HomeMy WebLinkAbout5/17/2022 Item 6a, Elke and Domini - Staff Agenda CorrespondenceCity of San Luis Obispo, Council Memorandum
City of San Luis Obispo
Council Agenda Correspondence
DATE: May 17, 2022
TO: Mayor and Council
FROM: Brigitte Elke, Finance Director
Nickole Domini, Human Resources Director
VIA: Derek Johnson, City Manager
SUBJECT: Item #6a – FY 2021-22 Third Quarter Budget Review
The purpose of this correspondence is to incorporate an additional recommendation as
part of the FY 2021-22 Third Quarter Budget item at the May 17th City Council meeting.
Staff recommends authorizing the use of $150,000 from the City’s Insurance Fund
balance to cover claims and related expenses for the remainder of the 2021-22 fiscal
year. As part of this recommendation, staff recommends amending the draft Resolution
in Attachment B of the Council Agenda Report to incorporate this change.
Background
The City of San Luis Obispo is a member of the California Joint Powers Insurance
Authority (CJPIA) which provides workers’ compensation and general liabi lity insurance
for the City and other member agencies throughout the State. In 2016, the City entered
into an agreement with CJPIA and Carl Warren, a third-party administrator, to manage its
liability claims. Carl Warren provides intake of claims, legal counsel, investigation of
claims, and represents the City in mediations and court cases.
At the beginning of FY 2021-22, $400,000 was placed in the reserve for the Liability
Excess Insurance Program that was expected to be sufficient for anticipated expenses in
FY 2021-22; however, a high-cost claim was settled this year. In addition, several other
claims that have not yet settled require legal expertise and have now resulted in higher
than anticipated costs.
Staff therefore recommends appropriating $150,000 of the City’s Insurance Fund balance
to cover anticipated claims and related expenses for the remainder of FY 2021-22. This
number is based on the average monthly expenses to date in FY 2021-22. The Insurance
Fund has a current fund balance of $1.9 million of which $400,000 are currently
unassigned and above the City’s reserve requirement for the fund1.
Attachment
A - Draft Resolution amending FY 2021-22 Budget Allocation (Redline)
1The Insurance Fund is maintained at a 75% confidence level based on actuarial studies. According to
the most recent actuarial report, the 75% confidence level based on the City’s recent claims experience
place that reserve requirement at $1.5 million.
R ______
RESOLUTION NO. _____ (2022 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING AN AMENDMENT TO THE 2021-
22 BUDGET ALLOCATION
WHEREAS, in accordance with the San Luis Obispo City Charter Section 802, the
City Manager submitted the 2021-23 Financial Plan to Council for its review and
consideration on June 1, 2021; and
WHEREAS, on June 1, 2021, the Council approved and appropriated the 2021-22
budget allocation including operating expenditures, debt service, and capital
improvement plan budget (R-11251); and
WHEREAS, the City received $6,900 in 2016 for trailhead improvements at
Terrace Hill that was paid by a developer; and
WHEREAS, the revenue was deposited into the Open Space Protection Fund and
currently resides in the fund balance; and
WHEREAS, the City will now be utilizing the funding to build new fences at Terrace
Hill and needs to appropriate the expenditure budget from fund balance ; and
WHEREAS, the City created an Insurance Fund which aggregates insurance -
related expenses including insurance premiums and payment of claims for workers’
compensation and excess liability and related costs; and
WHEREAS, the 2021-23 Financial Plan provides for the Insurance Fund to
manage the fluctuations in the insurance programs with a reserve for the Liability Excess
Insurance Program maintained at approximately 75% funded confidence level based on
the prior five-year average claims experience; and
WHEREAS, the funds within the reserve for the Liability Excess Insurance
Program are insufficient to cover anticipated claims and related expenses for the rest of
the 2021-22 fiscal year; and
WHEREAS, the Insurance Fund balance is sufficient to cover these costs so that
current transactions can take place in a timely manner.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
Resolution No. _____ (2022 Series) Page 2
R ______
SECTION 1. The 2021-22 budget is hereby amended to appropriate $6,900 of the
City’s Open Space Protection Fund balance into operating budget.
SECTION 2. The 2021-22 budget is hereby amended to appropriate $150,000 of
the City’s Insurance Fund balance to cover anticipated claims and related expenses for
the remainder of FY 2021-22.
Upon motion of _______________, seconded by _____________, and on the
following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _____ day of _____________________ 2022.
___________________________
Mayor Erica A. Stewart
ATTEST:
________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk