FY26 Proposed Budget

RISK MANAGEMENT FUND

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; workplace accidents, errors and omissions; and natural disasters. During fiscal year 1988, the City established the Loss Reserve Fund, an internal service fund, to account for and finance its uninsured risks of loss. Funds pay annual premiums to the Loss Reserve Fund based on actuarial estimates of the amounts needed to pay prior and current-year claims and to establish a reserve for catastrophic losses. Accumulated monies in the Loss Reserve Fund are available to cover the self-insured retention amounts and any uninsured losses. The Housing Authority Fund is insured under a separate policy with the Assisted Housing Risk Management Association. All other funds participate in the Loss Reserve Fund. Nearly 95% of the Risk Management Fund’s revenue is from internal service charges to the other funds for annual premiums. For the fiscal year ending June 30, 2024 the City has purchased property, liability, and workers’ compensation insurance under the program that provides for a $100,000 self-insured retention per occurrence on property losses (2% or $250,000 for wind or hail damage), and a $500,000 self-insured retention per occurrence on liability, and a $500,000 self-insured retention on workers’ compensation losses . Liability insurance provides coverage for claims in excess of the aforementioned self-insured retention up to a maximum of $20.0 million annual aggregate of losses paid.

Settled claims have not exceeded this commercial coverage in any of the past five fiscal years. The City will seek bids to renew or replace its insurance coverage this spring for fiscal year 2025.

The fiscal year 2025 revised fund balance is $3,576,594 which is $444,500 or 11.1% lower than the fiscal year 2024 ending fund balance. The fund balance is expected to slightly decrease over the next two years; however, the change in fund balance is entirely dependent on the amount of claims paid.

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