Title
Authorize and direct the Auditor-Controller to approve an operating transfer out of $1,600,000 from Contingencies (001-1050-CAO020-8034) into the General Liability Internal Service Fund's Non-recoverable Sub-Fund (475-RISK-1210-COU003-8408) for the FY2020-21 General Liability Non-Recoverable program.
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors authorize and direct the Auditor-Controller to approve an operating transfer out of $1,600,000 from Contingencies (001-1050-CAO020-8034) into the General Liability Internal Service Fund's Non-recoverable Sub-Fund (475-RISK-1210-COU003-8408) for the FY2020-21 General Liability Non-Recoverable program.
SUMMARY/DISCUSSION:
The County Budget Office and County Counsel have identified an issue with the sustainability of the County's non-recoverable internal service sub-fund. The issue requires a supplemental augmentation in order to meet anticipated expenses out of that fund for the current fiscal year, but that may require further augmentations for extraordinary expenses throughout the fiscal year. Our offices also have a recommendation for on-going short-term treatment of the ISF under difficult budget circumstances.
The County has historically maintained an Internal Service Fund (ISF) to finance the payment of claims, settlements and litigation related expenses. The ISF has been funded each year from the General Fund in the budget process at the start of the fiscal year. The funding has been in an amount determined by an actuary, with the goal of funding at least 70% of anticipated annual expenses as determined by an actuarial study ("70% confidence level"). The actuarial study is based on a rolling 7-year loss history, and thus can be affected by significant swings in losses in a given year. Expenses are paid when incurred and then recouped from departmental budgets on an allocation basis over 5 years, again based on an actuarial study.
Prior to Fiscal Year ("FY") 2017-18, the County ...
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