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HELP financial statements for year ended April 30, 2014 and Independent Auditors' Report April 30, 2014 and 2013 High-Level Excess Liability Pool Basic Financial Statements Page PRINCIPAL OFFICIALS 3 INDEPENDENT AUDITORS' REPORT 4 - 5 MANAGEMENT'S DISCUSSION AND ANALYSIS 6 - 9 BASIC FINANCIAL STATEMENTS Statements of Net Position 10 Statements of Revenues, Expenses, and Changes in Net Position - Budget and Actual 11 Statements of Cash Flows 12 Notes to the Financial Statements 13 - 19 REQUIRED SUPPLEMENTARY INFORMATION 21 - 23 SUPPLEMENTARY INFORMATION Term III and Term II Combining Statement of Net Position 25 Combining Statement of Revenues, Expenses, and Changes in Net Position 26 CONTENTS David Erb, Mount Prospect Chairman Christine Tromp, Elk Grove Village Secretary Eric Burk, Village of Deerfield Treasurer April 30, 2014 High-Level Excess Liability Pool PRINCIPAL OFFICIALS -3- Management's Responsibility for the Financial Statements Auditor's Responsibility (Continued) High-LevelExcessLiabilityPool'smanagement is responsibleforthepreparationandfairpresentation of these financialstatements in accordancewithaccountingprinciplesgenerallyaccepted in theUnitedStates of America. Management is alsoresponsibleforthedesign,implementation,andmaintenance of internalcontrolrelevant to the preparationandfairpresentation of financialstatementsthatarefreefrommaterialmisstatement,whetherdue to fraud or error. An auditinvolvesperformingprocedures to obtainauditevidenceabouttheamountsanddisclosures in the financialstatements.Theproceduresselecteddepend on theauditor'sjudgment,includingtheassessment of the risks of materialmisstatement of thefinancialstatements,whetherdue to fraud or error.In makingthoserisk assessments,theauditorconsidersinternalcontrolrelevant to theentity'spreparationandfairpresentation of the financialstatements in order to designauditproceduresthatareappropriate in thecircumstances,but not forthe purpose of expressing an opinion on theeffectiveness of theentity'sinternalcontrol.Accordingly,we express no suchopinion.An auditalsoincludesevaluatingtheappropriateness of accountingpoliciesusedandthe reasonableness of significantaccountingestimatesmadebymanagement,as well as evaluatingtheoverall presentation of the financial statements. We believethattheauditevidence we haveobtained is sufficientandappropriate to provideabasisforouraudit opinion. INDEPENDENT AUDITORS' REPORT Members of the Board of Directors High-Level Excess Liability Pool Mount Prospect, Illinois We haveauditedtheaccompanyingstatements of netposition,statements of revenues,expensesandchanges in netposition-budgetandactual,andstatements of cashflows of High-LevelExcessLiabilityPool,as of andfor theyearsendedApril30,2014and2013,andtherelatednotes to thefinancialstatements,whichcollectively comprise High-Level Excess Liability Pool's basic financial statements, as listed in the table of contents. Ourresponsibility is to express an opinion on thesefinancialstatementsbased on ouraudit.We conductedour audit in accordancewithauditingstandardsgenerallyaccepted in theUnitedStates of America.Thosestandards requirethat we planandperformtheaudit to obtainreasonableassuranceaboutwhetherthefinancialstatements are free from material misstatement. Report on the Financial Statements Members of the Board of Directors High-Level Excess Liability Pool Mount Prospect, Illinois Opinion Other Matters Required Supplementary Information Other Information Deerfield, Illinois September 11, 2014 (Continued) MILLER, COOPER & CO., LTD. Certified Public Accountants Ourauditwasconductedforthepurpose of forming an opinion on thefinancialstatementsthatcollectively comprisetheHigh-LevelExcessLiabilityPool'sbasicfinancialstatements.Theotherschedules,listed in thetable of contents as supplementaryinformation,arepresentedforpurposes of additionalanalysisandare not arequired part of thebasicfinancialstatements.Suchinformation is theresponsibility of managementandwasderivedfrom andrelatesdirectly to theunderlyingaccountingandotherrecordsused to preparethebasicfinancialstatements. Suchinformationhasbeensubjected to theauditingproceduresapplied in theaudit of thebasicfinancial statementsandcertainadditionalprocedures,includingcomparingandreconcilingsuchinformationdirectly to the underlyingaccountingandotherrecordsused to preparethefinancialstatements or to thefinancialstatements themselves,andotheradditionalprocedures in accordancewithauditingstandardsgenerallyaccepted in theUnited States of America.In ouropinion,thesupplementaryinformation is fairlystated in allmaterialrespects in relation to the basic financial statements as a whole. In ouropinion,thefinancialstatementsreferred to abovepresentfairly,in allmaterialrespects,thefinancial position of High-LevelExcessLiabilityPool,as of April30,2014and2013,andtheresults of itsoperationsand cashflowsfortheyearsthenended,in accordancewithaccountingprinciplesgenerallyaccepted in theUnited States of America. Accountingprinciplesgenerallyaccepted in theUnitedStates of Americarequirethatthemanagement'sdiscussion andanalysis on pages6through9andten-yearclaimsdevelopmentinformation on pages21through23be presented to supplementthebasicfinancialstatements.Suchinformation,although not apart of thebasic financialstatements,is requiredbytheGovernmentalAccountingStandardsBoardwhoconsiders it to be an essentialpart of financialreportingforplacingthebasicfinancialstatements in an appropriateoperational, economic,or historicalcontext.We haveappliedcertainlimitedprocedures to therequiredsupplementary information in accordancewithauditingstandardsgenerallyaccepted in theUnitedStates of America,which consisted of inquiries of managementaboutthemethods of preparingtheinformationandcomparingthe informationforconsistencywithmanagement'sresponses to ourinquiries,thebasicfinancialstatements,andother knowledge we obtainedduringouraudit of thebasicfinancialstatements.We donot express an opinion or provide anyassurance on theinformationbecausethelimitedprocedures donot provideuswithsufficientevidence to express an opinion or provide any assurance. High-Level Excess Liability Pool Management’s Discussion and Analysis FOR THE YEAR ENDED APRIL 30, 2014 -6- 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, 2014. We encourage readers to consider the information presented here in conjunction with HELP ’s 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 (Currently $13,000,000 of coverage after a $2,000,000 self-insured retention). HELP was organized on April 1, 1987 with an initial term of 11 years through April 30, 1998. The agreement was extended for a second term that ran through April 30, 2008. 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 13 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 membership at the conclusion of Term II, Village of Chicago Ridge and Village of Oak Lawn, are still liable for any claims that arose during the Term II period but have not yet been reported at this time. The following discussion provides an assessment by management of the current financial position, results of operations, cash flow and liquidity, and changes in financial position for HELP. Information presented in this discussion supplements the financial statements, schedules, and exhibits of the 2014 Annual Financial Report. FINANCIAL POSITION Total assets for HELP decreased from $14,863,805 to $11,974,068 as a result of a large jury verdict against a member was recorded in 2014. Assets are comprised of cash, cash equivalents, investments, and account receivables. The HELP investment portfolio consists of $2,402,179 of common stocks held in the form of an equity index fund and $9,169,182 invested in money market funds held through The Illinois Funds and the Illinois Metropolitan Investment Fund. High-Level Excess Liability Pool Management’s Discussion and Analysis FOR THE YEAR ENDED APRIL 30, 2014 -7- FINANCIAL POSITION (Continued) Total liabilities consist solely of a claims reserve totaling $7,650,000, an increase of $2,950,000 from the prior year. Net position decreased from $10,163,805 to $4,324,068 as a result of the increase in claims reserve and payment of the adverse verdict in excess of prior reserves. Table 1 Statement of Net Position 2013 2014 Current Assets Cash, cash equivalents, and investments $14,863,805 $11,571,361 Accounts receivable - 402,707 Total Assets $ 14,863,805 $ 11,974,068 Total Liabilities – claims reserve $ 4,700,000 $ 7,650,000 Total Net Position 10,163,805 4,324,068 Total Liabilities and Net Position $ 14,863,805 $ 11,974,068 RESULTS OF OPERATIONS Total operating revenues for 2014 were $900,600. The entire amount of operating revenue came from member assessments. The amount of the member assessments from year to year is determined annually at a regular Board of Directors meeting. Total operating expenses increased from $1,855,187 to $7,164,745 due to the adverse verdict and the increase in claims reserve. Excluding claims expense from the total; operating expenses were essentially flat year to year. Non-operating revenue increased by $115,536 due to gains on equities and higher rates of return on surplus funds. Change in net position for 2014 was a decrease of $5,839,737, due to the adverse verdict and the increase in the claims reserve. High-Level Excess Liability Pool Management’s Discussion and Analysis FOR THE YEAR ENDED APRIL 30, 2014 -8- RESULTS OF OPERATIONS (Continued) Table 2 Changes in Net Position 2013 2014 Total Operating Revenues $ 900,601 $ 900,600 Total Operating Expenses 1,855,187 7,164,745 Total Nonoperating Revenue 308,872 424,408 Decrease in Net Position (645,714) (5,839,737) Net Position Beginning of Year 10,809,519 10,163,805 End of Year $10,163,805 $4,324,068 BUDGETING HIGHLIGHTS The fiscal year for HELP runs from May 1 through April 30. The annual budget is approved at the first quarterly meeting of the calendar year, prior to the start of the fiscal year. For fiscal year 2013/2014, the annual budget was approved on April 9, 2013. There were no amendments to the original 2013/2014 budget. Table 3 below reflects the original budget and actual revenues and expenditures for HELP. High-Level Excess Liability Pool Management’s Discussion and Analysis FOR THE YEAR ENDED APRIL 30, 2014 -9- BUDGETING HIGHLIGHTS (Continued) Table 3 HELP Annual Budget Fiscal Year 2012/2013 Original Budget Actual Operating Revenues Member Assessments $ 900,600 $ 900,600 Total Revenues 900,600 900,600 Operating Expenses Expenses 3,484,000 7,164,745 Total Operating Expenses 3,484,000 7,164,745 Nonoperating Revenues Unrealized Gains - 406,657 Interest, Dividends and Realized Gains 220,000 17,751 Total Nonoperating Revenue 220,000 424,408 Increase (Decrease) in Net Assets $ (2,363,400) $ (5,839,737) CASH FLOW AND LIQUIDITY Cash flow from operating and investing activities resulted also decreased due to the adverse verdict. FACTORS BEARING ON THE FUTURE External factors potentially having an impact to the financial stability and functioning of the Pool include adverse claims activity and adverse pooling legislation. HELP pooled coverage kicks in at $2,000,000. A single large claim or catastrophic event with multiple claimants could shrink reserves or result in a supplemental payment from its members. Measures are in place at member organizations that work to minimize the likelihood and impact of adverse claims on the pool. Adverse pooling legislation is anything that works against sound practices of insurance pools such as set enrollment periods or minimum membership commitments. HELP legal counsel and insurance consultant have been proactive in reviewing by-laws in the event adverse pooling legislation is passed. REQUEST FOR INF ORMATION 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 Mr. Eric Burk, Finance Director, Village of Deerfield, 850 Waukegan Road, Deerfield Illinois 60015. BASIC FINANCIAL STATEMENTS ASSETS 2014 2013 CURRENT ASSETS Cash, cash equivalents, and investments $11,571,361$14,863,805 Accounts receivable 402,707 - Total assets $11,974,068$14,863,805 LIABILITIES AND NET POSITION CURRENT LIABILITIES Claims reserve $7,650,000$4,700,000 Total liabilities 7,650,0004,700,000 NET POSITION Unrestricted 4,324,06810,163,805 Total liabilities and net position $11,974,068$14,863,805 The accompanying notes are an integral part of these statements. High-Level Excess Liability Pool STATEMENTS OF NET POSITION April 30, 2014 and 2013 -10- BudgetActualBudgetActual Operating revenues Member assessments$900,600$900,600$893,100$900,601 Total operating revenues 900,600900,600893,100900,601 Operating expenses Risk management consultants39,00039,50038,00038,500 Excess insurance 400,000270,582400,000275,591 Attorneys' fees Case review 10,00038,87510,0009,453 Corporate matters 12,0005,77412,0004,878 Auditing fees 15,0009,61015,00013,976 Surety bonds 2,000 -2,0001,582 Meeting expenses 2,0002,3702,000 - Membership dues 4,0002,5184,0001,207 Office supplies -308 -- Actuary fees ---10,000 Claims expense 3,000,0006,795,208 -1,500,000 Total operating expenses3,484,0007,164,745483,0001,855,187 Operating income (loss)(2,583,400)(6,264,145)410,100(954,586) Nonoperating revenues Unrealized gains -406,657 -287,939 Interest, dividends, and realized gains 220,00017,751220,00020,933 Total nonoperating revenues220,000424,408220,000308,872 INCREASE (DECREASE) IN NET POSITION$(2,363,400)(5,839,737)$630,100(645,714) Net position Beginning of year 10,163,805 10,809,519 End of year $4,324,068 $10,163,805 The accompanying notes are an integral part of these statements. 2014 High-Level Excess Liability Pool STATEMENTS OF REVENUES, EXPENSES, AND Years Ended April 30, 2014 and 2013 CHANGES IN NET POSITION - BUDGET AND ACTUAL 2013 -11- 2014 2013 Cash flows from operating activities Cash received from members $900,600$900,601 Cash paid to suppliers (369,537)(359,187) Claims paid (4,247,915)- Net cash provided by (used in) operating activities (3,716,852)541,414 Cash flows from investing activities Investment income 17,75120,933 Net cash provided by investing activities 17,75120,933 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,699,101)562,347 Cash and cash equivalents Beginning of year 12,868,28312,305,936 End of year $9,169,182$12,868,283 Reconciliation Cash and cash equivalents $9,169,182$12,868,283 Investments 2,402,1791,995,522 Total cash, cash equivalents, and investments $11,571,361$14,863,805 Reconciliation of operating loss to net cash provided by operating activities Operating loss $(6,264,145)$(954,586) Adjustments to reconcile operating loss to net cash provided by operating activities Accounts receivable (402,707)- Accounts payable -(4,000) Claims reserve 2,950,0001,500,000 Net cash provided by (used in) operating activities $(3,716,852)$541,414 Supplemental noncash investing activities Change in market value of investments $406,657$287,939 The accompanying notes are an integral part of these statements. High-Level Excess Liability Pool STATEMENTS OF CASH FLOWS Years Ended April 30, 2014 and 2013 -12- 1. Years Member Pool Pool Total Ended Risk OccurrenceExcess Risk April 30,Responsibility LimitCoverage Financed 1988 $1,000,000 $1,000,000 $-$2,000,000 1989-1994 1,000,000 5,000,000 -6,000,000 1995-1996 1,000,000 5,000,000 5,000,000 11,000,000 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 2005-2013 2,000,000 4,000,000 6,000,000 12,000,000 2014 2,000,000 4,000,000 9,000,000 15,000,000 High-Level Excess Liability Pool NOTES TO THE FINANCIAL STATEMENTS April 30, 2014 Thefinancialstatements of theHigh-LevelExcessLiabilityPool(thePool)havebeenprepared in conformitywith accountingprinciplesgenerallyaccepted in theUnitedStates of America(GAAP),as applied to thistype of governmententity.TheGovernmentalAccountingStandardsBoard(GASB)is theacceptedstandard-settingbody forestablishinggovernmentalaccountingandfinancialreportingprinciples.Themoresignificant of thePool's accounting policies are described below. In evaluating how to definethePoolforfinancialreportingpurposes,managementhasconsideredallpotential componentunits.Thedecision to includeapotentialcomponentunit in thereportingentitywasmadeby applyingthecriteriasetforthbytheGovernmentalAccountingStandardsBoard(GASB).Baseduponthe application of GASBcriteria,thereare no potentialcomponentunits to beincluded in thePool'sreporting entity. The Pool is defined as a joint venture under these standards. Reporting Entity and its Services ThePoolwasorganized on April1,1987.TheTerm II agreementexpired on April30,2008,andwas extendedforanotherten-yearterm(Term III),with an expirationdate of April30,2018.Thepurpose of the Pool is to act as ajointself-insurancepoolforthepurpose of seekingtheprevention or lessening of liability claimsforinjuries to persons or property or claimsforerrorsandomissionsmadeagainstthemembersand otherpartiesincludedwithinthescope of coverage of thePool.Theamount of coverageprovided to the members by the Pool for subsequent years is as follows: NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -13- High-Level Excess Liability Pool NOTES TO THE FINANCIAL STATEMENTS April 30, 2014 1. % Share % Share Assets,CumulativeAssets,Cumulative Liabilities,PremiumLiabilities,Premium and Net Contributions and Net Contributions 12.63 % $ 678,393 11.65 % $ 2,784,342 * - - 2.51 600,646 3.70 197,711 3.52 841,004 11.01 590,460 9.90 2,365,731 8.24 441,706 7.61 1,819,670 9.56 513,924 7.42 1,774,167 10.20 543,531 8.04 1,921,762 2.34 131,634 1.67 398,217 8.32 446,762 7.32 1,750,396 * - - 9.25 2,210,513 6.32 337,557 5.76 1,376,666 10.11 549,952 9.53 2,278,434 5.30 282,156 4.41 1,054,527 8.10 434,439 7.42 1,772,513 4.17 225,379 3.99 952,517 100.00 % $5,373,604 100.00 % $23,901,105 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Village of Lincolnshire Village of Mount Prospect Thefollowingwerepercentages of sharesandcumulativepremiumcontributionsforthemembers of thePool as of April 30, 2014: Reporting Entity and its Services (Continued) EntitiesjoiningthePoolmustremainmembersforaminimum of tenyears.Entitiesapplyingformembership in thePoolmay do so on approval of atwo-thirdsvote of theBoard of thePool.Underwritingandrate-setting policieshavebeenestablishedafterconsultationwithactuaries.Membersaresubject to asupplemental assessment in the event of deficiencies. Village of Arlington Heights Village of Hoffman Estates Elk Grove Village Village of Chicago Ridge *TheVillage of ChicagoRidgeandtheVillage of OakLawnterminatedtheirmembershipsafterTerm II and are not covered under Term III. City of Wheaton Village of Winnetka Village of Oak Lawn Term II Village of Deerfield City of Des Plaines Village of Skokie Village of Streamwood Term III Village of Glenview City of Park Ridge -14- High-Level Excess Liability Pool NOTES TO THE FINANCIAL STATEMENTS April 30, 2014 2.Fund Accounting 3.Basis of Accounting 4. b) Allproprietaryfundsareaccountedfor on aflow of economicresourcesmeasurementfocus.Withthis measurementfocus,allassetsandallliabilitiesassociatedwiththeoperation of thesefundsareincluded in the statement of netposition.Proprietaryfund-typeoperatingstatementspresentincreases(e.g.,revenues)and decreases (e.g., expenses) in total net position. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Theaccrualbasis of accounting is utilizedbyproprietaryfundtypes.Underthismethod,revenuesarerecorded when earned and expenses are recorded at the time liabilities are incurred. Members fund the Pool to cover the costs of providing such services. Budgets Budgetsareadopted on abasisconsistentwithGAAP.AnnualbudgetsareadoptedforthePool.Allannual budgets lapse at fiscal year-end. NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) and The Pool provides risk management services to its member municipalities,a) ThePooloperates as asingleproprietaryfund,morespecifically asan enterprisefund.Proprietaryfundsare used to accountforactivitiessimilar to thosefound in theprivatesector,wherethedetermination of netincome is necessary or useful to soundfinancialadministration.Servicesfromsuchactivitiesareprovided to outside parties. Its operations are such that: -15- High-Level Excess Liability Pool NOTES TO THE FINANCIAL STATEMENTS April 30, 2014 5. 6. 7. 8. NOTE B - LEGAL COMPLIANCE AND ACCOUNTABILITY Budgets Claims Reserve Liabilities ThePoolestablishesclaimsreserveliabilitiesbasedupon an estimate of theultimatecost of claimsthathave beenreportedbut not settledand of claimsthathavebeenincurredbut not reported.Thelength of timefor whichsuchcostsmustbeestimatedvariesdepending on theindividualfactsandcircumstances.Adjustments to claims reserve liabilities are charged or credited to expense in the period in which the adjustments are made. Investmentsarecarried at fairvalue.Thereportedvalue of thepool is thesame as thefairvalue of thepool shares. Investments in mutual funds are stated at share price which is substantially the same as fair value. Theproposedbudget is presented to thegoverningbodyforreview.Thegoverningbodymayaddto,subtract from, or change amounts, but may not change the form of the budget. Thebudgetmaybeamendedbyamajorityvote of theBoard.No amendmentswerepassedfortheyearsended April 30, 2014 or 2013. In preparingfinancialstatements,management is required to makeestimatesandassumptionsthataffectthe reportedamounts of assetsandliabilities,thedisclosure of contingentassetsandliabilities at thedate of the financialstatements,andthereportedamounts of revenuesandexpensesduringthereportingperiod.Because thefinalresolution of potentiallylargeclaimsagainstthePool is uncertain,managementbelievesthatactual results could differ materially from those estimates. Cash Equivalents NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Forpurposes of thestatement of cashflows,thePoolconsidersallhighlyliquidinvestmentswithamaturity of three months or less, when purchased, to be cash equivalents. Investments Thebudget is preparedbyfunctionandactivity,andincludesinformation on thepastyear,currentyearestimates, and requested amounts for the next fiscal year. Use of Estimates -16- High-Level Excess Liability Pool NOTES TO THE FINANCIAL STATEMENTS April 30, 2014 1. Permitted Deposits and Investments Fair ValueLess than 1Equities The Illinois Funds $4,387,015 $4,387,015 $- Illinois Metropolitan Investment Fund 4,782,1674,782,167 - Mutual Fund - Equities 2,402,179 -2,402,179 Total cash, cash equivalents and investments $11,571,361 $9,169,182 $2,402,179 Fair ValueLess than 1Equities The Illinois Funds $8,102,548 $8,102,548 $- Illinois Metropolitan Investment Fund 4,765,7354,765,735 - Mutual Fund - Equities 1,995,522 -1,995,522 Total cash, cash equivalents and investments $14,863,805 $12,868,283 $1,995,522 2.Interest Rate Risk ThePool'sinvestmentpolicy is morerestrictivethanstatestatutes.ThePool'sdepositsandinvestmentsare limited to approvedbanksandspecificallyauthorizedinvestmentsincludingbonds,notes,bills,andotherfull faithandcreditU.S.Governmentsecurities,mortgage-backedsecurities,theIllinoisFunds(StateTreasurer- Managedinvestmentpool),IllinoisMetropolitanInvestmentFund(IMET)(short-termlocalgovernment investmentpool),corporatebonds,andfixedincomeandequitysecurities(withcreditrisklimited to 45%of the portfolio). Maturities (In Years) As of April 30, 2014, the Pool had the following cash, cash equivalents and investment maturities. ThePool'sinvestmentpolicydoes not limitinvestmentmaturities as ameans of managingitsexposure to fair valuelossesarisingfromincreasinginterestrates.Theobjective is to maintainacoreportfoliowithmaturities in the one-to-three-year range. NOTE C - DEPOSITS AND INVESTMENTS As of April 30, 2013, the Pool had the following cash, cash equivalents and investment maturities. Type Type Maturities (In Years) -17- High-Level Excess Liability Pool NOTES TO THE FINANCIAL STATEMENTS April 30, 2014 3. 4. 5. Thereareseveralclaimsandlegalactionspendingagainstmembers of thePool.Managementandtheirlegal counselbelievethatcertainactionsagainstthememberscouldresult in losses to thePool.Except as discussed in Note E,no additionalamountshavebeenrecorded as lossesandadditionalclaimsreservebecauseunfavorable outcomes are not probable and cannot be reasonably estimated. NOTE D - CONTINGENT LIABILITIES - LITIGATION It is thepolicy of thePool to diversifyitsinvestmentportfolio.Investmentsshallbediversified to eliminatethe risk of lossresulting in overconcentration in asecurity,maturity,issuer,or class of securities.ThePool's investmentpolicyrequiresthePool to diversifyitsinvestmentsbyinvestmenttype.Diversificationby investmenttype is as follows:Bonds,notes,bills,andotherfullfaithandcreditU.S.Governmentsecurities- 100%maximum;mortgage-backedsecurities-30%maximum;theIllinoisFunds-100%maximum;Illinois MetropolitanInvestmentFund-100%maximum;corporatebonds-30%maximum;andfixedincomeand equity securities - 40% maximum. Concentration of Credit Risk As of April30,2014,TheIllinoisFundsMoneyMarketFundwasrated AAAm byStandard&Poor'sandthe IllinoisMetropolitanInvestmentFundConvenienceMoneyMarketFundwasratedAaabyMoody's.The IllinoisFunds is not registeredwiththeSEC.TheIllinoisFunds is sponsoredbytheStateTreasurer in accordancewithstatelaw.Thefairvalue of thepositions in TheIllinoisFunds is thesame as thevalue of The IllinoisFundsshares.IMETwasestablished as anot-for-profitinvestmentfundundertheIllinoisMunicipal Code.TheFund is managed so as to maintainastable$1.00shareprice.As of April30,2014,theIMET investments were rated AA by Standard & Poor's and Aaa by Moody's. NOTE C - DEPOSITS AND INVESTMENTS (Continued) Custodial Credit Risk For an investment,custodialcreditrisk is theriskthat,in theevent of thefailure of thecounterparty,thePool will not beable to recoverthevalue of itsinvestments or collateralsecuritiesthatare in thepossession of an outside party. As of April 30, 2014, the Pool's investments were in compliance with their policy. Credit Risk -18- High-Level Excess Liability Pool NOTES TO THE FINANCIAL STATEMENTS April 30, 2014 2014 2013 Unpaid claims and claims adjustment expenses at the beginning of the fiscal year $ 4,700,000 $ 3,200,000 Incurred claims and claims adjustment expenses Provision for insured events of the current fiscal year 700,000 - Increases in provision for insured events of prior fiscal years 6,497,915 1,500,000 Total incurred claims and claims adjustment expenses 7,197,915 1,500,000 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 4,247,915 - Total payments 4,247,915 - Total unpaid claims and claims adjustment expenses at the end of the fiscal year $ 7,650,000 $ 4,700,000 NOTE F - SUBSEQUENT EVENT As discussed in Note A,thePoolestablishesaliabilityforbothreportedandunreportedinsuredevents,which includesestimates of futurepaymentsforbothclaimsandlossesandrelatedclaimsadjustmentexpenses.The claimsreserveliability at year-endrelates to claimyear1998.Theschedulebelowpresentsthechanges in the claims reserve for the years ended April 30, 2014 and 2013, respectively. NOTE E - CLAIMS RESERVE LIABILITIES Subsequent to year-end,thePoolsettledandpaid an outstandingclaimforapproximately$6,100,000.Theportion of the settlement that was the responsibility of the Pool was fully reserved for at year-end. ManagementhasevaluatedsubsequenteventsthroughSeptember11,2014,thedatethesefinancialstatements wereavailable to beissued.Managementhasdeterminedthat no events or transactions,otherthanthesettlement discussed in Note E,haveoccurredsubsequent to thestatement of netpositiondatethatrequiredisclosure in the financial statements. -19- REQUIRED SUPPLEMENTARY INFORMATION Ten-Year Claims Development Information High-Level Excess Liability Pool REQUIRED SUPPLEMENTARY INFORMATION April 30, 2014 Thetable on thefollowingpagesillustrates how thePool'searnedrevenuesandinvestmentincome compare to relatedcosts of lossesandotherexpensesassumedbythePool as of theend of each of thelast fiscaltenyears.Therows of thetablearedefined as follows:(1)Thislineshowsthetotal of eachfiscal year'searnedcontributionrevenuesandinvestmentrevenues.(2)Thislineshowseachfiscalyear'sother operatingcosts of thepool,includingoverheadandclaimsexpense not allocable to individualclaims.(3) ThislineshowsthePool'sincurredclaimsandallocatedclaimsadjustmentexpenses(bothpaidand accrued)as originallyreported at theend of thefirstyear in whichtheeventthattriggeredcoverageunder thecontractoccurred(calledpolicyyear).(4)Thissection of tenrowsshowsthecumulativeamountspaid as of theend of successiveyearsforeachpolicyyear.(5)Thissection of tenrowsshows how eachpolicy year'sincurredclaimsincreased or decreased as of theend of successiveyears.Thisannual reestimation results from new information received on known claims and reevaluation of existing information on knownclaims,as well as emergence of newclaims not previouslyknown.(6)Thisline comparesthelatestreestimatedincurredclaimsamount to theamountoriginallyestablished(line3),and showswhetherthislatestestimate of claimscost is greater or lessthanoriginallythought.As datafor individualpolicyyearsmature,thecorrelationbetweenoriginalestimatesandreestimatedamounts is commonlyused to evaluatetheaccuracy of incurredclaimscurrentlyrecognized in lessmaturepolicy years. The columns of the table show data for successive policy years. -21- Ten-Year Claims Development Information (Continued) 2005200620072008 1. Net earned required contribution and investment income $2,009,041 $2,377,597 $2,741,042 $1,346,104 2. Unallocated expenses 381,974 387,739434,976425,832 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 - Ten 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 - - - 1,500,000 Six years later - - - 5,000,000 Seven years later - - - Eight years later - - Nine years later - Ten years later 6. Increase (decrease) in estimated incurred claims and expense from the end of the policy year - - - 5,000,000 April 30, 2014 Ten-Year Claims Development Information High-Level Excess Liability Pool REQUIRED SUPPLEMENTARY INFORMATION -22- 200920102011201220132014 $893,099$1,312,140$1,154,791$983,780$1,209,473$1,325,008 378,492376,918331,162336,447355,187369,537 - - - - - - - - 2,000,000 - - - - - 2,000,000 - - - - 2,000,000 - - - 2,000,000 - - - - - - - - 700,000 - - - - 1,000,000 - - - 400,000 - - 250,000 - 200,000 100,000 100,000 200,000 250,000 400,000 1,000,000 700,000 -23- SUPPLEMENTARY INFORMATION ASSETS Term IIITerm IITotal CURRENT ASSETS Cash, cash equivalents, and investments$3,737,026$7,834,335$11,571,361 Accounts receivable -402,707402,707 Total assets $3,737,026$8,237,042$11,974,068 LIABILITIES AND NET POSITION CURRENT LIABILITIES Claims reserve $7,150,000$500,000$7,650,000 Total liabilities 7,150,000500,0007,650,000 NET POSITION Unrestricted (3,412,974)7,737,0424,324,068 Total liabilities and net position $3,737,026$8,237,042$11,974,068 High-Level Excess Liability Pool TERM III AND TERM II COMBINING STATEMENT OF NET POSITION April 30, 2014 -25- Term IIITerm IITotal Operating revenues Member assessments $900,600$-$900,600 Total operating revenues 900,600 -900,600 Operating expenses Risk management consultants 18,62520,87539,500 Excess insurance 270,582 -270,582 Attorneys' fees Case review 3,85635,01938,875 Corporate matters 4,1801,5945,774 Auditing fees 4,8054,8059,610 Meeting expenses -2,3702,370 Membership dues 2,518 -2,518 Office supplies 154 154 308 Claims expense 6,150,000645,2086,795,208 Total operating expenses 6,454,720710,0257,164,745 Operating loss (5,554,120)(710,025)(6,264,145) Nonoperating revenue Unrealized gains 105,505301,152406,657 Interest, dividends and realized gains 1,74516,00617,751 Total nonoperating revenue 107,250317,158424,408 DECREASE IN NET POSITION (5,446,870)(392,867)(5,839,737) Net position Beginning of year 2,033,8968,129,90910,163,805 End of year $(3,412,974)$7,737,042$4,324,068 Year Ended April 30, 2014 High-Level Excess Liability Pool TERM III AND TERM II COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION -26-