Adopting the budget for fiscal year 2018-2019 was not the only finance item the Ridgecrest City Council tackled at its June 6 meeting; council also voted to increase appropriations for the fiscal year 2017-2018 budget for workers' compensation claims by $390,000 to come from the city's self-insurance fund.
According to a staff report, the City Clerk has been working with a third party administrator to close long-time workers' comp claims. Six cases have been settled with another in progress. The six cases totaled $387,555 and the one in progress is $15,000 according to the report.
Combining these settlements with monthly regular claims, the projected workers' comp claims for fiscal year 2018 will be $815,000. According to the report, the adopted budget for fiscal year 2018 contains an appropriation of $425,000 for the workers' comp claims, so another $390,000 is needed.
According to Finance Director Tess Sloan, two of the settled claims have already reached their retention amount and the city is expecting to receive the excess insurance amount of approximately $130,000 on one in the near future.
Sloan also said the city is expecting to receive approximately $25,000 in excess insurance when one of the open claims reaches its retention amount.
Councilwoman Stephens noted that the self-insurance fund has been described as underfunded and asked it this expenditure would make the underfunded status worse.
Sloan replied that “we are hoping we are not going to spend all that money.”
“It appears we are depleting the already low funds,” Stan Rajtora. He suggested retroactively increasing worker's comp fees from the beginning of fiscal year 2018. City Manager Strand later said that this would reduce the general fund balance.
Discussion turned to the fact that the newly adopted budget for fiscal year 2018-2019 includes a 40 percent increase in worker's comp rates.
According to Strand, this is on purpose.
“One of the reasons we sought a 40 percent increase in workers' comp rates is because we knew we were going to experience this deficit this year,” Strand said. “This is one way we are trying to resolve the hole we are in.”
Approval was unanimous. All five council members were present.