Annual Contributions for the 2013-14 coverage year were reviewed and adopted by the Executive Committee at its meeting on February 27, 2013. Links to the Annual Contribution workbooks for the Liability program and the Workers’ Compensation program are located below.
Overview of the 2013-14 Annual Contributions
The total funding estimate is based on an actuarial study of the Authority’s historical claim costs. The selected projection of retained losses is calculated at the 75% confidence level, which includes a provision for contingencies. In addition to the estimated cost of claims and the cost of defending claims, the funding estimate includes budgeted expenses for excess insurance premiums, claims administration fees, broker fees, Authority operating expenses, and the California state assessment for Workers’ Compensation.
For both programs combined, the 2013-14 annual contribution funding estimate is $73.7 million, which is $4.4 million or 6.3% higher than the prior year. The majority of the increase is attributable to the Workers’ Compensation program. Compared to the prior year, the Liability programÕs funding estimate increased by $1 million from $43.9 million to $44.9 million, an increase of 2.2%. The funding estimate for the Workers’ Compensation program increased by $3.4 million from $25.4 million to $28.9 million, an increase of 13.5%.
The funding estimate was allocated to individual members based on the Authority’s cost allocation formula, which takes into consideration each member’s risk exposure and claims experience relative to other members. Volatility bands were also applied to limit the year-to-year change for individual members. For 2013-14, members were not permitted to experience an increase of more than 50%, nor a decrease of more than -25%. Exceptions to the volatility bands may occur in situations where a member’s risk exposure (payroll) increases or decreases by 20% or more.
Annual Contribution Workbooks
Annual Contribution Workbook 2013-14 Liability Program
Annual Contribution Workbook 2013-14 Workers’ Compensation Program
Timeline for Transition to Prospective Funding Model
Understanding the Annual Contribution Formula 2013-14