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else bein a ual we'd ex ect in the future to have less surplus funds available to be returned <br />All g q p <br />as dividends unless, of course, cities can continue to reduce losses fizrther. The bottom line is <br />this -the most important factor that determines whether LMCIT can return a dividend in any <br />future year and how much that dividend might be is what cities' losses turn out to be. ,_ - <br />For purposes of fmancial planning, here are the key points to leeep in mind: <br />• In preparing city budgets, don't rely on there being future dividends. LMCIT will return <br />funds that aren't needed for losses, expenses, or reserves, but we can never guarantee how <br />much if any unneeded funds will be available to be returned in any future year. <br />• The long-term trend is likely to be for smaller dividends in the future. As we've reduced <br />overall. rate levels, .the safety margin in the rates is smaller. That margin is what produces the <br />dividend if losses come in at or below projections. <br />Because LMCIT has been able to return sizable dividends for many years in a row, some. cities <br />have begun to build those amounts into their budgets. If your city does so, make sure you have a <br />plan for what you'd do if there is no 2004 dividend or if it's substantially smaller. <br />The LMCIT work comp program's recent history is a good illustration. Work comp members <br />received dividends each year from 1997 through 2000. But because of.rising loss costs; that <br />• program has essentially broken even since then-which means that no excess fiznds have been <br />available to be returned as a dividend to work comp members. <br />We'll do our best to run the program as economically as we can. LMCIT will return to the <br />members any funds that aren't needed for losses, expenses, or reserves. But we can't guarantee <br />that there will always be a sizable dividend, or any dividend at all. It's important to keep that in <br />mind when you're doing your financial planning. . <br />Caution about the future aside, we want to congratulate member cities on another successful <br />year. Cities put significant effort into controlling losses and made the commitment to <br />cooperating through LMCIT, which in turn contributed to a good year and a $9 million dividend. <br />If you have any questions or comments, please feel free to contact Pete Tritz or Ann Gergen at <br />the League office, or any of the members of the LMCIT Board. <br />• <br />