January 11, 2005

SUBJECT: Request for Authority to Pay the State's Annual Self Insured Assessment

REPORT IN BRIEF

The City has received our annual Self-Insurance Assessment from the State Department of Industrial Relations, in the amount of $53,198.54, the payment of which is required to maintain our Self Insurance Certificate.  The Certificate allows us to self-insure the first $500,000 of our Workers’ Compensation Program which in turn, saves the City millions of dollars annually.

BACKGROUND

All Self-insured’s in both the public and private sectors are required to pay legislated  assessments to the State on an annual basis in order to support the State’s administrative costs associated with the Workers’ Compensation System.

In the past, self insureds were required to pay 20% of the State’s administrative costs, the City’s portion of which was below $50,000.00 annually.  As part of the State’s Legislative reform of the “System” this past year, the Governor signed into law Senate Bill 899 (2004) which requires all self insureds to fund 100% of the State’s administrative costs.  This of course has driven the City’s Assessment into the threshold requiring Council’s approval. 

EXISTING POLICY & DISCUSSION

Historically (since 1993), the State’s Self Insured Assessment has been less than $50,000 annually. The 2003 assessment was $15,236.22, while the 2004 assessment was $38,228.43. These assessments are paid out of budgeted funds in the Risk and Insurance Division, of the City’s Human Resource Department. Payment of the Assessment is mandated by the State Labor Code and we are thereby required to pay same if we are to remain self insured.

FISCAL IMPACT

Budgeted funds are sufficient to cover payment of the Assessment.

ReCOMMENDATION

We request Council’s authority to pay the State’s Annual Self Insured Assessment in the amount of $53,198.54.

Reviewed by: