Travis County Commissioners Court
August 15, 2006
Item 31
31. Receive status report and take appropriate action on risk management liability fund. Tom, we do need to get legal advice on that matter which [indiscernible] this morning, number 5, right? Which we will take up right after this item. We scwussed part of this -- we discussed part of this in executive session. There's an open court part of it. Alicia perez, executive manager for operations. With me our risk manager daniel mansour, benefit in a patterson, benna patterson, the staff to talk about the full risk management report for fy '06. It's part of chapter 31, established originally in 1998, revised in 1998. -- 1988 revised in 1998. As part of the requirements we are required to come to the court at least once a year and make a full report on the fund. The department, the risk management fund, the total for the fund is about $21 million. It is anticipated or projected that the reserve at the end of '06, as of September the 30th of '06 will be 10,529,547, that was in -- that is in the memorandum provided as backup. What we have up on the scream now is I wanted to show you how we got to that 10 million-dollar reserve. If you look at the beginning balance of 7,361,956, then we have revenues from the general fund and other sources. But really general fund transfers, any subrogation maybe that we get, those sorts of things. And then under expenses, do you show the expenses? So our expenses have really been lower than what the revenues have come in. We did have several transfers out. We had 998 where we had shortage of health care fund. We had another transfer of 1-7 I think that was fluor daniel where we didn't need that money anymore. Another one for 996, which I think was a remainder of fluor daniel. I think those two had to deal with that particular lawsuit. So therefore you have a projected reserve of 930 -- at 93006 of over $10 million. 10-five to round it up. The county has through it's decreased departmental awareness, safety programs, training, really been able to reduce the number of claims by line items. This particular fund deals with workmen's compensation, auto liability, general liability, property insurance and aviation insurance, also. And we are going to go ahead and go to some of the programs and the charts that show you the decrease that -- that I think has also decreased our expenses. And the first one up there is -- is just the net asset balance. Is that -- is that -- okay. Yeah.
>> shows a gradual increase in the -- in the ending fund balance leading up to the project 10,529.
>> so we went from 4 million in '01, 6 million, back to 5, 6, 9 and then 10 for this year.
>> okay.
>> and incurred claims, is that the next one? Okay.
>> the incurred claims by year indicate how much we have actually spent on the incurred basis, when the claim was incurred not necessarily paid. A steady decline over the last three or four years to the point where it's projected out through the end of this year to be around $1.5 million. By the time we pay out our ending claims. So it's -- you can see that as the claim lives decrease, the reserve increase, so they kind of go hand in hand.
>> next screen gives us our general liability claims. You can see over the years they have kind of ping-ponged back and fort and in 2006 this is to date, so you need -- we are six months shy here or a few months of it actually being a four year, but it has decreased quite a bit as we talked about earlier, in executive session. Property has also gone down, since we've had our moya loss in 2002. Went down quite a bit, has slowly also dropped off.
>> what loss was that in 2002.
>> the moya, richard moya park.
>> oh, okay.
>> the flood.
>> the next one shows our third party auto. It has just, you know, really no way to predict that. It does kind of go up and down. It is on a -- again, this 2006, this -- this includes incurred losses, which are what we have things --
>> incurred losses for third party.
>> we just pay out.
>> well, this isn't just pay out, what we have reserved, I'm sorry. Come up with what was reserved, what we actually pay would end up being quite a bit less.
>> oh, so this is owe.
>> he this is actually when we have a claim in, we look at what the probability of what the loss will be, then when we actually settle it, this would include auto body damage and bodily injury claims.
>> okay.
>> so when it actually gets settled this number will probably be down next year. That last number.
>> this is not a good one.
>> internal audit.
>> these are our own and they have -- they have kind of not even steadied out really. They go up a little bit, again in 2006 number is not until the end of the year. So -- so that number might go up a little bit more. Which leads into the next screen of -- of the total loss reports. Which -- which the 2006, this does not include -- we have six pending to come before the court. Hopefully before the end of the fiscal year. And that number is not included in this amount here, also.
>> [indiscernible]
>> I will try to get them on the -- before christmas.
>> what are the sources of revenue for this fund?
>> the source of revenue is the the funding from general fund as well as interest income off of reserve and some subrogation recovery that we have pursued, the county attorney's office pursues very vigorously. We have seen a good increase in the recovery rate.
>> most ever it, though, is general fund budgeted money.
>> that's correct. Now it's important to point out over -- over what period of time?
>> four to five --
>> a five year period, the amount of increase over the five year period is $700,000. That's -- that's an increase in the contribution from the general fund to the risk fund. And I think what we are seeing is a reduction in -- in a lot of the overall costs, meaning the severity and frequency of claims. I think our employees have really done a good job and the awareness of safety, procedures, I think when you look at the number of workers' compensation claims that we are going to talk about in just a moment, we see that the frequency is down quite a bit. Severe tee as well. Severity as well. Anything else on the total loss?
>> can we get some feedback, would you guys generate some feedback for us related to -- to what departments are generation the third party auto claims, same thing on internal audit and to see some historical numbers associated with that. That would be helpful. Because we are hearing things and these numbers would not seem to be consistent with those statements.
>> we can provide that to you.
>> we don't have the workers' comp slide, but you do have it on page 13 of your backup. This is very, very positive. Because it goes from -- it shows from -- from 2001 about 1.3 million being spent on workers' comp, and to 2005, which is a completed year, 720,000. And then '06 to date is half a million. So quite a significant decrease, that's on page 13, we didn't have the slide.
>> I think what we are seeing now is the $700,000 level and these reductions are taking place even though we are adding employees, so the eligible employees under our workers' comp program is close to 5,000. When you include the -- the volunteers and the temporary employees. So that reduction is -- is quite significant, but I think that we are seeing, as bill pointed out to me earlier, we are seeing a plateauing of around 700, $600,000, $700,000, so we don't look for a large reduction to occur as it has been in years past. But it's a significant reduction between '03 and '04.
>> you want to talk about the benchmark?
>> sure. Bill patterson, senior risk and safety specialty, hrmd. As dan mentioned on the page 13 graph, we have increased employees by over 900 permanent employees over the same time period. So it is a -- quite a nice reduction overall. Excuse me. Severity of claims is reduced, the number of claims has reduced, we were averaging about 515 in 2000 and 2001 and should not on solid wood, only about 3,000 claims now, right in the 360 to 400 range barring anything unforeseen happening. The various deements are doing a very good job in maintaining and finding positions for the employees when they do or are released to come back to work. For a return to work program. Next slide is a benchmarking. Midwest employees casualty. Our ex-workers' comp insurance carrier. They performed a management review benchmarking survey for us. It shows over the five year period our ultimate loss cost, I guess that I should define ultimate lost comes, ultimate incurred losses, which will be the total losses trended if they are not having come to fruition yet. Divided by $100 worth of payroll. This would -- is a much better way of analyzing your losses. And as you can see, the blue line is Travis County. We are consistently performing better than the benchmark which is it is the red line and consistently performing better than their target market. Which is the green line. In other words, we are outperforming their target market in these areas. Our ultimate cost is 80 cents, target market is 1.02, the benchmark is 1.69. We are took 21% better than their target market.
>> the benchmarks that they use are similar entities to Travis County in Texas.
>> [indiscernible]
>> [indiscernible] by midwest employers casualty. We are averaging approximately $4,267 per claim. And these are claims that -- that have an incurred value, not report onlies which come out with no dollar value in the end. The benchmark is 14,600, the target market is 10,969.
>> what are the most common injuries that we see.
>> our four most common injuries are going to be knees, shoulders, backs and ends. So in this -- then this graph we are actually performing 71% better. Next page, is actually going to be the most important and definitive is the very top portion of the page, is the period 11-1-01 to 11-1-06. You can see the total cost of risks. Total and indirect costs. Indirect of course would be having to hire other employees to perform the job, overtime, things of that sort, to replace the employee that was injured. The benchmark average over that period of time would be 26 million. The target is 15-6. We are at 12-3. So we are actually outperforming their target market by 3,300,000 over the five year period. We are doing better than their target market by that amount.
>> the expected number of claims, I mean the -- so the target is 713, we are twice that.
>> we are showing twice the amount. But we do encourage the employees in the departments to report every claim. And if there is any problem, we encourage them to go see the doctor to at least get it checked out. Through our encouragement we are actually reporting more claims than the average employer would have. Yet we are outperforming everybody.
>> we ask them to report all incidents so we can take a look at it from a safety and loss prevention standpoint. So we want to know what's happening out there. This is one of the vehicle vehicle -- vehicles that we have to be able to to determine what's happening in the way of safety so we can address that before it turns into an injury. That's why you see that number --
>> [indiscernible] [inaudible - no mic] have we tracked the cost of correcting conditions that may have dealt with injury, especially those kind of repetitive things in the workplace? If so, what have those costs been if there is something -- if that is something that we have tracked?
>> we haven't actually tracked the cost. Most of the training, most of the prevention programs are through training, forklift training, van safety training, back to schools, things of that nature. The court a few years ago passed a -- approved an ergonomic program which has been extraordinarily valuable, repetitive motions, back injuries are still the highest among the highest top four causes are less than what they have been. The program runs between 30 and $50,000. But we generally are working with departments on education and awareness and then equipment, personal protective equipment. The departments have done an excellent job. I think t.n.r. Brought in a green hard hat program for their employees who have accidents. It's kind of a -- scare let letter for people having -- scarlet letter for people having an accident. But we have not tracked actual costs. Some of the safety programs are -- includes facility inspections, ergonomics as I mentioned, van safety, fire protective training. We do handle also the drug and alcohol testing. So there's a lot of programs that take place that really lend themselves to bringing these costs down, frequency and severity both.
>> we're done.
>> okay.
>> that completed our presentation on -- on risk management you have further detail in your backup. We do have a recommendation. Since the current level of risk fund reserve is larger than prudently necessarily with a -- necessary with a balance of over $10 million at the end of fy 20062006, the recommendation -- it is recommended procedure to reduce the reserve over a four year period by about $1.2 million each year. In subsequent years during the budget process, the fund's financial requirements will be evaluated based on the annual actuarial study to determine if one can the reserve be reduced further, two, if so, by what amount? This approach allows flexibility for unexpected circumstances and may be require retaining all revenues. The plan would be now not to transfer in or to reduce the am of revenue from the general fund to the risk management research by 1.2 over four years, with the caveat that every year we would come back to the court and report and see is it okay for the next year.
>> [indiscernible] recommendation each queer.
>> yes, uh-huh.
>> the recommendation is not to put another -- not to take out of the risk management fund, not to make a contribution from the general fund?
>> that is correct.
>> that's right.
>> that was either/or?
>> the latter. Not to make the contribution to the general fund.
>> okay.
>> I mean from the general fund to the risk management fund. Yeah.
>> I'm sorry.
>> to reduce the transfer to the general of the general fund to the risk management fund by [indiscernible]
>> the preliminary budget we have transferred 2.1 million, the recommendation is not to do that.
>> correct.
>> this is something that we would put on the changes to the preliminary budget. If this is something that the court approves that 1.2 million would be available for you during markup.
>> ongoing or one-time money.
>> ongoing.
>> well, we are recommending it for a four year period again with the caveat that we review it every year as, you know, want us to -- to be accountable and on our report that we would do on an annual basis. I don't see really anything changing that significantly. Because we have such a large reserve.
>> I think it's something that could be fine since it's over four years as an ongoing for a time being. -- [speaker interrupted -- multiple voices] continue reviewing it each year.
>> we can put that in the compensation.
>> that's where I'm trying to get to. You don't fund compensation out of one time moneys.
>> move approval of the recommendation, including annual review.
>> second.
>> discussion? All in favor? That passes by unanimous vote.
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Last Modified:
Tuesday, August 16, 2006 12:08 PM