMENTS
1. Permitted Deposits and Investments
• The Pool's investment policy is more restrictive than state statutes. The Pool's deposits and investments are limited
to approved banks and specifically authorized investments including bonds, notes, bills, and other full faith and
credit U.S. Government securities, interest - bearing investments (C.D.$), The Illinois Funds (State Treasurer -
Managed investment pool), IMET investment fund (short-term local government investment pool), money market
mutual funds, and fixed income and equity securities (with credit risk limited to 45% of the portfolio).
As of April 30, 2009, the Pool had the following cash equivalents and investment maturities.
Investment Maturities (In Years)
Investment Type Fair Value Less than 1 1 -3 Equities
The Illinois Funds $ 9,885,031 $ 9,885,031 $ - $ -
Illinois Metropolitan Investment Fund 2,721,135 - 2,721,135 -
Mutual Fund - Equities 1,001,169 - - 1,001,169
Total cash equivalents and investments $ 13,607,335 $ 9,885,031 $ 2,721,135 $ 1,001,169
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As of April 30, 2008, the Pool had the following cash equivalents and investment maturities.
Investment Maturities (In Years)
Investment Type Fair Value Less than 1 1 -3 Equities
The Illinois Funds $ 9,256,976 $ 9,256,976 $ - $ -
Illinois Metropolitan Investment Fund 2,683,882 - 2,683,882 -
Mutual Fund - Equities 1,546,426 - - 1,546,426
0 Total cash equivalents and investments $ 13,487,284 $ 9,256,976 $ 2,683,882 $ 1,546,426
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2. Interest Rate Risk
The Pool's investment policy does not limit investment maturities as a means of managing its exposure to fair value
losses arising from increasing interest rates. The objective is to maintain a core portfolio with maturities in the one•
to- three -year range.
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NOTES TO THE FINANCIAL STATEMENTS
April 30, 2009 and 2008
NOTE C - DEPOSITS AND INVESTMENTS (Continued)
3. Credit Risk
The Pool's investment policy limits investments in commercial paper, corporate bonds, and mutual bonds funds to
the top two ratings issued by nationally recognized statistical rating organizations. The Pool's investment policy is
more restrictive than state statutes. The Pool's deposits /investments are limited to approved banks and specifically
authorized investments including bonds, notes, bills, and other full faith and credit U.S. Government securities,
interest- bearing investments (C.D.$), The Illinois Funds (State Treasurer - Managed investment pool), Illinois
Metropolitan Investment Fund (short-term local government investment pool), money market mutual funds, and
• fixed income and equity securities. As of April 30, 2009, The Illinois Funds Money Market Fund was rated
AAAm by Standard & Pool's and the Illinois Metropolitan Investment Fund Convenience Money Market Fund was
rated AAAf by Standard & Poor's. The Illinois Funds is not registered with the SEC. The Illinois Funds is
sponsored by the State Treasurer in accordance with state law. The fair value of the positions in The Illinois Funds
is the same as the value of The Illinois Funds shares.
0 4. Custodial Credit Risk
For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the Pool will
not be able to recover the value of its investments or collateral securities that are in the possession of an outside
party. As of April 30, 2009, the Pool was not subject to custodial credit risk, as all of the Pool's investments are
insured.
5. Concentration of Credit Risk
It is the policy of the Pool to diversify its investment portfolio. Investments shall be diversified to eliminate the risk
• of loss resulting in overconcentration in a security, maturity, issuer, or class of securities. The Pool's investment
policy requires the Pool to diversify its investments by investment type. Diversification by investment type is as
follows: Bonds, notes, bills, and other full faith and credit U.S. Government securities - 100% maximum; interest -
bearing investments - 50% maximum; The Illinois Funds - 100% maximum; Illinois Metropolitan Investment Fund
100% maximum; money market mutual funds - 50% maximum; and fixed income and equity securities - 45%
maximum.
NOTE D - CONTINGENT LIABILITIES - LITIGATION
There are several claims and legal actions pending against members of the Pool. Management and their legal counsel
believe that certain actions against the members could result in losses to the Pool. Except as discussed in Note E, no
additional amounts have been recorded as losses and additional claims reserve because unfavorable outcomes are not
probable and cannot be reasonably estimated.
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High -Level Excess Liability Pool
NOTES TO THE FINANCIAL STATEMENTS
April 30, 2009 and 2008
NOTE E - CLAIMS RESERVE LIABILITIES
As discussed in Note A, the Pool establishes a liability for both reported and unreported insured events, which includes
estimates of future payments for both claims and losses and related claims adjustment expenses. The claims reserve
liability at year -end relates to claim year 1998. The schedule below presents the changes in the claims reserve for the
years ended April 30, 2009 and 2008, respectively.
Unpaid claims and claims adjustment expenses at the
beginning of the year.
$ 2,000,000 $ 2,000,000
Incurred claims and claims adjustment expenses
Provision for insured events of the current fiscal year - -
Increases in provision for insured events of prior
fiscal years - -
Total incurred claims and claims adjustment expenses - -
Payments
Claims and claims adjustment expenses attributable to
insured events of the current fiscal year - -
Claims and claims adjustment expenses attributable to
insured events of the prior fiscal year - -
• Total payments - -
Total unpaid claims and claims adjustment expenses at
the end of the fiscal year $ 2,000,000 $ 2,000,000
NOTE F - RECLASSIFICATIONS
Certain reclassifications have been made to the 2008 financial statements in order to conform to the 2009 presentation.
These reclassifications have no effect on the net income of the financial statements.
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REQUIRED SUPPLEMENTARY INFORMATION
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High -Level Excess Liability Pool
REQUIRED SUPPLEMENTARY INFORMATION
April 30, 2009
Ten -Year Claims Development Information
The table on the following pages illustrates how the Pool's earned revenues and investment income
compare to related costs of losses and other expenses assumed by the Pool as of the end of each of the last
ten years. The rows of the table are defined as follows: (1) This he shows the total of each fiscal year's
earned contribution revenues and investment revenues. (2) This line shows each fiscal year's other
operating costs of the pool, including overhead and claims expense not allocable to individual claims. (3)
This line shows the Pool's incurred claims and allocated claims adjustment expenses (both paid and
accrued) as originally reported at the end of the first year in which the event that triggered coverage under
the contract occurred (called policy year). (4) This section of ten rows shows the cumulative amounts
paid as of the end of successive years for each policy year. (5) This section of ten rows shows how each
policy year's incurred claims increased or decreased as of the end of successive years. This annual
reestimation results from new information received on known claims and reevaluation of existing
information on known claims, as well as emergence of new claims not previously known. (6) This line
compares the latest reestimated incurred claims amount to the amount originally established (line 3), and
shows whether this latest estimate of claims cost is greater or less than originally thought. As data for
individual policy years mature, the correlation between original estimates and reestimated amounts is
commonly used to evaluate the accuracy of incurred claims currently recognized in less mature policy
years. The columns of the table show data for successive policy years.
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MILLER COOPER & CO., LTD.
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High -Level Excess Liability Pool
REQUIRED SUPPLEMENTARY INFORMATION
Ten -Year Claims Development Information
April 30, 2009
Ten -Year Claims Development Information (Continued)
2000
1. Net earned required contribution
and investment income $ 1,462,539 $
2. Unallocated expenses 195,627
3. Estimated incurred claims and
expense, end of policy year
4. Paid (cumulative) as of:
End of policy year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
5. Reestimated incurred claims
and expense:
End of policy year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
6. Increase (decrease) in estimated incurred
claims and expense from the end
of the policy year
268,760
501,022
501,022
501,022
501,022
501,022
360,000
593,760
501,022
501,022
501,022
501,022
501,022
501,022
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MILLER COOPER & CO., LTD.
2001 2002 2003
1,546,330 $ 1,316,531 $ 1,054,854
178,869 295,634 433,015
8,935
8,935
8,935
8,935
8,935
502,000
8,935
8,935
8,935
8,935
8,935
8,935
505,000
150,000
150,000
150,000
150,000
505,000
505,000
505,000
150,000
150,000
150,000
150,000
(355,000)
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2004 2005 2006 2007 2008 2009
$ 1,993,124 $ 2,009,041 $ 2,377,597 $ 2,741,042 $ 1,346,104 $ 1,006,549
398,860 381,974 387,739 434,976 425,832 378,492
- 5,000 - - - -
•
•
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5,000 - - - -
- 7,500 - - -
5,000 - - -
(5,000) - - - -
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MILLER COOPER & CO., LTD.
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0
0
0
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11
SUPPLEMENTARY INFORMATION
MILLER COOPER & CO., LTD.
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High -Level Excess Liability Pool
TERM III AND TERM II
BALANCE SHEETS
April 30, 2009
ASSETS
CURRENT ASSETS
Cash, cash equivalents, and investments
Total assets
LIABILITIES AND FUND EQUITY
CURRENT LIABILITIES
Accounts payable
Claims reserve
Total liabilities
FUND EQUITY
Retained earnings
Total liabilities and fund equity
Term III Term II Total
$ 562,868 $ 13,044,467 $ 13,607,335
$ 562,868 $ 13,044,467 $ 13,607,335
$ - $ 4,000 $ 4,000
2,000,000 2,000,000
2,004,000 2,004,000
562,868 11,040,467 11,603,335
$ 562,868 $ 13,044,467 $ 13,607,335
-24-
MILLER COOPER & CO., LTD.
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High -Level Excess Liability Pool
TERM III AND TERM II
STATEMENTS OF REVENUES, EXPENSES, AND
CHANGES IN RETAINED EARNINGS
Year Ended April 30, 2009
Operating revenues
Member assessments
Total operating revenues
Operating expenses
Risk management consultants
Excess insurance
Attorneys' fees
Case review
Corporate matters
Auditing fees
Surety bonds
Membership dues
Total operating expenses
Operating income
Investment income (loss)
NET INCOME (LOSS)
Retained earnings
Beginning of year
End of year
$ 893,099 $
893,099
$ 893,099
893,099
3,700
33,300
37,000
321,981
-
321,981
-
1,639
1,639
2,204
2,580
4,784
967
7,775
8,742
1,972
-
1,972
2,374
-
2,374
333,198
45,294
378,492
559,901
(45,294)
514,607
2,967
(397,523)
(394,556)
562,868
(442,817)
120,051
- 11,483,284 11,483,284
$ 562,868 $ 11,040,467 $ 11,603,335
-25-
MILLER COOPER & CO., L.'rD.
MILLER
CAPER
&Co.)Ltd
ACCOUNTANT'S AND CONSULTANT'S
Members of the Board of Directors
High -Level Excess Liability Pool
Mt. Prospect, Illinois
We have audited the financial statements of High -Level Excess Liability Pool (the Pool) as of April 30,
2009 and 2008, and have issued our report thereon dated December 15, 2009. Professional standards
require that we advise you of the following matters relating to our audit.
Our Responsibility under Generally Accepted Auditing Standards
As communicated in our engagement letter dated June 11, 2007, and later amended on October 20, 2008,
our responsibility, as described by professional standards, is to form and. express an opinion about
whether the financial statements that have been prepared by management with your oversight are
presented fairly, in all material respects, in conformity with accounting principles generally accepted in
the United States of America. Our audit of the financial statements does not relieve you or management
of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain
reasonable, rather than absolute, assurance about whether the financial statements are free of material
misstatement. An audit of financial statements includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial
reporting. Accordingly, as part of our audit, we considered the internal control of the Pool solely for the
purpose of determining our audit procedures and not to provide any assurance concerning such internal
control.
We are also responsible for communicating significant matters related to the audit that are, in our
professional judgment, relevant to your responsibilities in overseeing the financial reporting process.
However, we are not required to design procedures for the purpose of identifying other matters to
communicate to you.
Other Information in Documents Containing Audited Financial Statements
We are not aware of any other documents that contain the audited financial statements. If such
documents were to be published, we would have a responsibility to determine that such financial
information was not materially inconsistent with the audited statements of the Pool.
Planned Scope and Timing of the Audit
We conducted our audit consistent with the planned scope and timing that we previously communicated
to you.
1751 Lake Cook Road, Suite 400, Deerfield, IL 60015 ■ 500 West Madison Street, Suite 3350, Chicago, IL 60661
847205.5000 ■ Fax 847205.1400 ■ www.millercooper.com
INTERNATIONAL
Members of the Board of Directors
High -Level Excess Liability Pool
Mt. Prospect, Illinois Page Two
Qualitative Aspects of the Company's Significant Accounting Practices
Significant Accounting Policies
Management has the responsibility to select and use appropriate accounting policies. A summary of the
significant accounting policies adopted by the Pool is included in Note A to the financial statements.
There have been no initial selection of accounting policies and no changes in significant accounting
policies or their application during the fiscal year ended April 30, 2009. No matters have come to our
attention that would require us, under professional standards, to inform you about (1) the methods used to
account for significant unusual transactions and (2) the effect of significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
Significant Accounting Estimates
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's current judgments. Those judgments are normally based on knowledge and
experience about past and current events and assumptions about future events. Certain accounting
estimates are particularly sensitive because of their significance to the financial statements and because of
the possibility that future events affecting them may differ markedly from management's current
judgments. The most sensitive accounting estimates affecting the financial statements are provisions for
risk retention, including uninsured losses or loss retentions (deductibles) attributable to events occurring
through April 30, 2009.
Financial Statement Disclosures
Certain financial statement disclosures involve significant judgment and are particularly sensitive because
of their significance to financial statement users. The most sensitive financial disclosures affecting the
Pool's financial statements are those related to claims reserve.
Significant Difficulties Encountered during the Audit
We encountered no significant difficulties in dealing with management relating to the performance of the
audit.
Uncorrected Misstatements
For purposes of this communication, professional standards require us to accumulate all known and likely
misstatements identified during the audit, other than those that we believe are trivial, and communicate
them to the appropriate level of management. In addition, professional standards require us to
communicate to you all material, corrected misstatements that were brought to the attention of
management as a result of our audit procedures. There were no uncorrected or corrected misstatements
noted during our audit.
Accounting Policies and Alternative Treatments
Management and the Board have the ultimate responsibility for the appropriateness of the accounting
policies used by the Pool. The Pool did not adopt any significant new accounting policies nor have there
been any changes in existing significant accounting policies during the current period which should be
brought to your attention.
MILLER COOPER & CO., LTD.
Members of the Board of Directors
High -Level Excess Liability Pool
Mt. Prospect, Illinois Page Three
Accounting Policies and Alternative Treatments (Continued)
We did not identify any significant or unusual transactions or significant accounting policies in
controversial or emerging areas for which there is a lack of authoritative guidance or consensus.
The following is a description of significant accounting policies which will be applicable in future years:
GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment
Benefits Other Than Pensions, issued in June 2004, will be effective for the Village beginning with its
year ending April 30, 2010. This Statement establishes standards for the measurement, recognition, and
display of other postemployment benefits expenses /expenditures and related liabilities (assets), note
disclosures, and, if applicable, required supplemental information in the financial statements of the
employer.
GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, issued in June
2008, will be effective for the Pool beginning with its year ending April 30, 2011. This Statement
addresses the recognition, measurement, and disclosure of information regarding derivative instruments
entered into by state and local governments. Common types of derivative instruments used by
governments include interest rite and commodity swaps, interest rate locks, options (caps, floors, and
collars), swaptions, forward contracts, and future contracts.
GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, issued in
March 2009, will be effective for the Pool beginning with its year ending April 30, 2011. The objective of
this Statement is to enhance the usefulness of fund balance information by providing clearer fund balance
classifications that can be more consistently applied and by clarifying the existing governmental fund type
definitions. This Statement establishes fund balance classifications that comprise a hierarchy based
primarily on the extent to which a government is bound to observe constraints imposed upon the use of
the resources reported in governmental funds.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter,
whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing
matter, which could be significant to the Pool's financial statements or the auditors' report. No such
disagreements arose during the course of the audit.
Representations Requested from Management
We have requested certain written representations from management, which are included in the attached
letter dated December 15, 2009.
MILLER COOPER & CO., LTD.
Members of the Board of Directors
High -Level Excess Liability Pool
Mt. Prospect, Illinois Page Four
Management's Consultations with Other Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters. In some cases, management may decide to consult with other accountants about auditing and
accounting matters. Management informed us that, and to our knowledge, there were no consultations
with other accountants regarding auditing and accounting matters.
Other Significant Findings or Issues
In the normal course of our professional association with the Pool, we generally discuss a variety of
matters, including the application of accounting principles and auditing standards, business conditions
affecting the Pool, and business plans and strategies that may affect the risks of material misstatement.
None of the matters discussed resulted in a condition to our retention as the Pool's auditors.
* * * * * * * * **
We will be pleased to respond to any questions you have about the foregoing. We appreciate the
opportunity to continue to be of service to the Pool.
This report is intended solely for the information and use of the Board of Directors and management and
is not intended to be and should not be used by anyone other than the specified parties.
MILLER, COOPER & CO., LTD.
J
Certified Public Accountants
Deerfield, Illinois
December 15, 2009
MILLER COOPER & CO., LTD.