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$: he mission of PARSAC is to provide quality protection at ... · For the Quarter Ended and Year-to-Date Ended December 31, 2016. T:\Financial Stmts\FYE 2017\December 2016\December$

T he mission of PARSAC is to provide quality protection at reasonable cost to members by maintaining a fi nancially stable risk sharing pool.

The concept that we are not an insurance company, rather a risk

sharing pool consisting of Member Entities that play an active role

in determining the direction of the organization.

Trust and integrity by assuring the Member Entities that we are

committeed to excellence and are accountable for our actions.

A stable working environment which promotes employee growth

and development, to the end that our employees are motivated and

committed to providing the best possible service to Member Entities.

The ability to make available programs that are specifi c to Member Entities’

needs and thus, conducive to maximizing membership growth.

The ability to effectively communicate with Member Entities to ensure that the

goals and objectives of the organization are accomplished.

Controlling risks through training and information sharing.

Participating in the legislative process as necessary.

Return on investment in risk sharing.

As an organization, we value:

Public Agency Risk Sharing Authority of California [PARSAC]

Executive Committee Meeting Thursday, March 30, 2017 – 8:00 a.m.

Westin Sacramento, 4800 Riverside Boulevard, Sacramento, CA 95822

In accordance with the requirements of the Brown Act, notice of this meeting must be posted in publicly accessible places, 72 hours in advance of the meeting, in each of the member agencies involved.

Note: The Executive Committee may take action on any item listed on the Agenda, the General Manager’s Recommendation for each item is solely the recommendation of staff and does not limit the Executive Committee’s authority to take action on any Agenda item.] I. CALL MEETING TO ORDER: DETERMINE QUORUM

II. MODIFICATIONS OF AGENDA

III. REPORTS A. President B. General Manager

GENERAL MANAGER’S IV. APPROVAL OF CONSENT AGENDA RECOMMENDATIONS

Note: If discussion of any item on the Consent Agenda is desired, it must be placed on the Regular Agenda. A. EC Minutes from November 30, 2016 Approve

B. Quarterly Denials Receive & File

C. Financial Statements Receive & File D. Update Liability Defense Panel – Firm Name Change Approve; Recommend

Rippetoe Law to Fortin Law Group Board Ratify

V. REGULAR AGENDA A. Annual Actuarial Review Approve

Presentation by Mike Harrington, Bickmore 1. Liability 2. Workers’ Compensation

B. Safety and Loss Control Grant Program Update Receive & File

C. Finance Committee Reports Approve, Recommend 1. 2017/18 Program Funding Board Ratify

a. Liability b. Workers’ Compensation

D. Estimated Retrospective Premium Adjustment (Multiple years) Approve, Recommend 1. Liability Board Ratify 2. Workers’ Compensation

E. Update on Other Post -Employment Benefits Approve, Recommend

(OPEB, Pension & Health) Board Ratify Actuarial Report

F. 2017/2018 Preliminary Budget Approve, Recommend

Board Ratify G. Allocation Method for ERMA Dividends and Use of EPL Grants

1. Allocation Method for ERMA Dividends Approve, Recommend Board Ratify

2. Use of EPL Grant Funds Direct to Committee

H. Supranational Investment Discuss and Take Presentation by Lauren Brant, PFM Appropriate Action

I. Experience Modification Method for non-TPA members Approve; Recommend

Board Ratify

J. Withdrawal Notices 1. Alturas, Timely Accept 2. Rialto, Untimely Accept and Take Action

per JPA

K. Best Practices 1. Assistive Animals in the Workplace Reasonable Approve, Recommend

Accommodation Policy Board Ratify

2. Best Practices Checklist Direct to Committee VI. CLOSED SESSION

A. Benefits and Compensation – Unrepresented Employees

Joanne Rennie – Designated Negotiator

B. Closed Session Claims New Cases: Claimant: Azevedo Claimant: Calderon Claimant: Hartford Agency: Alturas Agency: Rialto Agency: Pacific Grove Claimant: O’Brien Claimant: Rocklien Claimant: Roy

Agency: Grass Valley Agency: Grass Valley Agency: Menifee

Claimant: Thayer Agency: Clearlake

Ongoing: Claimant: Cobb Claimant: Cook Claimant: Cornwell

Agency: Highland Agency: California City Agency: Rialto

Claimant: Creative Frontiers Claimant: Deutsch Claimant: Gibson Agency: Citrus Heights Agency: Calistoga Agency: Avalon

Claimant: Gomez/Meisker Claimant: Gonzalez Claimant: Hoar Agency: California City Agency: West Hollywood Agency: Menifee

Claimant: Jackson/Ainely Claimant: Kennedy Claimant: Lambeth Agency: South Lake Tahoe Agency: Avalon Agency: Coalinga Claimant: Lewis Claimant: Limon Claimant: Lopez Agency: Rialto Agency: Rialto Agency: Rancho Cucamonga Claimant: Macias Claimant: Maldonado Claimant: Marston Agency: Rancho Cucamonga Agency: Rialto Agency: Rancho Cucamonga Claimant: McGowen/Camacho Claimant: Minor/Henry Claimant: Mints Agency: Rialto Agency: Coalinga Agency: Rancho Cucamonga Claimant: Olesky Claimant: Pena/Ortiz Claimant: Pike/Hislop Agency: Citrus Heights Agency: Rialto Agency: Placentia Claimant: Polopolus Claimant: Ramirez Claimant: Rex Agency: Rancho Cucamonga Agency: Rancho Cucamonga Agency: West Hollywood

Claimant: Ruffino Claimant: Salinas Claimant: Seeley Agency: South Lake Tahoe Agency: Citrus Heights Agency: Wildomar

Claimant: Tattersfield Claimant: Tarusov Agency: Coalinga Agency: Citrus Heights

Update: Claimant: Clemons Claimant: Chapman Claimant: Colimote Agency: Clearlake Agency: Citrus Heights Agency: Watsonville Claimant: Collis Claimant: Francies Claimant: Garcia Agency: Alturas Agency: South Lake Tahoe Agency: Watsonville Claimant: Gill Claimant: Hermosa Claimant: Squire Agency: Pacific Grove Agency: Avalon Agency: Menifee

VII. GENERAL INFORMATION

VIII. PUBLIC COMMENT ON ITEMS NOT ON AGENDA IX. DIRECTORS’ GENERAL COMMENTS/SUGGESTIONS FOR NEXT AGENDA

X. ADJOURNMENT

Any writings or documents pertaining to an open session item provided to a majority of the members of the legislative body less than 72 hours prior to the meeting, shall be made available for public inspection at the PARSAC business office, located at 1525 Response Road, Suite 1, Sacramento, CA 95815. For special accommodation because of a disability, please phone Carol Shreve at PARSAC (916) 927-7727 or (800) 400-2642 or email her at [email protected] at least 24 hours prior to the meeting time shown above.

March 30, 2017 Executive Committee Meeting, IV.B

Page 1 of 1

QUARTERLY REPORT ON COVERAGE DENIALS

SUMMARY: This report is intended to inform the Executive Committee of coverage denials and is delivered in any quarter where one or more members have received a letter that either fully or partially denies coverage. RECOMMENDATION: Receive and File DISCUSSION: Periodically, lawsuits received from member agencies allege causes of action which are not covered under PARSAC’s Memorandum of Coverage. These suits are analyzed by PARSAC’s coverage counsel to ensure coverage and defense is granted in accordance with the Memorandum. A denial may also be issued if a member chooses to assign defense counsel without using the Defense Panel since such assignment waives coverage per the Resolution. The following claims were denied during the period of October 1, 2016 – December 31, 2016.

Plaintiff/Entity Cause of Action Coverage Opinion Furhman v. City of Menifee Breach of Contract; Equal Protection; Exclusions D, P & Z Due Process; Dec. Relief Griffith Co. v City of Breach of Contract Exclusion D

West Hollywood Laborers International v. Declaratory and Injunctive Exclusions P and Z City of Rialto Relief Manners v. City of Declaratory and Injunctive Exclusions P and Z West Hollywood Relief

FISCAL IMPLICATIONS: Cost analysis by coverage counsel is included in each annual budget and varies by suit or claim. ATTACHMENT: None

FINANCIAL REPORT For the Quarter and Year to Date Ended

December 31, 2016

March 30, 2017 Board of Directors, IV. C

Page 1 of 1

FINANCIAL STATEMENTS – QUARTER ENDED DECEMBER 31, 2016 SUMMARY: The financial statements for the quarter reflect total assets of $47.0 million. Members remitted contributions timely, with two members making periodic payments. For the past several years, PARSAC has experienced increased claim expense in one or both self-insured programs. This quarter was no different, and resulted in a net loss for the Liability Program. Expenses were below or at budget for over half of the expense categories. The largest budget overage was in claims expense for the Liability Program. PARSAC also continues to see a decline in investment market values while portfolio investment earnings remain constant. RECOMMENDATION: Approve the financial statements for the quarter ended December 31, 2016. DISCUSSION: PARSAC reported an overall net loss for the period of $448,000. Declining market values and an increase in claim payments for the Liability Program has resulted in a net program loss for the year so far of $842,748. The Workers’ Compensation Program was under budget for claim payments for the quarter which resulted in net income of $527,514 for the quarter and $446,696 for the year to date. Most expenses were within expected budgeted amounts. Investment Earnings - Investment yields on the portfolio are slowly increasing. PFM Asset Management actively manages the portfolio now totaling $35.7 million. The returns shown in the table below are now above 1%, and exceed LAIF’s quarterly return of 0.68% by nearly 1%.

Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Yield at Market Value

1.19% 1.25% 1.34% 1.29% 1.51%

Yield at Cost 1.27% 1.29% 1.29% 1.04% 1.32%

FISCAL IMPLICATIONS: None. ATTACHMENT: Financial Report for the Quarter Ended December 31, 2016. trs/

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA

BALANCE SHEET

December 31, 2016

Liability Workers Comp Property/ Bond Building Total

Cash

LAIF 318,362$ 349,173$ 64,225$ 169,367$ 901,127$

Savings Account 1,925,109 2,420,389 - - 4,345,498

General Account 336,605 302,944 33,660 - 673,209

Claim Trust Accounts 119,066 148,288 - - 267,355

Petty Cash 118 97 - - 215

Total Cash 2,699,260 3,220,891 97,885 169,367 6,187,403

Accounts Receivable 100,481 431,831 - - 532,312

Excess Insurance Receivable 240,000 284,527 - - 524,527

Interest Receivable 58,566 80,876 - - 139,442

Prepaid Expenses 1,177,543 572,576 1,048,147 - 2,798,267

Prepaid OPEB 207,775 127,346 - - 335,121

Investments 15,018,192 20,739,408 - - 35,757,600

Property and Equipment

Building & Land less accum depr - - - 735,835 735,835

Office Equipment/Furniture less accum depr 6,766 6,766 - 13,532

Net Property and Equipment 6,766 6,766 - 735,835 749,367

Deferred Outflows of Resources 1,859 - - - 1,859

TOTAL ASSETS 19,510,442$ 25,464,221$ 1,146,032$ 905,202$ 47,025,897$

Liablities

Current Liabilities

Accounts Payable 9,720$ 8,237$ 411$ 5,715$ 24,083$

Payroll Liabilities 10,846 9,762 1,085 - 21,693

Reserve for Capital Replacement 5,903 5,312 590 - 11,805

Accrued Vacation Payable 52,059 46,853 5,206 - 104,118

RPA's Payable (Withdrawn Members) 293,921 679,758 - - 973,678

Unearned Contributions 3,042,082 - 2,908,154 - 1,082,691 - - 7,032,927

Total Current Liabilities 3,414,531 3,658,075 1,089,983 5,715 8,168,304

Long Term Liabilities

Committee Training Stipend Payable 14,443 10,504 1,313 - 26,261

Claim Reserves - at expected

Reserves for Reported Claims 3,033,612 4,490,080 - - 7,523,692

Incurred But Not Reported Reserve (IBNR) 2,886,520 5,972,293 - - 8,858,813

IBNR above expected CL - - - - -

Unallocated Loss Reserve ULAE 652,617 1,002,743 - - 1,655,360

Total Long Term Liabilities 6,587,192 11,475,620 1,313 - 18,064,126

Total Liabilities 10,001,724 15,133,696 1,091,296 5,715 26,232,430

Net Position

Contributed Capital - - - 1,233,306 1,233,306

Unrestricted 6,615,918 9,319,575 42,965 (294,482) 15,683,976

Designated Funds - detail on Page 2 3,735,548 564,254 5,000 - 4,304,803

Net Income (842,748) 446,696 6,771 (39,336) (428,617)

Total Net Postion 9,508,718 10,330,525 54,736 899,488 20,793,468

TOTAL LIABILITIES & NET POSITION 19,510,442$ 25,464,221$ 1,146,032$ 905,202$ 47,025,897$

ASSETS

LIABILITIES & NET POSITION

C:\Users\tsmith-reed\Desktop\FInancials\December 31,2016 Balance Sheet 1

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA

BALANCE SHEET

December 31, 2016

Liability Workers Comp Property/ Bond Building Total

Designated Funds

Designated for Cap Replacement 96,306 78,795 - - 175,101

Designated for Grant Program 187,979 153,801 - - 341,781

Designated for EPL Grant Program 326,739 - - - 326,739

Designated for Contingency 55,000 40,000 5,000 - 100,000

Designated for Pension/OPEB Liability 772,209 - - - 772,209

Designated for Errors and Omission 60,000 40,000 - - 100,000

Designated ERMA Dividend 656,380 - - - 656,380

Designated Liability Coverage Expansion 400,000 - - - 400,000

Designated CARMA Div-withdrawn mbr 149,676 - - - 149,676

Designated ERMA Div- withdrawn mbr 135,659 - - - 135,659

Designated for Rate Stabilization 350,000 251,658 - - 601,658

Designated for EPL Rate Stabilization 300,000 - - - 300,000

Designated for Liebert Cassidy Program 245,600 - - - 245,600

Total Designated Funds 3,735,548 564,254 5,000 - 4,304,803

SCHEDULE OF DESIGNATED EQUITY

C:\Users\tsmith-reed\Desktop\FInancials\December 31,2016 Balance Sheet 2

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIACONSOLIDATED

STATEMENT OF REVENUE AND EXPENSEFor the Quarter Ended and Year-to-Date Ended December 31, 2016

T:\Financial Stmts\FYE 2017\December 2016\December 31, 2017 Income Statement Consol 3

Quarter Ended Year to Date Annual BudgetBudget v

Actual

10/1 - 12/31 7/1 - 12/31 2016/17 % Budget

Income

Member Contributions 3,721,715$ 7,443,431$ 14,862,702$ 50%Rate Stabilization Credit (75,250) (150,499) (301,000) Special Events Credit - - (17,500) 0%Payroll Adjustment Prior Year - 159,800 - Investment Income (355,570) (393,300) 463,257 -85%Facility Contribution 15,740 31,480 62,960 50%Other Income 4,936 5,034 -

Total Income 3,311,571 7,095,946 15,070,419 47%

Expense

WC Self Insurance Fees 91,018 91,018 97,304 94%Excess Insurance 1,396,262 2,792,525 5,574,027 50%Claims Expense 1,740,297 3,456,338 6,507,307 53%Claims Administration 176,625 353,250 716,500 49%Payroll and Benefits 213,617 439,139 1,180,170 37%Consultants 24,402 55,151 166,882 33%Risk Management 13,249 140,799 391,746 36%General and Administrative 38,833 76,016 152,760 50%Staff Travel and Training 4,263 9,163 21,500 43%Board Expenses 20,896 40,348 57,200 71%Building Maintenance 40,606 70,816 125,919 56%Contingency Expense - - 50,000

Total Expense 3,760,068 7,524,563 15,041,315 50%

Net Income (448,497)$ (428,617)$ 29,104$

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIALIABILITY PROGRAM


T:\Financial Stmts\FYE 2017\December 2016\December 31, 2017 Income Statement Liab 4

Quarter Ended Year to DateAnnual Budget

Budget v Actual

10/1 - 12/31 7/1 - 12/31 2016/17 % Budget

Income

Member Contributions 1,629,892$ 3,259,784$ 6,620,191$ 49%Rate Stabilization Credit (57,500) (115,000) (230,000) Special Events Credit - - (17,500) 0%Payroll Adjustment Prior Year - 89,824 - Investment Income (160,007) (175,853) 194,568 -90%Other Income 2,100 2,198

Total Income 1,414,485 3,060,953 6,567,259 47%

Expense

Excess Insurance 587,193 1,174,385 2,449,388 48%Claims Expense 1,542,563 2,147,688 2,816,106 76%Claims Administration 76,625 153,250 316,500 48%Payroll and Benefits 106,809 219,569 590,085 37%Consultants 12,849 25,641 84,627 30%Risk Management 11,447 120,420 246,568 49%General and Administrative 19,416 38,008 76,380 50%Staff Travel and Training 2,131 4,582 10,750 43%Board Expenses 10,449 20,158 28,600 70%Contingency Expense - - -

Total Expense 2,369,481 3,903,701 6,619,004 59%

Net Income (954,996)$ (842,748)$ (51,745)$

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIAWORKERS' COMPENSATION PROGRAM


T:\Financial Stmts\FYE 2017\December 2016\December 31, 2017 Income Statement WC 5


Budget v Actual

10/1 - 12/31 7/1 - 12/31 2016/17 % Budget

Income

Member Contributions 1,549,445$ 3,098,891$ 6,197,783$ 50%Rate Stabilization Credit (17,750) (35,499) (71,000) 50%Payroll Adjustment Prior Year - 69,976 - Investment Income (195,564) (217,447) 268,689 -81%Other Income 2,836 2,836 -

Total Income 1,338,968 2,918,757 6,395,472 46%

Expense

WC Self Insurance Fees 91,018 91,018 97,304 94%Excess Insurance 284,996 569,992 1,153,113 49%Claims Expense 197,734 1,308,650 3,691,201 35%Claims Administration 100,000 200,000 400,000 50%Payroll and Benefits 96,128 197,612 531,076 37%Consultants 10,981 27,922 79,635 35%Risk Management 1,802 20,379 145,178 14%General and Administrative 17,475 34,207 68,742 50%Staff Travel and Training 1,918 4,123 9,675 43%Board Expenses 9,402 18,156 25,740 71%Contingency Expense - - 50,000

Total Expense 811,454 2,472,059 6,251,664 40%

Net Income 527,514$ 446,696$ 143,808$

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIAPROPERTY PROGRAM


T:\Financial Stmts\FYE 2017\December 2016\December 31, 2017 Income Statement Prop 6


Budget v Actual

10/1 - 12/31 7/1 - 12/31 2016/17 % Budget

Income

Member Contributions 524,414$ 1,048,829$ 2,005,728$ 52%Total Income 524,414 1,048,829 2,005,728 52%

Expense

Excess Insurance 506,110 1,012,220 1,932,526 52%Payroll and Benefits 10,681 21,957 59,009 37%Consultants 573 1,588 2,620 61%General and Administrative 1,942 3,801 7,638 50%Staff Travel and Training 213 458 1,075 43%Board Expenses 1,044 2,034 2,860 71%Contingency Expense - - - 0%

Total Expense 520,563 1,042,058 2,005,728 52%

Net Income 3,851$ 6,771$ -$

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIABOND PROGRAM

STATEMENT OF REVENUE AND EXPENSE For the Quarter Ended and Year-to-Date Ended December 31, 2016

T:\Financial Stmts\FYE 2017\December 2016\December 31, 2017 Income Statement Bond 7


Budget v Actual

10/1 - 12/31 7/1 - 12/31 2016/17 % Budget

Income

Member Contributions 17,964$ 35,928$ 39,000$ 94%Total Income 17,964 35,928 39,000 92%

Expense

Excess Insurance 17,964 35,928 39,000 92%

Total Expense 17,964 35,928 39,000 92%

Net Income -$ -$ -$

PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIABUILDING FUND


T:\Financial Stmts\FYE 2017\December 2016\December 31, 2017 Income Statement Bldg 8


Budget v Actual

10/1 - 12/31 7/1 - 12/31 2016/17 % Budget

Income

PARSAC Facility Contribution 15,740$ 31,480$ 62,960$ 50%Other Income - - -

Total Income 15,740 31,480 62,960

Operating Expense

Utilities 4,752 9,324 17,000 55%Janitorial Service 2,119 4,237 8,700 49%Landscaping Service 1,880 4,040 6,600 61%Pest Control 198 293 600 49%Security/Alarm 105 210 500 42%Property Taxes 5,988 5,988 12,928 46%Insurance - Property (Office) 558 1,116 2,981 37%Building Repairs 7,853 11,106 8,000 139%

Total Operating Expense 23,452 36,313 57,309 63%

Operating Income (7,712) (4,833) 5,651 -86%

Other Expense

Capital Replacement Fund Expense 5,903 11,805 23,610 50%Depreciation 11,251 22,698 45,000 50%

Total Expenses 40,606 70,816 125,919

Net Income (Loss) (24,866)$ (39,336)$ (62,959)$ 62%

March 30, 2017 Executive Committee Meeting, IV. D

Page 1 of 1

LIABILITY PROGRAM - RESOLUTION 2015-02 TO REVISE THE LIABILITY DEFENSE PANEL AND EXHIBIT A: REVISED LIST OF PANEL FIRMS

SUMMARY: It is PARSAC’s practice to assign cases to specific attorneys and not to firms in general. This item is presented to revise the panel to include Fortin Law Group. RECOMMENDATION: Approve and recommend ratification to the Board. DISCUSSION: It is PARSAC’s practice to assign cases to a specific attorney and not a firm in general. This approach ensures that the counsel with the most applicable experience and expertise is assigned based on the facts of each case. Since the Panel was adopted, there have been instances where the selected attorney has started an independent practice or changed firms. In every instance, the new firm is presented for Board approval. Due to the passing of Attorney Greg Rippetoe, Ms. Kelly Fortin has opened her own practice, the Fortin Law Group. Attorneys Kelly Fortin and Jennifer Miller will continue to practice law primarily in the areas of public entity defense. Both Kelly and Jennifer have represented PARSAC members successfully in their former firm and will be an asset to the panel. FISCAL IMPLICATIONS: Ms. Fortin and Ms. Miller’s rates are within the previously adopted fee schedule. ATTACHMENT: Resolution 2017-01, Exhibits A & B, and CVs of Kelly Fortin and Jennifer Miller.

RESOLUTION NO. 2015-02 2017-01

Page 1 of 3

Amended March 30, 2017 Adopted May 27, 2010 Amended May 29, 2014 Adopted December 3, 2015 Replaces Prior Resolutions 2015-02, 2014-01, 2011-01 and 2010-02

RESOLUTION OF THE BOARD OF DIRECTORS OF THE PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA ESTABLISHING CRITERIA FOR DEFENSE COUNSEL PANEL FOR THE LIABILITY PROGRAM

WHEREAS, the Public Agency Risk Sharing Authority of California, herein

referred to as PARSAC, is a Joint Powers Authority organized and existing in accordance with the laws of the State of California, and;

WHEREAS, one of PARSAC’s functions is to operate a liability risk sharing pool for its members, and;

WHEREAS, PARSAC and its members will retain defense counsel to provide defense against third party claims and suits, and;

WHEREAS, PARSAC shall have the right and duty to participate in the defense of any claim or suit against a member if the final judgment or settlement is likely to result in an ultimate net loss exceeding a member’s self-insured retention, and;

WHEREAS, PARSAC previously developed an informal list of defense attorneys throughout the state who have experience in defending public entities and their employees against third party liability claims, and;

WHEREAS, the geographic diversity and wide variability of members’ self-insured retentions result in inconsistent litigation management, reporting, administration, and defense costs, and;

WHEREAS, it is the desire of the Board of Directors to develop a formal defense attorney panel to ensure professional, competent, and cost effective handling of defense litigation of cases that affect PARSAC;

NOW, THEREFORE, BE IT RESOLVED by the Board of Directors as follows: A. The informal defense panel shall be replaced by a formal defense panel as per the

attached Exhibit A, which may only be amended by Board action. B. Law firms must meet and agree to the following provisions before PARSAC will

consider their inclusion on the panel:


Page 2 of 3


1. Attorneys must have no less than 10 years civil litigation practice which includes

substantial and significant experience in municipal entity liability defense to be eligible for case assignment;

2. The firm shall provide a resume setting forth the experience of the individual

attorneys that would be assigned to cases and their areas of expertise;

3. The firm must agree to the maximum hourly rates outlined in the attached Fee Schedule (Exhibit B), unless specialized legal representation is necessary (i.e. railroad litigation) which would require prior approval from PARSAC. Except where prior approval has been given, members will be responsible for the amount in excess of the maximum, which shall not reduce the member’s self-insured retention obligation. The maximum hourly rate will be reviewed on a bi-annual basis.

4. The firm must agree to abide by the policies and procedures established by

PARSAC for the handling of litigation.

5. The firm must evidence general liability, automobile liability, workers’ compensation, and professional liability insurance. The policy limits must not be less than $1,000,000 per occurrence and PARSAC its officials, officers, employees and agents, with the exception of workers’ compensation and professional liability, must be named additional insured.

C. The General Manager and Officers may appoint a particular attorney or law firm

other than panel counsel when specialized, unforeseen defense is required. The law firm or attorney shall comply with conditions 1 -6 above.

D. PARSAC will assign defense counsel for Members with SIRs under $250,000 in

collaboration with the Member. Members with SIRs of $250,000 and higher will make the assignment, except for claims involving law enforcement. Nothing in this resolution shall be construed to limit the right of the member entity to retain its own defense counsel to represent the member entity in any litigation. If, however, a member entity retains its own counsel who is not one of the defense panel firms, the member entity shall be solely responsible for all attorney’s fees and costs, and the member entity shall be deemed to have waived any rights to defense and indemnity coverage from PARSAC for that particular litigation, regardless of any change in PARSAC’s position on available coverage.


Page 3 of 3


E. A member entity has the right to utilize its own in-house counsel (i.e. an employee of

the member entity, not a contracted city attorney) to represent the member entity in any litigation. However, no in-house counsel fees or costs shall be applied towards the satisfaction of the member entity’s retained limit.

F. Law firms that are contracted city attorneys for the member entity will not serve in

the dual capacity of general counsel and defense counsel for the litigation of claims/suits. A member entity retaining the contracted city attorney’s law firm for defense counsel shall be solely responsible for all attorney’s fees and costs, and the member entity shall be deemed to have waived any rights to defense and indemnity coverage from PARSAC for that particular litigation.

G. Law firms that are contracted city attorneys for the member entity may serve in the

dual capacity of general counsel and defense counsel for the litigation of claims/suits if the member entity maintains a $350,000 self-insured retention. Member selected defense counsel must include PARSAC on all litigation correspondence from the onset of the claim or suit, comply with conditions 1 – 6, and is subject to regular review and approval of PARSAC. PARSAC may assign alternative counsel should the claim/suit involve an area of practice that is outside the contracted defense counsel’s specialty.

Effective Date. This Resolution shall become effective on upon adoption and shall

replace Resolution 2014-01.

ADOPTED this 3rd 30th day of March, 2017 December, 2015.

______________________________ ATTEST: Greg Franklin, President PARSAC Board of Directors ___________________________________ Joanne Rennie, PARSAC Board Secretary


Amended March 30, 2017 Adopted December 3, 2015 Replaces Resolutions 2015-02, 2014-01, 2011-01, 2010-02, and 2005-04

EXHIBIT A

Liability Defense Panel Approved Firm List

Aleshire & Wynder

Allen, Glaessner Hazelwood & Werth

Angelo Kilday & Kilduff

Best Best & Krieger

Bordin Martorell

Law Offices of Borton Petrini

Bradley Curley Asiano Barrabee Abel & Kowalski

Bremer Whyte Brown & O’Meara

Brobeck West Borges Rosa & Douville

Caulfield Law Firm

Collins Collins Muir & Stewart

Daley & Heft

Diepenbrock & Cotter

Edrington Schirmer & Murphy

Ferguson Praet & Sherman

Fortin Law Group

Law Office of Kathy M. Gandara

Gibeaut Mahan & Briscoe

Haight, Brown & Bonesteel

Law Offices of Scott C. Haith

Hawkins Parnell Thackston & Young

Howard Rome Martin & Ridley

Jones & Mayer

Kennedy Archer & Giffen

Longyear O’Dea & Lavra

Low Ball & Lynch

Manning & Kass Ellrod Ramirez Trester

Marderosian, Cercone & Cohen

McNamara Ney Beatty Slattery Borges & Ambacher

Mitchel Brisso Delaney & Vrieze

Murchison & Cumming

Nelson Rozier

Noland Hamerly Etienne & Hoss

Porter Scott

Pyka Lenhard Schnaider Zell

Richard Watson Gershon

Rippetoe Law

Thompson & Colegate

Weakley & Arendt


Amended March 30, 2017 Adopted December 3, 2015 Replaces Prior Resolutions 2015-02, 2014-01, 2011-01 and 2010-02

EXHIBIT B

Maximum Fee Schedule

Legal Staff Maximum

Rate

Partners $200

Associates $150

Paralegals $85

Kelly A. Fortin FORTIN LAW GROUP

Newport Beach, CA EDUCATION: 1991 Juris Doctorate Wayne State University (Law School)

Detroit, Michigan. 1988 Bachelor of Arts (English Literature w/Honors) Oakland University Rochester, Michigan.

PROFESSIONAL EXPERIENCE: Fortin Law Group, Newport Beach, CA (2017 – present)

Principle Litigator - Public Entity defense, construction disruption and delay claims, mechanics lien/stop notice, general business and contracts.

Rippetoe Law, P.C., Irvine, CA (2007 – 2017) Partner/Senior Litigator – Public Entity defense, construction disruption and delay claims, mechanics lien/stop notice, general business and contracts.

Pacific Auction Exchange, Inc./Western Stockman’s Market, Inc./West Coast Affiliate of Williams & Williams, Bakersfield, CA/Tulsa, OK (2006 – 2009) (Real Estate Auction/Cattle Auction Company)

Corporate Counsel/Vice President/Broker – General corporate compliance, contracts, brokerage. Beam, Brobeck, West, Borges & Rosa, LLP, Santa Ana, CA (1996 – 2005)

Senior Litigator - Public Entity defense, general liability defense of trucking companies, medical malpractice defense.

DiCaro, Highman, D’Antony, Dillard, Fuller & Gregor, Irvine, CA (1992 – 1996)

Associate Litigator – Construction defect, medical malpractice defense, general liability. United States District Court (Eastern District Michigan), Flint, MI (1988 – 1988) Legal Clerk Intern Honorable Stewart Newblatt ThyssenKrupp Budd Corporation, Troy, MI (1984 – 1988) Senior Executive Assistant to General Corporate Counsel . ADMISSIONS: 1992 State Bar of California; Admitted – U.S. District Courts, Central Division 1994 Admitted – U.S. District Courts, South Division 2000 California Real Estate Broker (re-licensed 2005, 2009, 2013, 2017) 2004 Certified Mortgage Broker PROFESSIONAL ASSOCIATIONS: State Bar of California; Orange County Bar Association.

PRACTICE AREAS: Government Claims and Liability Defense; Personal Injury and Wrongful Death; Automobile and

Trucking Claims; Construction; Premises Liability; Contract Litigation; Insurance Coverage and Indemnity.

Ms. Fortin has in excess of 30 years of legal experience, in excess of 25 years of which have been as a licensed California attorney. Experience in civil litigation and trial include the areas of public entity liability, personal injury, wrongful death, business and contract disputes, insurance coverage and indemnity matters and Appeals.

During her years as a civil litigator, Ms. Fortin has represented governmental entities in the defense of Government Claims Act claims including but not limited to dangerous condition, roadway design, premises liability, discretionary acts, inverse condemnation, nuisance, and contract. Throughout her legal career, Ms. Fortin has written and argued approximately 150 Motions for Summary Judgment/Adjudication with an extremely high success rate. In addition, she has extensive experience in Appellate briefing.

Ms. Fortin is very familiar with legal research and discovery, having taken and defended in excess of 100 depositions, both lay and expert witnesses. Her experience has led her to achieve success in bringing case to verdict via bench and jury trials as well as to judgment via Motions for Summary Judgment/Adjudication. Her experience also includes success with non-binding arbitrations and mediations.

SPECIAL INTERESTS: Ms. Fortin teaches meditation techniques in her free time. She is also an accomplished writer and

artist, having had pieces selected for exhibits in and around Southern California.

Jennifer J. Miller, Esq. FORTIN LAW GROUP Newport Beach, CA 92660

* Education

University of California, Santa BarbaraSanta Barbara, CA B.A. History, June 1984

Santa Clara University School of LawSanta Clara, CA J.D., May 1987Associate Editor, Law Review

* Employment History

Rippetoe Law, P.C.2 Park Plaza, Suite 525Irvine, CA 92614(949) 852-00202016 to February 2017

Senior Litigator in civil defense practice with focus on public entity defense, construction andbusiness disputes.

Scott W. Landis & Associates5580 East Second St., Suite 209Long Beach, CA 90803(562) 433-86772012 to 2015

Trial Attorney in plaintiff personal injury practice, with numerous jury trials, settlement conferences and mediations, law and motion, depositions, expert discovery and pleadings, inOrange County, Los Angeles, Riverside and San Bernardino Superior Courts.

Kramer, deBoer, Endelicato & Keane17011 Beach Blvd., Suite 560Huntington Beach, CA 92647(714) 848-85002007 to 2011

Senior Litigator in civil litigation defense practice with focus on medical malpractice, claims of elder abuse, premises liability and accounting malpractice.

Beam, Brobeck, West, Borges & Rosa1301 Dove St., Suite 700Newport Beach, CA 1992 to 2007

Senior litigator in civil litigation defense practice with emphasis on medical malpractice anddefense of governmental entities, with case responsibility from response to complaint throughtrial, with extensive experience in all phases of discovery, writs, and appeals, with several casesargued before the California Court of Appeal, Fourth Appellate District.

* Admissions

California, 1988; U.S. Dist. Court, Southern Dist. of CA- 1988; U.S. Dist. Court, Central Dist. of CA- 1990; U.S. Dist. Court, Northern Dist. of CA- 2005; U.S. Court of Appeals, Ninth Circuit- 2006

* Other Training/Experience

Orange County Superior Court Temporary Judge—2007 to 2010

Straus Institute for Dispute ResolutionPepperdine University School of LawMediating the Litigated Case- Jan./Feb. 2011(42 hours)

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1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833 • 800.541.4591 • f. 855.242.8919 • www.bickmore.net

Monday, January 30, 2017 Ms. Joanne Rennie General Manager Public Agency Risk Sharing Authority of California 1525 Response Road, Suite 1 Sacramento, CA 95815 Re: Actuarial Review of the Self-Insured Liability Program Dear Ms. Rennie: As you requested, we have completed our review of the Public Agency Risk Sharing Authority of California's self-insured liability program. We estimate the program’s liability for outstanding claims to be $6,220,387 as of June 30, 2017, including allocated loss adjustment expenses (ALAE), unallocated loss adjustment expenses (ULAE), and a discount for anticipated investment income. Of this amount, $67,185 can be attributed to the program’s employment practices liability (EPL) claims incurred during the 1999-00 through 2016-17 years. Given estimated program assets of $15,507,749, the program is funded well above the 95% confidence level (see Graph 1 on Page 9). In addition, we estimate the ultimate cost of claims and expenses for liability (non-EPL) claims incurred during the 2017-18 program year to be $2,501,532, again including ALAE and ULAE, and discounted for anticipated investment income. For budgeting purposes, the expected cost of 2017-18 claims translates to a rate of $0.927 per $100 payroll. The $2,501,532 estimate does not include the cost of the Authority’s EPL claims. We estimate that an additional $19,538 will need to be funded to cover the program’s EPL exposure. ALAE is basically the direct cost associated with the defense of individual claims. ULAE is the remainder of the cost to administer all claims to final settlement, which may be years into the future. The discount for investment income is calculated based on the likely payout pattern of your claims, assuming a 1.5% return on investments per year.

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Our conclusions regarding the Authority’s liability for unpaid loss and loss adjustment expenses (LAE) at June 30, 2017 are summarized in the table below.

Public Agency Risk Sharing Authority of California Self-Insured Liability Program

Estimated Liability for Unpaid Loss and LAE at June 30, 2017

Marginally Recommended Range Expected Acceptable Low High Conservative 70% CL 75% CL 85% CL 90% CL

Loss and ALAE $5,678,402 $6,388,202 $6,706,193 $7,552,275 $8,182,577

ULAE 639,054 718,936 754,723 849,942 920,877

Investment Income (164,254) (184,786) (193,984) (218,458) (236,690)

Discounted Loss and LAE $6,153,202 $6,922,352 $7,266,932 $8,183,759 $8,866,764

EPL Discounted Loss and LAE $67,185 $75,583 $79,345 $89,356 $96,814

Total Discounted Loss and LAE $6,220,387 $6,997,935 $7,346,277 $8,273,115 $8,963,578

Available Assets 15,507,749

Redundancy or (Deficiency) $9,287,362 $8,509,814 $8,161,472 $7,234,634 $6,544,171

Note: Includes Pooled EPL Losses

The $6,220,387 estimate is the minimum liability to be booked by the Authority as of June 30, 2017 in accordance with Governmental Accounting Standards Board (GASB) Statement #10. GASB #10 requires the Authority to accrue a liability on its financial statements for the ultimate cost of claims and expenses associated with all reported and unreported claims, including ALAE and ULAE. GASB #10 does not prohibit the discounting of losses to recognize investment income. GASB #10 does not address an actual funding requirement for the program, but only speaks to the liability to be recorded on the Authority’s financial statements. Because actuarial estimates of claims costs are subject to some uncertainty, we recommend that an amount in addition to the discounted expected loss costs be set aside as a margin for contingencies. Generally, the amount should be sufficient to bring funding to the 75% to 85% confidence level. We consider funding to the 70% confidence level to be marginally acceptable and to the 90% level to be conservative. However, given that the Authority’s liability program is somewhat of a cross between a primary pool and an excess pool, we recommend that PARSAC fund at the 90% confidence level.

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The tables below show our funding recommendations for the Authority for the 2017-18 fiscal year. We display separate recommendations for liability and EPL claims. These recommendations do not include consideration of the program’s projected June 30, 2017 funding position. Given the size of the program’s funding surplus, the 2017-18 contribution could be much lower than displayed below. However, we understand that the Authority returns excess funding through a retrospective rating plan. We recommend that the Authority contribute $4,315,143 for liability claims and $33,703 for EPL claims to fund the 2017-18 year at the 90% confidence level.


Loss and LAE Funding Guidelines For Fiscal Year 2017-18

Marginally Primary Pool Range PARSAC Acceptable Low High Recommended

Expected 70% CL 75% CL 80% CL 85% CL 90% CL

Loss and ALAE $2,227,953 $2,642,352 $2,854,007 $3,105,767 $3,419,908 $3,843,219

ULAE 376,226 446,204 481,946 524,459 577,507 648,990

Inv Income (102,647) (121,739) (131,491) (143,090) (157,563) (177,066)

Discounted Loss and LAE

$2,501,532 $2,966,817 $3,204,462 $3,487,136 $3,839,852 $4,315,143

Rate per $100 of 2017-18 Payroll

$0.927 $1.100 $1.188 $1.293 $1.424 $1.600

Public Agency Risk Sharing Authority of California Self-Insured Employment Practices Liability




Loss and ALAE $20,007 $23,728 $25,629 $27,890 $30,711 $34,512

ULAE 0 0 0 0 0 0

Inv Income (469) (556) (601) (654) (720) (809)


$19,538 $23,172 $25,028 $27,236 $29,991 $33,703


$0.0072 $0.0086 $0.0093 $0.0101 $0.0111 $0.0125

Note: The rates above are expressed as average rates per $100 of total pool payroll.

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The funding recommendations shown in the table on the prior page are for losses and loss adjustment expenses only. They do not include provision for loss control, overhead, excess insurance contributions, and other expenses associated with the program.

A comparison of the discounted loss and ALAE rates by deductible are shown in the tables below, for Liability and EPL coverage separately, at various confidence levels.

Prior * 2016-17 80% CL

Current2017-1880% CL

PercentChange

Prior * 2016-17 80% CL


PercentChange

Liability Deductible

$5,000 $2.371 $2.633 11.1% $2.371 $2.900 22.3%

$10,000 2.216 2.468 11.4% 2.216 2.718 22.7%

$25,000 1.906 2.120 11.2% 1.906 2.335 22.5%

$50,000 1.544 1.732 12.2% 1.544 1.907 23.5%

$100,000 1.153 1.283 11.3% 1.153 1.413 22.5%

$125,000 0.930 1.069 14.9% 0.930 1.177 26.6%

$150,000 0.835 0.967 15.8% 0.835 1.065 27.5%

$200,000 0.650 0.761 17.1% 0.650 0.838 28.9%

$250,000 0.496 0.592 19.4% 0.496 0.651 31.3%

$350,000 0.436 0.477 9.4% 0.436 0.525 20.4%

$500,000 0.299 0.299 0.0% 0.299 0.329 10.0%

$750,000 0.149 0.161 8.1% 0.149 0.177 18.8%

Average 11.1% Average 22.3%

Prior * 2016-17 90% CL


PercentChange

Prior * 2017-18 90% CL


PercentChange

EPL Deductible

$5,000 $0.225 $0.208 -7.6% $0.225 $0.247 9.8%

$10,000 0.159 0.153 -3.8% 0.159 0.181 13.8%

Average -5.1% Average 12.4% * Prior rates are from the 2016-17 Actuarial Report dated 3/11/16.

The rates shown above do not include any provision for claims administration, excess insurance, or other program expenses. The report that follows outlines the scope of our study, its background, and our conclusions, recommendations and assumptions. Judgments regarding the appropriateness of our conclusions and recommendations should be made only after studying the report in its entirety – including the graphs, attachments, exhibits and appendices. Our report has been developed for the Authority's internal use. It is not intended for general circulation.

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We provide the following allocation of premiums, which include ultimate loss and LAE for Non-EPL losses ($3,487,136) assuming a $1M retention per occurrence at the 80% confidence level, overhead expenses ($1,078,359), excess insurance ($1,295,645) and ERMA insurance premiums ($1,336,984) on a discounted basis (1.5%). This is shown in further detail on Ex Mod Exhibit 2-2.

Member Xmod Funding Excess

Insurance Total

Premium

Alturas 1.359 $56,464 $11,000 $67,464Amador City 0.999 7,500 312 7,812Avalon 1.282 197,999 48,021 246,019Belvedere 0.908 69,532 23,610 93,142Blue Lake 1.329 24,503 4,480 28,983California City 1.103 132,544 60,524 193,068Calimesa 1.000 34,548 9,048 43,595Calistoga 0.915 157,208 46,078 203,287Citrus Heights 0.817 282,655 183,709 466,364Clearlake 0.973 73,427 28,305 101,732Coalinga 0.815 153,607 58,523 212,130Ferndale 0.999 25,401 6,188 31,589Grass Valley 1.000 226,479 70,245 296,724Highland 1.788 96,768 27,339 124,107Menifee 1.097 145,650 41,364 187,014Nevada City 1.008 74,231 22,702 96,933Pacific Grove 1.106 114,526 68,137 182,663Placentia 0.804 166,179 109,764 275,943Placerville 1.211 200,663 62,905 263,569Plymouth 0.999 20,568 4,958 25,526Point Arena 0.999 11,699 2,713 14,412Rancho Cucamonga 0.796 105,066 300,676 405,743Rancho Cucamonga FD 0.629 88,643 162,353 250,996Rancho Santa Margarita 0.922 100,134 29,017 129,151Rialto 1.472 311,126 301,916 613,042San Juan Bautista 1.118 24,284 5,280 29,565South Lake Tahoe 0.654 99,215 174,719 273,934Tehama 0.999 2,732 439 3,171Trinidad 1.081 14,833 3,240 18,073Truckee 0.824 240,145 93,689 333,834Twentynine Palms 0.982 84,569 22,868 107,438Watsonville 0.787 123,858 300,325 424,183West Hollywood 1.512 684,497 229,953 914,450Wheatland 1.285 72,514 14,074 86,588Wildomar 1.591 71,837 11,263 83,101Yountville 0.989 93,346 25,084 118,430Yucaipa 0.940 99,853 41,794 141,647Yucca Valley 0.909 76,689 26,011 102,700 Total $4,565,495 $2,632,629 $7,198,125

Note: Excludes Pooled EPL Losses

Ex Mod Exhibit 2-1 includes the funding allocation at the 75% confidence level and Ex Mod Exhibit 2-3 includes the funding allocation at the 85% confidence level.

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We appreciate the opportunity to be of service to Public Agency Risk Sharing Authority of California in preparing this report. Please call Mike Harrington at (916) 244-1162, Nina Gau at (916) 244-1193 or Becky Richard at (916) 244-1183, with any questions you might have. Sincerely, Bickmore DRAFT Mike Harrington, FCAS, MAAA President, Property & Casualty Actuarial Services, Bickmore Fellow, Casualty Actuarial Society Member, American Academy of Actuaries DRAFT Nina Gau, FCAS, MAAA Director, Property and Casualty Actuarial Services, Bickmore Fellow, Casualty Actuarial Society Member, American Academy of Actuaries DRAFT Becky Richard, ACAS, MAAA Manager, Property and Casualty Actuarial Services, Bickmore Associate, Casualty Actuarial Society Member, American Academy of Actuaries

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TABLE OF CONTENTS

I. BACKGROUND 8

II. CONCLUSIONS AND RECOMMENDATIONS 9

A. LIABILITY FOR OUTSTANDING CLAIMS AS OF JUNE 30, 2017 9

B. COSTS OF 2017-18 CLAIMS 12

C. PROGRAM FUNDING: GOALS AND OBJECTIVES 13

D. HISTORICAL TRENDS IN THE SELF-INSURANCE PROGRAM 16

E. COMPARISON WITH OUR PREVIOUS RESULTS 19

F. DATA ISSUES 24

G. OVERALL ANALYTICAL APPROACH 25

III. ASSUMPTIONS AND LIMITATIONS 26

IV. GLOSSARY OF ACTUARIAL TERMS 28 V. EXHIBITS 30 VI. APPENDICES 39 VII. EPL APPENDICES 72 VIII. ALLOCATIONS 95

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I. BACKGROUND

The Public Risk Sharing Authority of California (PARSAC) was formed to provide pooled insurance coverage to cities in the State of California. PARSAC began its self-insured general liability program on July 1, 1986. Its current self-insured retention is $1,000,000, and excess coverage is provided by the California Affiliated Risk Management Authority. The program’s members select individual retentions from $5,000 to $500,000 per occurrence and PARSAC insures the layer between these retentions and the $1,000,000 pool limit.

For employment practices liability (EPL) claims, the Authority purchases insurance from ERMA for the layer $25,000 to $1 million and pools the first $25,000 of each occurrence. Members with Non-EPL deductible higher than $25,000 attach directly to ERMA at $25,000 effective July 1, 2007.

Individual cities are responsible for administering their own claims. Members are required to report claims to PARSAC once they reach 50% of the member’s retention for retentions greater than $50,000, or all of their claims for retentions less than $50,000. PARSAC contracts with George Hills Co. to administer claims with the potential to reach the pooled layer.

The Authority has funded each program year at the following historical confidence levels.

Program Year Confidence Level 2005-06 75% 2006-07 80% 2007-08 85% 2008-09 85% 2009-10 85% 2010-11 85% 2011-12 85% 2012-13 85% 2013-14 85% 2014-15 80% 2015-16 80% 2016-17 80%

As of June 30, 2017, the Authority expects to have available assets of $15,507,749 for the program. Additional background on the program is given in Appendix K. The purpose of this review is to provide a guide to the Authority to determine reasonable funding levels for its self-insurance program according to the funding policy the Authority has adopted to comply with Governmental Accounting Standards Board Statements #10 and #30. The specific objectives of the study are to estimate the Authority's liability for outstanding claims as of June 30, 2017, project ultimate loss costs for 2017-18, and provide funding guidelines to meet these liabilities and future costs.

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II. CONCLUSIONS AND RECOMMENDATIONS

A. LIABILITY FOR OUTSTANDING CLAIMS AS OF JUNE 30, 2017

Graph 1 on the following page summarizes our assessment of the Authority's funding position as of June 30, 2017. The dark-colored bars indicate our estimates of the program's liability for outstanding claims before recognition of the investment income that can be earned on the assets held before the claim payments come due. The horizontal line across the graph indicates the Authority's available assets at June 30, 2017. As you can see, the program is projected to be funded well above the discounted 95% confidence level. Our best estimate of the full value of the Authority's liability for outstanding claims within its self-insured retention (SIR) is $6,385,845, including EPL claims. This amount includes losses, allocated loss adjustment expenses (ALAE) and unallocated loss adjustment expenses (ULAE). ALAE is the direct cost associated with the defense of individual claims (e.g. legal fees, investigation fees, court charges). ULAE is the cost to administer claims to final settlement, which may be years in the future (e.g. claims adjusters’ salaries, taxes). There is some measure of uncertainty associated with our best estimate because of the random nature of much of the process that determines ultimate claims costs. For this reason, we generally recommend that a program such as this include some funding margin for the possibility that actual loss costs will be greater than the best estimate. We generally measure the amount of this margin by thinking in terms of the probability distribution of actual possible results around our best estimate. As the margin grows, the probability that the corresponding funding amount will be sufficient to meet actual claim liabilities increases. We typically refer to this probability as the "confidence level" of funding. Graph 1 shows the liabilities for outstanding claims at several confidence levels that are typically of interest to risk managers in formulating funding policies for self-insurance programs.

The Authority can earn investment income on the assets it holds until claims payments come due. Assuming a long-term average annual return on investments of 1.5%, we estimate the impact of investment income earnings to be about 2.6% if the program is funded within the range indicated in Graph 1. Investment income earnings will be less than this when the program does not maintain sufficient funding, and more when there is excess funding. Thus, thinking in terms of liabilities discounted for investment income can actually mask funding deficiencies and redundancies that might otherwise be obvious. However, the discounted liabilities do represent legitimate funding targets. The light-colored bars on Graph 1 show our estimates of the Authority's discounted liability for outstanding claims.

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Graph 1

6,220

6,9987,346

8,273

8,964

6,386

7,1847,542

8,493

9,202

15,508

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Expected 70% 75% 85% 90%

Thousands

Confidence Levels

PARSAC - LiabilityAvailable Assets vs Outstanding Liability ($000's)

at June 30, 2017

Discounted Undiscounted Available Assets

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We estimate the program’s expected discounted liability for outstanding claims to be $6,220,387 as of June 30, 2017. Again, these amounts include ALAE, ULAE and EPL claims. As shown, after recognition of the investment income, the program is funded above the 95% confidence level as of June 30, 2017. The information presented in Graph 1 is also summarized in tabular form below.

Liability for Outstanding Claims at June 30, 2017 Confidence

Levels Expected 70% 75% 85% 90%

Discounted $6,220,387 $6,997,935 $7,346,277 $8,273,115 $8,963,578

Not Discounted 6,385,845 7,184,076 7,541,683 8,493,174 9,202,003

Assets Available at 6/30/17 $15,507,749


GASB #10 does not address an actual funding requirement for the program, but only speaks to the liability to be recorded on the Authority’s financial statements. Because actuarial estimates of claims costs are subject to some uncertainty, we recommend that an amount in addition to the discounted expected loss costs be set aside as a margin for contingencies. Generally, the amount should be sufficient to bring funding to the 75% to 85% confidence level. We consider funding to the 70% confidence level marginally acceptable and to the 90% confidence level to be conservative. However, given that the Authority’s liability program is somewhat of a cross between a primary pool and an excess pool, we recommend that PARSAC fund at the 90% confidence level.

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B. COSTS OF 2017-18 CLAIMS

We estimate the ultimate cost of claims and allocated loss adjustment expenses (ALAE) for claims incurred during the 2017-18 program year to be $2,227,953 for liability claims and $20,007 for EPL claims. In addition, we estimate expenses of $376,226 will be required to administer the same claims to final settlement. Thus, the total expected cost of claims for program year 2017-18 within the Authority’s SIR is $2,624,186.

In addition, as with its funding for the outstanding liability, if the program is fully funded, the Authority can earn investment income on its funding for the coming year’s claims before all payments come due. We estimate the impact of this investment income to be about 3.9%, or $103,116. Thus the total expected cost of claims for program year 2017-18 including recognition of future investment income is $2,521,070. We provide the following estimates of the costs of 2017-18 claims at various confidence levels, after recognition of investment income. For budgeting purposes we also display rates per $100 of payroll. We have provided separate estimates for liability and EPL claims.

FY 2017-18 Liability Claims Expected $2,501,532 $0.927

70% Confidence 2,966,817 1.100 75% 3,204,462 1.188 85% 3,839,852 1.424 90% 4,315,143 1.600

FY 2017-18 EPL Claims

Expected $19,538 $0.0072 70% Confidence 23,172 0.0086

75% 25,028 0.0093 85% 29,991 0.0111 90% 33,703 0.0125

The funding recommendations above are for losses and loss adjustment expenses only. They do not include provision for loss control, overhead, excess insurance contributions, and other expenses associated with the program. The recommendations also do not include consideration of the program’s projected funding surplus as of June 30, 2017.

Again, we generally recommend funding to the 75% to 85% confidence levels. We consider funding to the 70% confidence level to be marginally acceptable, and to the 90% confidence level to be conservative. However, given that the Authority’s liability program is somewhat of a cross between a primary pool and an excess pool, we recommend that PARSAC fund at the 90% confidence level.

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C. PROGRAM FUNDING: GOALS AND OBJECTIVES

As self-insurance programs have proliferated among public entities, it has become apparent that there is a large measure of inconsistency in the way in which these programs recognize and account for their claims costs. This is the result of the fact that there have been several different sources of guidance available, none of which has been completely relevant to public entity self-insurance programs. According to the Governmental Accounting Standards Board (GASB), the most relevant source of guidance on the subject is Financial Accounting Standards Board Statement #60. A liability for unpaid claim costs, including all loss adjustment expenses, should be accrued at the time the self-insured events occur. This liability should include an allowance for incurred but not reported claims. It may be discounted for investment income at an appropriate rate of return, provided the discounting is disclosed. The regulations detailing the way in which this must be done are outlined in GASB's statements #10 and #30. GASB #10 and #30 do not address funding requirements. They do, however, allow a range of funded amounts to be recognized for accounting purposes, specifically GASB #10 and #30 allow recognition of a funding margin for unexpectedly adverse loss experience. Thus, it is possible to formulate a funding policy from a range of alternatives all acceptable for accounting purposes. The uncertainty in any estimate of the program's liability for outstanding claims should be taken into consideration in determining funding policy, but it may be offset by recognizing anticipated investment income earnings. This usually means developing a funding program based on discounted claims costs with some margin for unexpected adverse loss experience. The amount of the margin should be a question of long-term funding policy. We recommend that the margin be determined by thinking in terms of the probability that a given level of funding will prove to be adequate. For example, a reasonable goal might be to maintain a fund at the 85% confidence level. A key factor to consider in determining funding policy is the degree to which stability is required in the level of contributions to the program from year to year. If you elect to fund at a low confidence level, the chances are much greater that future events will prove that additional contributions should have been made for current claims. The additional contributions for years by that time long past may be required at the same time that costs are increasing dramatically on then-current claims. The additional burden of funding increases on past years as well as current years may well be prohibitive.

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For primary programs, we generally recommend maintaining program funding at the 80% confidence level, after recognition of investment income, with a recommended range of the 75% to 85% confidence levels. We tend to think of the 70% confidence level as marginally acceptable and of the 90% confidence level as conservative. However, in PARSAC’s case, we recommend the 90% confidence level due to the fact that the program is a cross between a primary program and an excess program. Further, the probabilities are reasonably high that resulting funding will be sufficient to meet claim liabilities, yet given the current funding surplus, the required margins are not so large that they will cause most self-insured entities to experience undue financial hardship. In addition, within this range, anticipated investment income generally pretty much offsets the required margin, which means that it is also reasonable to think of the liabilities as being stated on an undiscounted basis. We also strongly believe, however, that the confidence level to which any future year is funded should be evaluated in light of the relative certainty of the assumptions underlying the actuarial analysis, the Authority's other budgetary constraints, and the relative level of risk it is believed appropriate to assume. This means formulating both short- and long-term funding goals, which may be the same in some years, but different in others. In general, we recommend that you fund each year's claims costs in that year. When surpluses or deficiencies have developed and funding adjustments are necessary, they should be clearly identified as such so that the habit of funding each year's claims costs that year is maintained. We also recommend that you reduce surplus funding more slowly than you would accumulate funding to make up a deficiency.

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15

The tables below show our funding recommendations for the Authority for the 2017-18 fiscal year. We display separate recommendations for liability and EPL claims. These recommendations do not include consideration of the program’s projected June 30, 2017 funding position. Given the size of the program’s funding surplus, the 2017-18 contribution could be much lower than displayed below. However, we understand that the Authority returns excess funding through a retrospective rating plan. We recommend that the Authority contribute $4,315,143 for liability claims and $33,703 for EPL claims to fund the 2017-18 year at the 90% confidence level.





Loss and ALAE $2,227,953 $2,642,352 $2,854,007 $3,105,767 $3,419,908 $3,843,219

ULAE 376,226 446,204 481,946 524,459 577,507 648,990

Inv Income (102,647) (121,739) (131,491) (143,090) (157,563) (177,066)


$2,501,532 $2,966,817 $3,204,462 $3,487,136 $3,839,852 $4,315,143


$0.927 $1.100 $1.188 $1.293 $1.424 $1.600

Public Agency Risk Sharing Authority of California Self-Insured Employment Practices Liability




Loss and ALAE $20,007 $23,728 $25,629 $27,890 $30,711 $34,512

ULAE 0 0 0 0 0 0

Inv Income (469) (556) (601) (654) (720) (809)


$19,538 $23,172 $25,028 $27,236 $29,991 $33,703


$0.0072 $0.0086 $0.0093 $0.0101 $0.0111 $0.0125

Note: The rates above are expressed as average rates per $100 of total pool payroll.

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D. HISTORICAL TRENDS IN THE SELF-INSURANCE PROGRAM

Over the past ten years, PARSAC’s pooled loss rate per $100 of payroll has varied from a high of $1.74 per $100 of payroll in 2010-11 to low of $0.42 in 2008-09 and 2009-10. Our projected loss rate of $0.79 for 2016-17 is based on long-term average and relatively stable loss cost trends in the future.

Graph 2

0.48

1.48

0.42 0.42

1.74

0.51

1.30

0.93

0.59

0.90

0.79

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

06-07

07-08

08-09

09-10

10-11

11-12

12-13

13-14

14-15

15-16

16-17

Program Year

PARSAC - LiabilityDollars of Loss per

$100 of Payroll

Loss Rate

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PARSAC’s pooled cost per claim has been quite volatile over the past ten years. There are several large claims for the 2010-11 and 2013-14 accident years causing the extremely high average severity. The claim cost averaged $101,000 during the past ten years excluding the 2010-11 and 2013-14 years. Our projected severity for 2016-17 is $98,000.

Graph 3

70,000

147,000

47,00056,000

238,000

121,000

177,000

223,000

87,000

103,00098,000

0

50,000

100,000

150,000

200,000

250,000

06-07

07-08

08-09

09-10

10-11

11-12

12-13

13-14

14-15

15-16

16-17

Program Year

PARSAC - LiabilityDollars of Loss per Claim

Claim Severity

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The pooled claims frequency averaged 0.07 claims per $1 million of payroll for the 2006-07 to 2015-16 years. Our projected claims frequency of 0.08 for 2016-17 is similar to this average.

Graph 4

0.07

0.10

0.09

0.07 0.07

0.04

0.07

0.04

0.07

0.09

0.08

0.00

0.02

0.04

0.06

0.08

0.10

0.12

06-07

07-08

08-09

09-10

10-11

11-12

12-13

13-14

14-15

15-16

16-17

Program Year

PARSAC - LiabilityNumber of Claims per $1 Million of Payroll

Claim Frequency

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E. COMPARISON WITH OUR PREVIOUS RESULTS

The most recent report for PARSAC was dated March 11, 2016. In the table below we display actual versus expected development of incurred losses and ALAE by accident year since our prior report.

Actual Versus Expected Incurred Loss and ALAE Development

Accident Year

Expected Incurred

Development

Actual Incurred

Development

Actual Minus

Expected

Prior $0 $0 $0 2006-2007 0 0 0 2007-2008 0 0 0 2008-2009 2,000 (173,846) (175,846) 2009-2010 5,000 11,511 6,511 2010-2011 45,000 0 (45,000) 2011-2012 18,000 (26,981) (44,981) 2012-2013 85,000 (48,528) (133,528) 2013-2014 228,000 (43,726) (271,726) 2014-2015 636,000 (174,925) (810,925) 2015-2016 599,000 1,151,677 552,677

Total $1,618,000 $695,182 ($922,818)


As shown, actual incurred loss development was less than anticipated since the prior report. Based on the assumptions in the prior reports, it was expected that incurred losses would increase by $1,618,000 between the two evaluation dates. However, actual development was $695,182; or $922,818 less than expected. The less than anticipated development on accident years 2014-15 and prior was partially offset by the more than anticipated development in the 2015-16 year.

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In the table below we display the change in our estimates of the program’s ultimate losses and ALAE by accident year since our prior report.

Change in Ultimate Loss and ALAE

Change

Accident Year

Prior Report

Current Report

In Ultimate

2004-2005 $5,391,331 $5,391,331 $0 2005-2006 1,512,961 1,512,961 0 2006-2007 1,114,809 1,114,809 0 2007-2008 3,824,390 3,824,390 0 2008-2009 1,166,449 989,114 (177,335) 2009-2010 893,372 899,605 6,233 2010-2011 3,858,249 3,812,902 (45,347) 2011-2012 1,132,514 1,086,419 (46,095) 2012-2013 2,764,431 2,649,692 (114,739) 2013-2014 2,034,818 1,782,392 (252,426) 2014-2015 1,946,262 1,308,506 (637,756) 2015-2016 1,794,242 2,164,791 370,549

Total $27,433,828 $26,536,912 ($896,916)


As shown, overall we have decreased our estimated ultimates by $896,916 since our prior report. The changes in ultimate losses are in line with the actual vs. expected analysis shown in the previous page.

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At the time of the prior report, we estimated the liability for outstanding claims as of June 30, 2016 to be $5,902,085 at the discounted expected level. Our current estimate as of June 30, 2017 is $6,220,387, an increase in our assessment of PARSAC's outstanding liabilities, as shown below:

Outstanding Claim Liabilities for Loss and LAE

Prior Current Report at Report at June 30, 2016 June 30, 2017 Change

A) Case Reserves: $3,234,178 $3,287,815 $53,637

B) IBNR Reserves: 2,212,664 2,458,976 246,312

C) Claims Administration Reserves: 605,884 639,054 33,170

D) Total Reserves (A) + (B) + (C) $6,052,726 $6,385,845 $333,119

E) Offset for Investment Income: (150,641) (165,458) (14,817)

F) Total Outstanding Claim Liabilities: (D) + (E) $5,902,085 $6,220,387 $318,302


As shown, our estimate of outstanding claims liabilities at the discounted expected level has increased between June 30, 2016 and June 30, 2017, as reflected in our prior and current reports respectively. The increase in reserves is driven primarily by less than expected paid development since the prior report. Reserves for future claims administration expenses are expected to be higher due to increased budget for claims administration, resulting in a $333,119 increase in total claim reserves. This increase in reserves leads to a greater offset for investment income. The net change due to the above factors is an overall increase of $318,302 in our estimate of outstanding claim liabilities for Loss and LAE.

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At the time of the prior report, available assets were estimated to be $14,332,573 as of June 30, 2016, which matched the then-estimated discounted liability for outstanding claims above the 90% confidence level. Available assets are currently estimated to be $15,507,749 as of June 30, 2017, which matches the currently estimated liability for outstanding claims above the 90% confidence level. It can be summarized as follows:

Funding Margin


A) Outstanding Liability at the

Discounted Expected Level: $5,902,085 $6,220,387 $318,302

B) Estimated Assets At June 30: 14,332,573 15,507,749 1,175,176

C) Surplus/(Deficit): (B) – (A) $8,430,488 $9,287,362 $856,874


As you can see, our estimate of the program’s funding margin at the discounted expected confidence level has increased by $856,874 between June 30, 2016 (as previously estimated) and June 30, 2017 (as currently estimated). This is driven by an increase in the estimated assets between the two points, partially offset by an increase in the estimated outstanding liability.

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At the time of the prior report, our funding estimate for the 2016-17 year was $6,552,881 at the discounted 80% confidence level. That amount included allocated loss adjustment expenses (ALAE) for Non-EPL losses, unallocated loss adjustment expenses (ULAE), insurance expenses, other program expenses, and a discount for anticipated investment income. Our current estimate for the 2017-18 year is $7,198,125 at the discounted 80% confidence level, an increase in the program’s total funding, as shown in the table below:

Comparison of Funding for Loss and LAE Prior * Current Report Report 2016-17 2017-18 SIR = $1,000,000 SIR = $1,000,000

Change

A) Ultimate Loss and ALAE: $1,930,008 $2,227,953 $297,945

B) Ultimate Claims Administration (ULAE): 382,039 376,226 (5,813)

C) Total Claim Costs: (A) + (B) $2,312,047 $2,604,179 $292,132

D) Offset for Investment Income: (91,132) (102,647) (11,515)

E) Discounted Expected Loss & LAE: (C) + (D) $2,220,915 $2,501,532 $280,617

F) 80% CL Margin: 901,691 985,604 83,913

G) Other Program Expenses: 845,634 931,859 86,225

H) Pool Funding @ Discounted 80% CL: (E) + (F) + (G) $3,968,240 $4,418,995 $450,755

I) Loss Run Fees: 146,500 146,500 0

J) Liability Excess Insurance: 1,233,948 1,295,645 61,697

K) EPL Excess Insurance: 1,204,193 1,336,984 132,791

L) Total Funding @ Discounted 80% CL: (I) + (J) + (K) $6,552,881 $7,198,125 $645,244

M) Payroll ($100) $2,618,736 2,697,280 78,544

N) Total Funding rate per $100 of payroll @ Discounted 80% CL : (L) / (M) $2.50 $2.67 $0.17

Note: Excludes Pooled EPL Losses. * Prior amounts from the Final 2016-17 Premium Allocation.

As you can see, our funding recommendations at the discounted 80% confidence level have increased between 2016-17 and 2017-18, as shown in our prior and current reports respectively. Our estimates of ultimate loss and ALAE have increased by $297,945. In addition, claims administration costs are expected to be slightly lower, resulting in an overall increase in total claim costs of $292,132. Investment income is expected to be higher. The net change due to the above factors is an overall increase of $280,617. The risk margin at the discounted 80% confidence level has increased, driven by the increase in expected level costs. EPL Excess Liability Insurance, Liability Excess Insurance and other program expenses have increased, resulting an overall increase of $645,244 in our annual funding estimate at the discounted 80% confidence level.

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F. DATA ISSUES

Overall, the data utilized in preparing this report appears to be accurate. Comments and issues regarding the data are as follows:

We have assumed that the program’s self-insured retention will remain at $1,000,000 per occurrence for 2017-18 (See Appendix K).

We estimated the 6/30/17 asset balance by beginning with the 6/30/16 asset balance, and adjusting for anticipated revenue and expense for 2016-17 (see Appendix L).

We received a detailed claims listing evaluated as of 9/30/16. This listing was provided on a claimant basis and we aggregated the claims to an occurrence basis. The losses included dollars within the member’s retentions and were not capped at the Authority’s SIR. We applied historical member retentions and Authority SIRs to the uncapped losses to calculate losses in the pooled layer for each program year. (See Appendix M).

An EPL claims listing as of 9/30/16 was provided separately, which appears to be accurate and consistent with that provided for the prior study.

We also utilized the data from PARSAC’s most recent actuarial study for our assessment of loss development.

We have assumed that PARSAC’s payroll for 2016-17 and 2017-18 will be $261,873,578 and $269,728,000, respectively based upon information provided by PARSAC. (See Appendix N).

The data provided for the analysis appears to be reasonable for use in this actuarial valuation of liabilities and projection of loss costs.

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G. OVERALL ANALYTICAL APPROACH

The approach we have taken in developing this analysis is firmly grounded in the Authority’s loss and exposure data. We have approached the problem of estimating the program’s ultimate pooled loss costs in two steps. First, we have estimated ultimate loss rates for the $0 - $25,000, $0 - $1 million and $25,000 - $1 million layers of each occurrence for all of PARSAC members. Second, using a loss distribution, the $25,000 – $1 million ultimate loss rate, and our selected loss development patterns, we then estimated the ultimate losses of the excess layers for which the Authority is responsible by year. The following actuarial techniques were applied to PARSAC’s loss data to estimate the ultimate cost of claims in the $0 - $25K, $0 - $1M and $25K - $1M layers and to estimate the program’s pooled layers:

Incurred Loss Development

Paid Loss Development

Exposure Development Based on Incurred Losses

Exposure Development Based on Paid Losses

Frequency Times Severity Actuarial judgment was used to select among the ultimate losses indicated by the above methods. To project ultimate losses and recommended funding amounts for the 2017-18 program year, we adjusted the $25K - $1M loss rate for the various member deductibles and multiplied by estimated payroll for the year.

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III. ASSUMPTIONS AND LIMITATIONS Any quantitative analysis is developed within a very specific framework of assumptions about conditions in the outside world, and actuarial analysis is no exception. We believe that it is important to review the assumptions we have made in developing the estimates presented in this report. By doing so, we hope you will gain additional perspective on the nature of the uncertainties involved in maintaining a self-insurance program. Our assumptions, and some observations about them, are as follows:

Our analysis is based on loss experience, exposure data, and other general and specific information provided to us by PARSAC. We have accepted all of this information without audit.

We have assumed that the future development of incurred and paid losses can be reasonably predicted on the basis of development of such losses in the recent past. We have also assumed that the historical development patterns for other California public entities with self-insured liability programs in the aggregate form a reasonable basis of comparison for the patterns from PARSAC’s data.

We have made use of cost relationships for claims of various sizes derived from the most recent actuarial reviews of other California public entities with self-insured liability programs

We have made use of cost relationships for claims of various sizes derived from the most recent actuarial review of other California public entities with self-insured liability programs.

We have assumed that there is a continuing relationship between past and future loss costs.

It is not possible to predict future claim costs precisely. Most of the cost of liability claims arises from a small number of incidents involving serious injury. A relatively small number of such claims could generate enough loss dollars to significantly reduce, or even deplete, the self-insurance fund.

We cannot predict and have not attempted to predict the impact of future law changes and court rulings on claims costs. This is one major reason why we believe our funding recommendations are reasonable now, but should not be extrapolated into the future.

We have assumed that the loss rate associated with liability claim costs increases 5.0% annually. We have assumed that claim severity increases at 2.4% per year, and that claim frequency increases at 2.5% per year.

We have assumed that payroll and other inflation-sensitive exposure measures increase 2.5% annually due to inflation.

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We have assumed that assets held for investment will generate an average annual return of 1.5% over the duration of payment of the loss liabilities. It should be noted that actual future investment returns may vary significantly from this assumption, depending upon the prevailing investment market conditions.

The claims costs we have estimated include indemnity and medical payments, and all loss adjustment expenses. We have not provided estimates for excess insurance contributions to CSAC, and other expenses associated with the program.

Our funding recommendations do not include provision for catastrophic events not in PARSAC's history, such as earthquakes, flooding, mass civil disorder, or mass occupational disease.

Our estimates assume that all excess insurance is valid and collectible. Further, our funding recommendations do not include a provision for losses greater than the PARSAC’s excess coverage.

PARSAC’s assets available for the program are estimated to be $15,507,749 as of June 30, 2017 for use in this report. This is shown in further detail in Appendix L.

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IV. GLOSSARY OF ACTUARIAL TERMS Accident Year - Year during which the accidents that generate a group of claims occurs, regardless of when the claims are reported, payments are made, or reserves are established. Allocated Loss Adjustment Expenses (ALAE) - Expense incurred in settling claims that can be directly attributed to specific individual claims (e.g., legal fees, investigative fees, court charges, etc.) Case Reserve - The amount left to be paid on a claim, as estimated by the claims administrator. Claim Count Development Factor - A factor that is applied to the number of claims reported in a particular accident period in order to estimate the number of claims that will ultimately be reported. Claim Frequency - Number of claims per $1 million payroll. Confidence Level - An estimated probability that a given level of funding will be adequate to pay actual claims costs. For example, the 85% confidence level refers to an estimate for which there is an 85% chance that the amount will be sufficient to pay loss costs. Discount Factor - A factor to adjust estimated loss costs to reflect anticipated investment income from assets held prior to actual claim payout. Expected Losses - The best estimate of the full, ultimate value of loss costs. Incurred but not Reported (IBNR) Losses - Losses for which the accident has occurred but the claim has not yet been reported. This is the ultimate value of losses, less any amount that has been set up as reported losses by the claims adjuster. It includes both amounts for claims incurred but not yet received by the administrator and loss development on already reported claims. Loss Development Factor - A factor applied to losses for a particular accident period to reflect the fact that reported and paid losses do not reflect final values until all claims are settled (see Section IV).

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Loss Rate - Ultimate losses per $100 payroll. Non-Claims Related Expenses – Program expenses not directly associated with claims settlement and administration, such as excess insurance, safety program expenses, and general overhead. These exclude expenses associated with loss settlements (Indemnity/Medical, BI/PD), legal expenses associated with individual claims (ALAE), and claims administration (ULAE). Outstanding Losses - Losses that have been incurred but not paid. This is the ultimate value of losses less any amount that has been paid. Paid Losses - Losses actually paid on all reported claims. Program Losses - Losses, including ALAE, limited to the SIR for each occurrence. Reported Losses - The total expected value of losses as estimated by the claims administrator. This is the sum of paid losses and case reserves. Self-Insured Retention (SIR) - The level at which an excess insurance policy is triggered to begin payments on a claim. Financially, this is similar to an insurance deductible. Severity - Average claim cost. Ultimate Losses - The value of claim costs at the time when all claims have been settled. This amount must be estimated until all claims are actually settled. Unallocated Loss Adjustment Expenses (ULAE) – Claim settlement expenses that cannot be directly attributed to individual claims (e.g., claims adjusters' salaries, taxes, etc.)

March 30, 2017 Executive Committee Meeting, V.A.2

Page 1 of 1

ANNUAL ACTUARIAL REVIEW - WORKERS’ COMPENSATION PROGRAM SUMMARY: Staff is presenting the 2017-18 Workers’ Compensation Program actuarial study to the Finance Subcommittee for review and discussion. Mr. Mike Harrington from Bickmore Risk Services completed the analysis and will discuss the report. RECOMMENDATION: Approve the 2017-18 Workers’ Compensation Program actuarial report. DISCUSSION: The actuary has completed his analysis of the Workers’ Compensation Program for 2017-18, with estimates projected at June 30, 2017. Overall, the Program is well funding above the 90% confidence level. Other notable observations include: The Program’s discounted outstanding liability is increased approximately

$371,000 to $11,954,289 (expected) and $14,763,547 (90% confidence level).

Total program assets increased over $1 million to $23,470,781 and surplus at expected and 90% confidence levels are $11,516,492 and $8,707,234, respectively.

The estimated funding requirement for claims expenses (excluding excess

insurance and administration expense) at the 75% confidence level is $4,228,210, which includes allocated and unallocated loss adjustment expenses and discounted for investment income.

Actual paid loss development (all years through 15/16) is decreased $756,310,

ultimate losses decreased $1,145,246, and actual versus expected loss development decreased $1,632,224.

Loss funding rate at the 75% confidence level is projected to increase an average of 1.7% from the current year.

FISCAL IMPLICATIONS: The Program’s financial position remains strong with net assets exceeding $8.7 million at the 90% confidence level. ATTACHMENTS: Draft Workers’ Compensation Program actuarial report. ko/

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1750 Creekside Oaks Drive, Suite 200, Sacramento, CA 95833 • 800.541.4591 • f. 855.242.8919 • www.bickmore.net

Monday, January 30, 2017 Ms. Joanne Rennie General Manager Public Agency Risk Sharing Authority of California 1525 Response Road, Suite 1 Sacramento, CA 95815 Re: Actuarial Review of the Self-Insured Workers' Compensation Program Dear Ms. Rennie: As you requested, we have completed our review of Public Agency Risk Sharing Authority of California's (PARSAC) self-insured workers’ compensation program. Assuming an SIR of $500,000 per occurrence, we estimate the ultimate cost of claims and expenses in the pooled layer (i.e. above member deductibles and below pool SIR) for claims incurred during the 2017-18 program year to be $3,652,196. This amount includes allocated loss adjustment expenses (ALAE), unallocated loss adjustment expenses (ULAE), and a discount for anticipated investment income. ALAE is the direct cost associated with the defense of individual claims (e.g. legal fees, investigation fees, court charges). ULAE is the cost to administer all claims to final settlement, which may be years into the future (e.g. claims adjusters’ salaries, taxes). The discount for investment income is calculated based on the likely payout pattern of PARSAC’s claims, assuming a 2.5% return on investments per year. For budgeting purposes, the expected cost of 2017-18 claims translates to a rate of $1.880 per $100 payroll. We also estimate that about $2,326,143 will be paid for other general and administrative expenses and excess insurance premiums during the 2017-18 year. The expected cost of 2017-18 claims, including these overhead expenses, translates to a rate of $3.078 per $100 payroll. These estimates do not take into account the program’s current funding position or include a risk margin for potential adverse experience. In addition, we estimate the program’s liability for outstanding claims in the pooled layer to be $11,954,289 as of June 30, 2017, again including ALAE and ULAE, and discounted for anticipated investment income. Given estimated program assets of $23,470,781 as of June 30, 2017, the program is funded above the 90% confidence level (see Graph on Page 8.).

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The $11,954,289 estimate is the minimum liability to be booked by PARSAC at June 30, 2017 in accordance with Governmental Accounting Standards Board (GASB) Statement #10. GASB #10 requires PARSAC to accrue a liability on its financial statements for the ultimate cost of claims and expenses associated with all reported and unreported claims, including ALAE and ULAE. GASB #10 does not prohibit the discounting of losses to recognize investment income. Our conclusions regarding PARSAC’s liability for unpaid loss and loss adjustment expenses (LAE) at June 30, 2017 are summarized in the table below.

Public Agency Risk Sharing Authority of California Self-Insured Workers’ Compensation Program Estimated Liability for Unpaid Loss and LAE

at June 30, 2017 Marginally Recommended Range Expected Acceptable Low High Conservative 70% CL 75% CL 85% CL 90% CL

Loss and ALAE $12,291,095 $13,237,509 $13,606,243 $14,528,074 $15,179,502

ULAE 1,442,817 1,553,914 1,597,198 1,705,410 1,781,879

Investment Income Offset (1,779,623) (1,916,654) (1,970,043) (2,103,514) (2,197,834)


Available Assets 23,470,781 23,470,781 23,470,781 23,470,781 23,470,781

Surplus or (Deficit) $11,516,492 $10,596,012 $10,237,383 $9,340,811 $8,707,234

GASB #10 does not address an actual funding requirement for the program, but only speaks to the liability to be recorded on PARSAC’s financial statements. Because actuarial estimates of claims costs are subject to some uncertainty, we recommend that an amount in addition to the discounted expected loss costs be set aside as a margin for contingencies. Generally, the amount should be sufficient to bring funding to the 75% to 85% confidence level.

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The table below shows our funding recommendations for PARSAC for the 2017-18 fiscal year for losses and expenses in the pooled layer. These guidelines do not include recognition of the existing funding surplus. We recommend that PARSAC contribute $6,554,353 to $6,958,104 to fund within the 75% to 85% confidence range during the fiscal year.

Public Agency Risk Sharing Authority of California Self-Insured Workers’ Compensation Program

Funding Guidelines for 2017-18 Self-Insured Retention (SIR) of $500,000


Loss and ALAE $3,516,650 $3,917,373 $4,071,248 $4,460,090 $4,739,414

ULAE 518,942 578,101 600,935 658,018 699,534

Investment Income Offset (383,396) (427,104) (443,973) (486,147) (516,818)


Excess Insurance 1,268,424 1,268,424 1,268,424 1,268,424 1,268,424

Other Program Expenses 1,057,719 1,057,719 1,057,719 1,057,719 1,057,719

Indicated Funding $5,978,339 $6,394,513 $6,554,353 $6,958,104 $7,248,273


$3.078 $3.292 $3.374 $3.582 $3.731

A comparison of the discounted loss and ALAE rates by deductible are shown in the table below at various confidence levels.

Deductible

Prior * 2016-17 75% CL

Current 2017-18 75% CL

Percent Change

Prior * 2016-1775% CL


Percent Change

$0 $4.020 $4.088 1.7% $4.020 $4.243 5.5%$5,000 3.674 3.737 1.7% 3.674 3.878 5.6%

$10,000 3.421 3.478 1.7% 3.421 3.610 5.5%$25,000 2.978 3.028 1.7% 2.978 3.143 5.5%$50,000 2.405 2.446 1.7% 2.405 2.538 5.5%

$100,000 1.804 1.834 1.7% 1.804 1.946 7.9%$150,000 1.290 1.312 1.7% 1.290 1.392 7.9%$250,000 0.659 0.670 1.7% 0.659 0.710 7.7%

Average 1.7% Average 6.2% * Prior rates are from the 2016-17 Actuarial Report dated 3/11/16.

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The loss projections in this report reflect the estimated impact of benefit legislation contained in AB749, AB227, SB228, SB899, SB863, and various WCAB court decisions based upon information provided by the WCIRB. The ultimate impact on loss costs of legislated benefit adjustments are generally difficult to forecast in advance because the changes typically take place over a period of several years following enactment. Furthermore, actuarially derived benefit level evaluations often underestimate actual future cost levels. The shortfalls result from a variety of circumstances, including: increases in utilization levels, unanticipated changes in administrative procedures, and cost shifting among benefit categories. Thus, actual cost increases could differ, perhaps substantially, from the WCIRB’s estimates. The report that follows outlines the scope of our study, its background, and our conclusions, recommendations and assumptions. Judgments regarding the appropriateness of our conclusions and recommendations should be made only after studying the report in its entirety, including the graphs, attachments, exhibits and appendices. Our report has been developed for PARSAC's internal use. It is not intended for general circulation.

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We appreciate the opportunity to be of service to the Public Agency Risk Sharing Authority of California in preparing this report. Please feel free to call Mike Harrington at (916) 244-1162, Nina Gau at (916) 244-1193 or Becky Richard at (916) 244-1183 with any questions you may have concerning this report.

Sincerely,

Bickmore DRAFT Mike Harrington, FCAS, MAAA President, Property and Casualty Actuarial Services, Bickmore Fellow, Casualty Actuarial Society Member, American Academy of Actuaries DRAFT Nina Gau, FCAS, MAAA Director, Property and Casualty Actuarial Services, Bickmore Fellow, Casualty Actuarial Society Member, American Academy of Actuaries DRAFT Becky Richard, ACAS, MAAA Manager, Property and Casualty Actuarial Services, Bickmore Associate, Casualty Actuarial Society Member, American Academy of Actuaries

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TABLE OF CONTENTS

I. BACKGROUND 7

II. CONCLUSIONS AND RECOMMENDATIONS 9 A. LIABILITY FOR OUTSTANDING CLAIMS AS OF JUNE 30, 2017 9 B. COSTS OF 2017-18 CLAIMS 13 C. PROGRAM FUNDING: GOALS AND OBJECTIVES 14 D. HISTORICAL TRENDS IN THE SELF-INSURANCE PROGRAM 17 E. COMPARISON WITH OUR PREVIOUS RESULTS 20 F. REGARDING THE DATA 26

III. ASSUMPTIONS AND LIMITATIONS 27

IV. GLOSSARY OF ACTUARIAL TERMS 29

V. RESERVE EXHIBITS 31 1. SUMMARY 31 2. POOLED LOSS AND ALAE 32 3. POOLED ULAE 34 4. ASSETS 35

VI. RESERVE APPENDICES 36 A. LOSS AND ALAE METHODS 36 B. EXPECTED LOSSES 40 C. DEDUCTIBLES, LIMITS, AND PAYROLL 58

VII. RATE EXHIBITS 61 1. SUMMARY 61 2. EXPERIENCE MODIFICATION FACTORS 62 3. MEMBER PREMIUMS 65 4. ULTIMATE LOSS SELECTIONS 71 5. PROJECTED LOSS RATE SELECTION 73

VIII. RATE APPENDICES 75 A. INCURRED LOSS DEVELOPMENT 75 B. PAID LOSS DEVELOPMENT 80 C. EXPOSURE METHODS 85 D. FREQUENCY-SEVERITY METHODS 88 E. TREND FACTORS 95 F. DISCOUNT FACTORS 96 G. CONFIDENCE LEVEL FACTORS 97 H. LIMITS 98 I. LOSS AND CLAIM COUNT DATA 99 J. EXPOSURE DATA 102

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I. BACKGROUND

The Public Agency Risk Sharing Authority of California (PARSAC) was formed to provide pooled insurance coverage to cities in the State of California. PARSAC began its self-insured workers' compensation program on July 1, 1990. Its current self-insured retention is $500,000, and excess coverage is provided by the Local Agency Workers’ Compensation Excess Joint Powers Authority. Claims administration services are provided by Athens Administrators. As of June 30, 2017, the Authority is expected to have available assets of $23,470,781 for the program. Additional background on the program is given in Appendix K. The members of PARSAC and their deductibles are shown in the table below.

Member Date Joined Deductible Alturas 7/1/90 $5,000 Avalon 7/1/90 10,000

Belvedere 7/1/15 100,000 Blue Lake 7/1/90 0 Calimesa 7/1/04 0 Calistoga 7/1/02 25,000

Citrus Heights 7/1/06 100,000 Clearlake 1/1/04 50,000 Coalinga 7/1/01 25,000 Ferndale 7/1/90 0

Grass Valley 7/1/02 25,000 Highland 7/1/90 0 Menifee 10/1/08 5,000

Pacific Grove 7/1/05 100,000 Plymouth 1/1/91 0

Point Arena 7/22/93 0 Rancho Cucamonga 7/1/90 250,000

Rancho Cucamonga FD 7/1/15 250,000 Rancho Santa Margarita 3/1/04 5,000

Ridgecrest 7/1/90 Left 7/1/06 Tehama 7/1/90 0 Trinidad 7/1/90 0 Truckee 7/1/94 10,000

Twentynine Palms 2/2/91 0 Watsonville 7/1/02 150,000

West Hollywood 7/1/14 50,000 Wheatland 7/1/90 0 Wildomar 7/1/08 0 Yountville 7/1/90 0 Yucaipa 7/1/90 5,000

Yucca Valley 7/1/92 5,000

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The Authority has funded each program year at the following historical confidence levels.

Program Year Confidence Level 2005-06 70% 2006-07 80% 2007-08 80% 2008-09 80% 2009-10 80% 2010-11 75% 2011-12 75% 2012-13 75% 2013-14 75% 2014-15 70% 2015-16 75% 2016-17 75%

The purpose of this review is to provide a guide to PARSAC to determine reasonable funding levels for its self-insurance program in compliance with Governmental Accounting Standards Board Statements #10 and #30. The specific objectives of the study are to estimate PARSAC's liability for outstanding claims as of June 30, 2017, project ultimate loss costs for 2017-18 and provide funding guidelines to meet these liabilities and future costs.

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II. CONCLUSIONS AND RECOMMENDATIONS

A. LIABILITY FOR OUTSTANDING CLAIMS AS OF JUNE 30, 2017

Graph 1 on the following page summarizes our assessment of PARSAC's funding position. The dark-colored bars indicate our estimates of the program's liability for outstanding claims before recognition of the investment income that can be earned on the assets held before the claim payments come due. The horizontal lines across the graph indicates PARSAC's available assets at June 30, 2017. Our best estimate of the full value of PARSAC's liability for outstanding claims in the pooled layer is $13,733,912 as of June 30, 2017. This amount includes losses, allocated loss adjustment expenses (ALAE) and unallocated loss adjustment expenses (ULAE). ALAE is the direct cost associated with the defense of individual claims (e.g. legal fees, investigation fees, court charges). ULAE is the cost to administer claims to final settlement, which may be years in the future (e.g. claims adjusters’ salaries, taxes). There is some measure of uncertainty associated with our best estimate because of the random nature of much of the process that determines ultimate claims costs. For this reason, we generally recommend that a program such as this include some funding margin for the possibility that actual loss costs will be greater than the best estimate. We generally measure the amount of this margin by thinking in terms of the probability distribution of actual possible results around our best estimate. As the margin grows, the probability that the corresponding funding amount will be sufficient to meet actual claim liabilities increases. We typically refer to this probability as the "confidence level" of funding. Graph 1 shows the liabilities for outstanding claims at several confidence levels that are typically of interest to risk managers in formulating funding policies for self-insurance programs. PARSAC can earn investment income on the assets it holds until claims payments come due. Assuming a long-term average annual return on investments of 2.5%, we estimate the impact of investment income earnings to be about 13.0% if the program is funded within the range indicated in the graph. Investment income earnings will be less than this when the program does not maintain sufficient funding, and more when there is excess funding. Thus, thinking in terms of liabilities discounted for investment income can actually mask funding deficiencies and redundancies that might otherwise be obvious. However, the discounted liabilities do represent legitimate funding targets. The light-colored bars on Graph 1 shows our estimates of PARSAC's discounted liability for outstanding claims.

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Graph 1

11,954

12,87513,233

14,13014,764

13,734

14,79115,203

16,23316,961

23,471

0

5,000

10,000

15,000

20,000

25,000

Expected 70% 75% 85% 90%

Thousands

Confidence Levels

PARSAC - Workers' CompensationAvailable Assets vs Outstanding Liability

at June 30, 2017

Discounted Undiscounted Available Assets

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We estimate the program’s expected discounted liability for outstanding claims to be $11,954,289 as of June 30, 2017. Again, this amount includes ALAE and ULAE. As shown, after recognition of the investment income, the program is funded above the 90% confidence level as of June 30, 2017. The information presented in Graph 1 is also summarized in tabular form below.

Liability for Outstanding Claims at June 30, 2017 Confidence

Levels _Expected ___70%___ ___75%___ ___85%__ ___90%___

Discounted $11,954,289 $12,874,769 $13,233,398 $14,129,970 $14,763,547

Not Discounted 13,733,912 14,791,423 15,203,441 16,233,484 16,961,381

Assets Available at June 30, 2017 $23,470,781

GASB #10 does not address an actual funding requirement for the program, but only speaks to the liability to be recorded on PARSAC’s financial statements. Because actuarial estimates of claims costs are subject to some uncertainty, we recommend that an amount in addition to the discounted expected loss costs be set aside as a margin for contingencies. Generally, the amount should be sufficient to bring funding to the 75% to 85% confidence level.

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The table below displays a breakdown of the program’s outstanding loss and LAE liabilities into case reserves and incurred but not reported (IBNR) reserves at June 30, 2017, before recognition of investment income.


Estimated Liability for Unpaid Loss and LAE at June 30, 2017

Year Case

ReservesIBNR

ReservesTotal

Outstanding

PRIOR $7,239 $3,435 $10,674 1996-1997 90,618 2,771 93,389 1997-1998 66,312 4,415 70,727 1998-1999 301 3,533 3,834 1999-2000 183,453 9,610 193,063 2000-2001 1,329 11,682 13,011 2001-2002 218,288 15,387 233,675 2002-2003 54,255 26,703 80,958 2003-2004 225,014 23,763 248,777 2004-2005 35,287 33,187 68,474 2005-2006 181,169 38,489 219,658 2006-2007 79,177 40,868 120,045 2007-2008 295,905 80,060 375,965 2008-2009 635,663 151,324 786,987 2009-2010 147,151 173,357 320,508 2010-2011 671,453 167,030 838,483 2011-2012 738,129 122,902 861,031 2012-2013 634,439 173,405 807,844 2013-2014 698,337 273,249 971,586 2014-2015 364,671 847,086 1,211,757 2015-2016 629,639 1,331,511 1,961,150 2016-2017 593,180 2,206,319 2,799,499

Loss and ALAE $6,551,009 $5,740,086 $12,291,095

ULAE 1,442,817 1,442,817

Total $6,551,009 $7,182,903 $13,733,912

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B. COSTS OF 2017-18 CLAIMS

We estimate the ultimate cost of claims and allocated loss adjustment expenses (ALAE) for claims incurred during the 2017-18 program year to be $3,516,650. In addition, we estimate expenses of $518,942 will be required to administer the same claims to final settlement. Thus, the total expected cost of claims for program year 2017-18 within the PARSAC’s SIR of $500,000 is $4,035,592. In addition, as with funding for the outstanding liability, if the program is fully funded, PARSAC can earn investment income on its funding for the coming year’s claims before all payments come due. We estimate the impact of this investment income to be about 9.5%, or $383,396 for 2017-18. Thus the total expected cost of claims for program year 2017-18, including recognition of future investment income, is $3,652,196. We provide the following estimates of the costs of 2017-18 claims at various confidence levels, after recognition of investment income.

2017-18

Expected $3,652,19670% Confidence 4,068,370

75% 4,228,21085% 4,631,96190% 4,922,130

For budgeting purposes, these translate to the following contribution rates per $100 payroll: 2017-18

Expected $1.880 70% Confidence 2.094

75% 2.177 85% 2.385 90% 2.534

Again, we generally recommend funding to the 75% to 85% confidence levels. We consider funding to the 70% confidence level to be marginally acceptable, and to the 90% confidence level to be conservative. The claim costs and rates shown above do not include any recognition of the existing funding margin. They are for losses and loss adjustment expenses in the pooled layer only, and do not include a provision for loss control, overhead, excess insurance premiums, and other expenses associated with the program.

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C. PROGRAM FUNDING: GOALS AND OBJECTIVES

As self-insurance programs have proliferated among public entities, it has become apparent that there is a large measure of inconsistency in the way in which these programs recognize and account for their claims costs. This is the result of the fact that there have been several different sources of guidance available, none of which has been completely relevant to public entity self-insurance programs. According to the Governmental Accounting Standards Board (GASB), the most relevant source of guidance on the subject is Financial Accounting Standards Board Statement #60. A liability for unpaid claim costs, including all loss adjustment expenses, should be accrued at the time the self-insured events occur. This liability should include an allowance for incurred but not reported claims. It may be discounted for investment income at an appropriate rate of return, provided the discounting is disclosed. The regulations detailing the way in which this must be done are outlined in GASB's statements #10 and #30. These regulations are required to be applied by PARSAC. GASB #10 and #30 do not address funding requirements. They do, however, allow a range of funded amounts to be recognized for accounting purposes, specifically GASB #10 and #30 allow recognition of a funding margin for unexpectedly adverse loss experience. Thus, it is possible to formulate a funding policy from a range of alternatives all acceptable for accounting purposes. The uncertainty in any estimate of the program's liability for outstanding claims should be taken into consideration in determining funding policy, but it may be offset by recognizing anticipated investment income earnings. This usually means developing a funding program based on discounted claims costs with some margin for unexpected adverse loss experience. The amount of the margin should be a question of long-term funding policy. We recommend that the margin be determined by thinking in terms of the probability that a given level of funding will prove to be adequate. For example, a reasonable goal might be to maintain a fund at the 85% confidence level. A key factor to consider in determining funding policy is the degree to which stability is required in the level of contributions to the program from year to year. If you elect to fund at a low confidence level, the chances are much greater that future events will prove that additional contributions should have been made for current claims. The additional contributions for years by that time long past may be required at the same time that costs are increasing dramatically on then-current claims. The additional burden of funding increases on past years as well as current years may well be prohibitive.

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We generally recommend maintaining program funding at the 80% confidence level, after recognition of investment income, with a recommended range of the 75% to 85% confidence levels. We tend to think of the 70% confidence level as marginally acceptable and of the 90% confidence level as conservative. We recommend the 75% to 85% confidence level range because the probabilities are reasonably high that resulting funding will be sufficient to meet claim liabilities, yet the required margins are not so large that they will cause most self-insured entities to experience undue financial hardship. In addition, within this range, anticipated investment income generally pretty much offsets the required margin, which means that it is also reasonable to think of the liabilities as being stated on an undiscounted basis. We also strongly believe, however, that the confidence level to which any future year is funded should be evaluated in light of the relative certainty of the assumptions underlying the actuarial analysis, PARSAC’s other budgetary constraints, and the relative level of risk it is believed appropriate to assume. This means formulating both short- and long-term funding goals, which may be the same in some years, but different in others. In general, we recommend that you fund each year's claims costs in that year. When surpluses or deficiencies have developed and funding adjustments are necessary, they should be clearly identified as such so that the habit of funding each year's claims costs that year is maintained. We also recommend that you reduce surplus funding more slowly than you would accumulate funding to make up a deficiency.

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The table below shows our funding recommendations for PARSAC for the 2017-18 fiscal year for losses and expenses in the pooled layer. These guidelines do not include recognition of the existing funding surplus. We recommend that PARSAC contribute $6,554,353 to $6,958,104 to fund within the 75% to 85% confidence range during the fiscal year.


Funding Guidelines for 2017-18 Self-Insured Retention (SIR) of $500,000


Loss and ALAE $3,516,650 $3,917,373 $4,071,248 $4,460,090 $4,739,414

ULAE 518,942 578,101 600,935 658,018 699,534

Investment Income Offset (383,396) (427,104) (443,973) (486,147) (516,818)


Excess Insurance 1,268,424 1,268,424 1,268,424 1,268,424 1,268,424

Other Program Expenses 1,057,719 1,057,719 1,057,719 1,057,719 1,057,719

Indicated Funding $5,978,339 $6,394,513 $6,554,353 $6,958,104 $7,248,273


$3.078 $3.292 $3.374 $3.582 $3.731

A comparison of the discounted loss and ALAE rates by deductible are shown in the table below at various confidence levels.

Deductible

Prior * 2016-17 75% CL


Percent Change

Prior * 2016-1775% CL


Percent Change

$0 $4.020 $4.088 1.7% $4.020 $4.243 5.5%$5,000 3.674 3.737 1.7% 3.674 3.878 5.6%

$10,000 3.421 3.478 1.7% 3.421 3.610 5.5%$25,000 2.978 3.028 1.7% 2.978 3.143 5.5%$50,000 2.405 2.446 1.7% 2.405 2.538 5.5%

$100,000 1.804 1.834 1.7% 1.804 1.946 7.9%$150,000 1.290 1.312 1.7% 1.290 1.392 7.9%$250,000 0.659 0.670 1.7% 0.659 0.710 7.7%

Average 1.7% Average 6.2% * Prior rates are from the 2016-17 Actuarial Report dated 3/11/16.

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D. HISTORICAL TRENDS IN THE SELF-INSURANCE PROGRAM

The Authority’s loss rate, or average annual loss per $100 of payroll has varied from a high of $2.61 per $100 of payroll in 2010-11 to a low of $1.33 in 2006-07. Our projected loss rate of $2.27 for 2016-17 is based on long-term.

Graph 2

Note: Losses are limited to $100,000 per occurrence above.

1.33

1.89 1.94

2.41

2.61

1.61

2.25

2.45

2.05 2.05

2.27

0.00

0.50

1.00

1.50

2.00

2.50

3.00

06-07

07-08

08-09

09-10

10-11

11-12

12-13

13-14

14-15

15-16

16-17

Accident Year

PARSAC - Workers' CompensationDollars of Loss per

$100 of Payroll

Loss Rate

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The Authority’s average severity, or cost per claim, has also been generally increasing over the last ten years, ranging from a low of $7,100 per claim for the 2006-07 accident year to a high of $15,600 per claim for the 2012-13 accident year. We selected a severity of $15,600 per claim for the 2016-17, based on the increasing trend.

Graph 3

Note: Losses are limited to $100,000 per occurrence above.

7,100

9,500

10,600

11,900

14,400

9,900

15,600

14,600

13,700

12,700

15,600

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

06-07

07-08

08-09

09-10

10-11

11-12

12-13

13-14

14-15

15-16

16-17

Accident Year

PARSAC - Workers' CompensationDollars of Loss per Claim

Claim Severity

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The Authority’s claim frequency, or number of claims per $1 million of payroll, has steadily decreased over the past ten years. This trend is similar to what other California public entities have experienced. Our projected claims frequency for 2016-17 is 1.45 based on the decreasing trend.

Graph 4

1.871.98

1.83

2.02

1.81

1.63

1.45

1.67

1.50

1.62

1.45

0.00

0.50

1.00

1.50

2.00

2.50

06-07

07-08

08-09

09-10

10-11

11-12

12-13

13-14

14-15

15-16

16-17

Accident Year

PARSAC - Workers' CompensationNumber of Claims per $1 Million of Payroll

Claim Frequency

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E. COMPARISON WITH OUR PREVIOUS RESULTS

The most recent report for the Public Agency Risk Sharing Authority of California was dated March 11, 2016. In the table below we display actual versus expected development of incurred losses and ALAE by accident year since our prior report.

Actual Versus Expected Incurred Loss and ALAE Development

Accident Year

Expected Incurred

Development

Actual Incurred

Development Actual

Minus Expected

Prior $2,063 ($21,257) ($23,320) 1996-97 915 3,295 2,380 1997-98 2,239 (23,750) (25,989) 1998-99 1,170 0 (1,170) 1999-00 3,572 (509) (4,081) 2000-01 4,608 (6) (4,614) 2001-02 5,774 27,268 21,494 2002-03 9,088 52,513 43,425 2003-04 7,258 81,828 74,570 2004-05 6,358 (152,948) (159,306) 2005-06 10,706 13,567 2,861 2006-07 9,201 29,367 20,166 2007-08 18,005 (58,737) (76,742) 2008-09 33,030 (57,904) (90,934) 2009-10 40,585 (52,486) (93,071) 2010-11 65,741 (156,613) (222,354) 2011-12 37,379 60,625 23,246 2012-13 62,925 128,088 65,163 2013-14 166,503 281,026 114,523 2014-15 723,728 354,392 (369,336) 2015-16 1,431,872 502,738 (929,134)

Total $2,642,720 $1,010,496 ($1,632,224)

As shown, overall actual incurred development was less than anticipated since the prior report. Based on the assumptions from the prior report, it was expected that incurred losses would increase by $2,642,720 between the two evaluation dates. However, actual incurred development was $1,010,496; or $1,632,224 less than expected.

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In the table below we display actual versus expected development of paid losses and ALAE by accident year since our prior report.

Actual Versus Expected Paid Loss and ALAE Development

Accident Year

Expected Paid

Development

Actual Paid

Development Actual

Minus Expected

Prior $1,458 ($28,419) ($29,877) 1996-97 10,961 7,139 (3,822) 1997-98 8,207 (23,750) (31,957) 1998-99 418 0 (418) 1999-00 22,447 13,229 (9,218) 2000-01 1,660 (6) (1,666) 2001-02 19,210 (58,089) (77,299) 2002-03 10,442 62,600 52,158 2003-04 44,035 232,544 188,509 2004-05 23,317 8,768 (14,549) 2005-06 33,459 78,841 45,382 2006-07 13,424 15,542 2,118 2007-08 62,045 100,255 38,210 2008-09 141,811 199,626 57,815 2009-10 99,576 96,967 (2,609) 2010-11 273,565 24,171 (249,394) 2011-12 274,696 161,556 (113,140) 2012-13 257,631 209,887 (47,745) 2013-14 301,794 344,533 42,739 2014-15 553,137 532,556 (20,581) 2015-16 702,712 121,746 (580,966)

Total $2,856,005 $2,099,695 ($756,310)

As shown, overall actual paid development was less than anticipated since the prior report. Based on the assumptions from the prior report, it was expected that paid losses would increase by $2,856,005 between the two evaluation dates. However, actual paid development was $2,099,695; or $756,310 less than expected.

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In the table below we display the change in our estimates of the program’s ultimate losses and ALAE by accident year since our prior report.

Change in Ultimate Loss and ALAE

Change

Accident Year

Prior Report

Current Report

In Ultimate

Prior $5,643,820 $5,619,428 ($24,392)

1996-97 923,852 926,241 2,389 1997-98 1,133,926 1,107,805 (26,121) 1998-99 593,475 592,299 (1,176) 1999-00 1,214,610 1,210,496 (4,114) 2000-01 1,184,558 1,179,889 (4,669) 2001-02 1,177,390 1,198,861 21,471 2002-03 2,238,333 2,282,002 43,669 2003-04 1,424,479 1,499,032 74,553 2004-05 942,445 789,872 (152,573) 2005-06 1,365,299 1,365,704 405 2006-07 588,898 605,566 16,668 2007-08 1,852,570 1,767,932 (84,638) 2008-09 3,247,232 3,138,961 (108,271) 2009-10 3,084,792 2,973,333 (111,459) 2010-11 3,799,016 3,468,725 (330,291) 2011-12 2,197,939 2,230,295 32,356 2012-13 2,072,510 2,131,849 59,339 2013-14 2,255,751 2,362,959 107,208 2014-15 2,207,395 2,119,218 (88,177) 2015-16 3,166,502 2,599,079 (567,423)

Total $42,314,792 $41,169,546 ($1,145,246)

As shown, overall we have decreased our estimated ultimates by $1,145,246 since our prior report. The changes in ultimate losses are in line with the actual vs. expected analysis shown in the previous pages.

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At the time of the prior report, we estimated the liability for outstanding claims as of June 30, 2016 to be $11,583,243 at the discounted expected level. Our current estimate as of June 30, 2017 is $11,954,289, reflecting an increase in our assessment of PARSAC's outstanding liabilities, as shown below:

Outstanding Claim Liabilities


A) Case Reserves: $7,298,534 $6,551,009 ($747,525)

B) IBNR Reserves: 4,976,796 5,740,086 763,290

C) Claims Administration Reserves: 1,075,130 1,442,817 367,687

D) Total Reserves: (A) + (B) + (C) $13,350,460 $13,733,912 $383,452

E) Offset for Investment Income: (1,767,217) (1,779,623) (12,406)

F) Total Outstanding Claim Liabilities: (D) + (E) $11,583,243 $11,954,289 $371,046

As shown, our estimate of outstanding claims liabilities at the discounted expected level has increased between June 30, 2016 and June 30, 2017, as reflected in our prior and current reports respectively. The decrease in claim case reserves is driven primarily by favorable loss development in recent years. We have increased our estimate of IBNR reserves by $763,290. Reserves for future claims administration expenses are expected to be higher due to increased budget for claims administration, resulting in a $386,452 increase in total reserves. This increase in reserves leads to a greater offset for investment income. The net change due to the above factors is an overall increase of $371,046 in our estimate of outstanding claim liabilities for Loss and LAE.

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At the time of the prior report, available assets were estimated to be $22,452,532 as of June 30, 2016, which matched the then-estimated discounted liability for outstanding claims above the 90% confidence level. Available assets are currently estimated to be $23,470,781 as of June 30, 2017, which matches the currently estimated liability for outstanding claims above the 90% confidence level. It can be summarized as follows:

Funding Margin


A) Outstanding Liability at the

Discounted Expected Confidence Level: $11,583,243 $11,954,289 $371,046

B) Estimated Assets 22,452,532 23,470,781 1,018,249

C) Surplus/(Deficit): (B) – (A) $10,869,289 $11,516,492 $647,203

As you can see, our estimate of the program’s funding margin at the discounted expected confidence level has increased by $647,203 between June 30, 2016 (as previously estimated) and June 30, 2017 (as currently estimated). This is driven by an increase in the estimated fund assets between the two points, partially offset by an increase in the estimated outstanding liability.

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At the time of the prior report, our funding estimate for the 2016-17 year was $6,103,347 at the discounted 75% confidence level. That amount included allocated loss adjustment expenses (ALAE), unallocated loss adjustment expenses (ULAE), insurance expenses, non-claims related expenses, and a discount for anticipated investment income. Our current estimate for the 2017-18 year is $6,554,353 at the discounted 75% confidence level, an increase in the program’s total funding, as shown in the table below:

Comparison of Funding for Loss and LAE

Prior * Current Report Report 2016-17 2017-18 SIR = $500,000 SIR = $500,000 Change

A) Ultimate Loss and ALAE: $3,592,930 $3,516,650 ($76,279)

B) Ultimate Claims Administration (ULAE): 315,646 518,942 203,296

C) Total Claim Costs: (A) + (B) $3,908,576 $4,035,592 $127,017

D) Offset for Investment Income: (375,954) (383,396) (7,442)

E) Discounted Loss & LAE: (C) + (D) $3,532,622 $3,652,196 $119,574

F) 75% CL Margin: 558,579 576,014 17,435G) Pool Funding @ 75% CL:

(E) + (F) $4,091,201 $4,228,210 $137,009H) Excess Insurance: 1,116,871 1,268,424 151,553I) Other Program Expenses: 895,275 1,057,719 162,444J) Total Funding @ 75% CL:

(G) + (H) + (I) $6,103,347 $6,554,353 $451,006K) Payroll ($100): $1,885,895 $1,942,470 $56,575L) Total Funding Rate @ 75% CL:

(J) / (K) $3.236 $3.374 $0.138 * Prior amounts from the Final 2016-17 Premium Allocation.

As you can see, our funding recommendations at the discounted 75% confidence level have increased between 2016-17 and 2017-18, as shown in our prior and current reports respectively. Our estimates of ultimate loss and ALAE have decreased by $76,279, driven primarily by aforementioned favorable loss development. In addition, claims administration costs are expected to be much higher due to increased budget for claims administration, resulting in an overall increase in total claim costs of $127,017. The offset for investment income is expected to be higher. The net change due to the above factors is increase of $119,574 at the discounted expected level. The contingency margin at the 75% confidence level, excess insurance, and other program expenses also increased resulting an overall increase of $451,006 in our annual funding estimate.

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F. REGARDING THE DATA

Overall, the data utilized in preparing this report appears to be accurate. Comments and issues regarding the data are as follows:

We received loss data valued as of 9/30/2016 from seven sources. Detailed claim-level loss run with first-dollar unlimited loss information was provided in Rancho Cucamonga, Rancho Cucamonga Fire District, Pacific Grove, Watsonville, Ridgecrest, West Hollywood and other PARSAC member loss data. This loss data, net of 4850 benefits and recoveries, was used for the rate analysis.

We received excess loss data valued as of 9/30/2016 for Rancho Cucamonga, Pacific Grove, Watsonville and Ridgecrest.

Labor Code 4850 benefits are excluded from the losses used in both the rate and reserve analysis.

We have assumed that the program’s self-insured retention will remain at $500,000 per occurrence for 2016-17 and 2017-18 (Exhibit C, Page 1).

We have assumed that the members’ deductibles will be as shown on page 6 for 2016-17 and 2017-18 (Exhibit C, Page 2).

We were provided projected payrolls for 2016-17 and 2017-18. We have assumed a 3% payroll trend to estimate missing payroll info for historical years used in our ratemaking study to ensure a match between payroll and losses (Exhibit C, Page 3).

We estimated the 6/30/2017 asset balance starting with the 6/30/2016 asset balance, and adjusting for anticipated revenue and expense for the remainder of the fiscal year as provided by PARSAC (Appendix L).

The PARSAC data did not include excess recovery field. There were twelve claims in the 9/30/15 PARSAC data with excess recoveries. We assumed the same excess recovery amounts for the twelve claims.

The data provided for the analysis appears to be reasonable for use in this actuarial valuation of liabilities and projection of loss rates. Regarding claims administration reserves, also referred to as ULAE (unallocated loss adjustment expenses), we have calculated a provision for future claims administration costs for all claims for all members except Pacific Grove, Rancho Cucamonga, and Watsonville. For these three members, we have calculated a provision for future claims administration costs for pool layer claims, with these members remaining responsible for all claims within their deductibles.

DRAFT

27

III. ASSUMPTIONS AND LIMITATIONS Any quantitative analysis is developed within a very specific framework of assumptions about conditions in the outside world, and actuarial analysis is no exception. We believe that it is important to review the assumptions we have made in developing the estimates presented in this report. By doing so, we hope you will gain additional perspective on the nature of the uncertainties involved in maintaining a self-insurance program. Our assumptions, and some observations about them, are as follows: Our analysis is based on loss experience, exposure data, and other general and

specific information provided to us by PARSAC. We have accepted all of this information without audit.

We have also made use of loss statistics that have been developed from the information gathered and compiled from other California public entities with self-insured workers' compensation program.

We have assumed that the future development of incurred and paid losses can be reasonably predicted on the basis of development of such losses in the recent past. We have also assumed that the historical development patterns for the participants of other California public entities with self-insured workers' compensation programs in the aggregate form a reasonable basis of comparison to the patterns from the Public Agency Risk Sharing Authority of California's data.

We have made use of cost relationships for claims of various sizes derived from the most recent actuarial review of other California public entities with self-insured workers' compensation programs.

We have assumed that there is a continuing relationship between past and future loss costs.

It is not possible to predict future claim costs precisely. Most of the cost of workers' compensation claims arise from a small number of incidents involving serious injury. A relatively small number of such claims could generate enough loss dollars to significantly reduce, or even deplete, the self-insurance fund.

We cannot predict and have not attempted to predict the impact of future law changes and court rulings on claims costs. This is one major reason why we believe our funding recommendations are reasonable now, but should not be extrapolated into the future.

DRAFT

28

The changes in cost levels associated with benefit increases and administrative changes typically take place over a period of several years following their enactment, and these changes are very difficult to forecast in advance. We have based our benefit level factors on those produced by the Workers’ Compensation Insurance Rating Bureau of California. See Appendix E for a display of the benefit level cost indices by fiscal year.

We have assumed that the loss rate trend associated with claim costs increases at 1.9% per year. We have assumed that claim severity increases at 4.0% per year, and that claim frequency decreases at 2.0% per year.

We have assumed that payroll and other inflation-sensitive exposure measures increase 2.5% annually due to inflation.

We have assumed that assets held for investment will generate an average annual return of 2.5% over the duration of payment of the loss liabilities. It should be noted that actual future investment returns may vary significantly from this assumption, depending upon the prevailing investment market conditions.

The claims costs we have estimated include indemnity and medical payments, and all loss adjustment expenses. We have not provided estimates for excess insurance premiums and other expenses associated with the program.

Our funding recommendations do not include provision for catastrophic events not in PARSAC's history, such as earthquakes, flooding, mass civil disorder, or mass occupational disease.

Our estimates assume that all excess insurance is valid and collectible. Further, our funding recommendations do not include a provision for losses greater than PARSAC’s excess coverage.

DRAFT

29

IV. GLOSSARY OF ACTUARIAL TERMS Accident Year - Year during which the accidents that generate a group of claims occurs, regardless of when the claims are reported, payments are made, or reserves are established. Allocated Loss Adjustment Expenses (ALAE) - Expense incurred in settling claims that can be directly attributed to specific individual claims (e.g., legal fees, investigative fees, court charges, etc.) Benefit Level Factor - Factor used to adjust historical losses to the current level of workers' compensation benefits. Case Reserve - The amount left to be paid on a claim, as estimated by the claims administrator. Claim Count Development Factor - A factor that is applied to the number of claims reported in a particular accident period in order to estimate the number of claims that will ultimately be reported. Claim Frequency - Number of claims per $1 million payroll. Confidence Level - An estimated probability that a given level of funding will be adequate to pay actual claims costs. For example, the 85% confidence level refers to an estimate for which there is an 85% chance that the amount will be sufficient to pay loss costs. Discount Factor - A factor to adjust estimated loss costs to reflect anticipated investment income from assets held prior to actual claim payout. Expected Losses - The best estimate of the full, ultimate value of loss costs. Incurred but not Reported (IBNR) Losses - Losses for which the accident has occurred but the claim has not yet been reported. This is the ultimate value of losses, less any amount that has been set up as reported losses by the claims adjuster. It includes both amounts for claims incurred but not yet received by the administrator and loss development on already reported claims. Loss Development Factor - A factor applied to losses for a particular accident period to reflect the fact that reported and paid losses do not reflect final values until all claims are settled (see Section IV).

DRAFT

30

Loss Rate - Ultimate losses per $100 payroll. Non-Claims Related Expenses – Program expenses not directly associated with claims settlement and administration, such as excess insurance, safety program expenses, and general overhead. These exclude expenses associated with loss settlements (Indemnity/Medical, BI/PD), legal expenses associated with individual claims (ALAE), and claims administration (ULAE). Outstanding Losses - Losses that have been incurred but not paid. This is the ultimate value of losses less any amount that has been paid. Paid Losses - Losses actually paid on all reported claims. Program Losses - Losses, including ALAE, limited to the SIR for each occurrence. Reported Losses - The total expected value of losses as estimated by the claims administrator. This is the sum of paid losses and case reserves. Self-Insured Retention (SIR) - The level at which an excess insurance policy is triggered to begin payments on a claim. Financially, this is similar to an insurance deductible. Severity - Average claim cost. Ultimate Losses - The value of claim costs at the time when all claims have been settled. This amount must be estimated until all claims are actually settled. Unallocated Loss Adjustment Expenses (ULAE) – Claim settlement expenses that cannot be directly attributed to individual claims (e.g., claims adjusters' salaries, taxes, etc.)

March 30, 2017 Executive Committee Meeting, V.C.1a

Page 1 of 2

2017/18 PROGRAM FUNDING – LIABILITY PROGRAM SUMMARY: 2017/18 Liability Program funding options are presented The primary funding rate increased 11.1% and 22.3% at the 80% and 85% confidence levels, respectively. Alternatively, should the Executive Committee accept Rialto’s Notice of Intent to Withdraw, the rate increases are reduced to 8.2% and 19.5% respectively. Historically, the Program has funded at the 85% confidence level. However, the Board approved funding at the 80% confidence level in recent years due to the pool’s healthy financial position. Funding at a lower confidence level provides an upfront dividend to members. ERMA has not completed its 2017-18 budget. Therefore, estimates are based on the current year’s budget and payroll. The excess coverage rate through CSAC is projected to increase 8.4% next year, with PARSAC’s annual cost estimated at $1,346,600 compared to the current year’s premium of $1,144,233. CARMA, PARSAC’s prior excess pool, will be issuing a dividend of $250,000. It is proposed that $100,000 be applied to reduce the primary funding rate and $150,000 is applied to the rate stabilization fund to bring the balance up to $500,000. RECOMMENDATION: Recommend funding the primary layer at the 80% confidence level. Apply $100,000 of new CARMA dividend to reduce increases in the primary funding layer. Apply $150,000 of CARMA dividend to replenish the liability rate stabilization fund. DISCUSSION: PARSAC’s policy requires prospective funding of the Liability Program at the 85% confidence level. A conservative funding philosophy not only ensures sufficient assets are available to pay expected losses, but also builds Program surplus in the event of adverse loss development, and is consistent with the Board’s target equity goals. Self-Insured Pooled Funding Layer to $1 million Overall, pool losses have developed favorably; however, losses in most recent years are trending higher. As a result, the 2017-18 loss funding rate at the 80% and 85% confidence levels increased 11.1% and 22.3%, respectively. The City of Rialto has submitted an untimely Notice of Intent to Withdraw, effective July 1, 2017. Should the Executive Committee accept their notice, the rate increases are reduced to 8.2% and 19.5%, respectively. Historically, the Program funds prospectively at the 85% confidence level. There is a fine line between funding conservatively and remaining competitive in the marketplace to attract quality members and retain membership. As such, the Board began funding the program at the 80% confidence level the past three years. Funding at a lower confidence

March 30, 2017 Executive Committee Meeting, V.C.1a

Page 2 of 2

level results in lower rates and essentially provides an up-front dividend to members; however, it increases the potential for future assessments should contributions fall short. The Board established a Liability Program Rate Stabilization Fund of $500,000 to off-set potential primary and/or excess rate increases. The fund limit was subsequently increased to $750,000 through additional dividends returned by CARMA (prior excess pool). The fund balance is currently $350,000 and staff was informed that CARMA will be returning another $250,000. The Finance Committee recommends applying $100,000 of CARMA dividends to temper the rate increase in the primary funding layer, and applying $150,000 to the rate stabilization fund to bring the fund balance to $500,000. The Board also established an EPL rate stabilization fund of $300,000 in 2014. The fund balance is currently $300,000 after it was recently replenished with $80,000 of ERMA dividend. It is too early to determine whether the ERMA rate will increase next year and therefore use of rate stabilization is not recommended at this time. Once staff receives ERMA’s preliminary estimates, staff will provide a recommendation on use of this fund. PARSAC’s funding policy allows the Board to have discretion to adjust prospective funding annually if the program’s overall financial position is healthy. Because the Program’s overall financial position is very good and funded above the 90% confidence level with surplus exceeding $6.5 million, funding at the 80% confidence level is appropriate. ERMA (EPL coverage from $25,000 to $1,000,000) ERMA has yet to finalize its 2017-18 budget. The premium estimates are based on the current year’s budget and payroll. Staff will update the ERMA estimates once we receive ERMA’s preliminary funding report. CSAC (Excess liability coverage, including EPL, from $1,000,000 to $35,000,000) Staff received a preliminary excess liability funding projection from CSAC for 2017-18. The projected renewal premium is $1,346,600 (including Rialto) compared to the current year’s premium of $1,144,233. The 2017-18 rate is projected to increase approximately 8.4%. The excess limits remain at $35 million per occurrence, with an option to increase limits to $50 million, and includes employment liability coverage excess of ERMA’s $1 million limit. FISCAL IMPLICATIONS: Higher confidence level funding increases the probability that premiums are sufficient to meet claims liabilities and reduces the likelihood that members will be assessed in the future. However, the Program maintains sufficient surplus to consider funding below the 85% confidence level next year. ATTACHMENTS: 80% confidence level funding spreadsheet.

March 30, 2017 Executive Committee Meeting, V.C.1.b

2017/18 PROGRAM FUNDING – WORKERS’ COMPENSATION SUMMARY: 2017-18 funding options are presented to the Executive Committee for discussion. Overall, the pool’s base funding rate will increase 1.7% next year from $4.02 to $4.09. The Program’s financial position is excellent and funded above the 90% confidence level. LAWCX is projecting a rate increase of 4% next year. Additionally, funding of the mid layer pool ($2 million to $5 million) is projected to increase 20%. Overall, LAWCX’s net position decreased 10% to $9.1 million due to adverse loss experience. The excess rate above LAWCX’s retention (CSAC) is projected to increase 26%. Overall when combining the excess rates from LAWCX and CSAC, the increase for PARSAC is 13%. RECOMMENDATION: Approve funding at the 75% confidence level for 2017-18 and recommend Board ratify. DISCUSSION: The Workers’ Compensation Program funding policy mandates funding on a year-to-year basis at a 75% confidence level. Historically the Program has funded between 75 and 80%. This conservative funding approach has been very successful and resulted in overall pool funding above the 90% confidence level and estimated Program surplus exceeding $8 million projected at June 30, 2016. Self Insured Pooled Funding Layer to $500,000 Although losses have developed favorably, resulting in overall decreases, the most recent years are trending higher. Because the actuary places more weight on recent development versus older years; the 2017-18 discounted base rate at the 75% confidence level increased an average of 1.7% from $4.02 to $4.09. Each year, the Committee considers the economic climate and balancing the needs of the membership with the funding objectives of the pool. A $500,000 rate stabilization fund was established to offset potential rate and excess cost increases. Rate stabilization funds have been used in prior years to offset increases due to lowering the discount factor and higher excess costs. The fund has a balance of $251,658 and policy requires the fund maintain a minimum balance of $250,000. At the Board’s discretion, the fund may be replenished if it falls below the minimum balance. The Finance Committee recommends continued funding at the 75% confidence level next year and replenishing the rate stabilization fund with retrospective premium adjustment dividends (see Item V.E.b.).

March 30, 2017 Executive Committee Meeting, V.C.1.b

LAWCX Excess Funding Layer At June 30, 2016, LAWCX has net assets of $9.1, a 10% reduction from the prior year of $10.1 million. Losses in the $250,000 pooling layer and multiple losses in the $2 to 5 million layer (mid-layer) has led to erosion in equity the last three years. According to LAWCX’s actuarial report, the pool’s incurred loss development increased $5.8 million and ultimate loss estimates have increased approximately $2.9 million. Additionally, LAWCX’s Board approved a reduction in the discount factor from 3% to 2.75% next year. The overall affect is a projected increase in the primary funding rate (members’ SIR to $2 million) of 4% at the 80% confidence level. In 2006, LAWCX established the mid layer pool. The mid-layer was funded over a five- year period accumulating $5 million in funding. LAWCX stopped funding this layer in the 2009/10 program year once the pool reached its funding target. There are several significant claims in this layer. The pool had a $1.7 million deficit last year and adverse development has further eroded equity resulting in a $4.5 deficit this year. The mid-layer was previously funded at the expected confidence level. Funding for this layer resumed in 2015-16 and the current year is funded at the 80% confidence level. The rate in the mid layer is projected to increase 20% next year. Excess insurance is jointly purchased through CSAC, which provides coverage to statutory limits. CSAC’s initial estimates are conservative and rates are typically lower with each budget iteration. The projected rate increase for excess insurance is 26%. When combining the funding rates for LAWCX and CSAC, the overall excess rate increases approximately 13% FISCAL IMPLICATIONS: Funding at higher confidence levels decreases the likelihood that additional contributions may be required to meet claim liabilities. However, the probability is reasonably high that confidence level funding between 75% and 80% will be sufficient. ATTACHMENTS: Premium allocation spreadsheet. ko/

2017-18 Workers' Compensation Program Funding @ 75% CL

MemberEst. 2017-18 Payroll (00's) SIR

2.50% Disc. Factor Base Loss Rate

Capped Ex. Mod. Factor

SIR Factor

Adjusted Loss Rate

Loss Funding

Rate Stabilization

CreditClaims Adm.

Allocation

Gen. & Adm. Expense Allocation

Excess Insurance

2017-18 Total

Funding75% CL 25%

Alturas* $11,270 $5,000 4.088 1.387 0.914 5.182 $58,406 $0 $5,719 $13,998 $7,656 $85,779Avalon $49,200 $10,000 4.088 1.292 0.851 4.495 $221,140 $0 $23,257 $53,000 $33,423 $330,821Belvedere $24,190 $100,000 4.088 1.178 0.449 2.162 $52,304 $0 $10,426 $12,536 $16,433 $91,699Blue Lake $4,590 $0 4.088 0.504 1.000 2.060 $9,457 $0 $846 $2,267 $3,118 $15,688Calimesa $9,270 $0 4.088 0.494 1.000 2.019 $18,721 $0 $1,675 $4,487 $6,297 $31,180Calistoga $47,210 $25,000 4.088 1.245 0.741 3.771 $178,046 $0 $21,505 $42,672 $32,072 $274,294Citrus Heights $188,220 $100,000 4.088 1.483 0.449 2.722 $512,347 $0 $102,126 $122,794 $127,865 $865,131Clearlake $29,000 $50,000 4.088 1.958 0.598 4.787 $138,811 $0 $20,775 $33,269 $19,701 $212,555Coalinga $59,960 $25,000 4.088 1.454 0.741 4.404 $264,092 $0 $31,897 $63,295 $40,733 $400,017Ferndale $6,340 $0 4.088 1.216 1.000 4.971 $31,516 $0 $2,821 $7,553 $4,307 $46,197Grass Valley $71,970 $25,000 4.088 1.169 0.741 3.541 $254,856 $0 $30,782 $61,081 $48,892 $395,611Highland $28,010 $0 4.088 0.447 1.000 1.827 $51,184 $0 $4,581 $12,267 $19,028 $87,060Menifee $42,380 $5,000 4.088 0.418 0.914 1.562 $66,190 $0 $6,481 $15,864 $28,790 $117,326Pacific Grove $69,810 $100,000 4.088 1.297 0.449 2.381 $166,194 $0 $33,127 $39,831 $47,425 $286,577Plymouth $5,080 $0 4.088 0.570 1.000 2.330 $11,837 $0 $1,059 $2,837 $3,451 $19,185Point Arena $2,780 $0 4.088 0.494 1.000 2.019 $5,614 $0 $502 $1,346 $1,889 $9,351Rancho Cucamonga $308,060 $250,000 4.088 0.618 0.164 0.414 $127,638 $0 $2,692 $30,591 $209,277 $370,197Rancho Cucamonga Fire Dist. $161,730 $250,000 4.088 1.323 0.164 0.887 $143,452 $0 $0 $34,381 $109,869 $287,702Rancho Santa Margarita $29,730 $5,000 4.088 0.447 0.914 1.670 $49,655 $0 $4,862 $11,901 $20,197 $86,614Tehama $450 $0 4.088 0.494 1.000 2.019 $909 $0 $81 $218 $306 $1,514Trinidad $3,320 $0 4.088 0.513 1.000 2.097 $6,963 $0 $623 $1,669 $2,255 $11,510Truckee $95,990 $10,000 4.088 0.998 0.851 3.472 $333,271 $0 $35,050 $79,875 $65,210 $513,405Twentynine Palms $23,430 $0 4.088 0.722 1.000 2.952 $69,154 $0 $6,189 $16,574 $15,917 $107,835Watsonville $307,700 $150,000 4.088 1.473 0.321 1.933 $594,766 $0 $10,768 $142,547 $209,033 $957,113West Hollywood $235,600 $50,000 4.088 0.314 0.598 0.768 $180,849 $0 $27,067 $43,344 $160,052 $411,312Wheatland $14,420 $0 4.088 1.188 1.000 4.857 $70,031 $0 $6,268 $16,784 $9,796 $102,879Wildomar $11,540 $0 4.088 0.494 1.000 2.019 $23,305 $0 $2,086 $5,585 $7,840 $38,815Yountville $25,700 $0 4.088 0.447 1.000 1.827 $46,963 $0 $4,203 $11,255 $17,459 $79,880Yucaipa $42,820 $5,000 4.088 0.456 0.914 1.704 $72,957 $0 $7,144 $17,486 $29,089 $126,676Yucca Valley $26,650 $5,000 4.088 0.466 0.914 1.741 $46,402 $0 $4,544 $11,121 $18,104 $80,172PARSAC $6,050 $0 4.088 0.494 1.000 2.019 $12,218 $0 $1,093 $2,928 $4,110 $20,350

$1,942,470 $3,819,247 $0 $410,250 $915,354 $1,319,595 $6,464,446

Excess OnlyAlturas has submitted its notice to withdraw. They will continue to contribute their share of administrative expenses the next 3 program years, per PARSAC's JPA Agreement.

Workers' Compensation Program Year to Year Comparison

Member2016/17 Est. Payroll 00's

2017/18 Est. Payroll 00's

Payroll Difference

00's

Percent Change in

Payroll

2016/17 Experience Modification

Factor

2017/18 Experience Modification

FactorPercent Change

2016/17 Estimated

Premium @ 75% CL

2017/18 Estimated

Premium @ 75% CL

Premium Difference

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)Alturas $10,051 $11,270 $1,219 12% 1.399 1.387 -1% $75,151 $85,779 $10,628Avalon $47,771 $49,200 $1,429 3% 1.314 1.292 -2% $317,300 $330,821 $13,521Belevedere $23,486 $24,190 $704 3% 1.134 1.178 4% $82,763 $91,699 $8,936Blue Lake $4,454 $4,590 $136 3% 0.454 0.504 11% $13,393 $15,688 $2,296Calimesa $8,253 $9,270 $1,017 12% 0.454 0.494 9% $24,816 $31,180 $6,365Calistoga $48,957 $47,210 -$1,747 -4% 1.219 1.245 2% $270,760 $274,294 $3,534Citrus Heights $182,734 $188,220 $5,486 3% 1.484 1.483 0% $810,578 $865,131 $54,553Clearlake $33,131 $29,000 -$4,131 -12% 1.701 1.958 15% $207,808 $212,555 $4,747Coalinga $58,214 $59,960 $1,746 3% 1.314 1.454 11% $344,464 $400,017 $55,553Ferndale $6,160 $6,340 $180 3% 1.446 1.216 -16% $51,329 $46,197 -$5,132Grass Valley $69,869 $71,970 $2,101 3% 1.106 1.169 6% $354,283 $395,611 $41,328Highland $27,190 $28,010 $820 3% 0.397 0.447 13% $73,436 $87,060 $13,624Menifee $48,575 $42,380 -$6,195 -13% 0.406 0.418 3% $125,034 $117,326 -$7,708Pacific Grove $67,772 $69,810 $2,038 3% 1.729 1.297 -25% $343,886 $286,577 -$57,309Plymouth $4,933 $5,080 $147 3% 0.739 0.570 -23% $22,381 $19,185 -$3,196Point Arena $2,700 $2,780 $80 3% 0.444 0.494 11% $7,974 $9,351 $1,377Rancho Cucamonga $299,089 $308,060 $8,971 3% 0.624 0.618 -1% $325,832 $370,197 $44,365Rancho Cucamonga Fire Dist. $161,494 $161,730 $236 0% 1.058 1.323 25% $232,492 $287,702 $55,210Rancho Santa Margarita $25,240 $29,730 $4,490 18% 0.416 0.447 7% $66,215 $86,614 $20,399Tehama $440 $450 $10 2% 0.444 0.494 11% $1,299 $1,514 $214Trinidad $3,227 $3,320 $93 3% 0.444 0.513 16% $9,530 $11,510 $1,980Truckee $93,192 $95,990 $2,798 3% 1.125 0.998 -11% $537,591 $513,405 -$24,187Twentynine Palms $21,500 $23,430 $1,930 9% 0.647 0.722 12% $86,925 $107,835 $20,910Watsonville $298,740 $307,700 $8,960 3% 1.521 1.473 -3% $913,733 $957,113 $43,381West Hollywood $228,742 $235,600 $6,858 3% 0.343 0.314 -8% $393,297 $411,312 $18,015Wheatland $14,600 $14,420 -$180 -1% 1.228 1.188 -3% $104,570 $102,879 -$1,690Wildomar $11,207 $11,540 $333 3% 0.444 0.494 11% $33,096 $38,815 $5,719Yountville $24,950 $25,700 $750 3% 0.470 0.447 -5% $77,164 $79,880 $2,716Yucaipa $41,568 $42,820 $1,252 3% 0.482 0.456 -5% $122,596 $126,676 $4,080Yucca Valley $26,250 $26,650 $400 2% 0.500 0.466 -7% $79,752 $80,172 $420PARSAC $5,870 $6,050 $180 3% 0.444 0.494 11% $17,335 $20,350 $3,014

Total $1,900,359 $1,942,470 $42,111 3% 2% $6,126,783 $6,464,446 $337,663

March 30, 2017

Executive Committee, V. D

Page 1 of 4

ESTIMATED RETROSPECTIVE PREMIUM ADJUSTMENT

(MULTIPLE YEARS)

SUMMARY: Funding policies for the Liability and Workers’ Compensation programs

detail the method for returning equity. The Retrospective Premium Adjustment (RPA) is

a reconciliation of premiums and expenses by program year to determine remaining

equity.

RECOMMENDATION: a. Liability Program: Approve and recommend the Board ratify the Finance

Subcommittee’s recommendation to reallocate program equity to years with a

deficit balances totaling $888,736. No dividend is recommended due to

insufficient equity to meet the target amount set by the Funding Policy.

b. Workers’ Compensation Program: Approve and recommend the Board ratify the

Finance Subcommittee’s recommendation to distribute $1 million to members,

$250,000 to the Workers’ Compensation rate stabilization fund, and reallocate

$243,941 of program equity to clear out years with deficit balances.

DISCUSSION: The RPA is calculated annually for each self-insured program. Below is

a description of the formula for determining program equity. The RPA for both programs

is calculated using a single-layer method allocating each element below based on

members’ pro-rata contribution to the program.

Contributions

+ Investment earnings

- Admin expenses

- Claims payments

- Reserves for reported claims and unallocated loss adjustment exp (ULAE)

- Reserves for incurred but not reported claims (IBNR)

= Equity*

*If positive, available for dividend; negative charged to member

Summary of Funding Policy:

Program

Confidence

Level

Requirement

Target

Equity (5 x SIR)

First

Year

Eligible

Maximum Assessment

Liability 90% $5 million 5th year 125% of contribution

Workers’ Compensation 90% $2.5 million 8th year 125% of contribution

The attached RPA Determination Worksheet details the RPA process and funding

requirements from the Funding Policy. Three criteria that must be satisfied to determine

whether a dividend can be distributed: 1) meet the minimum overall program confidence

March 30, 2017


Page 2 of 4

level; 2) meet the target equity requirement; and 3) determine eligible RPA years and

amounts. After the criteria have been satisfied, the lowest dividend option is eligible for

distribution.

Other factors considered prior to distribution include four financial performance benchmarks

and equity trends for those years not yet included in the RPA schedule, which are designed to

provide members with trending information on the adequacy of claim reserves and equity.

The Board may adjust the amount returned to members for a variety of reasons, including

setting aside funds for future negative years, building equity, or stabilizing rates.

The prior year’s RPA Determination Worksheet on page 2 of the attachments shows

projected assets for the Liability Program decreasing by $1.1 million and the minimum

set aside to meet the 90% confidence level for claims increasing by $435,000,

representing a nearly $750,000 reduction in assets overall. Projected assets for the

Workers’ Compensation Program increased by about $1.0 million and the minimum set

aside increased by $470,000, leaving the Target Equity fully funded with additional funds

available for return to members.

a. Liability Program

The projected financial position has increased compared to the prior year. Program assets

projected to June 30, 2017 are $15.5 million and the Program meets the 90% confidence

level funding. However, the increase in net assets is not enough to overcome the prior

year deficit after meeting target equity requirements. The funding policy requires meeting

both equity targets before a dividend can be declared.

In addition, only three of four financial benchmarks were met. The Change in Net Assets

benchmark was below the target due claims costs.

*SIR – self insured retention

RPA Decision Criteria Projection Met

Projected Assets $15,507,749

1. Minimum overall funding at 90%

confidence level

$8,963,578 X

2. Target Equity of 5 x SIR* ($5,000,000)

$3,813,642

3. RPA - Maximum Available $3,670,206 X

Other Factors

Eligible RPA Per Policy Limits $0

Financial Benchmark Indication 3 of 4

Equity Trend 2012/13 deficit balance totaling

$875,000 not included in RPA.

Rate Stabilization Fund Balance $350,000

March 30, 2017


Page 3 of 4

The RPA schedule spans the 2004/05 to 2010/12 program years and includes three

deficit years as well as five closed years. Page 6 illustrates equity available for

distribution of $3.6 million, but this is limited by the funding policy to zero.

b. Workers’ Compensation Program

The projected financial position of the Program remains strong in spite of claims

continuing to develop. Assets are projected to be $23.4 million at June 30, 2017. The

Program still meets both equity goals and all of the financial benchmarks.

The graphs on page 10 illustrate the remaining claim liabilities, equity, and RPA paid for

each program year projected to June 30, 2017 and June 30, 2016. Both graphs show a

deficit in the projected year that resulted from the estimated claim payments for three

quarters of the year that have not been included in the RPA schedule; a majority of the

claim payments will apply to recent years.

*SIR – self insured retention

The RPA schedule spans the 1990/91 to 2008/09 years and includes seven years in deficit

totaling $243,942. These deficits are offset by other years, leaving total equity available

for distribution of $2,726,119 as shown on pages 11 – 12. If a dividend is declared, two

former members will be assessed due to their individual claim experience.

The Workers’ Compensation Program has historically taken a cautious approach to

returning funds due to legislative impacts and the long life of claims. Last year, the Board

approved a dividend of $1.6 million, which represented 50% of the available balance.

The Finance Subcommittee recommends distributing equity in the Workers’

Compensation Program in the amount of $1.25 million ($1 million returned to members

and $250 thousand to fund the rate stabilization fund). In addition, a recommendation

was made to reallocate equity to program years with deficit balances ($243,942).

RPA Decision Criteria Projection Met

Projected Assets $23,470,781

1. Minimum overall funding at 90%

confidence level

$14,763,547 X

2. Target Equity of 5 x SIR* ($2,500,000)

$2,500,000 X

3. RPA - Maximum Available $2,726,119 X

Other Factors

Eligible RPA Per Policy Limits $2,726,119

Financial Benchmark Indication 4 of 4

Equity Trend 2010/11 deficit balance totaling

$573,000 not included in RPA.

Rate Stabilization Fund Balance $251,658

March 30, 2017


Page 4 of 4

FISCAL IMPLICATIONS: Returning equity reduces the surplus available in the

respective program.

ATTACHMENTS: RPA Determination Worksheets, Performance with Financial

Benchmarks, Liability Program Summary, Equity Graphs, and RPA schedule, Workers’

Compensation Program Summary, Equity Graphs, and RPA schedule.

trs/

Liability

Program WC Program

Actuarial Projection of Financial Position 6/30/17

Assets 15,507,749$ 23,470,781$

Less: 1. Minimum set aside at 90% confidence level discounted loss (8,963,578) (14,763,547)

Less: Other liabilities and designated Net Assets (2,730,529) (1,222,893)

Assets Available before Equity Target 3,813,642$ 7,484,341$

Less: Target Equity (5,000,000) (2,500,000)

Net Assets Available after Equity Target (1,186,358)$ 4,984,341$

1. Equity Goals Summary

Criteria

Met

Criteria

Met

A. Minimum Equity To Be Set Aside

Confidence level of discounted loss and loss adjustment expense 90% 90%

Funding amount at above confidence level 8,963,578$ 14,763,547$

B. Target Equity Criteria (Equity to SIR of 5:1 )

Program Self-Insured Retention (SIR) 1,000,000$ 500,000$

Equity Target (Program SIR x 5) 5,000,000 2,500,000

Assets Available after Target Equity goal is met from above - 4,984,341

2. RPA from schedule

Liability Program - fy 2004/05 to 2011/12 3,670,206$

Workers' Comp Program - fy 1990/91 to 2008/09 2,726,119$

3. Financial Performance Benchmark Review at 6/30/15 Page 2

3 of 4 met 4 of 4 met

4. Equity Trends Noted - Comparative Program Graphs attached

Liability Program - 12/13 deficit yrs not yet included in RPA Page 4

Workers' Comp Program - 10/11 deficit not yet included in RPA Page 9

5. Eligible RPA - lower of #1 or #2.

Liability Program $0

Workers' Compensation Program 2,726,119$

6. Executive Committee Recommended Distribution

Liability Program -$

Workers' Compensation Program - 50% of available funds Pages 11 - 12 -$

7. Prior Year RPA Decision

Liability Program - 27% of available RPA -$

Workers' Compensation Program - 50% of available funds 1,631,272$

Public Agency Risk Sharing Authority of CaliforniaRPA Determination Worksheet

February 28, 2017

Available RPA will be the lower of criteria #1 or #2 to meet the policy requirements.

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\17 Equity Available for Return 022817 FC 1

Liability

Program WC Program

Actuarial Projection of Financial Position 6/30/16

Assets 14,322,573$ 22,452,532$

Less: 1. Minimum set aside at 90% confidence level discounted loss (8,528,512) (14,293,722)

Less: Other liabilities and designated Net Assets (2,730,529) (1,222,893)

Assets Available before Equity Target 3,063,532$ 6,935,917$

Less: Target Equity (5,000,000) (2,500,000)

Net Assets Available after Equity Target (1,936,468)$ 4,435,917$

1. Equity Goals Summary

Criteria

Met

Criteria

Met

A. Minimum Equity To Be Set Aside

Confidence level of discounted loss and loss adjustment expense 90% 90%

Funding amount at above confidence level 8,528,512$ 14,293,722$

B. Target Equity Criteria (Equity to SIR of 5:1 )

Program Self-Insured Retention (SIR) 1,000,000$ 500,000$

Equity Target (Program SIR x 5) 5,000,000 2,500,000

Assets Available after Target Equity goal is met from above - 4,435,917

2. RPA from schedule

Liability Program - fy 2004/05 to 2010/11 2,628,479$

Workers' Comp Program - fy 1990/91 to 2007/08 3,262,543$

3. Financial Performance Benchmark Review at 6/30/15 Page 2

2 of 4 met 4 of 4 met

4. Equity Trends Noted - Comparative Program Graphs attached

Liability Program - 12/13 deficit yrs not yet included in RPA Page 4

Workers' Comp Program - 10/11 deficit not yet included in RPA Page 9

5. Eligible RPA - lower of #1 or #2.

Liability Program $0

Workers' Compensation Program 3,262,543$

6. Executive Committee Recommended Distribution

Liability Program -$

Workers' Compensation Program - 50% of available funds Pages 11 - 12 1,631,272$

7. Prior Year RPA Decision

Liability Program - 27% of available RPA 895,584$

Workers' Compensation Program - 53% of available funds 1,399,460$

Public Agency Risk Sharing Authority of CaliforniaRPA Determination Worksheet

May 26, 2016

Available RPA will be the lower of criteria #1 or #2 to meet the policy requirements.

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\17 Equity Available for Return 052616 BD 2

1. Net

Contribution

to Net Assets

2. Claim

Reserves to

Net Assets

3. Change in

Loss Dev.

4. Change in

Net Assets

56% 91% -34% -16%

68% 198% 30% -29%

62% 113% -43% 55%

81% 86% 12% 31%

53% 75% -13% -2%

40% 80% 24% 0%

32% 46% -32% 27%

45% 62% 31% -30%

31% 63% 27% -18%

26% 68% -11% 17%

< 200% < 300% +/- 20% > -10%

below 200% below 300%

less than

+/-20%

above 10%

decline

49% 88% -1% 4%

1. Net

Contribution

to Net Assets

2. Claim

Reserves to

Net Assets

3. Change in

Loss Dev.

4. Change in

Net Assets

83% 162% 14% 26%

56% 136% 1% 36%

38% 65% -30% 66%

30% 48% 19% 27%

32% 66% 38% -5%

31% 71% -18% -1%

36% 86% 3% -8%

48% 113% 3% -14%

41% 98% -15% 11%

41% 105% 11% -0.3%

< 200% < 300% +/- 20% > -10%

below 200% below 300%

less than

+/-20%

above 10%

decline

44% 95% 3% 14%

Notes:

2005/06 Completion of the Separation of Assets project between the Liability and Workers'

Compensation Programs. Transferred $1 million from the Liability Program to the

Workers' Compensation Program.

2010/11 Workers' Compensation Program claim administrators changed reserving practices,

significantly increased reserves for several years.

2006/07

2014/15

2014/15

2013/14

2008/09

2007/08 ($500k )

2012/13

2009/10

2007/08

2011/12

Public Agency Risk Sharing Authority of CaliforniaPerformance with Financial Benchmarks - At Expected

Projected to June 30, 2017

Liability

2008/09

Target

2010/11

2006/07 ( $250k )

2009/10

2011/12

2012/13

Target

JPA Industry Guidelines

2010/11

2013/14

Program Average

JPA Industry Guidelines

Program Average

Workers' Compensation

2015/16

2015/16

T:\RPA-Equity\Financial Benchmarks\MasterTarget Worksheet-charts 3

Public Agency Risk Sharing Authority of CaliforniaLiability Program RPA Equity Summary


Equity Eligible for RPA Dividend (%) 100% 100% 100% 100% 80% 70% 60% 50%

Projected

I. Balance Sheet 06/30/05 06/30/06 06/30/07 06/30/08 06/30/09 06/30/10 06/30/11 06/30/12 06/30/13 06/30/14 06/30/15 06/30/16 6/30/17 Total

Assets (3,189,077)$ 998,104$ 2,100,004$ 116,851$ 3,146,467$ 2,211,650$ (1,247,415)$ 1,665,830$ (432,013)$ 152,087$ 1,596,368$ 2,590,867$ 5,676,839$ 15,386,563$

Liabilities

Payables - - - - - - - - - - - 133,928 133,928

RPA/Rate Stabil. Payable - - - - - - - - - - - 293,921 293,921

Reserve for Reported Claims - - - - - 2,968 175,000 279,609 - 179,857 354,078 925,000 - 1,916,512

Reserve for IBNR and ULAE - - - 87,362 200,249 46,361 (152,275) 21,826 154,655 (384,025) 568,701 1,209,378 2,826,106 4,578,338

Discounted IBNR Reserve (10,965) (25,134) (5,706) 21,020 (1,121) (11,619) 56,948 (43,360) (84,486) (170,040) (274,463)

Subtotal Claim Liabilities - - - 76,397 175,115 43,623 43,745 300,314 143,036 (147,220) 879,419 2,049,892 2,656,066 6,220,387

Total Liabilities - - - 76,397 175,115 43,623 43,745 300,314 143,036 (147,220) 879,419 2,049,892 3,083,915 6,648,236

Net Assets - RPA (3,189,077) 998,104 2,100,004 40,454 2,971,351 2,168,027 (1,291,160) 1,365,516 (575,049) 299,307 716,949 540,975 118,296 6,263,699

Net Assets - Building - - - - - - - - - 113,243 113,243

Net Assets - Designated - 3,957,076 3,957,076

Net Assets - Claims Develpmt (1,595,691) (1,595,691)

Net Assets - Other - - - - - - - - - -

Total Net Asset (3,189,077) 998,104 2,100,004 40,454 2,971,351 2,168,027 (1,291,160) 1,365,516 (575,049) 299,307 716,949 540,975 2,592,924 8,738,327

Total Liabilities and Net Assets (3,189,077) 998,104 2,100,004 116,851 3,146,467 2,211,650 (1,247,415) 1,665,830 (432,013) 152,087 1,596,368 2,590,867 5,676,839 15,386,563

II. Statement of Revenue and ExpenseMember Contributions 4,547,082 5,045,646 5,626,657 6,960,024 6,895,142 6,151,205 5,611,390 5,170,960 5,006,340 4,973,329 4,985,698 5,836,899 6,372,691 73,183,063

Investment Income 295,404 599,903 791,755 522,672 394,033 280,469 47,253 132,585 29,515 114,446 74,411 80,134 194,568 3,557,149

Total Income 4,842,486 5,645,549 6,418,412 7,482,696 7,289,175 6,431,674 5,658,643 5,303,545 5,035,855 5,087,775 5,060,109 5,917,033 6,567,259 76,740,212

Excess Insurance 2,102,192 2,348,333 2,500,211 2,878,253 2,486,017 2,480,701 2,176,835 1,896,029 1,763,653 1,693,021 1,819,767 1,883,768 2,449,388 28,478,168

General Administrative Expense 486,714 639,037 607,587 620,244 718,226 730,819 697,606 715,684 922,779 970,996 955,846 1,062,137 1,037,009 10,164,684

Allocated Claims Admin per RPA 20,000 95,000 101,967 105,609 129,600 157,650 233,000 228,500 235,654 245,265 273,755 321,827 306,500 2,454,327

Incurred Claims 5,422,657 1,565,075 1,108,643 3,761,739 808,865 853,822 3,973,617 1,077,111 2,545,782 2,206,263 768,451 983,434 - 25,075,459

IBNR and ULAE Reserve - - - 87,362 200,249 46,361 (152,275) 21,826 154,655 (384,025) 568,701 1,209,378 2,826,106 4,578,338

Claims Exp-IBNR adj to disc exp - - - (10,965) (25,134) (5,706) 21,020 (1,121) (11,619) 56,948 (43,360) (84,486) (170,040) (274,463)

Total Expenses 8,031,563 4,647,445 4,318,408 7,442,242 4,317,823 4,263,647 6,949,803 3,938,029 5,610,904 4,788,468 4,343,160 5,376,058 6,448,963 70,476,513

Net Revenues Over/(Under) Expenses (3,189,077)$ 998,104$ 2,100,004$ 40,454$ 2,971,351$ 2,168,027$ (1,291,160)$ 1,365,516$ (575,049)$ 299,307$ 716,949$ 540,975$ 118,296$ 6,263,699$

Cumulative Dividends and Assessments (3,235,920) 1,098,197 1,321,962 54,401 824,361 262,732 - - - - - - - 325,733$

Remaining Net Assets 46,843$ (100,093)$ 778,042$ (13,947)$ 2,146,990$ 1,905,295$ (1,291,160)$ 1,365,516$ (575,049)$ 299,307$ 716,949$ 540,975$ 118,296$ 5,937,966$

AVAILABLE RPA (ASSESSMT) 46,843$ (100,093)$ 778,042$ (13,947)$ 1,717,592$ 1,333,707$ (774,696)$ 682,758$ -$ -$ -$ -$ -$ 3,670,206$

Recommended Reallocation 46,843$ (100,093)$ 155,608$ (13,947)$ 343,518$ 266,741$ (774,696)$ 76,026$ -$ -$ -$ -$ -$ -$

Remaining Equity After Reallocation 0$ (0)$ 622,434$ 0$ 1,374,074$ 1,066,966$ 0$ 606,732$ -$ -$ -$ -$ -$ 3,670,206$

III. Members 37 37 37 37 37 37 36 35 35 35 36 37 37

IV. Payroll in 000's 178,093 193,875 233,628 258,867 233,997 224,914 214,383 203,409 196,254 194,711 224,587 238,818 262,873

V. Pool Retained Limit $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000

VI. Funding - confidence levels 85% 75% 80% 85% 85% 85% 85% 85% 85% 85% 80% 80% 80%

VII. Claims Activity as of December 31, 2015

Number of Open Claims 0 0 0 0 0 2 4 3 3 9 38 49 10 118

Number of Closed Claims 101 138 110 99 103 94 176 81 93 77 47 25 0 1144

Total Reported Claims 101 138 110 99 103 96 180 84 96 86 85 74 10 1262

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\17 Liability Program Summary 2 factor deficit 0229 FC Input Data from RPA 123116 4

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\17 CurrentComparative Graphs FC Liab.doc 5

Public Agency Risk Sharing Authority of California

Liability Program –Comparative Current Liability and RPA Equity Graphs


(1,500,000)

(1,000,000)

(500,000)

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Payables Claim Reserves Program Year Net Assets


(2,000,000)

(1,500,000)

(1,000,000)

(500,000)

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

Payables Claim Reserves Program Year Net Assets

|-------------------------Years included in RPA-------------------------------|

|----------------------Years included in RPA--------------------------------|

PUBLIC AGENCY RISK SHARING AUTHORITY of CALIFORNIA PUBLIC AGENCY RISK SHARING AUTHORITY of CALIFORNIARetrospective Premium Adjustment Calculations - Liability Program Single Layer Retrospective Premium Adjustment Calculations - Liability Program Single Layer

For All Program Years July 1, 2003 - June 30, 2012 For All Program Years July 1, 2003 - June 30, 2012at December 31, 2016 at December 31, 2016

Summary of Retrospective Premium Adjustments Summary of Retrospective Premium Adjustments

Entity 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12Equity Eligible for Dividend X 100% X 100% X 100% X 100% X 80% X 70% X 60% X 50% Total

(1) (2) (3) (4) (5) (6) (7) (8) (10) (9)----------------------------------- --------------------- -------------------- --------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------Alturas $1,263 ($1,708) ($4,259) $3,756 $36,632 $31,540 ($10,920) $10,121 $66,425Amador $793 ($114) $2,533 $850 $3,649 $3,665 ($1,700) $1,796 $11,472Avalon $3,103 ($4,133) $18,495 $12,844 $59,636 $73,261 ($24,912) ($13,589) $124,706Belvedere $0 $0 $0 $0 $0 $0 $0 $0 $0Blue Lake $786 $196 $3,317 ($1,940) ($2,407) $7,771 ($3,205) ($2,553) $1,967California City $583 $20,272 $9,203 $3,216 $24,620 ($9,080) ($16,371) $23,539 $55,982Calimesa $935 ($1,074) ($1,563) $3,917 $11,596 $10,437 ($5,096) ($3,020) $16,131Calistoga $2,462 $766 $3,567 $9,788 $52,615 $65,940 ($29,324) $32,506 $138,320

* Canyon Lake $709 ($280) $2,489 ($1,682) $11,205 $13,096 ($3,890) $0 $21,647Citrus Heights $3,823 ($5,216) $55,107 $52,695 $196,215 $155,629 ($73,722) $69,156 $453,686Clearlake $1,674 ($2,894) $26,855 ($9,247) $56,099 ($14,800) ($20,810) $24,637 $61,514Coalinga $1,819 ($6,906) $46,629 $28,070 $104,913 $34,424 ($51,868) $35,469 $192,550

* Elk Grove $3,002 ($6,387) $196,665 ($101,811) $0 $0 $0 $0 $91,468Ferndale $316 ($400) $3,368 ($1,769) $8,010 $10,400 ($4,582) $5,279 $20,622Grass Valley $5,447 $1,196 $59,490 ($26,596) $100,212 $110,299 ($50,852) $52,083 $251,278

* Hesperia $3,589 ($6,474) ($18,444) ($42,043) $238,467 $183,341 $0 $0 $358,436Highland $1,933 $472 $25,479 $21,204 $73,564 $59,726 ($19,457) $19,829 $182,748Menifee $0 $0 $0 $0 $9,582 $4,754 ($15,524) $18,881 $17,693Nevada City ($203) ($851) $495 $48 ($6,990) $31,531 ($16,530) $18,726 $26,226Pacific Grove $2,825 ($8,413) $75,487 $39,788 $116,752 $48,629 ($25,353) $24,541 $274,256Placentia $1,394 $1,641 $7,291 ($25,900) $123,575 $46,430 ($67,346) $76,900 $163,984Placerville $1,324 $976 $18,270 $10,614 ($4,812) $6,884 ($23,339) $39,393 $49,310Plymouth $732 ($610) $1,966 $1,312 $10,087 $10,889 ($4,091) $4,322 $24,606Point Arena $665 ($578) $1,651 $345 $3,450 $3,706 ($2,158) $1,787 $8,868Rancho Cucamonga ($4,743) ($16,004) $14,221 $4,016 $93,272 $73,586 ($48,808) $35,926 $151,466Rancho Cucamonga Fire $0 $0 $0 $0 $0 $0 $0 $0 $0Rancho Santa Margarita $965 ($1,055) $5,430 ($6,161) $38,586 $49,151 ($21,196) $22,095 $87,815Rialto ($1,791) ($25,585) $72,294 $7,023 $119,937 $65,348 ($51,936) ($26,680) $158,609

* Ridgecrest $1,891 ($4,511) $22,250 $8,894 $0 $0 $0 $0 $28,525San Juan Bautista $939 ($829) $2,783 $241 ($843) ($657) ($1,308) $3,787 $4,113South Lake Tahoe $2,247 ($8,558) ($4,077) $663 $40,770 $31,794 ($25,157) $17,758 $55,441Tehama $94 ($97) $998 $98 $1,074 $882 ($614) $125 $2,561Trinidad $688 ($570) $1,840 $477 $3,760 $5,391 ($2,060) $2,441 $11,966Truckee $3,817 ($7,568) $52,185 ($12,734) $70,844 $80,608 ($54,806) $71,147 $203,493Twentynine Palms $1,470 ($2,039) $27,147 $16,901 ($17,552) $53,941 ($24,983) $40,738 $95,623Watsonville ($3,704) ($3,747) $5,959 ($2,460) $35,547 $9,675 ($13,688) $6,676 $34,258West Hollywood $0 $0 $0 $0 $0 $0 $0 $0 $0Wheatland $1,293 ($1,851) ($2,768) ($6,115) $30,001 $22,449 ($9,374) $5,114 $38,749Wildomar $0 $0 $0 $0 ($3,047) $12,351 ($4,619) ($2,760) $1,925Yountville $1,592 ($1,927) $19,060 $12,138 $49,695 $35,887 ($11,728) $13,356 $118,074Yucaipa $1,797 ($2,681) $14,992 ($8,314) $108 ($15,440) ($19,565) $30,026 $924Yucca Valley $1,313 ($2,551) $11,641 ($6,073) $28,769 $20,269 ($13,806) $23,207 $62,769----------------------------------- --------------------- -------------------- --------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------------------------Total $46,843 ($100,093) $778,042 ($13,947) $1,717,592 $1,333,707 ($774,696) $682,758 $3,670,206

( ) represents member assessment * Withdrew prior to December 2010. Eligible to receive RPA refunds on closed years, and assessments on open and closed deficit years when declared by the Board.

Closed Years

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\123116 Single layer RPA liab2 0228 FC - T Drive Summary 6

Public Agency Risk Sharing Authority of CaliforniaWorkers' Compensation Program RPA Equity Summary


Equity Eligible for Return (%) 100% 100% 100% 100% 100% 90% 90% 90% 100% 100%

I. Balance Sheet 06/30/91 06/30/92 06/30/93 06/30/94 06/30/95 06/30/96 06/30/97 06/30/98 06/30/99 06/30/00

Assets (143,072)$ (106,996)$ (1,348)$ 3,426$ (23,938)$ 30,454$ 107,850$ 53,173$ (12,742)$ 123,349$

Liabilities

Payables

RPA/Equity Payable

Reserve for Reported Claims 93,100 - - 42,339 - 118,935 37,024 - -

Reserve for IBNR & ULAE (149,442) (192,942) - (63,779) (11,547) (33,416) 7,795 9,236 232,185

Subtotal Claim Liabilities (149,442) (99,842) - - (21,440) (11,547) 85,519 44,819 9,236 232,185

Total Liabilities (149,442) (99,842) - - (21,440) (11,547) 85,519 44,819 9,236 232,185

Net Assets - RPA 6,370 (7,154) (1,348) 3,426 (2,498) 42,001 22,331 8,354 (21,978) (108,836)

Net Assets - Designated - - - - - - - - - -

Total Liabilities and Net Assets (143,072)$ (106,996)$ (1,348)$ 3,426$ (23,938)$ 30,454$ 107,850$ 53,173$ (12,742)$ 123,349$

II. Updated Statement of Revenue and ExpenseMember Contributions 954,449$ 1,319,137$ 1,310,995$ 1,309,088$ 1,463,184$ 1,461,626$ 1,617,108$ 1,448,896$ 1,347,399$ 1,288,016$

Investment Income 163,351 203,247 173,722 202,836 263,673 268,333 287,798 247,813 221,888 138,306

Total Income 1,117,800 1,522,384 1,484,717 1,511,924 1,726,857 1,729,959 1,904,906 1,696,709 1,569,287 1,426,322

Excess Insurance 64,383 115,220 125,172 130,761 164,585 171,492 103,748 83,585 153,655 46,000

General Administrative Expense 124,723 147,629 116,641 218,851 191,909 198,085 268,666 249,067 177,792 188,879

Claims Admin 37,432 42,400 54,600 113,200 76,534 67,797 60,682 71,456 89,893 86,964

Incurred Claims 1,160,945 1,362,594 922,022 588,889 749,552 1,253,136 959,657 1,100,010 583,063 978,311 IBNR Reserve (149,442) (192,942) - - (63,779) (11,547) (33,416) 7,795 9,236 232,185

Total Expenses 1,238,041 1,474,901 1,218,435 1,051,701 1,118,801 1,678,963 1,359,337 1,511,913 1,013,639 1,532,339

Net Revenues Over/(Under) Expenses (120,241)$ 47,483$ 266,283$ 460,224$ 608,056$ 50,996$ 545,569$ 184,796$ 555,648$ (106,017)$

Cumulative Dividends & Assessments (126,611) 54,637 267,631 456,798 610,554 8,995 523,238 176,442 577,626 2,819

Remaining Net Assets 6,370$ (7,154)$ (1,348)$ 3,426$ (2,498)$ 42,001$ 22,331$ 8,354$ (21,978)$ (108,836)$

AVAILABLE Dividend/(Assessment) 6,370$ (7,154)$ (1,348)$ 3,426$ (2,498)$ 37,801$ 20,098$ 7,519$ (21,978)$ (108,836)$

Recommended Distributions 6,370 (7,154) (1,348) 1,714 (2,498) 34,022 10,049 3,759 (21,978) (108,836)

Remianing Equity After Distribution 0$ (0)$ (0)$ 1,712$ (0)$ 3,779$ 10,049$ 3,761$ 0$ (0)$

III. Members 15 16 16 17 18 18 18 18 17 17

IV. Payroll ( $ 000 ) 21,011 26,276 25,899 27,018 28,753 30,398 31,614 33,316 31,990 34,073

V. Pool Retained Limit $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000

VI. Funding - confidence levels 70% 70% 70% 60% 60% 60%

VII. Claims Activity through December 31, 2015

Number of Open Claims 0 1 0 1 1 0 3 2 0 0

Number of Closed Claims 140 193 170 202 180 166 206 163 148 121

Total Reported Claims 140 194 170 203 181 166 209 165 148 121

State Fund rates used

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\17 WC Program Summary 03-30-17 EC 7



Equity Eligible for Return (%)

I. Balance SheetAssets

Liabilities

Payables

RPA/Equity Payable

Reserve for Reported Claims

Reserve for IBNR & ULAE

Subtotal Claim Liabilities

Total Liabilities

Net Assets - RPA

Net Assets - Designated

Total Liabilities and Net Assets

II. Updated Statement of Revenue and ExpenseMember Contributions

Investment Income

Total Income

Excess Insurance

General Administrative Expense

Claims Admin

Incurred Claims

IBNR Reserve

Total Expenses

Net Revenues Over/(Under) Expenses

Cumulative Dividends & Assessments

Remaining Net Assets

AVAILABLE Dividend/(Assessment)

Recommended Distributions

Remianing Equity After Distribution

III. Members

IV. Payroll ( $ 000 )

V. Pool Retained Limit

VI. Funding - confidence levels


Number of Open Claims

Number of Closed Claims

Total Reported Claims

90% 100% 100% 90% 90% 80% 70% 60% 50%

06/30/01 06/30/02 06/30/03 06/30/04 06/30/05 06/30/06 06/30/07 06/30/08 06/30/09 06/30/10 06/30/11

197,434$ 226,632$ 7,924$ 639,992$ 614,410$ 977,690$ 1,649,169$ 1,832,480$ 1,212,326$ 472,773$ 585,758$

- - -

- - -

22,243 123,433 97,526 156,615 27,520 201,818 23,192 289,855 650,091 139,595 380,015

163,985 129,894 (14,170) 357,092 22,298 355,877 146,249 202,578 387,959 208,162 779,030

186,228 253,327 83,356 513,707 49,818 557,695 169,441 492,433 1,038,050 347,757 1,159,045

186,228 253,327 83,356 513,707 49,818 557,695 169,441 492,433 1,038,050 347,757 1,159,045

11,206 (26,695) (75,432) 126,285 564,592 419,995 1,479,728 1,340,047 174,276 125,016 (573,287)

- - - - - - - - - - -

197,434$ 226,632$ 7,924$ 639,992$ 614,410$ 977,690$ 1,649,169$ 1,832,480$ 1,212,326$ 472,773$ 585,758$

906,040$ 1,390,253$ 2,309,925$ 3,095,872$ 3,598,336$ 3,838,782$ 4,454,105$ 4,331,655$ 4,301,051$ 4,213,740$ 3,995,315$

63,436 132,656 134,182 339,228 492,799 469,639 584,162 448,232 225,258 133,020 96,686

969,476 1,522,909 2,444,107 3,435,100 4,091,135 4,308,421 5,038,267 4,779,887 4,526,309 4,346,760 4,092,001

69,265 128,219 346,834 579,463 618,472 965,066 1,051,357 566,448 492,400 526,606 466,781

190,014 151,112 182,380 302,504 277,693 320,206 365,725 521,890 548,672 548,825 556,782

96,093 84,585 128,599 159,444 164,227 164,232 172,000 172,000 172,000 173,000 173,000

1,015,904 1,068,967 2,296,172 1,141,940 767,574 1,009,827 459,317 1,565,354 2,751,002 2,765,151 2,689,695 163,985 129,894 (14,170) 357,092 22,298 355,877 146,249 202,578 387,959 208,162 779,030

1,535,261 1,562,777 2,939,815 2,540,443 1,850,264 2,815,208 2,194,648 3,028,270 4,352,033 4,221,744 4,665,288

(565,785)$ (39,868)$ (495,707)$ 894,657$ 2,240,871$ 1,493,213$ 2,843,619$ 1,751,617$ 174,276$ 125,016$ (573,287)$

(576,991) (13,173) (420,275) 768,372 1,676,279 1,073,218 1,363,891 411,570 - - -

11,206$ (26,695)$ (75,432)$ 126,285$ 564,592$ 419,995$ 1,479,728$ 1,340,047$ 174,276$ 125,016$ (573,287)$

10,085$ (26,695)$ (75,432)$ 113,656$ 508,133$ 335,996$ 1,035,810$ 804,028$ 87,138$ -$ -$

5,044 (26,695) (75,432) 56,827 254,064 167,998 517,907 402,013 34,174 - -

5,041$ (0)$ (0)$ 56,829$ 254,069$ 167,998$ 517,903$ 402,015$ 52,964$ -$ -$

17 18 21 23 24 25 25 25 27 27 27

36,685 49,207 79,303 86,025 99,975 106,112 124,746 136,722 138,043 136,692 137,608

$250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $500,000 $500,000 $500,000 $500,000

60% 60% 70% 70% 70% 70% 80% 80% 80% 80% 75%

1 1 2 7 3 5 1 8 13 9 18

99 140 202 158 148 153 150 163 145 190 170

100 141 204 165 151 158 151 171 158 199 188




Equity Eligible for Return (%)

I. Balance SheetAssets

Liabilities

Payables

RPA/Equity Payable

Reserve for Reported Claims

Reserve for IBNR & ULAE

Subtotal Claim Liabilities

Total Liabilities

Net Assets - RPA

Net Assets - Designated

Total Liabilities and Net Assets

II. Updated Statement of Revenue and ExpenseMember Contributions

Investment Income

Total Income

Excess Insurance

General Administrative Expense

Claims Admin

Incurred Claims

IBNR Reserve

Total Expenses

Net Revenues Over/(Under) Expenses

Cumulative Dividends & Assessments

Remaining Net Assets

AVAILABLE Dividend/(Assessment)

Recommended Distributions

Remianing Equity After Distribution

III. Members

IV. Payroll ( $ 000 )

V. Pool Retained Limit

VI. Funding - confidence levels


Number of Open Claims

Number of Closed Claims

Total Reported Claims

Projected

06/30/12 06/30/13 06/30/14 06/30/15 06/30/16 06/30/17 Total

1,847,320$ 2,256,549$ 1,967,171$ 2,801,235$ 3,738,996$ 5,124,475$ 26,182,490$

- - - - 130,062 130,062

- - - - 689,354 689,354

297,469 629,290 666,014 334,510 508,546 63,118 4,902,248

965,869 978,074 555,034 1,108,363 1,940,843 3,615,798 11,701,025

1,263,338 1,607,364 1,221,048 1,442,873 2,449,389 3,678,916 16,603,273

1,263,338 1,607,364 1,221,048 1,442,873 2,449,389 4,498,332 17,422,689

583,982 649,185 746,123 1,358,362 1,289,607 143,808 8,277,466

- - - - 482,335 482,335

1,847,320$ 2,256,549$ 1,967,171$ 2,801,235$ 3,738,996$ 5,124,475$ 26,182,490$

4,001,185$ 4,258,260$ 4,582,825$ 5,106,699$ 5,878,528$ 6,126,783$ 79,909,252$

93,834 109,666 141,354 103,799 114,203 268,689 6,121,812

4,095,019 4,367,926 4,724,179 5,210,498 5,992,731 6,395,472 86,031,064

468,335 590,417 590,971 725,481 988,777 1,153,113 11,486,606

612,408 771,475 793,827 769,429 869,280 1,007,350 10,671,814

200,000 225,000 230,298 238,008 245,988 400,000 3,899,432

1,264,426 1,153,775 1,807,925 1,010,855 658,236 75,403 33,159,701

965,869 978,074 555,034 1,108,363 1,940,843 3,615,798 11,701,025

3,511,038 3,718,741 3,978,055 3,852,136 4,703,124 6,251,664 70,918,578

583,982$ 649,185$ 746,123$ 1,358,362$ 1,289,607$ 143,808$ 15,112,486$

- - - - - - 6,835,020

583,982$ 649,185$ 746,123$ 1,358,362$ 1,289,607$ 143,808$ 8,277,466$

-$ -$ -$ -$ -$ -$ 2,726,119$

- - - - - 1,250,000

-$ -$ -$ -$ -$ -$ 1,476,120

27 27 27 28 30 30

135,253 135,992 139,291 157,992 178,928 190,036

$500,000 $500,000 $500,000 $500,000 $500,000 $500,000

75% 75% 75% 75% 75% 75%

15 18 30 33 33 33 205

130 124 126 107 35 35 3,929

145 142 156 140 68 68 4,134


T:\RPA-Equity\2017 RPA\2017 WC RPA\Prepared for Finance Committee Mtg 2-28-17\17Current Comparative Graphs FC WC.doc 10

Public Agency Risk Sharing Authority of California

Workers’ Compensation Program – Current Comparative Liability and RPA Equity Graphs



|----------------------------------------Years included in RPA-----------------------------------------------|

|--------------------------------------Years included in RPA----------------------------------------------|

PUBLIC AGENCY RISK SHARING AUTHORITY of CALIFORNIARetrospective Premium Adjustment Calculations - Workers Compensation

For All Program Years July 1, 1990 - June 30, 2016

at December 31, 2016

Summary of Retrospective Premium Adjustment

Closed Year

Member 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99 1999/00Percent of Net Assets included

in RPA X 100% X 100% X 100% X 100% X 100% X 90% X 90% X 90% X 100% X 100%

Distribution of of Available

RPA 100% 100% 100% 50% 100% 90% 50% 50% 100% 100%

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

Alturas $1,884 ($702) ($153) $59 $5,941 ($112) $1,809 $945 $169 ($8,016)

Avalon $3,464 ($2,061) $108 $68 $12,105 $4,900 ($198) ($159) $221 ($1,976)

Belvedere $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Blue Lake $244 ($20) $32 $41 $1,161 $644 $650 $272 ($274) ($2,369)

Calimesa $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Calistoga $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Citrus Heights $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Clearlake $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Coalinga $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Ferndale $292 ($128) ($34) $27 ($10) $242 ($25) ($20) ($184) ($1,467)

Grass Valley $0 ($2,240) ($263) $395 $13,918 $24,522 $5,588 ($285) $0 $0

Highland $488 ($292) $84 $88 $3,012 $958 $1,011 ($55) ($1,758) ($1,520)

Menifee $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Pacific Grove $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Plymouth $74 ($106) ($17) $26 $970 $266 $295 ($12) $17 ($57)

Point Arena $0 $0 $0 $22 $554 $209 $216 $88 ($58) ($594)

Rancho Cucamonga ($252) ($446) $376 $836 ($76,840) ($593) $8,459 $2,120 ($6,373) ($3,216)

Rancho Cucamonga Fire $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rancho Santa Margarita $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Ridgecrest ($206) ($354) ($496) ($92) $21,129 ($398) ($11,372) ($963) ($7,588) ($64,728)

Rio Dell ($26) ($66) $0 $0 $0 $0 $0 $0 $0 $0

Tehama $11 $0 $4 $1 $87 $14 $13 $4 ($3) ($47)

Trinidad ($11) ($15) $27 $16 $1,188 $321 $185 $77 ($104) ($920)

Truckee $0 $0 $0 $0 $5,578 ($107) ($107) $471 ($4,034) ($10,651)

Twentynine Palms $148 ($161) $47 $169 ($29) $787 $1,024 $440 ($627) ($254)

Watsonville $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

West Hollywood $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Wheatland ($23) ($329) ($966) ($14) ($16) $510 $547 $174 ($826) ($2,910)

Wildomar $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Yountville $323 ($136) $48 $36 $1,571 $531 $583 $231 ($224) ($2,893)

Yucaipa ($40) ($98) ($57) $59 $3,148 ($98) ($101) $503 $138 ($6,804)

Yucca Valley $0 $0 ($88) ($23) $4,035 $1,426 $1,472 ($72) ($470) ($414)

Total $6,370 ($7,154) ($1,348) $1,714 ($2,498) $34,022 $10,049 $3,759 ($21,978) ($108,836)

Closed Years

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\12-31-16 WC RPA1 03-30-17 EC Recomm RPA 3-30-17 11

Member 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 TotalPercent of Net Assets included

in RPA X 90% X 100% X 100% X 90% X 90% X 80% X 70% X 60% X 50%

Distribution of 50% of

Available RPA 50% 100% 100% 50% 50% 50% 50% 50% 39%

Equity

Distributed to

Refund Rate

Stabilizaton

Fund

Dividend

Returned to

Members

(12) (13) (14) (15) (16) (17) (18) (19) (20) (21)

Alturas $379 ($942) ($1,519) ($1,825) ($1,273) ($3,061) $9,972 $9,557 ($588) $12,524 $2,505 $10,019

Avalon $751 ($2,218) ($3,902) ($12,270) $17,205 ($22,315) $38,590 $24,184 ($1,192) $55,305 $11,061 $44,244

Belvedere $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Blue Lake $145 ($355) ($1,851) ($606) $2,141 $1,889 $3,945 ($1,378) $1,283 $5,594 $1,119 $4,476

Calimesa $0 $0 $0 $0 $3,277 $2,788 ($522) $5,455 $1,509 $12,507 $2,501 $10,006

Calistoga $0 $0 ($4,078) ($3,770) $9,859 ($2,892) $8,465 $18,621 $12,725 $38,930 $7,786 $31,144

Citrus Heights $0 $0 $0 $0 $0 $0 $88,162 $37,736 ($21,553) $104,345 $20,869 $83,476

Clearlake $0 $0 $0 ($2,702) $8,210 $10,480 $25,202 ($7,796) ($5,829) $27,565 $5,513 $22,052

Coalinga $0 ($5,625) ($8,334) ($14,464) $86,138 ($10,070) $53,152 ($6,754) $15,509 $109,552 $21,910 $87,642

Ferndale $95 ($939) ($1,187) ($478) $1,464 $1,282 $3,000 $3,169 ($994) $4,105 $821 $3,284

Grass Valley $0 $0 ($5,021) ($3,966) ($6,562) $17,517 $14,480 ($12,056) ($10,900) $35,127 $7,025 $28,102

Highland $246 ($2,460) ($1,321) ($2,283) $8,360 $5,658 $10,276 $6,744 $6,215 $33,451 $6,690 $26,761

Menifee $0 $0 $0 $0 $0 $0 $0 $0 $82 $82 $16 $66

Pacific Grove $0 $0 $0 $0 $0 ($8,934) $31,350 $32,679 ($9,486) $45,609 $9,122 $36,487

Plymouth $34 ($369) ($217) ($200) ($294) $769 ($368) ($697) $1,269 $1,383 $277 $1,106

Point Arena $31 ($329) ($465) ($498) $693 $409 $1,264 $1,491 $414 $3,447 $689 $2,758

Rancho Cucamonga $467 $7,891 ($11,413) $42,068 $23,626 $82,643 $62,174 $62,233 $38,481 $232,241 $46,448 $185,793

Rancho Cucamonga Fire $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Rancho Santa Margarita $0 $0 $0 ($631) $4,565 $3,406 $9,582 $12,049 $6,153 $35,124 $7,025 $28,099

* Ridgecrest $848 ($2,180) ($2,661) ($1,334) $15,625 $12,043 $0 $0 $0 ($42,727) ($8,545) ($34,182)

* Rio Dell $0 $0 $0 $0 $0 $0 $0 $0 $0 ($92) ($18) ($74)

Tehama $5 ($82) ($164) ($59) $197 $177 $373 $471 $133 $1,135 $227 $908

Trinidad $46 ($651) ($1,042) ($249) $701 $676 $2,067 $2,097 $865 $5,274 $1,055 $4,219

Truckee $614 ($2,436) ($6,144) ($17,553) $25,491 $1,131 $28,882 $54,610 ($18,575) $57,170 $11,434 $45,736

Twentynine Palms $204 ($2,430) ($1,057) ($1,670) $5,756 $2,534 $7,573 $13,671 $5,824 $31,949 $6,390 $25,559

Watsonville $0 $0 ($14,490) $85,007 $25,226 $62,351 $68,496 $77,571 ($3,358) $300,803 $60,161 $240,642

West Hollywood $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Wheatland $218 ($4,928) ($3,958) ($1,361) ($845) $3,604 $7,836 $9,598 $4,108 $10,419 $2,084 $8,335

Wildomar $0 $0 $0 $0 $0 $0 $0 $0 $78 $78 $16 $62

Yountville $159 ($1,617) ($3,035) ($1,506) $5,768 $376 $8,289 $10,359 $5,558 $24,421 $4,884 $19,537

Yucaipa $452 ($3,409) ($1,629) ($1,601) $11,090 $961 $23,120 $26,956 ($3,738) $48,852 $9,770 $39,082

Yucca Valley $350 ($3,616) ($1,944) ($1,222) $7,646 $4,576 $12,547 $21,443 $10,181 $55,827 $11,165 $44,661

Total $5,044 ($26,695) ($75,432) $56,827 $254,064 $167,998 $517,907 $402,013 $34,174 $1,250,000 $250,000 $1,000,000

PUBLIC AGENCY RISK SHARING AUTHORITY of CALIFORNIARetrospective Premium Adjustment Calculations - Workers Compensation

For All Program Years July 1, 1990 - June 30, 2016

at December 31, 2016

Summary of Retrospective Premium Adjustment

T:\RPA-Equity\2017 RPA\EC Meeting 3-30-17\12-31-16 WC RPA1 03-30-17 EC Recomm RPA 3-30-17 12

March 30, 2017 Executive Committee Meeting, V.E

Page 1 of 2

UPDATE ON COMPLIANCE WITH REPORTING REQUIREMENTS FOR PENSION (GASB 68) AND OTHER POST-EMPLOYMENT BENEFITS (OPEB)

LIABILITY (GASB 75) SUMMARY: The purpose of this report is to update the Executive Committee on the status of GASB 68 compliance, and current OPEB funding. The Executive Committee requested this item be brought back after a question was raised during the December review of the audit. The question arose from an audit footnote stating the OPEB liability was $1,098,000. Which reflected, for the first time, the implicit subsidy amount required by GASB. RECOMMENDATION: Recommend Executive Committee approval of July 1, 2015 Actuarial Report on GASB 45 Retiree Benefit Valuation received June 2016 and recommend Board Ratify. Direct staff to expense active/retiree benefits costs until 2018 actuary study is received. DISCUSSION: PENSION: As reported last May, the Government Accounting Standards Board (GASB) approved Statement No. 68, Accounting, and Financial Reporting for Pensions, requiring the long-term obligation for pension benefits to be recorded as a liability on the financial statements. The Board elected to fund the pension liability, at the time, of $715,004 by using a combination of excess dividends and a portion of pool dividends. Total annual contributions from both employer and employee grew the asset to $964,632. The pension liability is $962,773 as of 6/30/16 reflecting a net overpayment of $1,859. It is anticipated that for FY ’17-18 PARSAC’s participation in the small agency miscellaneous group increases the contribution $6,423 which is attributed to unfunded liability. PARSAC’s staff is currently at two Classic and two Pepra employees. Pension liabilities have been attributed to each program based on the change in total liabilities reported by the actuary from year to year. OPEB liabilities were retroactively calculated by year by Catherine MacLeod from Bickmore Risk Services. Funds were allocated based on that formula. The Finance Committee has reviewed and made no recommendations to change. OPEB Implementation of GASB 75, the new OPEB accounting standard, alters PARSAC’s practice of recording as a footnote to reporting the liability on the balance sheet in June of 2018. Again, the Board recognizing the importance of reducing future costs by pre-funding the OPEB liability with a combination of excess and pool dividends. That liability has increased due to several factors: updated CalPERS data; reduced return on

March 30, 2017 Executive Committee Meeting, V.E

Page 2 of 2

investment in the CalPERS trust (CERBT); escalating costs for healthcare; and PARSAC’s demographics. Additionally, actuarial standards now require CalPERS to report the implicit subsidy, which offsets pre-Medicare retiree costs by collecting more funds than needed from the ‘active’ population. The inclusion of the implicit subsidy increased the OPEB liability $211,698. The explicit subsidy, which is the funding required for post-employment benefits, increased by $81,121 (2016). Over time, the Board elected to direct excess dividends to the OPEB liability bringing the asset total to $772,209 which is not inclusive of annual required payments. Additionally, PARSAC meets the Annual Required Contribution of $126,595 which increases over time on a ten-year amortization schedule. A new actuarial report will be required to both meet the requirements and recognize staffing changes. In the interim, the Annual Required Contribution will be paid to CERBT. Subsequent to the report two long time staff members retired unexpectedly, both many years from Medicare. Three retirees generate approximately $39,000 in annual benefit costs. This sum could be drawn down from CERBT or could be used to reduce the annual required contribution. The Finance Committee recommended no draw down take place until the next actuarial study (2018) is received and reviewed. FISCAL IMPLICATIONS: The Annual Required Contribution of $126,235 will be made to CERBT and the required actuarial report submitted. Funds are budgeted for health benefits and the amounts required for current retirees could be expensed through the budget for 2017-18.

March 30, 2017

Executive Committee, V. F

Page 1 of 2

2017/18 PRELIMINARY BUDGET

SUMMARY: The preliminary budget is presented for the Executive Committee’s

consideration and recommendation to the Board. The budget reflects the Finance

Subcommittee’s recommendation to maintain funding at the same confidence levels and

discount factors as last year as well as the Loss Control Subcommittee’s recommendation

to continue the grant program with no change in amount per member.

RECOMMENDATION: Approve the 2017/18 preliminary budget and recommend the

Board ratify.

DISCUSSION: The preliminary budget is based on the Finance Subcommittee’s

recommendation to maintain Liability Program funding at the 80% confidence level and

1.5% discount factor; and the Workers’ Compensation Program at the 75% confidence

level and 2.5% discount factor (refer to agenda item V.5.C). The following summary

highlights key changes in the 2017/18 budget:

Budget Overview

Investment Income increases by 12% based on the investment advisor’s projected

yield increase from 1.29% to 1.45%.

Payroll and Benefits decrease by 8% due to staffing changes within the last year.

o The Cost of Living Adjustment (COLA) is based on California CPI which

was 2.3% for 2015/16. No COLA is included in this first draft. The budget

includes salary and benefits for a new Loss Control position.

o CalPERS retirement cost increases 7% or $5,643 with the change in

required contributions.

o Retiree medical costs decreases based on actuarial annual required

contribution calculations. The finance committee has recommended not to

receive the retiree benefit trust fund subsidy.

Risk Management. The Grant program provides members with $5,000 per member

per program for loss control needs such as purchasing loss control equipment or

training staff. Members must use Grant funds by May 1 each year; unused funds are

redistributed through the Grant Program the following year. The final budget will

be adjusted based on actual usage determined in May with unused funds offsetting

budgeted amounts.

Staff Travel and Training increases by 12% for the new staff’s training and travel

costs.

Capital Expenditures of $50,000 include amounts that have been carried over from

prior years. The Capital Replacement Fund schedule identifies the expense charged

each year to build the fund.

March 30, 2017

Executive Committee, V. F

Page 2 of 2

Key Changes in the Liability Program

Member Contributions increase of 7%. The Liability Program budget is charged 50% of

general administration expense, or $1,011,312, which is a 3% increase from the prior

year.

Excess Insurance increases by 10%, with CSAC-EIA estimated to increase by

9%, and ERMA increasing by 3%.

Claims Expense increases by 11% based on the actuary’s estimate at the 80%

confidence level. Claims Administration, now a component of Claim Expense

remains the same for pool administration at $160,000 and includes a 3% increase

to $150,500 for primary claims administration.

Contingency includes $27,500 to replenish the Contingency Fund.

Key Changes in the Workers’ Compensation Program

Member Contributions increase by 4%. The Workers’ Compensation Program budget is

charged 45% of general administration expense, or $915,354, which is 2% increase from

the prior year.

Excess Insurance increases by 14% based on estimates provided by LAWCX.

Claims Expense increases by 3% based on the actuary’s estimate, and includes a

3% increase in Claims Administration to $410,250.

Self-Insurance Fee decreases by 8% based on current year actual and anticipated

rate decrease.

Consultants increase by 4% due to expected usage and contracted rate increase.

Contingency includes $22,500 to replenish the Contingency Fund.

Key Changes in the Property and Bond Program

Member Contributions include a 9% increase for the Property Program and no increase

for the Bond Program based on estimated insurance costs.

FISCAL IMPLICATIONS: The overall budgeted net income is $220,927; the self-

funded Liability and the Workers’ Compensation Programs have a projected net income

of $75,990 and net income of $212,817, respectively. The Building fund is projected to

sustain a net operating loss on a cash basis of $57,100, and a $135,700 loss on the accrual

basis. One-half of the building costs have been included in the self-insured programs

reducing the program net loss to $67,880.

ATTACHMENT: Preliminary 2017/18 Budget.

Public Agency Risk Sharing

Authority of California

March 30, 2017

2017/18 Program

Budget

__________________________________ 2017/18 PARSAC BUDGET v 033017

TABLE OF CONTENTS

I. Introduction …………………………………….…………………… 1 II. Significant Changes In Budget …………………………………….. 2 III. Budget Summaries

A. All Programs ……………………………….…………….…….. 5 B. Liability Program ……….……..……………………………..… 6 C. Workers’ Compensation Program …………..….…..………… 7 D. Property and Bond Program ……….………………………… 8 E. Building Fund ………..………………………………………… 9

IV. Capital Expenditures and Capital Replacement Fund …………… 10

V. Detailed Budget for All Programs 11 Includes a narrative of budget changes by line item VI. Detailed Budget by Program

A. Liability Program ……….……..……………………………..… 14 B. Workers’ Compensation Program …………..….…..………… 17 C. Property and Bond Program ……….…….…………………… 20

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I. INTRODUCTION The Budget is intended to serve as a policy document, financial plan and operations guide. This fiscally prudent budget reflects the Strategic Plan and policies adopted by the Board. Under the guidance of the Finance and Executive Committees, staff develops a balanced plan, working diligently to keep costs down while striving to provide quality services and loss control programs members have come to expect. Fund Structure and Budgetary Accounting Method PARSAC established funds for each program to report the financial position and results of operations. Fund accounting is designed to aid financial management by segregating transactions related to each program. A fund is a separate accounting entity with a self-balancing set of accounts. Funds are classified into two categories: governmental and proprietary. PARSAC’s funds are proprietary, specifically enterprise funds (recognizing depreciation) and are used to account for risk financing and loss control services financed through member contributions. Proprietary funds use the accrual basis of accounting. Under this method, revenue is recorded when earned and expenses are recorded at the time the liabilities are incurred. Budget Calendar and Modification Process The Board adopts an annual budget for all funds. A preliminary budget is presented to the Finance and Executive Committee each spring with the final version brought forth for Board approval in May. For budget management purposes, the Board may approve requests for adjustments mid-year to accommodate changes to programs that occur during the year. PARSAC’s policies allow the General Manager to apply Contingency Funds when required, and staff to transfer appropriations between accounts without increasing total expenditures when appropriate for continued operations. Report Structure Section II provides a summary of significant changes. Section III provides budget summaries by program. Section IV identifies the planned Capital expenditures and usage of the Capital Replacement Fund. Section V includes the detailed budget for all programs, along with a narrative of the budget items and changes. Section VI provides budget details by program. Workers’ Compensation Program members approve the Workers’ Compensation Program budget, Sections III C. and VI C, and Liability Program members approve the rest of the budget.

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II. SIGNIFICANT CHANGES IN BUDGET

A. Income from Member Contribution

The Finance Subcommittee recommends continued funding of the Liability Program at the 80% confidence applying a 1.5% discount factor. Estimates of excess coverage indicate increases in both the ERMA and CSAC premiums. Total Contributions increase by 7%. The Workers’ Compensation Program includes continued funding at the 75% confidence level with a 2.5% discount factor. Total Contributions increase by 4%. The Property program includes funding at a 9% increase. Actual contributions may vary depending on changes in total insured values of property. The bond program budget increased over the prior year’s budgeted amount due to the increase in coverage limits and the addition of cyber crime coverage. However, the actual contributions collected and excess premiums paid remain unchanged from the prior year.

B. Investment Income

Investment income increased by 12% based on an increased earnings yield to 1.45% as recommended by investment consultants, PFM Asset Management. The prior year’s budget included a 1.29% investment earnings yield.

C. Excess insurance The overall budget for excess insurance increases by 10%. Excess providers offered preliminary estimates as rates are being developed. The Liability Program excess insurance budget increases by 6% with CSAC-EIA estimating a 9% increase and ERMA, the excess Employment Practices Liability (EPL) provider estimating a 3% increase. The Workers’ Compensation Program excess insurance budget increases by 14%. The property coverage through PEPIP includes a 10% budget increase. No change is anticipated for the Crime Bond Program actual from the prior year.

D. Claims Expense In total, the budget increases by 7%. The Liability Program increases by 11%. The Workers’ Compensation Program increases by 3% as recommended by the actuary. Claims Administration is included under the Claims Expense category to better align with the actuarial report. The Liability Program claims administration budget remains the same for the pool layer and includes primary administration increase of 3%. The Workers’ Compensation Program claims administration fee increases by 3%. The budget continues to include a line for the Funding to Confidence Level (CL) on pages 11, 14 and 17. Claims expense was historically budgeted at the actuary’s expected confidence level of about 50% according to GASB Statement 10. However, this budget recognizes claims expense to the 80% and 75% confidence levels for the Liability and Workers’ Compensation Programs respectively, matching the revenue at the increased confidence level with the expense. For GASB compliance, this item will be reversed at year end and the increased funding will be recorded as Net Income and added to the Net Position.

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II. SIGNIFICANT CHANGES IN BUDGET - continued

E. Workers’ Compensation Self Insurance FeeThe Department of Industrial Relations charges an annual fee for public agencies self-insuring Workers’ Compensation coverage. The budget includes an 8% decrease based on last year’s actual expense and anticipated funding changes by the Department of Industrial Relations.

F. Payroll and BenefitsAn overall decrease of 8% is projected due to changes in staffing during the last fiscal year. No Cost of Living Adjustment (COLA) is included in this first draft. The PERS retirement cost increases 7% or $5,643 due to required funding. The budget includes salary and benefits for a new Loss Control position. The budget assumes the new employee will be a CalPERS classic member.

o Retiree Medical (OPEB) – Retiree medical costs decrease based on actuarial annual required contribution calculations. The finance committee has recommended not to receive the retiree benefit trust fund subsidy.

The California Consumer Price Index (CPI) is used as the basis for cost of living adjustments (COLAs), and was reported at 2.3% for the 2015/16 year. The table below summarizes the CPI along with previous staff and Executive Committee COLA recommendations, and employee contribution toward pension expense.

G. Risk ManagementThe Loss Control Subcommittee recommends continuing the Grant Program funding of$5,000 per member per program for a total of $340,000. The Program requires members touse funds allocated in the current year. Any funds unused by May 1 are re-distributed throughthe Grant Program the following year. The full amount is included in the budget but may bereduced by unused fund in May.

H. Building Maintenance – Details on page 9Cash based expenses remain unchanged from the prior year. A net loss of $135,700 isexpected when the accruals are included. One-half of the facility costs are allocated directlyto the coverage program budgets.

Fiscal Year

Prior Year California CPI

Staff Rec COLA

Exec Rec COLA

Classic/PEPRA Employee PERS

Contribution 2010/11 -0.3% 0% 0% 0% 2011/12 1.0% 0% 0% 0% 2012/13 3.2% 0% 0% 0% 2013/14 3.4% 3.4% 5% 2% 2014/15 0.2% 0% 4% 4% 2015/16 1.8% 2% 3% 6% 2016/17 2017/18

1.2%2.3%

2% 2% 8% / 6.5% 8% / 6.5%

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II. SIGNIFICANT CHANGES IN BUDGET - continued

I. Non-Cash Expense Depreciation expense charges the programs for assets that have already been paid for, but require expensing according to the accrual based accounting rules. The Building Fund includes Capital Replacement expense to fund planned and emergency replacement of vital property of the organization.

J. Expense Allocation Percentages The table below provides historic allocation of administrative expense. The recent change was based on member contribution and staff time required for each program.

K. Contingency Expense A $100,000 Contingency Reserve was established in 2013/14. These funds are available to the General Manager for unexpected events or emergencies. The Workers’ Compensation Program will contribute $50,000 to replenish the reserve.

Program Prior Allocation

Allocation Since 2007/08

Allocation Since 2015/16

Liability Program 70% 55% 50% Workers’ Compensation Program 30% 40% 45% Property Program 0% 5% 5%

III. A. ALL PROGRAMS

* Investment Consultant expense offset by Investment earnings.** Includes Claims Administration of $730,750._____________________________________2017/18 PARSAC BUDGET v 033017 5

Prior Year Actual

Current Yr Budget

Current Year Forcast

Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % change

Income

Member Contributions 13,125,167$ 14,845,202$ 14,776,739$ 15,801,758$ 6%Retrospective Premium Adjustment (1,631,272) - - - Rate Stabilization Fund Credit (200,000) (301,000) (301,000) (100,000) Investment Income 941,002 463,256 178,220 470,421 2%Investment Consultant * (54,340) (53,932) (37,567) (54,487) Prior Year Adjustment 86,145 - 88,023 - PARSAC Facility Contribution 61,082 62,960 65,294 67,880 Other Income 282,544 - 6,054 -

Total Income 12,610,328 15,016,485 14,775,763 16,185,572 8%

Expense

Excess Insurance 4,589,002 5,574,027 5,559,249 6,111,849 10% Excess Dividend Refund 0 0 0 0Claims Expense ** 4,543,680 7,223,807 7,892,992 7,710,246 7%General Administration

WC Self Insurance Fee 60,032 97,304 91,017 90,000 -8%Payroll and Benefits 1,067,313 1,180,169 951,578 1,085,918 -8%Consultants 143,036 112,950 104,516 116,950 4%Risk Management 412,088 391,746 443,987 420,500 7%General and Administrative 157,168 145,759 133,236 156,930 8%Staff Travel and Training 22,349 21,500 18,500 24,000 12%Board Expenses 90,424 57,200 57,197 57,200 0%Non-Cash Expense 4,173 7,000 4,172 7,000 0%

Total General Administration 1,956,583 2,013,629 1,804,203 1,958,498 -3%

Contingency Expense - 50,000 - 50,000 Building Maintenance 95,000 125,919 130,588 135,760 8%

Total Expense 11,184,265 14,987,382 15,387,032 15,966,353 7%

Net Income (Loss) 1,426,063$ 29,103$ (611,269)$ 219,220$

Capital Expenditures - detail on page 6 32,595$ 85,000$ 25,000$ 50,000$ -41%

Two Year Budgeted Expense Comparison Charts

2016/17 2017/18

37%

14%48%

1% 0%

Excess and Group Purchase Insurance

General Admin

Claims Expense

Building Expense

Contingency Expense

38%

12%

48%1% 1%

Excess and Group Purchase Insurance

General Admin

Claims Expense

Building Expense

Contingency Expense

III. B. LIABILITY PROGRAM

* Investment Consultant expense offset by Investment Income.** Includes Claims Administration of $320,500._____________________________________2017/18 PARSAC BUDGET v 033017 6

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % change

Income

Member Contributions 5,547,074$ 6,620,191$ 6,485,524$ 7,087,823$ 7%Special Events Credit (17,500) (17,500) (17,500) (17,500) 0%Rate Stabilization Expense (200,000) (230,000) (230,000) (100,000) Retrospective Premium Adjustment - - - - Investment Income 395,221 194,568 74,852 197,577 2%Investment Consultant* (22,823) (26,427) (15,778) (26,698) 1%Prior Year Adjustment Income (1,878) - - - Other Income 277,792 - 2,012 -

Total Income 5,977,886 6,540,832 6,299,111 7,141,202 9%

Expense

Excess Insurance 1,883,768 2,449,388 2,322,970 2,594,475 6% Claims Expense ** 1,561,948 3,132,606 3,007,272 3,482,036 11% General Adminstration

Payroll and Benefits 540,749 590,085 467,338 542,959 -8%Consultants 89,590 58,200 56,855 60,075 3%Risk Management 284,625 246,568 318,665 264,000 7%General and Administrative 78,584 72,880 66,625 78,465 8%Staff Travel and Training 11,175 10,750 9,250 12,000 12%Board Expenses 45,312 28,600 28,599 28,600 0%Non-Cash Expense 2,086 3,500 2,085 3,500 0%

Total General Administration 1,052,121 1,010,582 949,417 989,599 -2%Contingency Expense - - - 27,500

Total Expense 4,497,837 6,592,576 6,279,659 7,093,610 8%

Net Income (Loss) 1,480,049$ (51,744)$ 19,451$ 47,592$ -192%



2016/17 2017/18

37%

15%

48%

0%

Pooled Excess and EPL Insurance

General Admin

Claims Expense

Contingency Expense

37%

14%49%

0%

Pooled Excess and EPL Insurance

General Admin

Claims Expense

Contingency Expense

III. C. WORKERS' COMPENSATION PROGRAM

* Investment Consultant expense offset by Investment Income.** Includes Claims Administration of $410,250._____________________________________2017/18 PARSAC BUDGET v 033017 7

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % change

Income

Member Contributions 5,826,034$ 6,197,783$ 6,197,781$ 6,464,446$ 4%Rate Stabilization Expense - (71,000) (71,000) - Retrospective Premium Adjustment (1,631,272) - - - Investment Income 545,781 268,689 103,368 272,844 2%Investment Consultant* (31,517) (27,505) (21,789) (27,788) 1%Prior Year Adjustment Income 88,023 - 88,023 - Other Income 4,746 - 4,036 -

Total Income 4,801,795 6,367,966 6,300,418 6,709,502 5%

Expense

Excess Insurance 1,013,246 1,153,113 1,139,984 1,319,595 14%Claims Expense ** 2,981,732 4,091,201 4,885,720 4,228,210 3%General Administration

WC Self Insurance Fee 60,032 97,304 60,032 90,000 -8%

Payroll and Benefits 475,949 531,076 435,085 488,663 -8%Consultants 51,067 52,130 45,070 54,218 4%Risk Management 127,463 145,178 125,322 156,500 8%General and Administrative 70,726 65,592 59,933 70,619 8%Staff Travel and Training 10,057 9,675 8,325 10,800 12%Board Expenses 40,591 25,740 25,739 25,740 0%Non-Cash Expense 1,878 3,150 1,878 3,150 0%

Total General Administration 837,763 929,845 761,384 899,689 -3%Contingency Expense - 50,000 - 22,500

Total Expense 4,832,741 6,224,159 6,787,088 6,469,994 4%

Net Income (Loss) (30,946)$ 143,807$ (486,669)$ 239,508$ 67%



2016/17 2017/18

18%

15%

66%

1%

Pooled Excess

General Admin

Claims Expense

Contingency Expense

21%

14%65%

0%

Pooled Excess

General Admin

Claims Expense

Contingency Expense

III. D. PROPERTY AND BOND PROGRAMS

** Increase in bond budget due to increased coverage limit and addition of cyber crime policy________________________________2017/18 PARSAC BUDGET v 033017 8

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % change

Income

Property Contributions 1,732,421$ 2,005,728$ 2,039,079$ 2,194,989$ 9%Bond Income* 37,138 39,000 71,855 72,000 85%Other Income 6 - 6 -

Total Income 1,769,565 2,044,728 2,110,940 2,266,989 11%

Expense

Property Insurance - PEPIP 1,654,850 1,932,526 2,024,440 2,125,779 10%Bond Insurance* 37,138 39,000 71,855 72,000 85%General Administration

Payroll and Benefits 50,615 59,008 49,156 54,296 -8%Consultants 2,379 2,620 2,591 2,658 1%General and Administrative 7,858 7,288 6,678 7,847 8%Staff Travel and Training 1,117 1,075 925 1,200 12%Board Expenses 4,521 2,860 2,859 2,860 0%Non-Cash Expense 209 350 209 350 0%

Total General Administration 66,699 73,201 62,417 69,210 -5%Contingency Expense - - - - 0%

Total Expense 1,758,687 2,044,728 2,158,712 2,266,989 11%

Net Income (Loss) 10,878$ -$ (47,772)$ -$

III. E. BUILDING FUND

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Prior Year Actual

Current Year Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % Change

Income

PARSAC Facility Contribution 61,082$ 62,960$ 65,294$ 67,880$ Total Income 61,082 62,960 65,294 67,880 0%

Operating Expense

Utilities 15,773 17,000 17,000 17,750 4%Janitorial Service 8,197 8,700 8,820 8,500 -2%

Landscaping Service 3,830 6,600 6,740 6,800 3%Pest Control 567 600 595 600 0%Security/Alarm 450 500 450 450 -10%Property Taxes 11,998 12,928 11,975 12,500 -3%Insurance - Property (Office) 2,443 2,981 2,231 2,500 -16%

Building Repairs 7,610 8,000 15,000 8,000 0%Total Operating Expense 50,868 57,309 62,811 57,100 0%

Operating Income (Loss) 10,214 5,651 2,483 10,780 91%

Non-Cash Expenses

Capital Replacement Fund Expens - 23,610 22,575 33,660 43%Depreciation 44,132 45,000 45,202 45,000 0%

Total Expenses 95,000 125,919 130,588 135,760 8%

Net Income (33,918)$ (62,959)$ (65,294)$ (67,880)$ 8%

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IV. CAPITAL EXPENDITURES and CAPITAL REPLACEMENT FUND

CAPITAL EXPENDITURES Capital expenditures are expenses of a permanent nature that will be capitalized and depreciated over an estimated useful life. The threshold for capitalizing costs is $10,000.

PARSAC OFFICE Amount Update Access claims database - carryover 10,000 Miscellaneous 10,000 Total $25,000 BUILDING RELATED Tenant Improvement - carryover Balance set aside to renovate suite for new tenant.

$15,000

Miscellaneous 10,000 Total $25,000 Grand Total $50,000

CAPITAL REPLACEMENT FUND The Capital Replacement Fund was created in fiscal year 2003/04 for planned and emergency replacement of vital property of the organization. A portion of the replacement costs is collected annually. The roof replacement project has been carried over from the prior year.

Description

Last

Replacement

Estimated

Life

Original

Cost Planned

Purchase Roof Sep 1986 25 $ 25,000 $100,000 Phone system Feb 2017 5 3,000 HVAC – 10 units May 2003 10 50,000 25,000 Exterior paint Apr 2016 5 12,400 Company vehicle Oct 2010 5 30,000 40,000 Office Copier Dec 2012 5 7,700 Parking lot sealing/paving Jun 2013 5 25,000 Interior paint/carpet-PARSAC Dec 2014 10 21,400 Exterior doors May 2015 10 11,500 Entry/landscape remodel Jun 2016 10 25,000 Computer equipment 2005-2016 3 15,500 Total $226,500 $165,000 Expense at 10% per year

$33,660

Fund balance at June 30, 2016 $185,151

V. DETAILED BUDGET FOR ALL PROGRAMS

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Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % change

INCOME

Member Contributions

Liability Contributions 5,547,074$ 6,620,191$ 6,485,524$ 7,087,823$ 7%Liability Retrospective Premium Adjustment 0 - - - Rate Stabilization Credit (200,000) (230,000) (230,000) (100,000) Special Events Credit (17,500) (17,500) (17,500) (17,500) 0%Workers' Compensation Contributions 5,826,034 6,197,783 6,197,781 6,464,446 4%WC Rate Stabilization 0 (71,000) (71,000) 0WC Retrospective Premium Adjustment (1,631,272) - - - Property Income 1,732,421 2,005,728 2,039,079 2,194,989 9%Bond Income 37,138 39,000 71,855 72,000 85%Liability Payroll Adjustment -prior year (1,878) - 0 - WC Payroll Adjustment -prior year 88,023 - 88,023 -

Total Member Contributions 11,380,040 14,544,202 14,563,762 15,701,758 8%

Investment Income 486,898 463,256 455,431 470,421 2%Change in Market Value 454,104 - (277,211) - Investment Consultant* (54,340) (53,932) (37,567) (54,487) 1%

Total Investment Income 886,662 409,324 140,653 415,935 2%

PARSAC Facility Contribution 61,082 62,960 65,294 67,880 8%

Other Income 282,544 - 6,054 -

TOTAL INCOME 12,610,328 15,016,485 14,775,763 16,185,572 8%

EXPENSE

Excess Insurance Liability Insurance - CSAC 1,030,763$ 1,233,948$ 1,111,805$ 1,346,600$ 9%Employment Practices Premium -ERMA 853,005 1,215,440 1,211,165 1,247,875 3%Workers Comp Premium - LAWCX 1,013,246 1,153,113 1,139,984 1,319,595 14%Property Insurance - PEPIP 1,654,850 1,932,526 2,024,440 2,125,779 10%Bond Insurance 37,138 39,000 71,855 72,000 85%

Total Excess Insurance 4,589,002 5,574,027 5,559,249 6,111,849 10%

Excess Dividend Refund 0 - - -

Liability Claims Expense Liability Claims Expense at expected 1,176,319 1,837,524 2,234,113 2,281,523 24%Unallocated Loss Adj Expense 63,802 382,039 0 376,226 -2%Funding to 80% CL 0 596,543 463,062 503,787 -16%Claim Administration Fees 303,875 306,500 306,500 310,500 1%Sewer Consulting 17,952 10,000 3,597 10,000 0%

Total Liability Claims Expense 1,561,948 3,132,606 3,007,272 3,482,036 11%

Workers Compensation Claims Expense WC Claims Expense at expected 2,546,941 2,816,976 3,916,829 2,723,004 -3%Unallocated Loss Adj Expense 188,802 315,646 - 518,942 64%Funding to 75% CL - 558,579 568,891 576,014 3%Claim Administration Fees 245,989 400,000 400,000 410,250 3%

Total Workers Compensation Claims Exp 2,981,732 4,091,201 4,885,720 4,228,210 3%

_________________________________

- a 2017/18 PARSAC BUDGET v 033017

11

V. DETAILED BUDGET FOR ALL PROGRAMS - DESCRIPTION OF CHANGES

Liability Contributions The Finance Subcommittee recommends continued funding at the 80% confidence level,

with the discount factor continuing at 1.5%. Contributions increase by 7% and include excess insurance through CSAC-EIA ($33 million xs $1 million) and ERMA ($1 million limit). Workers’ Compensation Contributions The Finance Subcommittee recommends continued funding at the 75%

confidence level applying the discount factor of 2.5%. Contributions increase by 4% and include excess insurance with LAWCX ($500,000 to statutory limits). Property Contributions Contributions are estimated to increase by 9%. Members are charged an administrative fee

equal to 5% of PARSAC’s total administrative cost. Actual contributions may vary depending on changes in total insured values and individual claim experience. Bond Contributions The bond program budget increased over the prior year’s budgeted amount due to an increase

in coverage limits and the addition of cyber crime coverage. However, the actual contributions collected and excess premiums paid remain unchanged from the prior year. Members are not charged for administration of the Bond Program. The insurance premium is passed directly through to members. Retrospective Premium Adjustment (RPA) The RPA represents the calculation of a return of program year equity

or assessment of deficit, as declared by the Board in May. It is calculated in February to include the most up-to date claim information. The finance committee has recommended declaring a dividend in the Workers’ Compensation Program in the amount of $ 1,250,000 with $1million being returned to the members and $250,000 allocated to replenishing the rate stabilization fund. It is also recommended that $243,941 be reallocated to fund deficit years in the Workers’ Compensation Program and $887,641liability equity in the amount of $887,341 is recommended to reallocate equity from available funds to years with deficits. Investment Income Investment income recognizes the portfolio’s return on investment. The portfolio includes $35.7

million invested through PFM Asset Management LLC and $903 thousand maintained in the California State Local Agency Investment Fund (LAIF) account. The remainder is in checking and savings accounts and invested in PARSAC’s building. The budget for investment income reflects an expected increase in yield from 1.29% to 1.45% as projected by the Investment consultants at PFM Asset Management. Investment Consultant Expense PFM Asset Management manages the portfolio. The fee arrangement is 15

basis points for the first $10 million and 14 basis points thereafter. This category also includes the bank custodial service fee of $3,500.

Excess Insurance Expense

Liability Premium (CSAC-EIA) Increases by 9% based on estimates provided by CSAC. Employment Practices Premium (ERMA) Increases by 10% based on estimates provided by ERMA. Workers’ Compensation (LAWCX) Increases by 14% based on estimates provided by LAWCX. Property Insurance (PEPIP) Estimated to increase by 10%. Bond Insurance A minimal increase is expected in the insurance premium and is within the current budget

amount. Claims Expense Claims expense is the cost of claims for this coverage year, and is projected by the actuary to

increase by 11% in the Liability Program and 3% in the Workers’ Compensation Program due to increased claims development. To better align with the actuarial report, Claims Administration expense has been combined with this category. Liability Program claims administration remains the same for pool claims administration and increases 3% for primary claims administration. The Workers’ Compensation Program claims administration fee increases by 3%. Claims expense is included in the budget at the actuary’s expected confidence level (about 50%) according to GASB Statement No. 10. The budget also includes a separate line item to record the additional expense of funding at a higher confidence level in each program. The actual columns vary from the budgets due to the required recording of payments and actuarial adjustments for prior years’ claim activity.


_____________________________________2017/18 PARSAC BUDGET v 033017 12

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % change

EXPENSE - continued

WC Self Insurance Fee 60,032$ 97,304$ 91,017$ 90,000$ -8%

Payroll and Benefits Employee Salary 670,494$ 707,821$ 574,730$ 667,068$ -6%Merit Increase - 14,121 - 15,000 6%Accrued Vacation Expense 9,956 7,000 7,000 7,000 0%COLA Increase - 12,656 17,467 - -100%Deferred Compensation 16,000 17,500 16,000 19,000 9%Performance Pay 0 15,000 - 15,000 0%Payroll Taxes PARSAC 10,304 13,000 11,000 12,000 -8%Medical Benefit 88,233 118,000 111,407 118,000 0%Ancillary Health Benefits 16,314 25,000 15,933 19,000 -24%PERS Retirement Cost 156,644 138,358 173,292 139,411 1% Employee pension withholding (37,782) (58,543) (50,709) (53,953) -8%Pension exp - GASB 68 62,343 - - - Retiree Medical - OPEB 74,807 170,256 75,458 128,392 -25%

Total Payroll and Benefits 1,067,313 1,180,169 951,578 1,085,918 -8%

Consultants Actuarial Liability Fee 9,855 11,000 11,000 12,000 9%Actuarial WC Fee 11,855 13,500 13,500 14,500 7%Computer Consultant 3,236 6,000 5,500 6,000 0%Web Development 7,960 2,900 7,811 2,900 0%Legal- General 30,654 26,550 26,305 26,550 0%Financial Audit/Accounting 23,200 24,500 23,900 25,250 3%Consultants Liab Other 39,930 12,500 9,500 13,000 4%Consultants WC Other 16,346 16,000 7,000 16,750 5%

Total Consultants 143,036 112,950 104,516 116,950 4%

Risk Management

Safety & Loss - Liability New Member Audit 0 5,000 - 5,000 0%Grant Program 155,509 172,568 180,000 190,000 10%EPL Grant - from EPL Grant Fund 22,386 - 15,000 - EPL Consortium - from Consortium Fund 81,566 - 81,665 0 Workshops - - - - Lexipol 24,108 65,000 40,000 65,000 0%On-line Training 1,056 4,000 2,000 4,000 0%Member Risk Assessments - - - -

Safety & Loss - WC Grant Program 126,359 138,678 122,322 150,000 8% Workshops - - - - Video Program 0 500 - 500 0%On-line Training 1,104 6,000 3,000 6,000 0%

Total Risk Management 412,088 391,746 443,987 420,500 7%

_________________________________ - a 2017/18 PARSAC BUDGET v 033017 12

V. DETAILED BUDGET FOR ALL PROGRAMS - DESCRIPTION OF CHANGES

Payroll and Benefits Employee Salary Represents the current staff salary and the addition of one staff member. Merit Increase Includes funding for eligible staff. COLA Increase No cost of living adjustment is included with this draft budget. The COLA is based on the California CPI which was 2.3% for the 15/16 year. Accrued Vacation Estimated budget remains the same as the prior year.

Deferred Compensation Increases by $1,500 per year by contract. Medical Decreases from the prior year..

Ancillary Health Benefits Dental, vision, life and disability insurance are provided. The budget decreased by 24% due to a reduction in staff. PERS Retirement The retirement costs increase 7% or $5,643 based on change in funding rates. Employer rate for existing classic employees with a 2.5% @ 55 benefit increases from 11.195% to 11.236% and PEPRA employees decreases from 7.066% to 7.045% . Employee Pension Withholding The CalPERS retirement expense is reduced by staff contributions with PERS Classic members contributing 8% and PEPRA members contributing 6.5%. Retiree Medical - OPEB A 26% decrease is expected due to projected actuarial annual required contribution calculations. The finance committee has elected not to receive the retiree benefit trust fund subsidy.

Consultants Actuarial Services Estimated fees for the year includes a second report of claim liabilities for both programs as

of June 30th

.Computer Consultant Estimate based on anticipated costs for the year. Web Development The budget covers site maintenance. Legal – General Estimate remains the same as the prior year. Financial Audit/Accounting The budget is based on the fee set by the contract and increases by 3%. Consultants Liability – Other Increases by 4%. Includes funds for a contract’s consultant and special projects. Consultants WC – Other Increases by 5%. Includes funds for a contract’s consultant and special projects.

Safety and Loss Control – Liability Program New Member Audit Cost of consultant to assist with analysis of prospective member applications. Grant Program The Grant Program will continue the amount of $5,000 per program per member for a total

budget of $340,000. Members must use the Grant funds by May 1 each year; unused funds are redistributed through the Grant Program the following year. The final budget will be adjusted based on actual usage determined in May with unused funds decreasing budgeted amount. Lexipol Provides member reimbursement for the law enforcement policy manual and daily training bulletins.

There is no change in the budget. Police department reimbursement: 50% of policy development up to a maximum of $2,500; $1,000 annually for the manual update; and the full cost of the Daily Training Bulletin. Fire department reimbursement: 50% of policy development up to a maximum of $3,500; and 50% of renewal fees up to a maximum of $2,500.

On-line Training On-line training program continues with Target Safety for OSHA compliance and fire and

waste water certification programs. The budget is based on past usage.

Safety and Loss Control – Workers’ Compensation Program

Grant Program - See description above under Safety and Loss Control - Liability Program Safety Video Program PARSAC continues to build an in-house safety library. On-line Training On-line training program continues with Target Safety for OSHA compliance. Budget remains

the same.


_____________________________________2017/18 PARSAC BUDGET v 033017 13

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % change

EXPENSE - continued

General and Administrative Advertising & Promotion 10,882$ 6,000$ 5,600$ 10,500$ 75%Dues 7,502 1,500 1,500 2,000 33%Subscriptions 398 600 600 500 -17%Copier Maintenance 926 700 635 700 0%Computer Cost 6,506 5,000 5,000 5,000 0%Repairs & Maintenance - 500 - 500 0%Insur Liab Office 8,247 9,000 8,248 9,000 0%Employee WC Insurance 19,747 25,000 19,747 25,000 0%Office Expense 8,613 8,000 8,000 8,250 3%Printing 3,416 3,900 2,750 5,000 28%Postage & Express Mail 3,396 3,000 2,000 3,000 0%Telephone 12,806 11,000 9,800 11,000 0%Payroll Service 1,855 1,600 1,551 1,600 0%Internet Service - web host,domain, dsl 736 1,000 1,000 1,000 0%Bank Service Fee 11,056 6,000 5,723 6,000 0%Facility Expense 61,082 62,959 61,082 67,880 8%

Total General and Administrative 157,168 145,759 133,236 156,930 8%

Staff Travel and Training Staff- Training 3,828 5,000 4,000 5,000 0%Staff-Travel Cost - mediation,mbr visits 13,012 12,000 10,000 12,500 4%Staff - Vehicle maintenance 5,509 4,500 4,500 6,500 44%

Total Staff Travel and Training 22,349 21,500 18,500 24,000 12%

Board Expenses Board Directors- Travel & Meetings 90,424 57,200 57,197 57,200 0%Board Directors- Education - - - -

Total Board Expenses 90,424 57,200 57,197 57,200 0%

Building Maintenance See Building Schedule - page 9 95,000 125,919 130,588 135,760 8%

Total Building Maintenance 95,000 125,919 130,588 135,760 8%

Contingency Expense - 50,000 - 50,000 0%

Non-Cash Expense

Office - depreciation 4,173 7,000 4,172 7,000 0%Total Non-Cash Expense 4,173 7,000 4,172 7,000 0%

TOTAL EXPENSE 11,184,265 14,987,382 15,387,032 15,966,353 7%

NET INCOME 1,426,063$ 29,103$ (611,269)$ 219,220$

_________________________________

- a 2017/18 PARSAC BUDGET v 033017

13

V. DETAILED BUDGET FOR ALL PROGRAMS - DESCRIPTION OF CHANGES General and Administrative

Advertising & Promotion Increases due to the increased cost to participate in the League of California Cities

conference and replacement and replenishment of marketing materials. Also included in the costs is the annual report.

Dues Increases for increased costs and additional association dues for loss control staff member. Printing Increases for the printing of the annual report.

Staff Travel and Training Includes funds for member visits, attendance at mediations and trials as well as staff

training. Travel and training budget increased to provide additional training for new personnel. Board Expenses Travel & Meetings Includes funds for Committee and Board meetings, member travel expenses, an Annual

Academy and Strategic Planning . The budget remains the same.

Building Maintenance – page 9 Utilities Increases by 4% based on estimated increases. Landscaping Service Increases in based on contract costs. Capital Replacement Fund Expense Funds a reserve to cover the cost of replacing large value assets. See

table on page 10. Depreciation Expense The budget remains the same.

Contingency Expense A Contingency Reserve of $100,000 was established in the 2013/14 year. Includes

$50,000 from the Workers’ Compensation Program to replenish the fund. Non-Cash Expense This category includes assets that have already been paid for, but require expensing through

depreciation or amortization according to the accrual based accounting rules. Depreciation of office furniture and equipment is the only expense remaining in this category.

VI. A. LIABILITY PROGRAM - DETAILED BUDGET

__________________________________2017/18 PARSAC BUDGET v 033017 14

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % Change

INCOME


Liability Contributions 5,547,074$ 6,620,191$ 6,485,524$ 7,087,823$ 7%Liability Retrospective Premium Adjustment - Rate Stabilization Expense (200,000) (230,000) (230,000) (100,000) Special Events Credit (17,500) (17,500) (17,500) (17,500) 0%Liability Payroll Adjustment- prior year (1,878) - -


Investment Income 204,497 194,568 191,281 197,577 2%Change in Market Value 190,724 - (116,429) Investment Consultants (22,823) (26,427) (15,778) (26,698) 1%

Total Investment Income 372,398 168,141 59,074 170,879 2%Other Income 277,792 - 2,012

TOTAL INCOME 5,977,886 6,540,832 6,299,111 7,141,202 9%

EXPENSE

Excess Insurance

Liability Insurance Premium - CSAC 1,030,763 1,233,948 1,111,805 1,346,600 9%Employment Practices Premium -ERMA 853,005 1,215,440 1,211,165 1,247,875 3%


Excess Dividend Refund 0 -

Liability Claims Expense

Liability Claims Expense at expected 1,176,319 1,837,524 2,234,113 2,281,523 24%Unallocated Loss Adj Expense 63,802 382,039 - 376,226 -2%Funding to 80% CL 596,543 463,062 503,787 -16%Liab Administration Fees - pool 158,635 160,000 160,000 160,000 0%Liab Administration Fees - primary 145,240 146,500 146,500 150,500 3%Sewer Consulting 17,952 10,000 3,597 10,000 0%

Total Liability Claims Expense 1,561,948 3,132,606 3,007,272 3,482,036 11%

Payroll and Benefits

Employee Salary 335,247 353,911 287,365 333,534 -6%Merit Increase - 7,060 - 7,500 6%Accrued Vacation Expense 4,589 3,500 3,500 3,500 0%COLA Increase 0 6,328 8,733 - -100%Deferred Compensation 8,000 8,750 8,000 9,500 9%Performance Pay 0 7,500 - 7,500 0%Payroll Taxes PARSAC 5,152 6,500 5,500 6,000 -8%Medical Benefit 44,116 59,000 55,704 59,000 0%Ancillary Health Benefits 8,157 12,500 7,966 9,500 -24%PERS Retirement Cost 78,322 69,179 86,646 69,706 1% Employee pension withholding (18,891) (29,271) (33,806) (26,977) -8%


__________________________________2017/18 PARSAC BUDGET v 033017 15

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % Change

EXPENSE - continued

Pension exp- GASB 68 38,653 Retiree Medical - OPEB 37,404 85,128 37,729 64,196 -25%

Total Payroll and Benefits 540,749 590,085 467,338 542,959 -8%

Consultants

Actuarial Liability Fee 9,855$ 11,000$ 11,000$ 12,000$ 9%Web Develop/Maint 3,980 1,450 3,905 1,450 0%Computer Consultant 1,618 3,000 2,500 3,000 0%Legal- General 22,607 18,000 18,000 18,000 0%Financial Audit/Accounting 11,600 12,250 11,950 12,625 3%Consultants Liab Other 39,930 12,500 9,500 13,000 4%


Risk Management

New Member Audit 0 5,000 - 5,000 0%Grant Program 155,509 172,568 180,000 190,000 10%EPL Grant - from EPL Grant Fund 22,386 0 15,000 - EPL Consortium - from Consortium Fund 81,566 0 81,665 0 Workshops - - - - Lexipol 24,108 65,000 40,000 65,000 0%On-line Training 1,056 4,000 2,000 4,000 0%Member Risk Assessments - - - -


General and Administrative

Advertising & Promotion 5,441 3,000 2,800 5,250 75%Dues 3,751 750 750 1,000 33%Subscriptions 199 300 300 250 -17%Copier Maintenance 463 350 300 350 0%Computer Cost 3,253 2,500 2,500 2,500 0%Repairs & Maintenance - 250 - 250 0%Insur Liab Office 4,124 4,500 4,124 4,500 0%Employee WC Insurance 9,874 12,500 9,874 12,500 0%Temporary Services - - - - 0%Office Expense 4,306 4,000 4,000 4,125 3%Printing 1,708 1,950 1,400 2,500 28%Postage & Express Mail 1,698 1,500 1,000 1,500 0%Telephone 6,403 5,500 4,900 5,500 0%Payroll Service 927 800 775 800 0%Internet Service- web host,domain,dsl 368 500 500 500 0%Bank Service Fees 5,528 3,000 2,862 3,000 0%Facility Expense 30,541 31,480 30,541 33,940 8%



__________________________________2017/18 PARSAC BUDGET v 033017 16

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % Change

EXPENSE - continued

Staff-Educ & Training 1,914 2,500 2,000 2,500 0%Staff-Travel Cost 6,506 6,000 5,000 6,250 4%Staff - Vehicle Maintenance 2,755 2,250 2,250 3,250 44%


Board Expenses

Board Directors- Travel & Meetings 45,312$ 28,600$ 28,599$ 28,600$ 0%Board Directors- Education - - - -


Contingency Expense - - - 27,500 0%

Non-Cash Expense


TOTAL EXPENSE 4,497,837 6,592,576 6,279,659 7,093,610 8%

NET INCOME 1,480,049$ (51,744)$ 19,451$ 47,592$ -192%

VI. B. WORKERS' COMPENSATION PROGRAM - DETAILED BUDGET

____________________________________2017/18 PARSAC BUDGET v 033017 17

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % Change

INCOME


Workers' Compensation Contributions 5,826,034$ 6,197,783$ 6,197,781$ 6,464,446$ 4%WC Retrospective Premium Adjustment (1,631,272) - Rate Stabilization Expense - -71,000 -71,000 - WC Payroll Adjustment- prior year 88,023 - 88,023


Investment Income 282,401 268,689 264,150 272,844 2%Change in Market Value 263,380 (160,782) Investment Consultants (31,517) (27,505) (21,789) (27,788) 1%

Total Investment Income 514,264 241,183 81,579 245,056 2%Other Income 4,746 - 4,036 -

TOTAL INCOME 4,801,795 6,367,966 6,300,418 6,709,502 5%

EXPENSE

Excess Insurance

Workers Comp Premium - LAWCX 1,013,246 1,153,113 1,139,984 1,319,595 14%


Workers Compensation Claims Expense WC Claims Expense at expected 2,546,941 2,816,976 3,916,829 2,723,004 -3% Unallocated Loss Adj Expense 188,802 315,646 - 518,942 64% Funding to the 75% CL - 558,579 568,891 576,014 3% WC Adm Fees 245,989 400,000 400,000 410,250 3%

Total Workers Compensation Claims Exp 2,981,732 4,091,201 4,885,720 4,228,210 3%

WC Self Insurance Fee 60,032 97,304 60,032 90,000 -8%

Payroll and Benefits

Employee Salary 301,722 318,520 258,629 300,180 -6%Merit Increase - 6,354 - 6,750 6%Accrued Vacation Expense 4,869 3,150 3,150 3,150 0%COLA Increase - 5,695 7,860 - -100%Deferred Compensation 7,200 7,875 7,200 8,550 9%Performance Pay 0 6,750 - 6,750 0%Payroll Taxes PARSAC 4,637 5,850 4,950 5,400 -8%Medical Benefit 39,705 53,100 50,133 53,100 0%Ancillary Health Benefits 7,341 11,250 7,170 8,550 -24%PERS Retirement Cost 70,490 62,261 77,982 62,735 1% Employee pension withholding (17,368) (26,344) (15,945) (24,279) -8%


____________________________________2017/18 PARSAC BUDGET v 033017 18

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % Change

EXPENSE - continued

Pension exp - GASB 68 23,690$ Retiree Medical -OPEB 33,663 76,615 33,956 57,776 -25%


Consultants

Actuarial WC Fee 11,855 13,500 13,500 14,500 7%Computer Consultant 1,456 2,700 2,700 2,700 0%Web Develop/Maint 3,582 1,305 3,515 1,305 0%Legal- General 7,388 7,600 7,600 7,600 0%Financial Audit/Accounting 10,440 11,025 10,755 11,363 3%Consultants WC Other 16,346 16,000 7,000 16,750 5%


Risk Management

Safety & Loss - WC Grant Program 126,359 138,678 122,322 150,000 8% Safety Video 0 500 - 500 0% On-line training 1,104 6,000 3,000 6,000 0%


General and Administrative

Advertising & Promotion 4,897 2,700 2,520 4,725 75%Dues 3,376 675 675 900 33%Subscriptions 179 270 270 225 -17%Copier Maintenance 417 315 300 315 0%Computer Cost 2,928 2,250 2,250 2,250 0%Repairs & Maintenance - 225 - 225 0%Insur Liab Office 3,711 4,050 3,711 4,050 0%Employee WC Insurance 8,886 11,250 8,886 11,250 0%Temporary Services - - - - 0%Office Expense 3,876 3,600 3,600 3,713 3%Printing 1,537 1,755 1,200 2,250 28%Postage & Express Mail 1,528 1,350 900 1,350 0%Telephone 5,763 4,950 4,410 4,950 0%Payroll Service 835 720 698 720 0%Internet Service - web host,domain,dsl 331 450 450 450 0%Bank Service Fee 4,975 2,700 2,576 2,700 0%Facility Expense 27,487 28,332 27,487 30,546 8%



____________________________________2017/18 PARSAC BUDGET v 033017 19

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2016/17 6/30/17 2017/18 % Change

EXPENSE - continued

Staff Travel and Training

Staff-Educ & Training 1,723$ 2,250$ 1,800$ 2,250$ 0%Staff-Travel Cost -mediation, mbr visits 5,855 5,400 4,500 5,625 4%Staff - Vehicle Maintenance 2,479 2,025 2,025 2,925 44%


Board Expenses

Board Directors- Travel & Meetings 40,591 25,740 25,739 25,740 0%Board Directors- Education - - - -


Contingency Expense - 50,000 - 22,500 0%

Non-Cash Expense


TOTAL EXPENSE 4,832,741 6,224,159 6,787,088 6,469,994 4%

NET INCOME (30,946)$ 143,807$ (486,669)$ 239,508$ 67%

VI. C. PROPERTY AND BOND PROGRAM - DETAILED BUDGET

____________________________________2017/18 PARSAC BUDGET v 033017 20

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2015/16 6/30/17 2017/18 % Change

INCOME

Member Contributions Property 1,732,421$ 2,005,728$ 2,039,079$ 2,194,989$ 9%Bond 37,138 39,000 71,855 72,000 85%Other Income 6 - 6 -


EXPENSE

Excess Insurance

Property Ins Premium -PEPIP 1,654,850 1,932,526 2,024,440 2,125,779 10%Bond Ins Premium 37,138 39,000 71,855 72,000 85%


Payroll and Benefits Employee Salary 33,525 35,391 28,736 33,353 -6%Merit Increase - 706 - 750 6%Accrued Vacation Expense 498 350 350 350 0%COLA Increase - 633 873 0 -100%Deferred Compensation 800 875 800 950 9%Performance Pay 0 750 - 750 0%Payroll Taxes PARSAC 515 650 550 600 -8%Medical Benefit 4,412 5,900 5,570 5,900 0%Ancillary Health Benefits 816 1,250 797 950 -24%PERS Retirement Cost 7,832 6,918 8,665 6,971 1% Employee pension withholding (1,523) (2,927) (958) (2,698) -8%Retiree Medical - OPEB 3,740 8,513 3,773 6,420 -25%


Consultants Computer Consultant 162 300 300 300 0%Web Develop/Maintenance 398 145 391 145 0%Legal- General 659 950 705 950 0%Financial Audit/Accounting 1,160 1,225 1,195 1,263 3%


General and Administrative Advertising & Promotion 544 300 280 525 75%Dues 375 75 75 100 33%Subscriptions 20 30 30 25 -17%Copier Maintenance 46 35 35 35 0%Computer Cost 325 250 250 250 0%Repairs & Maintenance 0 25 0 25 0%Insur Liab Office 412 450 412 450 0%Employee WC Insurance 987 1,250 987 1,250 0%Temporary Services - - - - 0%

VI. C. PROPERTY AND BOND PROGRAM - DETAILED BUDGET

____________________________________2017/18 PARSAC BUDGET v 033017 21

Prior Year Actual

Current Yr Budget


Proposed Budget

Budget Difference

2015/16 2015/16 6/30/17 2017/18 % Change

EXPENSE - continued

Office Expense 431$ 400$ 400$ 413$ 3%Printing 171 195 150 250 28%Postage & Express Mail 170 150 100 150 0%

Telephone 640 550 490 550 0%Payroll Service 93 80 78 80 0%Internet Service-high speed 37 50 50 50 0%Bank Service Fee 553 300 286 300 0%Facility Expense 3,054 3,148 3,054 3,394 8%


Staff Travel and Training Staff-Educ & Training 191 250 200 250 0%Staff-Travel Cost -mediation, mbr visits 651 600 500 625 4%Staff - Vehicle Maintenance 275 225 225 325 44%

Total Staff Travel and Training 1,117 1,075 925 1,200 12%

Board Expenses Board Directors- Travel & Meetings 4,521 2,860 2,859 2,860 0%Board Directors- Education - - - -


Contingency Expense - - - -

Non-Cash Expense

Office - depreciation 209 350 209 350 0%Total Non-Cash Expense 209 350 209 350 0%

TOTAL EXPENSE 1,758,687 2,044,728 2,158,712 2,266,989 11%

NET INCOME 10,878$ -$ (47,772)$ -$

March 30, 2017 Executive Board, V.G.1

ALLOCATION METHOD FOR ERMA DIVIDENDS

SUMMARY: PARSAC has received additional ERMA dividends and the Executive Committee has approved $380,000 to be distributed through the Employment Practices Liability (EPL) grant fund program. Previously each member received a $10,000 grant. The Executive Committee directed staff to provide alternative methods to allocate additional grant funds, and to suggest uses of these funds under Agenda Item V.G.2. Two options are presented for discussion with the Finance Committee recommending option 1. RECOMMENDATION: Approve and recommend the Board ratify allocation formula. DISCUSSION: As a result of additional ERMA dividend distributions, the Executive Committee approved $380,000 of EPL grant funds to be allocated to members. The allocation is reduced to $370,000 with the withdrawal of Alturas. This will be the second allocation of EPL grants. The first grants were equally distributed with each member receiving $10,000. Members have used grant funds to update their personnel policies, employee handbooks, and training. However, there are 20 members that have not taken advantage of these available funds with a remaining balance of $290,000. Because funds are not being fully utilized by all members, the Executive Committee has requested staff, working with the Finance Committee, to develop options for the next allocation of grants. Two options are available. The first option is based on 50% exposure (measured by payroll) and 50% loss experience using ERMA’s individually calculated experience modification factors. This allocation method will provide more funds to members with a larger employee count and accounts for members claims experience. Option 2 allocates funds based on 1/3 payroll, 1/3 loss experience and 1/3 ERMA contribution. Inclusion of the ERMA contribution partially returns dividends in the manner collected. The Finance Committee is recommending option 1. The Executive Committee may also consider changing the allocation percentages or applying a need based method to distribute funds. FISCAL IMPLICATION: Use of grant funds to update personnel policies and provide training will reduce the members’ EPL exposures and result in lower costs to the pool. ATTACHMENT: Alternative Allocation Methods.

March 30, 2017 Executive Committee Meeting, V.G.2

USE OF EPL GRANT FUNDS SUMMARY: The Executive Committee at the December meeting requested, in conjunction with an allocation formula for ERMA dividends, suggested uses for those dividends. The attached policy update incorporates some suggested uses of the ERMA dividends as grant funds to benefit the membership. RECOMMENDATION: Refer to the Safety and Loss Control Committee for review. Return for Executive Committee approval and Board ratification in May. DISCUSSION: Previous dividends were distributed equally to encourage members to update personnel policies in advance of a directive from ERMA. Continually updated policies, training and oversight reduce the likelihood of costly employment practices liability claims which benefits the membership overall. FISCAL IMPLICATION: Best Practices in Human Resources reduces the cost of claims. Funds are available for this grant program through an ERMA dividend release. ATTACHMENT: Safety and Loss Control Grant Program policy – updated.

801.006

Revised March 30, 2017

Approved May 27, 2014 by the Board of Directors

Revised May 27, 2015 by the Board of Directors

Revised December 3, 2015 by the Board of Directors

Policies are reviewed on a regular basis and are subject to change

Public Agency Risk Sharing Authority of California PARSAC

Safety & Loss Control Grant Program

Section: 800 – Risk Management/Loss Control Programs; Programs Effective Date: December 3, 2015 March 30, 2017 BACKGROUND: PARSAC is confident that net costs for members and the pool can be reduced through proactive risk management. The Safety & Loss Control Grant Program was implemented to assist members as they strive to improve safety in both the community and the workplace. The program was approved in 2011 as a two-year pilot, continued in 2013 for an additional three years, and is reviewed annually by the Board of Directors. Funding was originally achieved through the Liability and Workers’ Compensation Programs by redirecting existing risk management budget items and a slight increase in prospective funding. POLICY: Program Funding Unused Funds from the prior fiscal year will be the starting point of funding for the next fiscal year and redistributed equally. “Unused Funds” are defined as the total amount remaining at the end of each fiscal year after all reimbursements have been processed. Additional program funding will be at the discretion of the Board of Directors. Additional funds collected through each self-insured program are distributed equally based on program participation. Grant funds must be used during the fiscal year in which they are awarded. Approved applications that remain incomplete at the end of the fiscal year will be deemed “unused.” In the event a project cannot be completed within the fiscal year, members may submit a duly executed contract, or similar documented commitment, to request a maximum one-year extension. Funds for projects remaining incomplete after the extension period will be considered “unused.” Member Risk Assessments Per the Joint Powers Agreement, a risk assessment of member facilities and operations must be completed (refer to Article VII, Paragraph I). To assist members in complying with this

801.006






requirement, the Board approved funding member risk assessments through the Grant Program. One-third of the membership will be completed each fiscal year and the cost deducted from their grant fund. The total cost of annual assessments will be approved by the Executive Committee and shared equally by the members being assessed, approximately $3,000 each. Application Process Any employee may submit a completed Grant Program Application, either before or after a project or purchase is completed, by regular or electronic mail. However, pre-approval is recommended to commit available grant funds and confirm reimbursement will be provided upon completion. The application should clearly describe the project and explain the loss control benefit; additional information can be attached as needed. All applications must be signed by either the city/town manager or mayor to ensure: 1) awareness of available grant funds; and 2) funds are being used toward the member’s loss control priorities. Approval is based on the member’s individual needs as well as potential to mitigate liability or workers’ compensation exposures. The intent is to be as flexible as possible while considering the member’s loss experience, member risk assessment findings, and cost drivers for the pool. Applications are reviewed by PARSAC staff and/or the Loss Control Subcommittee Chair and the member is promptly notified of the decision. Approved applications must be completed and documentation submitted for reimbursement no later than May 1st. Acceptable Uses & Limitations Members are encouraged to consult with PARSAC to identify loss trends or specific areas of risk that should be addressed. Grant funds must first be used toward any critical issues identified through either loss experience or risk assessment. Grant funds may then be used for training, equipment, projects, or services that promote workplace safety and/or mitigate liability. Members are encouraged to review and seek input from their Safety Committee when considering projects. Examples include:

Equipment:

Lease, Purchase, or Repair Personal Protective Equipment

Workplace Safety:

Facility Assessments Policy & Program Implementation Wellness Programs OSHA Compliance Ergonomic Improvements

Human Resources:

Pre-Employment Screening Policy Development

Training:

On-Site Team Training Job Safety Risk Management

801.006






Conferences: ($1500 limit per fiscal year)

PARMA, CAJPA, AGRiP, or PRIMA

Community Improvements:

Reduce or Remove Specific Hazards

Park Improvements & Signage Road Safety & Signage Tree Trimming & Removal Sidewalk Inspection & Repair ADA Improvements Projects, repairs or equipment that would fall under “general maintenance” or routine operational expenses require an explanation of the risk management purpose to be included with the application. EPL: A $10,000 one-time grant allows members funds to review and update personnel policies and does not sunset. Subsequent grants, if issued, may be used for regulatory compliance (SB 1825/AB 1661), human resources training and conferences and organizational development. The Committee may consider additional usage on a case-by-case basis provided the Member is in compliance with all ERMA requirements. Appeal Process

Members who disagree with an application decision may request review by the Loss Control Subcommittee. Further appeal may be presented to the Executive Committee at their next regular meeting and their decision will be considered final.

March 30, 2017 Executive Committee Meeting, V.H

Page 1 of 1

SUPRANATIONALS

SUMMARY: During the December 2016 Board Meeting, the Board requested that we look into the supranational bond market as a potential for future investment to expand the PARSAC portfolio. The supranational bond market, as with most bonds, carries the highest credit rating assigned by major rating agencies. On February 28, 2017, Lauren Brant of PFM reported to the Finance Committee. RECOMMENDATION: Approve Finance Committee Recommendation amending the Statement of Investment Policy to include purchase of Supranationals based on PFM’s recommendation of 5% of portfolio and recommend Board ratify. DISCUSSION: A supranational organization is formed by a group of countries through an international treaty with specific objectives, such as promoting economic development. Supranational organizations also issue debt in the United States. The most commonly recognized supranational debt is issued by the World Bank. The supranational bond market is well established and most bonds carry the highest credit rating assigned by the major rating agencies. Recently the California Government Code was expanded to allow local agencies to invest in supranational debt. Lauren Brant of PFM Asset Management will present information on supranational to the Executive Committee. FISCAL IMPLICATIONS: PARSAC, in consultation with PFM, shall establish a method of determining whether non-U.S. financial institutions meet the requirements of government code before purchasing securities from these institutions. ATTACHMENT: PFM Presentation – Supranational Presentation.

Lauren Brant

Managing Director

PFM Asset Management

50 California St., Ste. 2300San Francisco, CA 94111

pfm.com

(415) 982-5544

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

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Fannie Mae and Freddie Mac Retained Portfolios

FNMA Retained Portfolio FHLMC Retained Portfolio Maximum Permitted

53601(q)

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•

March 30, 2017 Executive Committee Meeting, V.I.

EXPERIENCE MODIFICATION METHOD FOR NON-TPA MEMBERS SUMMARY: Incomplete or inaccurate claim reserving may skew actuarial projections and result in inequitable allocation of member contributions. Therefore, staff proposes an initial reserve of $15,000 is established on claims where members are not compliant with PARSAC’s reserving policy. RECOMMENDATION: Approve and recommend the Board ratify. DISCUSSION: PARSAC requires each member submit updated liability claims reports quarterly. This data is needed for both PARSAC and its excess providers to determine the pool’s exposure as well as calculating members’ contributions. Therefore, it is essential that each member provide complete and accurate information on their claims, including paid and reserves totals. Because some members administer claims in-house, it has not been their practice to establish claim reserves. As such, the Board adopted a reserve policy several years ago to ensure adequate reserves are established. A reserve is an evaluation of liability; it is an analysis of the value of a claim at different points in time. As the claim develops and additional information is available, the reserves need to be re-evaluated to ensure they reflect the most accurate picture. Reserves should include the estimated settlement value and cost of defense (attorneys’ fees, experts, consultants, etc.). Accurate reserving is essential for the member and PARSAC to ensure sufficient funds are available to meet its liability obligations. Additionally, premiums are based on the total incurred claim costs (paid and reserves) and inadequate reserving will result in inaccurate premium charges to members. Inaccurate reserving will also distort actuarial projections because the actuary relies on accurate data to develop appropriate funding levels and determine the pool’s outstanding liability. To illustrate why it is important accurately reserve, we present the following example:

Paid

Reserves

Total Incurred

Experience Mod. Factor

A $50,000 $66,302 $116,302 1.00 B $50,000 None $50,000 .811

In both examples above, we assume the entities have identical payrolls and identical claims. Both members, A and B, have claims payments of $50,000 the past three years. However, A has reserved $66,302 for future expected costs in addition to what has already been paid. City B has not posted reserves; therefore, its total incurred costs are much lower. This results in a lower calculated experience modifier and reduces their pool rate by 19%., which results in a lower premium.

March 30, 2017 Executive Committee Meeting, V.I.

The reserve policy is intended to eliminate inequities mentioned above. However, some members continue to be out of compliance. Where members are not compliant, staff (after consulting with the actuary) recommends a minimum reserve of $15,000 to be assigned to any claim with incomplete data. Note that some claims will not have reserves since there is no exposure (i.e., claim that occurs outside the member’s jurisdiction). Staff will monitor claims activity to make certain reserves are updated to reflect exposure and adjust accordingly. FISCAL IMPLICATION: Adopting sound reserving practices further ensures members’ contributions reflect their exposures and the pool adequately funds its outstanding liabilities. ATTACHMENT: Reserve Policy

Public Agency Risk Sharing Authority of California PARSAC

Liability Program – Claims Reserving

Section: 400 – Liability; Funding Effective Date: July 1, 2004 POLICY: A reserve is an amount of money set aside in order to pay the estimated cost of claims. Liability loss reserves maintain the cities’ financial strength to ensure funds will be available to meet their obligations to pay for claims which they are legally liable. As the in-house claims administrator, it is your entity’s responsibility to promptly establish initial reserves. When establishing an initial reserve, the amount should not reflect the best nor the worst possible results but a realistic outcome with unresolved or disputed factors biased against the city. Damage issues that are unresolved should be calculated in favor of the claimant until those issues can be clarified. This will prevent under-reserving a claim. The loss reports to PARSAC should include the reserve amount for the claim. The damage evaluation should include all out of pocket expenses, past, future, and general damages such as pain and suffering. An effort should be made to estimate future damages as accurately as possible when establishing a reserve or revising an existing one. Reserves should also take into consideration intangible factors including possible jury sympathy for the claimant and/or hostility toward the defendant (City). In reserving cases that have serious injuries or damages with high dollar potential, there must be clear recognition of these factors: 1. The injury and its possible residuals. 2. Inflationary trends and general economic conditions for long-term claims for which

disposition may not occur for a substantial length of time. 3. Litigation climate and jurisdiction. The reserving of a claim is a continual process. Claims examiners should continue to monitor the reserves to ensure they are adequate throughout the life of the claim. The reserves should be reduced by that portion, in the claims examiner’s opinion, which is the responsibility of the claimant. Approved by the Board of Directors on May 7, 2004 Effective July 1, 2004 Revised: Policies are reviewed on a regular basis and are subject to change

402.011

March 30, 2017 Executive Committee, V.J

Page 1 of 1

NOTICE TO WITHDRAW – TWO MEMBERS SUMMARY: Staff received a Notice to Withdraw from two members. One, City of Alturas, was received timely and the other, City of Rialto was not. RECOMMENDATION: Accept the Notice to Withdraw from the City of Alturas. Approve shorter withdrawal period and take action as prescribed by the JPA agreement for the untimely withdrawal for the City of Rialto. DISCUSSION: The Joint Powers Agreement specifies conditions under which a member may withdraw from PARSAC membership. The City of Alturas met the conditions for a timely withdrawal having sent their notice prior to December 31, 2016. Staff visited with Councilmembers for the City to address any concerns or issues which may have precipitated their departure. Council chose to withdraw for financial reasons expressing gratitude to PARSAC leadership and staff for the many years of service. They selected a pooling arrangement that offered a three-year rate guarantee and no deductible or self-insured retention. A letter was sent to the City (see attached) detailing the City’s on-going obligations to PARSAC. The City of Rialto has requested an untimely withdrawal from PARSAC. Staff was informed of the Council’s displeasure with the direction ERMA had taken on a series of four employment practice claims. The City took exception to ERMA’s requirements to use a defense panel attorney or defense panel conflict counsel for all parties and is choosing to withdraw for less restrictive coverage options. The Joint Powers Agreement under section XXIII states:

“In the event of an untimely notice of intent to withdraw, the withdrawing member shall forego their right to any remaining equity. The withdrawn member shall remain subject to assessments if equity is insufficient to cover costs for those years in which they participated.”

“A notice of intent to withdraw may be rescinded in writing with Executive Committee consent at any time earlier than ninety (90) days before the expiration of the withdrawal period, except that any withdrawal approved by the Executive Committee upon less than 6 months’ notice shall be final.”

The City’s Withdrawal Notice and PARSAC’s response is attached. FISCAL IMPLICATIONS: An updated actuarial report is forthcoming to determine the fiscal impact of the member withdrawals. ATTACHMENTS: Letters from City of Alturas and City of Rialto and PARSAC response.

March 30, 2017 Executive Committee Meeting, V.K.1

BEST PRACTICES – ASSISTIVE ANIMALS IN THE WORKPLACE REASONABLE ACCOMMODATION POLICY

SUMMARY: New or updated best practices programs, policies and templates are developed to provide members resources that allow them to manage and control loss exposure in accordance with our second “End Result” Statement:

“As a result of our efforts, there is a realization of financial benefit to the membership based on adherence to best practice risk management standards through an equitable sharing of risk and financing.”

Presented is a best practice template policy for Assistive and Support Animals for employment. RECOMMENDATION: Approve and recommend the Board ratify and adopt. DISCUSSION: Under Title II of the Americans with Disabilities Act (ADA), state and local government entities are prohibited from discriminating, on the basis of disability, in its programs or services. Public entities must provide reasonable accommodation to individuals with disabilities that require the assistance of a service animal. The attached template provides guidance on the use of assistive and support animals in employment, including recruiting, hiring process, terms and conditions of employment, interactive process, and evaluation of requested reasonable accommodations. It does not address requests for accommodation under the Fair Housing Act (FHA). The FHA protects a person with a disability from discrimination in obtaining housing. Under this law, a landlord or homeowner’s association must provide reasonable accommodation to people with disabilities so that they have an equal opportunity to enjoy and use a dwelling. Because very few members may be subject to the FHA; staff will seek direction from the Executive Committee on policy development. FISCAL IMPLICATION: Implementation of risk management standards will increase member awareness of hazards, reduce exposures, and ultimately lower the members’ and pool’s claim costs. ATTACHMENT: Assistive and Support Animal Policy for employment.

ASSISTIVE ANIMALS IN THE WORKPLACE REASONABLE ACCOMMODATION POLICY

I. INTRODUCTION

Individuals with disabilities may use service animals for a variety of reasons. Under the Americans with Disabilities Act (ADA) and the California Fair Employment & Housing Act. (FEHA). Government entity employers that serve the public generally must allow service animals to accompany people with disabilities in all areas of the facility where the public is normally allowed.

Under the California Fair Employment & Housing Act (FEHA), State and local governments that serve the public and/or employ individuals with disabilities are required to provide reasonable accommodations in public facilities, housing, and the workplace.

II. POLICY

The (Entity) is committed to providing reasonable accommodations to persons with disabilities and fulfilling obligations to applicants and employees. This Policy governs the use of assistive animals in all aspects of employment, including recruiting, hiring process, the interactive process, and evaluation of requested reasonable accommodations. Reasonable accommodations may involve more than one modification or adjustment in addition to the presence of an assistive animal.

III. DEFINITIONS

Service Animals or Assistive Animals: any animal that is individually trained to do work or perform tasks for the benefit of an individual with a disability. This may include, but is not limited to a physical, sensory, psychiatric, intellectual, or other mental disability. Examples of tasks performed include, pulling a wheelchair, retrieving dropped items, alerting a person to a sound, reminding a person to take medication, assistance with balance and stability, pressing an elevator button, providing non-violent protection or rescue work, or helping persons with psychiatric and neurological disabilities by preventing or interrupting impulsive or destructive behaviors.

Assistive animals assist people with disabilities to mitigate the limiting effects of their disabilities or to alert them to an impending medical incident. Assistive animals may be any breed, size, or weight. Some, but not all, service animals wear special collars or harnesses. Assistive animals are not required to have

special licenses, to be certified by any government or training agency, or to have any visible identification.

Emotional Support or Therapy Animals: animals used as part of a medical treatment plan as therapy animals, are not considered service animals under the ADA. These support animals provide companionship, relieve loneliness, and sometimes help with depression, anxiety, and certain phobias, but do not have special training to perform tasks that assist people with disabilities. A support animal (sometimes called a “comfort animal”) is one that provides emotional, cognitive, or other similar support to a person with a disability, including, but not limited to, a traumatic brain injury, or a mental disability such as post-traumatic stress disorder, or major depression.

Individual with a Disability: A person who: (1) has a physical or mental impairment or medical condition that limits one or more major life activities; (2) has a record of such an impairment or limitation; or (3) is regarded as or perceived as having a limitation in performing one or more major life activities. Physical Disability: Having any physiological disease, disorder, condition, cosmetic disfigurement, or anatomical loss that does both of the following: (1) Affects one or more of the following body systems: neurological, immunological, musculoskeletal, special sensory organs, respiratory, including speech organs, cardiovascular, reproductive, digestive, genitourinary, hemic and lymphatic, skin, and endocrine; and (2) “Limits” a major life activity.

Mental Disability: (1) Having any mental or psychological disorder or condition, such as intellectual or cognitive disability, organic brain syndrome, emotional or mental illness, clinical depression, bipolar disorder, post-traumatic stress disorder, or specific learning disabilities, that may limit a major life activity. (2) Any other mental or psychological disorder or condition that requires special education or related services. Major life activities: include without limitation the following: working, seeing, sleeping, remaining alert, learning, hearing, breathing, thinking, concentrating, reading, interacting with others, communicating, performing manual tasks, performing cognitive tasks, walking, lifting, reaching, and caring for oneself. Limits: includes making achievement of major life activities difficult. Reasonable Accommodation: Reasonable accommodations are changes in rules, policies, practices, or services that are necessary for a person with a disability to have an equal opportunity to all aspects of employment from recruiting and hiring to terms and conditions of employment, including consideration for a reasonable accommodation. Allowing individuals with disabilities to have their service or assistive animals accompany them into the workplace to assist with medical

needs, or to facilitate their performance of essential job functions, is a form of reasonable accommodation. Interactive Process: An essential face-to-face dialogue with a disabled applicant or employee to fully explore adjustments or accommodations that may remove barriers to performance and/or to privileges and benefits of employment. Every accommodation evaluation is an individualized decision in which the (Entity) must consider the particular employee’s functional limitations or work restrictions, the essential functions of that employees usual job (or other vacant positions for which he may be qualified by education), training and experience, and your business needs at the time the accommodation decision is made. Minimum Standards: Standards set by the entity for assistive animals. Animals must be free from offensive odors and display habits appropriate to the work environment. Animals must not engage in behavior that endangers the health or safety of the individual with the disability or others in the workplace. Trained to provide assistance for the employee’s disability.

IV. REASONABLE ACCOMMODATION FOR APPLICANTS AND EMPLOYEES

(Entity) is committed to providing modified work or other reasonable accommodations to its employees and applicants for employment to ensure that individuals with disabilities enjoy full access to equal employment opportunity at (Entity). The (Entity) provides reasonable accommodations in three situations:

When an applicant with a disability needs an accommodation to be considered

for a job;

When an employee with a disability needs an accommodation to enable him or her to perform the essential functions of the job or to gain access to the workplace;

When an employee with a disability needs an accommodation to enjoy equal

benefits and privileges of employment. An individual with a disability is “qualified” if:

He or she satisfies the required skill, experience, education and other job-related requirements of the position he or she currently occupies or another position within (Entity) to which he or she may be re-assigned; and

He or she can perform the essential functions of the position, with or without

reasonable accommodation

Qualified individuals with disabilities are entitled to equal pay and other forms of compensation (or changes in compensation) as well as in job assignments, classifications, organizational structures, position descriptions, promotional opportunities, and seniority lists. Leave of all types will be available to all employees on an equal basis.

This policy is neither exhaustive nor exclusive. (Entity) is committed to taking all other actions necessary to ensure equal employment opportunity for persons with disabilities in accordance with the ADA and FEHA and all other applicable federal, state or local laws.

V. PROCEDURES TO REQUEST ACCOMMODATIONS

A. Applicants for Employment. All applicants who are invited to interview or to take an employment examination at (Entity) will be informed, at the time of such invitation, of the policy to provide reasonable accommodation for applicants and employees with disabilities.

Applicants may request accommodations for the examination process orally by contacting the individual responsible for the exam at least 7 days prior to the test. If accommodations are requested, the applicant shall document the accommodation request by filling out a Voluntary Disability Accommodation Request Form (Attachment A). Copies of the completed Request Form shall be forwarded to the HR Department along with a doctor's note verifying same at the time the accommodation is requested. Interviews.

Applicants may be asked questions regarding their ability to perform specific

job duties. These questions shall be prefaced with a statement regarding (Entity)'s willingness to make a reasonable accommodation, including allowing the presence of a service or assistive animal. Applicants may not be asked whether they have a disability, or any other questions related to their health, physical condition or disabilities.

After describing the functions and duties of the job, an applicant may be asked

questions about his or her ability to perform job-related functions, such as, "Do you have the ability to perform all the duties of this job?" or, "This job requires the ability to _______. Can you perform that function with or without accommodation?"

If an applicant indicates in the interview process that he or she has a disability

or that he or she does or may need a reasonable accommodation, follow-up questions regarding the job-related impact of any such disability or accommodation may be asked. No questions may be asked regarding the identity or nature of the disability.

Offers of Employment.

(Entity) may make a job offer that is conditioned upon the applicant’s ability

to pass a medical or psychological examination designed to determine if the applicant can perform job related functions or to respond to an applicant’s request for reasonable accommodations if the following criteria are met: I) the examination is job-related and consistent with business necessity; and 2) all entering employees in the same job classification are subject to the same examination. An individual with a disability who is an applicant for a position will not be denied employment solely on the basis of a disability or a need for reasonable accommodation.

Employment opportunities will not be denied because of the need to make

reasonable accommodation."

All requests for workplace accommodations shall be made to the Human Resources Department.

An applicant may be rejected due to disability only if:

(1) He or she is unable to perform the job functions even with a reasonable

accommodation; OR

(2) He or she cannot perform essential duties in a manner that would not endanger his or her health or safety or the health or safety of others even with reasonable accommodation; AND

(3) (Entity) has considered all further information and documentation that

the applicant has submitted.

B. The Interactive Process

When it becomes apparent that an interactive process is required, (Entity) may require additional information, such as reasonable documentation of the existence of a disability. (Entity) will consider all rebuttal information the employee or applicant may provide.

The department head, or designee shall engage in an interactive process, consulting with the applicant/employee, representative(s) of the employee’s/applicant’s choice, HR Department, Risk Management if appropriate, the employee's supervisor, and/or anyone else with knowledge or information regarding the request, including, but not limited to, a physician retained by (Entity) to independently determine if accommodation is necessary.

The interactive process meeting will be conducted in good faith in order to

determine effective reasonable accommodations. Depending upon the circumstances, more than one meeting may be necessary.

C. Analyzing Requests for Support Animals in the Workplace

Like any other request for an accommodation, an employee’s request for a support animal requires an individualized assessment and a result reached through the interactive process. A support animal accommodation must be reasonable, effective, and not overly burdensome, and must be the product of a good-faith mutual interactive process. The accommodations analysis shall address the following issues:

Reasonableness: Is the requested accommodation reasonable? Effectiveness: Is the request effective? Will this requested accommodation

effectively allow the employee to perform his or her job functions? Undue hardship: Does the request pose an undue hardship? With regards to

support animals, the (Entity) shall weigh all issues related to other employees or the public, such as fears of the animal, allergies, or other issues.

D. When Addressing Assistive Animal Accommodation Requests for Employees

Medical verification: If an employee requests permission to bring an assistive animal into the workplace as a reasonable accommodation, the (Entity) may require that the employee supply:

o A letter from the employee’s health care provider stating that the

employee has a disability and explaining why the employee requires the presence of the assistive animal in the workplace (e.g., why the animal is necessary as an accommodation to allow the employee to perform the essential functions of the job); and

o Confirmation that the animal meets the standards required under the

California Fair Employment & Housing Act (FEHA).

Medical Verification of Need vs. “Certification”: When it is not obvious what service an animal provides, only limited inquiries are allowed. Staff may ask two questions: (1) is the service animal required because of a disability, and (2) what work or task has the animal been trained to perform. Staff cannot ask about the person’s disability, require medical documentation, require a special identification card or training documentation for the service animal, or ask that the service animal demonstrate its ability to perform the work or task.

An employee must provide written medical verification from his or her medical provider which documents the employee’s restrictions and need for accommodation in the same way he or she would for any other accommodation requests. It is not necessary for the medical verification to disclose details about the employee’s underlying medical issues, but should confirm the existence of a disability or medical condition and restrictions the employee has as a result of the condition.

Reasonableness: Once (Entity) receives appropriate medical verification, the (Entity) shall examine whether the accommodation request is reasonable based on the work environment and the employee’s position. For example, the (Entity) might consider issues such as whether the animal will be in a place where health and safety issues might arise (e.g. in an eating facility).

Effectiveness: (Entity) may consider whether the request will be effective in allowing the employee to perform the essential functions of his or her job, to determine whether the restrictions, the requested accommodation, and the employee’s job are compatible.

Undue Hardship: (Entity) will evaluate whether or not the requested accommodation will cause an undue hardship on the department or employees in the department or the worksite. The (Entity) will carefully balance the rights of all employees to ensure compliance and cooperation.

o Allergies and fear of the animal are not valid reasons for denying a reasonable accommodation outright. The [(Entity)] will conduct a thorough interactive process and evaluate the respective rights and responsibilities of the entity and affected employees or visitors. For example, if a person is allergic to dog dander and a person who uses a service animal must spend time in the same room or facility, they both should be accommodated by assigning them, if possible, to different locations within the room or different rooms in the facility.

o Individuals with disabilities who use assistive animals cannot be isolated from other employees, treated less favorably than others, or have any negative impact on the terms and conditions of their employment.

o Individuals who request a reasonable accommodation may not be

subjected to actual or threatened retaliation for requesting a workplace

accommodation, whether or not the requested accommodation is granted.

Care of Assistive Animal: (Entity) is not responsible for the care or supervision of a service animal. The service animal’s supervision is the responsibility of the individual. Assistive animals are not required to be on a leash if being on a leash would affect the ability of the animal to perform its service. They are only required to be “under the control of its handler.”

E. Minimum Standards for Assistive Animals in the Workplace

The (Entity) shall require the animal to meet minimum standards. If the animal does not meet the “minimum standards,” the (Entity) may object to the presence of an assistive animal in the workplace, and shall notify the employee within two weeks. Any objections must be based on objective evidence that the assistive animal’s behavior is offensive or disruptive.

F. The Decision-Making Process

The following factors will be considered in determining the necessity for and reasonableness of any request for accommodation:

Is there medical verification of a covered disability? Is there medical verification

of the need for the assistive animal and confirmation that the animal is trained to provide assistance that will facilitate the individual’s performance of essential job functions?

Are the job functions for which the accommodation is requested essential?

Is the applicant or employee otherwise qualified to perform the essential job

functions?

Does the requested accommodation achieve the desired result of allowing the individual to perform the essential job functions?

Will the accommodation or the presence of the assistive animal endanger the

health or safety of the employee or other employees?

If an employee has developed or acquired a disability and the employer cannot make the present job possible with the presence of the assistive animal as a reasonable accommodation, is there alternative placement by reassignment or transfer to a vacant position for which the employee is qualified and where the presence of the assistive animal can be reasonably accommodated?

Attachment A

Voluntary Request for Reasonable Accommodation Form If you have a disability that is covered (protected) under the American with Disabilities Act (ADA) or Section 504 of the Rehabilitation Act of 1973, or other applicable state laws, and you are a qualified individual, you are entitled to request a reasonable accommodation. A reasonable accommodation will be provided to the extent that it does not pose an undue hardship and may be requested for the following purposes: • To complete the employment application process • To perform essential job functions • To have equivalent benefits and privileges as non-disabled employees. • To obtain evacuation assistance in a time emergency. Advance notice is usually required to fulfill Reasonable Accommodation requests. However, a response to immediate need for accommodation will be made to the fullest extent feasible. Date: ___________________________________________________

Name: __________________________________________________

Department: ______________________________________________

Supervisor _______________________________________________

Job Title: ________________________________________________

Home Address: ___________________________________________

Work Phone: _____________________________________________

Home Phone: ____________________________________________

Do you have a disability or significant impairment of mobility, vision, hearing or other function for which a reasonable accommodation might be made in order for you to perform the essential functions of your job? No___ Yes___ (If yes, please identify disability and needed accommodation in the appropriate section below) Documentation of Protected Status When requesting Reasonable Accommodation, be prepared to submit appropriate and current medical documentation or other documentation from a professional qualified to make an assessment of your

Attachment A

condition. Additional documentation may be needed if there is an ongoing need for the accommodation. All such documentation will be treated confidentially. I am requesting accommodation for the following reason(s): (Please check relevant boxes) � To complete the employment application process. �To perform essential job functions. �To have equivalent benefits and privileges of non-disabled employees. �To obtain evacuation assistance in time of emergency. How does your limitation restrict your ability to accomplish or obtain the item(s) checked above? If related to the performance of job responsibilities, state the job functions for which you need an accommodation, and describe the difficulty you have performing that task. ____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

What type of accommodations do you believe would be effective? ____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

For accommodations where equipment must be purchased or attained, please identify possible resources for the department to consider in responding to the accommodation request: ____________________________________________________________________________

____________________________________________________________________________

____________________________________________________________________________

How long will you need this accommodation? Short-term ______ Ongoing ______ I CERTIFY THAT THE ABOVE STATEMENT AND ALL INFORMATION PROVIDED IS TRUE AND CORRECT TO THE BEST OF MY KNOWLEDGE. Signature: ______________________________________ Date: _______________________

Name: ______________________________________ (Please print)

March 30, 2017 Executive Committee Meeting, V.K.2

Page 1 of 1

BEST PRACTICES CHECKLIST SUMMARY: New or updated best practices programs, policies and templates are developed to provide members resources that allow them to manage and control loss exposure in accordance with our second “End Result” Statement:

“As a result of our efforts, there is a realization of financial benefit to the membership based on adherence to best practice risk management standards through an equitable sharing of risk and financing.”

RECOMMENDATION: Review and Direct to Safety and Loss Control Committee for comment. Return for Approval at May meeting. DISCUSSION: At the request of the Officers, this checklist is presented as a resource guide along with the Operational Best Practices Template to assist members in ensuring that they are meeting or exceeding operational best practices in managing risk. The membership is encouraged through individual practice, financial incentives and PARSAC initiated risk assessments to continuously improve and innovate. Staff addresses trends and exposure through the creation of policy templates, individual consultation, and risk management programming. All approved policies are available on the PARSAC website. Additionally, staff is available to assist with or research areas of concern. FISCAL IMPLICATIONS: No additional funding is required. Adherence to best practices reduces risk and costs associated with claims. ATTACHMENTS: Checklist

BEST PRACTICES CHECKLIST

Description No Policy Adopted Modified Comments ADA COMPLIANCE

Interactive Process/Supervisors Self-Evaluation Service Animals Title 1 Title 2

EMPLOYMENT AB 1825 / AB 1661Training Percent in Compliance Cell Phones Drug Free Workplace Fall Protection/Ladder Safety/Job Safety Job Descriptions/Analysis Personnel Policies Update Dates Last Revised Records Retention Policy Return to Work/Transitional Duty Safety Inspections Salary Continuation Use of Volunteers Policy/Manual Vehicle Use Work Comp. Basics Guide Workplace Violence

INFRASTRUCTURE Bicycle Road Manual Roadway and Traffic Control Sewer Sidewalk Inspections Streets, Roads, Signs, and Lights Storm Preparedness Urban Forest

PUBLIC SAFETY Lexipol Fire Lexipol Police

OSHA COMPLIANCE Safety Committee or Risk Management

Accident Investigation AED Confined Space Defensive Driving Exposure Control (BBP) Facility Safety Fall Protection/Ladder Safety Hazard Communication Hearing Conservation

BEST PRACTICES CHECKLIST

Heat/Illness IIPP OSHA Inspection Matrix Personal Protection Equipment

PARKS & RECREATION/EVENTS Lifeguard/Aquatics Safety Playground Inspection Special Events

PARSAC REQUIREMENTS Claims Handling Contractual Risk Transfer Council Presentations New Member Orientation Travel Expenses/Reimbursement

Public Agency Risk Sharing Authority of California2016-17 Member Demographics

GL WC EPL GLArea1 Pop.1 Emp.2 SIR3 SIR3 SIR3

Prop Bond Subro4

Alturas 3.00 2,723 55 10 5 10 5,000 25,000

Amador City 0.30 184 5 10 -- 10 5,000 2,500

Avalon 2.90 3,820 127 25 10 25 5,000 25,000

Belvedere 2.40 2,094 25 25 100 25 5,000 2,500Blue Lake 0.54 1,253 23 5 0 5 5,000 2,500

California City 204 13,751 176 100 -- 100 10,000 25000

Calimesa 15 8353 10 10 0 10 5,000 2500

Calistoga 2.50 5,261 71 10 25 10 5,000 2,500

Citrus Heights 14.00 85,147 307 100 100 100 5,000 2,500

Clearlake 10.50 15,250 69 50 50 25 5,000 2,500

Coalinga 6.49 18,087 98 25 25 25 5,000 2,500

Ferndale 1.00 1,382 20 5 0 5 -- --

Grass Valley 4.75 12,900 115 25 25 25 5,000 2,500

Highland 15.00 54,050 43 100 0 25 5,000 25,000

Menifee 48.00 85,385 63 25 5 25 5,000 2,500

Nevada City 2.50 3,194 60 25 -- 25 5,000 2,500

Pacific Grove 2.30 15,388 389 150 100 50 5,000 2,500

Placentia 6.70 52,397 182 100 -- 100 5,000 2,500

Placerville 5.80 10,673 235 50 -- 50 5,000 2,500

Plymouth 2.50 967 20 5 0 5 5,000 2,500

Point Arena 2.00 478 7 5 0 5 -- 2,500

R. Cucamonga 40.20 174,064 747 500 250 250 10,000 2,500

R. Cucamonga FPD 50.00 174,064 120 250 250 75 5,000 2,500R. Santa Margarita 13.00 49,125 30 10 5 10 5,000 2,500

Rialto 26.00 102,741 543 350 -- 25 5,000 2,500

San Juan Bautista 3.00 1,800 14 5 -- 5 5,000 2,500

South Lake Tahoe 11.00 21,738 275 250 -- 100 5,000 2,500

Tehama 0.75 417 4 5 0 5 5,000 25,000

Trinidad 1.00 365 15 5 0 5 5,000 2,500

Truckee 34.00 16,000 133 25 10 25 5,000 2,500

Twentynine Palms 58.00 26,600 48 10 0 10 5,000 2,500

Watsonville 6.19 52,508 392 500 150 250 5,000 25,000

West Hollywood 1.90 35,899 273 100 50 100 5,000 2,500Wheatland 8.80 3,600 25 5 0 5 5,000 2,500

Wildomar 25.00 34,148 10 5 0 5 5,000 2,500

Yountville 1.60 2,933 27 10 0 10 5,000 2,500

Yucaipa 27.00 52,100 161 50 5 50 5,000 2,500

Yucca Valley 30.00 20,700 113 25 5 25 5,000 2,500 Pool Totals 1,161,539 5,030

Member EntityGroup Purchased

Spec Events

Deductible

1Area in sq. mi; from liability renewal2 F/T, P/T and Volunteers combined; from 2016-17 liability renewal (not FTE)3 SIRs stated in 000's of dollars4 George Hills Co. liability subrogation recovery program

he mission of parsac is to provide quality protection at ... · for the quarter ended and...

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