TO: Board of Supervisors
FROM: Ryan J. Alsop, Chief Executive Officer
REPORT BY: Becky Craig, Assistant CEO
SUBJECT: Budget Amendment for General Liability Claims and Expenses
RECOMMENDATION
title
Approve an increase in Fiscal Year 2024-25 appropriations for General Liability Claims by $700,000 for current and projected expenses. (Fiscal Impact $700,000 Expense; General Liability Fund; Not Budgeted; Discretionary)
[4/5 vote required]
body
BACKGROUND
The County funds its general liability claims up to $500,000 per claim and limits its exposure through membership in a local entity risk pool that in turn purchases insurance coverage for claims that exceed the County’s self-insured retention amount. The County annually estimates the premiums, claims, and administrative expenses with input from an actuarial study and the third-party claims administrator. Claims activity includes payments of damages, settlements, and legal expenses. The risk pool’s memorandum of coverage only reimburses legal expenses if outside attorneys are used.
The adopted budget for Fiscal Year 2024-25 estimated $10.1 million for premiums, claims, and administrative expenses. Staff reviewed activity at mid-year and anticipated that additional appropriations would be needed; however, the amount was uncertain because additional legal activities for a few claims matters were accelerating month over month. The budget amendment was postponed until activity was known. Staff requests increasing appropriations by $266,000 to process remaining expenses for FY 2024-25.
An actuarial study was prepared to project future claims activity that may arise from incidents that have occurred but not been claimed or incurred. The County funds reserves for projected future claims liabilities at the 75% confidence level. The actuarial study recommends increasing reserves by $434,000 to $3.9 million. The revenues are collected through internal service charges to departments. There is sufficient available fund balance in the General Liability fund to cover the additional appropriation.
Requested Action: Approve an increase in Fiscal Year 2024-25 appropriations for GL Claims (4500000-52710) by $700,000 offset by use of available fund balance.
FISCAL & STRATEGIC PLAN IMPACT
|
Is there a Fiscal Impact? |
Yes |
|
Is it currently budgeted? |
No |
|
Where is it budgeted? |
Fund 4500 General Liability, available fund balance |
|
Is it Mandatory or Discretionary? |
Discretionary |
|
Discretionary Justification: |
Expenses have been incurred and estimated. |
|
Is the general fund affected? |
No |
|
Future fiscal impact: |
Charges will be estimated and collected. |
|
Consequences if not approved: |
Expenses will exceed budgetary authority or remain unpaid. |
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.