|President's Letter |
By Janet Selby, Workers' Comp Manager Municipal Pooling Authority (MPA)
"A smooth sea never made a skillful mariner" - English proverb
Ask 10 people what is behind the current increase in workers' comp claim costs, and you may well receive a variety of answers: medical inflation; the economy and budget deficits; the aging workforce; growing rates of obesity and diabetes; greater complexity of legal issues; unfavorable court decisions; Medicare reporting and set aside requirements; and an increase in the cost of medical cost containment. Take your pick, because all of these are cited by industry experts as factors driving costs higher and keeping claims open longer. To complicate things further, the list changes regularly as new laws are enacted and research provides fresh insight. A similar story can be told of liability and health care costs. Our public agency members have relied on risk pools to help them navigate these ever-changing and sometimes treacherous waters. The overarching challenge now is convincing our members to stay invested in loss prevention and control programs at a time when their budgets are upside down and resources are stretched thin.
The weak economy is certainly changing the landscape for public risk pools. Public agency budget cuts have resulted in significant service and staff reductions. Our members are scrambling to do more with less, and sometimes just doing without. It's an ideal time for risk pools to step in and help public agencies protect essential financial and human resources. According to a recent article by Matthew Brodsky at Risk & Insurance online, several industry experts at the recent PRIMA meeting called the fiscal crisis an "opportunity for risk managers to lower their entities' cost of risk." Among other things, risk pools can use their claims data to benchmark against peers and gauge the effectiveness of claims administration and other services. Such analysis will help public agencies make smart decisions on vendors, rather than defaulting to the lowest bidder for quick savings. Data can also help risk pools to connect the dots and show return on investment for cost containment programs. The point is to convince struggling members to think long-term when it comes to risk management, and continue investing in prevention and early intervention strategies that address the variety of factors driving costs. As Brodsky says, it comes down to "think(ing) smarter" and "looking at that total cost of risk."
Risk pools do this all the time. We analyze issues, offer ideas and paint the bigger picture for our members to help them make informed decisions. But risk pool resources also face the chopping block. Unfortunately, travel and training funds are easy targets for the budget axe. At our recent budget-approval board meeting, one of our members specifically asked about conference travel. I'm sure some of yours have as well. It can be difficult to quantify the benefits gained from education and networking. Pool managers know they are vital tools for keeping our fingers on the pulse of the public risk pool community and learning ways we can best serve our members. The trick is proving it, and in demanding times like these we might have to.
This year, the CAJPA Fall Conference offers many sessions that focus on technology. A recent study by Avizent, a national claims and risk management service provider, talked about challenges to workers' comp costs in 2010 and beyond. Among the top trends noted was an expansion of the use of technology to more areas, including compliance and training, and increased demand for real-time access to claim and loss data. Electronic exchange of information is commonplace in this day and age, and it can be an amazing tool. We also read the news headlines when confidential information is hacked or inappropriately released. The cost is significant, both in dollars and reputation. For public risk pools, it's also a matter of the public trust. Do you know what sensitive data is entering and leaving your office, and how? And are you ready to be without your data for days and even weeks in the event of a disaster? Our technology-focused conference sessions will offer an excellent forum to learn about the risks and opportunities associated with exchanging, storing and using data. That alone is worth the price of admission.
Looking forward to seeing you in September.
(Both of the articles mentioned, "Down and Out With Public Risk Managers" and "Comp Claim Costs: Economy Will Challenge Industry in '10" (the Avizent study) can be found at www.riskandinsurance.com
New Legislative Report Available to CAJPA Members
By Julianne Broyles, California Advocates, CAJPA Legislative Advocate
A new report has been created for CAJPA that shows all bills where CAJPA has taken a position of SUPPORT, OPPOSE, NEUTRAL, SPONSOR and WATCH-HIGH PRIORITY. The report includes both those bills marked as a "AA" priority bills, as well as those that are not. Priority bills are those where CAJPA submits position letters, testifies on the bills or works in coalitions with both business and private sector partner organizations to support or oppose legislation. Currently, CAJPA tracks nearly 200 bills and has taken active positions on 54 of those measures.
|New GASB Statements Impacting Governmental Entities|
Over the past year and a half, the Governmental Accounting Standards Board (GASB) has been busy issuing five new statements (Statement Nos. 54 -58). Effective dates range from immediate implementation to periods beginning after June 15, 2011. The following topics are covered in these new GASBs: No. 54 - Fund Balance Reporting and Governmental Fund Type Definitions; No. 55 - The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments; No. 56 - Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statements on Auditing Standards; No. 57 - OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans; and No. 58 - Accounting and Financial Reporting for Chapter 9 Bankruptcies.
The last standard that impacted so many of us was GASB Statement No. 45-Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. In fact for many smaller governmental agencies, 2009/10 represents the final phase of implementation for GASB 45.
Of all these new statements, only GASB Statement No. 54 will have a significant impact for the majority of governmental entities. The following paragraphs summarize the changes required by GASB 54 and the impact on your financial reporting.
Fund balance classifications will soon be reported in five new categories for governmental entities. GASB Statement No. 54 enhances the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. This Statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds.
Fund balance will be displayed in the following classifications depicting the relative strength of the spending constraints placed on the purposes for which resources can be used:
· Nonspendable fund balance-amounts that are not in a spendable form (such as inventory or prepaid expenses) or are required to be maintained intact (such as the corpus of an endowment fund).
· Restricted fund balance-amounts constrained to specific purposes by their providers (such as grantors, bondholders and higher levels of government), through constitutional provisions, or by enabling legislation.
· Committed fund balance-amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest-level action to remove or change the constraint.
· Assigned fund balance-amounts a government intends to use for a specific purpose, but do not meet the criteria to be classified as restricted or committed; intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority.
· Unassigned fund balance-amounts that are available for any purpose; these amounts are reported only in the general fund and includes all spendable amounts not contained in the other classifications.
Governments also are required to classify and report amounts in the appropriate fund balance classifications by applying their accounting policies that determine whether restricted, committed, assigned, and unassigned amounts are considered to have been spent. Disclosure of the policies in the notes to the financial statements is required.
This Statement also provides guidance for classifying stabilization amounts on the face of the balance sheet and requires disclosure of certain information about stabilization arrangements in the notes to the financial statements.
The definitions of the general fund, special revenue fund type, capital projects fund type, debt service fund type and permanent fund type are clarified by the provisions in GASB 54.
The requirements in this statement will improve financial reporting by providing fund balance categories and classifications that will be more easily understood. Elimination of the reserved component of fund balance in favor of a restricted classification will enhance the consistency between information reported in the government-wide statements and information in the governmental fund financial statements and avoid confusion about the relationship between reserved fund balance and restricted net assets.
For government agencies that use encumbrance accounting, significant encumbrances should be disclosed in the notes to the financial statements by major funds and nonmajor funds in the aggregate in conjunction with required disclosures about other significant commitments.
This statement is effective for financial statements for periods beginning after June 15, 2010. Early implementation is encouraged. Fund balance reclassifications made to conform to the provisions of this Statement should be applied retroactively by restating fund balance for all prior periods presented.
|Master Your Meetings: Robert's Rules in Real Life|
By Ann G. Macfarlane, Professional Registered Parliamentarian
When boards of directors are faced with difficult issues, it can be disconcerting to encounter deafening silence in the meeting. Wishing to go along with the consensus before any consensus has emerged, members are sometimes hesitant to speak up. There is a simple and effective way to counter this problem. The leader can go around the table, inviting each person in turn to give an opinion about the issue.
Some folks who don't yet have an opinion will pass, and that is fine. They are given another opportunity to speak at the end of the round, if they wish. But when specifically invited, members are often willing to venture a comment, an opinion, or a question. Even introverts who seldom pronounce their views may respond well to this procedure.
We have found that a quick round of comment using this method of discussion clarifies a group's current position. Perhaps the position is that more information is needed, or that there don't seem to be any reasonable alternatives to pursue, or that the obvious choice is too painful to accept. Any of these, while challenging, is better than dead silence.
The leader - president, chair of the board, or facilitator - may take part in the discussion too if the board is a small one. We recommend that the presider, the person running the meeting, speak after the other members have spoken. This counteracts the natural human tendency to defer to the person in authority. It also allows the presider to sum up what he or she has heard. This is important, since there will usually be a range of views, and sometimes discussion can wander off the track.
Our free article on this method, the "round robin," can be downloaded here for more details. We have found the round robin method benefits small boards. It makes meetings fair and efficient and guarantees a better-than-silence outcome.
Ann G. Macfarlane is a Professional Registered Parliamentarian. She is looking forward to speaking at the CAJPA Fall Conference. More information is available at www.jurassicparliament.com.
© Jurassic Parliament 2010
The Journal is a quarterly publication of the California Association of Joint Powers Authorities, a non-profit trade association formed in 1981 to serve as a communication and educational resource to California Joint Powers Authorities.
Jan DeGracia, Executive Director, North Bay Schools Insurance Authority
Jenifer A. McDonald
P.O. Box 255431 · Sacramento, CA 95865-5431
Phone: (916) 485-5875 · Fax: (916) 487-7105 · www.cajpa.org
|Remembering Jeff Stevens, City of Santa Ana|
Jeff (shown center) with friends and colleagues Tom Phillips and Tom Vance
Jeff Stevens, longtime member of CAJPA's Legislative Committee passed away on July 13, just a short time after being diagnosed with cancer.
Our sincere and heartfelt sympathy is extended to Jeff's family and friends.
|2010 Fall Conference Exhibitors
Acclamation Insurance Management Services, Inc. (AIMS)
Alliant Insurance Services, Inc.
American Fidelity Assurance Company