HomeMy WebLinkAboutE- 5 Request for Amendment of $122.730 to the Human Resources Dearmtnet Operating Budget for the 2002-2003 Fiscla Year dor
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CONSENT ITEM
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: VICTORIA CROSS, DIRECTOR OF HUMAN RESOURCES/PERSONNEL OFFICER
VIA: RICK COLE, CITY MANAGER /0-t(' '
DATE: AUGUST 5, 2002
SUBJECT: REQUEST FOR AMENDMENT OF $212,730 TO THE HUMAN RESOURCES
DEPARTMENT OPERATING BUDGET FOR THE 2002-2003 FISCAL YEAR
RECOMMENDATION
It is recommended that the City Council approve an amendment to the operating budget of the
Human Resources Department in the total amountof $212,730, for the 2002-2003 fiscal year.
This increase will be distributed accordingly:
• $10,800 for Mathis &Associates
• $80,000 Workers' Compensation Insurance Premium
• $121,930 Property Insurance Premium
BACKGROUND
On May 13, 2002,Mathis&Associates began facilitation of the City Manager and City Attorney
Evaluation process, as approved by City Council. Consultations and workshops were conducted
and the Evaluation process was completed on July 8, 2002.
The total cost for services is $10,800. This amount and service was not estimated in the
approved FY 2002-2003 Human Resources Department budget. The amounts currently budgeted
in this area are not sufficient to cover the costs incurred through this process.
In June 2002, the City's insurance pool ICRMA(Independent Cities Risk Management Authority)
informed all member cities that insurance premiums for Workers' Compensation, Property and
Liability would increase substantially.
According to ICRMA the insurance industry faced troubling issues prior to the events of September
11, 2001. The second quarter 2001 financial results showed record low investment yields, record
high natural catastrophe losses, declining policy holder surplus and continued high loss cost
trends from prior accident years. The first half of 2001 increased premium rates were not enough
to show material improvement relative to the prior year. The catastrophic events of September
11, 2001, further pushed the insurance industry into a chaotic state with significant changes
implemented in the last quarter of 2W1, which continued to effect premiums for 2002.
The City's Workers' Compensation insurance premium rose from $34,000 in FY 2001-2002 to
$101,330 in FY 2002-2003. This increase is recognized as substantial and ICRMA is currently
marketing additional sources of Workers' Compensation insurance coverage for its member
agencies in hopes of further reducing the exorbitant premium costs. If ICRMA is successful in
finding lower premiums, any cost savings will be refunded to member agencies. An amount of
$80,000 is being requested to bridge the difference in the approved FY 2002-2003 Human
Resources budget to cover the increase in Workers' Compensation premium.
Lastly, the insurance premium for Property substantially increased from an estimated $160,000
to $282,575 for the FY 2002-2003. An amount of$121,930 is being requested to bridge the gap
between the approved FY 2002-2003 Human Resources budget to cover this increase in Property
Insurance.
As these items were not estimated within the requested and approved FY 2002-2003 Human
Resources Department budget a request is being made for an increase to the Human Resources
Department operating budget in the total amount of $212,730. This increase will specifically
address the unforeseen and unbudgeted costs related to the above described activity.
FISCAL IMPACT
The increase costs will be charged to self-insurance fund and spread across all funds.