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City staff outline strategy to shore up workers’ comp and risk reserves; propose ongoing $1.5M transfer
Summary
Risk and safety staff told Boise City Council they plan to pursue proactive mitigation work and recommended an ongoing $1.5 million annual transfer to workers' compensation and risk funds to restore actuarial reserve ratios after legislative changes increased city liabilities.
City risk and safety staff told the Boise City Council on Tuesday that a mix of legislative changes, large claims and national insurance-market trends have reduced the city's reserves relative to actuarial targets and that the city should both mitigate risk and increase ongoing funding to the risk and workers' compensation funds.
"If our insurance policy had a $1,000,000 self insured retention, then our actuaries...would want us to have somewhere between 5,000,000 and 10,000,000 for us to have what would be considered a healthy fund surplus," Christine Miller, the city's risk and safety presenter, said during her briefing. Miller described the two-city funds — a workers' comp fund and a separate risk fund — and the way self-insured retention (SIR) levels affect the amount actuaries recommend the city keep in reserve.
Miller told the council that legislative changes increased exposure for public-safety employees: a 2016 presumptive illness law for fire employees (linking certain cancers to job exposure) and a later law expanding post-traumatic stress injury coverage both led to larger claims and higher self-insured-retention requirements. Miller said those changes contributed to a shift in the funds' SIR and reserve ratios and that the city has previously used one-time transfers and higher annual reimbursements to try to restore the funds to actuarial targets.
Miller said staff were recommending an ongoing $1,500,000 annual investment to the workers' comp and risk funds to keep reserves within the actuaries' target range. She also described a proactive, performance-management approach the city has begun: monthly scorecards with department heads, targeted facility inspections, cybersecurity training, investments in park forestry and police technology intended to reduce claims exposure.
When asked for fund balances, Miller said she did not have the “today” balance on hand in the meeting but provided beginning-of-fiscal-year numbers: the workers' compensation fund balance at the start of the fiscal year was $9,600,000 and the risk fund was about $4,000,000. Miller offered to follow up with current balances and additional details if council requested them.
Councilmembers expressed support for a proactive mitigation approach and asked staff to continue reporting on progress and any budget implications.
