2018 City of Shakopee Budget

166

2018 Annual Budget

Fund:

Self Insurance Internal Service Fund

Description of Services:

This fund pays the costs related to the City's workers' compensation and property/casualty insurance policies through charges received from city departments and divisions. Coverage is maintained through the League of Minnesota Cities Insurance Trust (LMCIT).

Key Measures:

Actual

Actual

Budgeted

Budgeted

2015

2016

2017

2018

Workers Compensation: Deductible

$1,000 $6,636

$500

$10,000 $13,887

$10,000

Amount Paid

$7,183

NA NA

Experience Modification (less than 1.0 is good)

1.12*

1.05*

0.70

General Liability: Deductible

$2,500 $14,562 0.821*

$50,000 $10,620 0.799*

$50,000 $19,650

$50,000

Amount Paid

NA NA

Liability Rating (less than 1.0 is good)

0.878

* City of Shakopee and Shakopee Public Utility Commission were in a combined pool for insurance.

Establishment:

Budget Impact: The Self Insurance Fund was created in 2016 as a result of savings realized from increasing deductible premiums for the property/casualty policy. General liability moved to the self insurance fund at the 7/1/16 renewal. Workers Compensation moved to the self insurance fund at the 1/1/17 renewal. In addition, a 2016 transfer of $75,000 from the General Fund surplus created an inital balance suitable for covering annual deductible claims expenses. The goal of the fund is to establish an appropriate fund balance with the ultimate goal of moving towards a self insurance program, thus realizing the benefit of reduced premiums. The workers comp mod factor relates to the frequency and severity of an employer's workers compensation claims over a three-year period, and it is used to calculate the premium. A mod factor of 1.00 is considered average for an employer's particular industry; the lower the mod factor, the better. The liability rating is calculated using a formula that looks at the city's expected liability claim losses compared to the actual losses. Data is used over a three-year period, and it is used to calculate the premium. A liability rating of 1.00 means the city's actual losses equal the expected losses for a city of similar size and expenditures.