It is the policy of the Board of County Commissioners (BOCC) to have and maintain financial reserves, within the County’s Risk Management Fund, to pay claims and claims-related expenses. The County Manager will prepare funding recommendations with the BOCC making the final determination of the amount of the Risk Management Fund reserves.
The Risk Management Fund is comprised of two distinct reserve funds:
In accordance with statutory requirements and County resolution, each of the two reserve funds is segregated and has its own defined purpose, funding methodology, and disbursement procedures.
The County Manager shall submit a statement of projected expenses and funding allocations for each reserve fund as a part of the proposed annual operating budget for consideration by the BOCC. This funding shall be in an amount determined annually by an independent actuary firm. The objective for each reserve fund is to provide a reserve sufficient to pay, at least, expected ultimate limited losses.
The Risk Management Reserve will be funded at least to the expected loss level and up to an 80% confidence level calculated by the Actuary. The Workers’ Compensation Reserve will be funded at the Expected Loss level calculated by the Actuary.
Expected ultimate limited loss is the total amount projected to be paid for a particular claim period to bring all claims for that claim period to closed status. Projected ultimate limited losses are the total loss costs, including claim settlements, legal fees, and other claims related expenses within the County’s self-insured, retained loss, and deductible levels.
The County Manager shall develop and adopt criteria and procedures, recognized in the risk management industry, for determining the funding level and those criteria shall consider the following:
Each fund, including reserve amounts, contained in the Risk Management Fund, shall be used exclusively for the purpose of that fund, and excess funds, whether considered reserved or otherwise, shall not be transferred to any other fund nor used for any other purpose, other than noted within each fund, but may be spent down within the fund to reduce future contributions from the amounts allocated to departments and agencies. Interest earned on the investment on moneys in such reserve fund shall be credited to the Risk Management Fund.
In the event that the amount of the fund reserve falls below the projected ultimate limited loss level for a given year, the County Manager may prepare and submit recommendations to the BOCC, within 90 days following receipt of Notice from the Director of Budget and Financial Planning, to replenish the Fund to an acceptable level.
In the event that the balance for the Risk Management Fund at the end of any fiscal year, exceeds the amount required to pay for compensation, benefits, and expenses, plus any additional amount required to pay all pending claims, the County Manager, may elect to transfer all or part of the excess amount to certain other reserve funds or may apply all or part of the excess to the budget appropriation of the next succeeding fiscal year for the Risk Management Fund, subject to the approval of the BOCC, as required by law.
Resolution No. 025-13