TOWN OF OCEAN CITY

FISCAL YEAR 2020 ADOPTED BUDGET

RISK MANAGEMENT FUND

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BUDGET HIGHLIGHTS:

 

REVENUE CHANGES:

Interest earnings are expected to increase in FY 20. 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 49% of the Risk Management budget.

 

PERSONNEL CHANGES:

Two full-time positions are funded in this division. A step increase effective January 1, 2020 has been included. Funding has been included for one part-time Office Associate position to work two days per week for June, July and August and two days per month for the remainder of the year. Estimated contributions for health insurance, retiree health and pension increase for this division.

 

CHANGES IN OPERATIONS:

Contracted Services include professional services and legal services. Legal fees have been budgeted at $84,000. 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 included in the FY 19 budget. It has been recommended by the Town’s auditing firm that this study be conducted every few 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 increased the amount of Risk fund balance restricted for claims and liability, auto claims and future claims. Reserves necessary for worker’s compensation claims decreased. Overall, restricted fund balance increased $510,612, resulting in a budgetary loss in FY 18. As a result, a contingency of $80,000 over the projected expenses has been included in the FY 20 budget. Insurance coverage and payment of insurance claims are the largest expenses in this department. Overall insurance costs are expected to decrease $11,200 in FY 20. The Maryland cap on General Liability and Auto claims was increased to $400,000 on October 1, 2015, increasing overall liability to the Town. The amount allocated for worker’s compensation claims in FY 20 is $720,000, while the total allocation for worker’s compensation is $1,187,302. Property insurance is estimated to decrease to $275,000 for FY 20, while General Liability claims have been budgeted at $100,000. Automobile claims are budgeted at $200,000. $1,843,750 has been budgeted to cover the cost of insurance policies and insurance claims for FY 20. Allocations for IT and Vehicle Lease increase, while the allocation for General Overhead decreases for this department.