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Topic: COST ALLOCATION FOR Date Issued: June 30, 1994

LIABILITY/PROPERTY SELF- Date Revised:

INSURANCE FUND

Section: LIABILITY/PROPERTY

INSURANCE PROGRAM

Number: XXIII.8.

PURPOSE:

To establish a procedure to charge departments for self-funded liability

and property insurance costs.

POLICY:

It is the policy of the County of Santa Cruz to charge departments for

self-funded liability and property insurance. Self-funded liability insur-

ance shall be based on exposure and experience factors in compliance with

State Controller guidelines for self-insured plans.

PROCEDURE:

1. The Liability Program Manager will calculate actual claim settlement

and legal experience for the most current 10 year period for each

department. The experience portion of the cost allocation is based

upon 70% of each department's actual experience for this period.

2. The Liability Program Manager will review department functions and

will assign each department an exposure factor based upon loss poten-

tial, frequency and severity. These exposure factors will comprise

30% of the total liability self-insurance charges.

3. The Liability Program Manager will apportion property insurance costs

based upon departmental occupancy and/or control of various County

owned/leased locations. Square footage for each department will be

used in cases of multiple occupancy in a single building.

4. The Liability Program Manager will prepare a proposed budget for the

NEXT fiscal year each October. The budget will include an estimate of

all accounts in the Liability/Property Budget.

PAM XXIII.8.

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PROPERTY SELF-INSURANCE FUND

5. The proposed budget, including department charges, will be reviewed by

the Risk Manager and Personnel Director for submission to the County

Administrative Office. The County Administrative Office will include

the proposed department charges in the budget instructions.

6. Department charges may be modified by the County Administrative Office

or the Board of Supervisors up to the close of budget hearings.

7. Department charges for the Liability and Property Fund are processed

on a quarterly basis. The amount approved for each department in

budget hearings is divided into four equal amounts. A journal entry

is prepared by the Liability Program Manager to charge departments in

July, October, January and April. Adjustments are calculated in the

April charge.

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PAM2308 RFT F1 01/10/01