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DAS warns state insurance fund balance shrinking; actuaries see $10M monthly run rate
Summary
Department of Administrative Services risk managers told the Ways and Means Subcommittee that the state's insurance fund has declined in recent years, that actuarial estimates and large litigation have driven liabilities up, and that the governor's proposed assessment would increase agency charges to begin rebuilding reserves.
The Joint Committee on Ways and Means Subcommittee on General Government heard Feb. 25 from the Department of Administrative Services’ risk management team that the state insurance fund’s balance has declined, driven by a run of large liability claims and rising defense and medical costs.
Shelley Hoffman, risk program manager at the Department of Administrative Services, introduced the department’s overview of self-insurance and commercial insurance layers that cover property, liability and workers’ compensation for state agencies. Carl Anderson, DAS finance analyst, told the committee the fund had about $90 million in assets at the start of the year and that DAS is currently running a net outflow of roughly $10 million per month on normal operations.
“That run rate downward is about $10,000,000 per month,” Anderson said, describing ongoing monthly payments for defense costs, settlements and premiums. Anderson and other DAS staff attributed the fund’s deterioration to a combination…
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