FYE 14 Budget prelim - City of Norman

CITY OF NORMANRISK MANAGEMENT FUNDBUDGETHIGHLIGHTSBackgroundThe Risk Management Fund is an Internal Service Fund established to account for theresources utilized to provide for the self-insurance of Worker’s Compensation and UnemploymentInsurance and to pay premiums on insurance for employee health and property loss. This fund waseliminated and combined with the General Fund in FYE 2002, but re-established in FYE 2012.Workers’ Compensation benefits are paid to employees who are injured on the job. TheLegal Department administers this program in conjunction with the Finance Department andHuman Resources Department. Claims are submitted to the Finance Department for review and, ifapproved, are paid directly by the City. The projected cost in FYE 14 is $1,658,400.Unemployment claims are filed with the State and when approved, are then submitted to theCity for their response. The FYE 14 estimated cost of unemployment claims is approximately$39,121. Health insurance claims will also be accounted for in this fund. The City self-insures forthese benefits and utilizes a third party administrator to administer the benefits. Consultants are alsoutilized to set premiums and structure plan benefits.Judgments and claims against the City are accounted for in the Risk Management Fund.Judgments are placed on ad valorem tax rolls and revenues are transferred from the Debt ServiceFund to cover claims expenditures.A five-year financial forecast is found in this section. The purpose of a five-year forecast isto project existing conditions into the future, given certain assumptions, in order to determine futurefinancial viability, to identify financial strengths and weaknesses and to provide a base for remedialor supportive financial policy.Reserve PolicyOperating Reserves are based on a three-month claim history excluding judgments andclaims as they are repaid from ad valorem tax revenues.FYE 14 BudgetRevenues are being projected to reflect conservative estimates while recognizing someextraordinary losses in the prior year. Claims are customarily paid when reduced to judgments,which depletes fund balance. Collections from the tax rolls in subsequent years rebuild fundbalance.ANNUAL BUDGET103