Finance Committee - Regular Meeting

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Good afternoon, everyone. Full house here. We're gonna call the what's that? Exactly. We're gonna call the meeting to order for our finance committee meeting scheduled today, January 14. We'll start at three. So let's let's start with our first agenda item, and that is public comment so we could play the message.

Public comment is now open for this item. Available in both English and Spanish. Call (951) 826-8686 and follow the prompts to access the meeting in either language. To request to speak, press 9. You can also join via Zoom. The meeting ID for both languages can be found on the agenda.

Alright. And I see we have no callers on the line, and we don't have any cards in the chamber, so we will close public comment, move on to our discussion calendar item number two. This is the annual financial review of the city self insurance trust funds for fiscal year twenty four-twenty five. Out Ryan Carter will be presenting. Thank you. Thanks.

Alright. Good afternoon, members of the committee. I'm Ryan Carter, controller, and I'm here to present the financial overview of the city self insurance trust fund. This overview covers two primary self insurance trust funds. First, the workers compensation fund, which is administered by human resources.

And second, the general liability fund, is overseen by risk management with third party claims administered by the city attorney. Alright. As of 06/30/2025, both funds had an aggregate policy limit of 25,000,000 and a self insured retention of 4,000,000 for general liability and 3,000,000 for workers' compensation. And it's worth noting that our retention rate remains competitive. Other agencies of similar size typically have a retention upwards of 5,000,000.

Over the past ten years, two tort claims have exceeded the city's self insurance retention. Two major cash outlays for these funds are claims payments and legal fees. Over the past five years, the average annual claims payments for workers' compensation has been approximately 4,700,000 and for general liability is 4,000,000. Legal fees average 130,000 per year for workers' compensation and just under 1,800,000.0 for general liability. Alright.

This slide presents the combined income statement for the two funds. The primary revenue source is the city departmental contributions reflected in the charges for services category. We also received interest earnings and miscellaneous revenues. Charges for services decreased slightly in fiscal year twenty five from prior year. This decrease was primarily due to budgeted charges for services lowering as we expect the reserve ratio to go above 50% when the analysis is made in prior years.

All right. Here we show the five year expenditures for both funds with projections for fiscal year twenty twenty six. The major expenditures include claims and judgments, legal fees, indirect charges, insurance premiums and actuarial adjustments. The overall expenditures decreased by $4,100,000 in fiscal year twenty twenty five compared to the prior year. The decrease was mainly attributed to a decrease in claims judgment payments for the general liability of roughly $5,000,000 caused by lower claim payouts.

And then conversely, the premium payments for general liability increased by $900,000 from prior year due to market changes in the premium costs. Alright. This table shows the fund's cash position relative to estimated claims and judgments liability. According to the city's policy, we aim to maintain at least 50% of our claims liability in available cash. At fiscal year two thousand twenty five, cash reserves are at 48%, and we are projecting 47% for fiscal year twenty six.

Alright. In fiscal year twenty twenty five the fund balance was 37,400,000.0 in deficit while cash reserves stood at approximately 34,000,000. A fund deficit is typical due to the long term nature of the estimated claims liability which is adjusted every year based on the actuarial study. We currently have enough cash to cover 48% of our long term liabilities, and finance is planning to present a plan to city council to achieve the 50% ratio as part of the 02/2028 biannual budget. Alright.

This chart illustrates the five year trend of our fund balance and available cash. Ideally, cash reserves should align closely with a fund deficit or a shifting to the right side showing increased cash. In fiscal year twenty twenty five, the fund balance decreased roughly the same rate as the cash reserves increased, maintaining the 48% ratio from prior year. However, we plan to build those cash reserves over the next three fiscal years to achieve the 50%. Alright.

This side slide shows the breakdown of our claims and judgment liability. The liability is calculated by a third party actuarial service based on historical data and adjusted annually to reflect current and future trends. We don't want to keep 100% cash on hand to pay for the entire estimated claims liability. And the reason being claims are often resolved for less than the estimated liability and the claims will be paid over several years. Okay.

This final chart outlines the portion of the claims liability related to workers compensation and general liability. The majority of the liability is tied with workers' compensation with overall liability increasing primarily due to increased liability claims and increased projected payroll. And with that, we recommend that the finance committee receive and provide input on the annual financial review of the city's self insurance trust fund for fiscal year 02/2425. And that concludes my presentation. Here to answer any questions you may have, and we also have members from our risk and claims to help.

Excellent. Thank you. Will look to see if we have any comments on this item. I know there's none in chamber, and no callers online, so close public comment for this. I'll turn to all two of us. No questions. You know, because we're the experts in all of this with you all sitting no. Thank you for this. This, I think, just by way of info to the public is a way for us to keep this open and transparent on what the fund realities are and our obligations as a city. It's pretty pretty straightforward as far as sort of trying to fluctuate and keep funds in the right place.

And it sounds like we'll make the correction to get us closer to that 50% at the next budget cycle. If we could repeat '23, that would be great. It looks like at least according to charts. But, yeah, pretty straightforward. Thank you for that. I don't think we have any questions, so we'll leave it at that. Thank you. Alright. Thank you for that. And, I know we don't have any communications, legislative updates, any items for future consideration? Man, I'll say finance committee is one of the most efficient committees, I think, in in our space. So thank you all for your work. Yeah. Exactly. I'll take it, Edward. Great leadership. Thank you for that. And with that, we'll adjourn at 03:07. Thank you all.