TO: Board of Supervisors
FROM: Ryan J Alsop, Chief Executive Officer
REPORT BY: Becky Craig, Assistant Chief Executive Officer
SUBJECT: Budget Amendment for Workers Compensation Program
RECOMMENDATION
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Approve a Budget Amendment increasing Workers Compensation Claims appropriation to record reserves per the actuarial study. (Fiscal Impact: $207,000 Expense; All Operating Funds; Not Budgeted; Discretionary)
[4/5 vote required]
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BACKGROUND
The self-insured Workers Compensation program’s appropriations incorporate three parts: the excess insurance policy premium to cover claims exceeding the $350,000 per claim retention, the retained claims activity, and administrative expenses. The estimated expenses are then allocated annually to departments based on weighted position counts and claims history. The County proactively administers its program to assist employees in healing and expeditiously returning to work, and thereby manages expenses.
Funding reserves is a best practice to recognize future obligations when incurred with reasonable expectation. The County fully funds its reserves at the 75% confidence level to protect future operations. The actuarial study completed in 2024 reflects a 14% increase in reserves totaling $1.64 million due to significant claims settlement activity occurring statewide. There is insufficient budget authority to record the increase to liabilities and expenses.
The County has accumulated funds from current and prior year program charges and recommends the available fund balance estimated at approximately $1.45 million be appropriated to process the increased reserve liability. The balance of approximately $207,000 will be charged to departments based on the same allocation methodology. The charges equate to an additional 5% appropriation amount and department budget balances are sufficient for this additional expense.
Requested Action:
Approve a Budget Amendment increasing the Workers Compensation Claims (4402000-52710) appropriation by $1,640,000 offset with increased Charges for Services (4402000-46800) revenue of $207,000 and use of available fund balance.
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? |
Discretionary |
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Discretionary Justification: |
Recognize future liabilities when incurred. |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
Unknown |
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Consequences if not approved: |
Impose future operations with expenses incurred in prior years. |
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.