RISK MANAGEMENT FUND

TOWN OF OCEAN CITY

FISCAL YEAR 2023 PROPOSED BUDGET

Print/Download Data Summary

BUDGET HIGHLIGHTS:

REVENUE CHANGES:

Interest earnings are expected to decrease slightly in FY 23. The expenses for this division are separated into four categories: General liability, Auto claims and insurance, Property and Worker’s compensation. Expenses in these four categories are allocated to each department based on a formula determined by an actuarial study done every few years. Worker’s compensation costs are the most expensive of these three categories, making up roughly 41% of the Risk Management budget.

PERSONNEL CHANGES:

Two full-time positions are funded in this division. A step increase effective January 1, 2023 has been included. Benefit cost reductions include a decrease in retirement contributions. In addition, no funding has been budgeted for retiree health in FY 23.

CHANGES IN OPERATIONS:

Contracted Services include professional services and legal services. Legal fees have been budgeted at $139,000. An Actuarial study to assess ultimate losses and outstanding liability associated with the Town’s self-insured worker’s compensation, general liability and auto exposure was conducted in FY 21 to give funding recommendations for the next few years. The study is completed every three fiscal years. Necessary reserves for each type of insurance claim and the allocation to each department by insurance type is determined by the study. The last actuarial study did not increase the amount of Risk fund balance restricted for claims and liability, auto claims and future claims. A contingency of $80,000 over the projected expenses has been included in every budget since FY 20, in an effort to build fund balance to cover future claims in this fund. Insurance coverage and payment of insurance claims are the largest expenses in this department. $2,521,123 has been budgeted to cover the cost of insurance policies and insurance claims for FY 23. Costs for insurance policies increase $406,693 in FY 23, due to projected increases in property, general liability and worker’s compensation excess coverage. Property insurance is estimated to increase to$667,185 for FY 23, while General Liability excess coverage was increased to $575,257. The Maryland cap on General Liability and Auto claims was increased to $400,000 on October 1, 2015, further increasing overall liability to the Town. The amount allocated for worker’s compensation claims in FY 23 was increased to $700,000, while the total allocation for worker’s compensation is $1,168,932. Liability claims have been budgeted at $100,000. Automobile claims are budgeted at $250,000. Allocations for General Overhead, radio lease, IT Services, and Vehicle lease increase for this department.