HomeMy WebLinkAboutMINUTES - 01101989 - 1.72 BOARD OF SUPERVISORS 1-070fd
FROM: Phil Batchelor, County Administrator CnlJl tra
Cowa
DATE: January 10, 1989 COu*
SUBJECT: Actuarial Study of County' s Self-Insurance Trust Funds
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATION•
Receive this report on the actuarial analyses of the County' s
self-funded workers' compensation, general liability and medical liability
programs and readopt a funding strategy plan with a goal of funding the
County' s self-insurance programs at the 80 to 90 percent confidence level
by the end of the 1991-1992 fiscal year.
FINANCIAL IMPLICATIONS:
Receipt of this report has no direct financial implications. However,
$9,856, 000 is required to fund the County' s self-insured 1988/89 losses at
expected value. Funding at the 80% confidence level would require total
funding of $12,049, 000 or $2,193 , 000 additional funding; funding at the 900
confidence level would require total funding of $13 ,639,000 or another
$1, 581, 000 . This additional funding would increase the chances that the
County could fully fund losses incurred.
BACKGROUND:
Each year, a comprehensive actuarial study is conducted of the
County' s self-insurance trust funds. Last year' s study was submitted to
the Board of Supervisors. The Board adopted a funding and strategy plan
with the goal of funding the County' s self-insurance programs at the 80 to
90 percent confidence levels by the end of 1989-1990 fiscal year.
An updated study of the County' s self-insured liabilities incurred
through June 30, 1988 found these liabilities are funded at approximately
the expected value level. Expected value refers to the overall average
level of losses estimated for a coverage year and approximates a 55 percent
confidence level. Confidence level refers to the estimated probability
that losses will not exceed the indicated reserve funding amount. The
actuary recommends funding at the 80 to 90 percent confidence level.
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RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMEUATONdd BOARUOMMITTEE
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CC. g
CAO Risk Management ATTESTED AN 10 1989
Auditor-Controller PHIL BATCHELOR, CLERK OF THE BOARD OF
SUPERVISORS AND COUNTY ADMINISTRATOR
M382/7-83 BY '"
,DEPUTY
Since the prior actuarial study, the County has maintained its
self-insurance funding level at the expected value level. To ensure the
self-insurance program is sound and able to meet its financial obligations,
the program should be funded at an 80 to 90 percent confidence level. To
accomplish this, upcoming fiscal years should be funded at the 90 percent
confidence level. This would result in raising the overall confidence
level for all liabilities. It is anticipated that three years of funding
at the 90 percent confidence level will bring the overall confidence level
of the program to 80 percent. It is, therefore, recommended that the
self-insurance program be funded at the 90 percent confidence level for the
next three fiscal years if sufficient funding can be identified to meet
this objective.