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Staff Report by: <br />Brian Carlson <br />Budget and Finance Director <br />Topic: <br />2024 Budget <br />Health Self-Insurance Program <br />Meeting <br />Finance Study Session <br />October 19th, 2023 <br /> <br />Summary: <br />• County’s health self-insurance program, to begin on January 1, 2024, has a State requirement for <br />minimum cash reserves <br />• Finance Director proposes repurposing “Rainy Day Fund” of $1.5MM to satisfy this requirement. <br /> <br />Background: <br />• State of WA allows two years to accumulate minimum <br />reserve requirements equal to sixteen weeks of claims <br />costs; current estimate: $1.3MM <br />• County has $1.6MM within General Fund reserves <br />assigned as a “Rainy Day Fund”, which was established in <br />2004 during the annual budget retreat. <br />• Finance Director finds no formal documents to <br />memorialize the “rainy day fund”, other than as a <br />budget/finance policy embedded in each annual budget <br />document. Therefore no policy, resolution, or code <br />revisions are included with this recommendation <br /> <br />Analysis: <br />• Health insurance benefits are the fastest-growing cost <br />of the largest expense category (FTE personnel). The <br />self-insurance program is a proactive initiative to <br />pursue sustainable costs without reducing coverage. <br />• Self-insurance premium for 2024 plan renewal <br />includes an extra margin to meet this requirement on <br />a two-year timeline. Using “Rainy Day Fund” allows <br />County to <br />o Eliminate this margin, generating a 2024 <br />budget savings of 2024 Budget Savings of <br />$250K General Fund, $400K Countywide. <br />o Exceed the estimated State-required margin <br />by $250K, 20% on the first day of plan <br />impmentation <br />o Maintain General Fund balances at five months’ expense; more than twice the GFOA- <br />recommended level of two months’ expense. <br />Unassigned, $18 <br />Jails, $9 <br />CrimJust, $2.5 <br />Rainy Day, $1.6 <br />General Fund Balances <br />2022 YE: $31MM <br />10% <br />15% <br />20% <br />25% <br />30% <br />Health Benefits as % of Salaries: <br />General Fund