TO: Board of Supervisors
FROM: Ryan J. Alsop, County Executive Officer
REPORT BY: Becky Craig, Assistant County Executive Officer
SUBJECT: Property Insurance Fund
RECOMMENDATION
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County Executive Officer requests the Board authorize (4/5 vote required):
1. A Budget Adjustment increasing the General Fund Transfer Out (1050000-56100) by $245,000 offset by a decrease in General Fund Appropriation for Contingency (1059000-58100); and
2. Increase Property and Other Insurance Premiums (4500001-52705) by $295,000 offset by increase in Transfer In (4500001-48200) of $245,000 and reduction in appropriation from Interest on Other Debt (4500001-54315) of $50,000 due to higher than anticipated property insurance premiums.
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EXECUTIVE SUMMARY
Property and Other Insurance policy premiums are estimated when the budget is prepared in the spring. Invoices are received and processed in July with the renewal of policies. Property Insurance increased significantly more than anticipated. This is an Internal Service Fund that does not have reserves to draw upon and charges have already been programmed for the year.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Is it Mandatory or Discretionary? |
Mandatory |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
This will be budgeted in future years. |
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Consequences if not approved: |
The subdivision has insufficient budget authority to process other transactions. |
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County Strategic Plan pillar addressed: |
Effective and Open Government |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.
BACKGROUND AND DISCUSSION
Property and Other Insurance policy premiums are estimated when the budget is prepared in the spring. Invoices are received and processed in July with the renewal of policies. Property Insurance premium increased significantly more than anticipated. The FY 2022-23 actual premiums for property and other insurances totaled $1,406,000 and staff budgeted $1,807,000 (increase 28.5%) for FY 2023-24; however, actual premiums totaled $2,099,000 (increase 49.3%). The amount appropriated for Interest on Other Debt appears to be a previous expense that is no longer applicable. This is an Internal Service Fund that does not have reserves to draw upon, and charges for services have already been programmed for the year. Therefore, the General Fund is called upon to cover the additional expense.