Comprehensive Annual Financial Report - City of Santa Monica

CITY OF SANTA MONICA, CALIFORNIA
Notes to Basic Financial Statements, Continued
For the fiscal year ended June 30, 2008
compensation coverage for major employee injury risks through a program of pooled self insurance/reinsurance
and insurance on a risk sharing basis.
The City retains self-insurance up to $1,000,000 for general liability, automobile liability, bus
operations liability and workers’ compensation. ACCEL covers up to an additional $4,000,000 for all
liabilities and arranges placement of excess of liability insurance over $5,000,000 up to $80,000,000.
California State Association of Counties Excess Insurance Authority covers up to $4,000,000 for
workers’ compensation and arranges for excess of workers compensation over $4,000,000 up to
$300,000,000. No claim settlements have exceeded insurance coverage in any of the past three years.
In order to provide funds to pay claims, ACCEL collects premiums from each member. The premiums
paid are credited with investment income at the rate earning on the Authority’s investments. Based on
ACCEL’s June 30, 2008 audited financial statements, the City had deposits of $2,674,842 (15.8% of
ACCEL’s total deposits) net of unpaid claims with ACCEL. Total assets of ACCEL at June 30, 2008
were $29,960,045. ACCEL has no capital contributions.
The City’s unpaid claims liabilities are based on the results of actuarial studies. The unpaid claims
liabilities are compiled by the Risk Manager of the City and include amounts for claims incurred but not
reported as of year end. Claims liabilities are calculated considering the effects of inflation, recent
claim settlement trends including frequency and amount of payouts and other economic and social
factors. Net present values of the unpaid claims liabilities are estimated for the year ended June 30,
2008, based on interest rates ranging from 4.40% to 4.45%. Revenues of the risk management funds,
together with funds to be provided in the future, are expected to provide adequate resources to meet
liabilities as they come due. Nonincremental claims expenses have not been included as part of the
liability for claims.
Changes in the liability for claims during the past two fiscal years for the self-insurance funds follow:
Fund (by fiscal year)
Beginning of
year
Current-year
claims and
changes in
estimates
Claims
payments
End of year
Due within
one year
June 30, 2007:
Comprehensive $ 5,387,973 817,248 (1,128,569) 5,076,652 999,234
Bus 2,012,795 2,022,013 (2,505,690) 1,529,118 702,369
Automobile 599,311 382,796 (727,649) 254,458 95,350
Workers' Compensation 21,189,344 4,188,819 (4,677,225) 20,700,938 3,239,345
$ 29,189,423 7,410,876 (9,039,133) 27,561,166 5,036,298
June 30, 2008:
Comprehensive $ 5,076,652 1,021,194 (1,851,875) 4,245,971 1,523,291
Bus 1,529,118 833,433 (421,913) 1,940,638 455,605
Automobile 254,458 233,103 (252,306) 235,255 89,994
Workers' Compensation 20,700,938 5,250,183 (5,315,934) 20,635,187 4,224,579
$ 27,561,166 7,337,913 (7,842,028) 27,057,051 6,293,469
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