TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
Teresia Zadroga-Haase, Human Resources Director
SUBJECT:Title
Fiscal Year 2014-2015 Insurance Fund Status Report; Phased Transfer of Funds from the General Fund to the Insurance Fund to Correct Fund Imbalance (Finance Director Moe).
ACCEPT REPORT; APPROVE TRANSFER PLAN
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council: a) accept a report on the Fiscal Year 2014-2015 Insurance Fund performance and steps being taken to improve loss experience; and b) approve a three-year phased transfer plan of $667,000 per year from the unreserved General Fund balance to the Insurance Fund, including a transfer of $667,000 in Fiscal year 2015-2016.
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FISCAL IMPLICATIONS:
Due to higher than expected claims activity during FY 2014-2015, the Insurance Fund ended the fiscal year with a negative fund balance of approximately $1.87 million. The trend to this outcome was first reported to the City Council with the FY 2014-2015 first quarter budget report in November 2014, and again at the mid-year budget report in February 2015. The prediction of the negative fund balance was discussed with the third and fourth quarter budget updates as well.
With the Q3 and Q4 reports, staff recommended that the final results for FY 14-15 be determined before correcting the fund balance issue. With FY 2014-2015 Insurance Fund transactions now substantially completed, a plan of funding needs to be implemented to correct the negative fund balance.
The fund balance as of June 30, 2015, was negative $1.87 million. This can be corrected through a recommended three-year phased transfer from available unreserved General Fund moneys of $667,000 each year starting with FY 15-16 through FY 17-18. This will leave a negative fund balance of approximately $1.2 million in the...
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