TASB Risk Management Fund Renewal Rates
By Dubravka Romano
Because we know this year has been especially difficult from a budgetary perspective, we want to provide some early indications of what members can expect in terms of renewal rates from the TASB Risk Management Fund. At its meeting last month, the Fund’s Board of Trustees directed TASB staff to develop a funding and rating plan for 2011-12, which uses the Fund’s Members’ Equity to provide budgetary relief and stability to Fund members over the coming biennium. The following is how that plan will affect members of the respective programs:
Workers’ Compensation and Property/Liability
The Fund has enjoyed very broad membership support and financial success over the past decade, and the Fund Board wishes to use the results of the Fund’s successful operations to provide budget relief to members of the workers’ compensation and property and liability programs during these difficult budgetary times by:
- Using the Fund’s Members’ Equity to reduce costs through subsidized rates and Members’ Equity credits
- Freezing fees for services charged by the Fund for self-funded members
- Offering two-year rate guarantees to members with loss ratios of 75 percent or less
As a result of the above actions, most Fund members will see a reduction in their overall costs of coverage for the coming year (absent changes in exposures, such as total insured values, numbers of vehicles, ADA, or payrolls). Increases or decreases in exposures will have a corresponding impact on overall costs.
Unemployment Compensation
The continued uncertainty about the level of state funding for public education and the resulting impact of the proposed budget cuts on school district staffing makes it very difficult to provide any indications for the Fund’s unemployment compensation (UC) program at this time. The Fund continues to explore all options to determine what kind of coverage and at what cost it may be able to offer next year.
Though unlikely, there is a possibility that the state budget difficulties could impact the Fund’s UC program this year. Because the Fund’s UC program has over 960 members, widespread layoffs by member districts could have a significant impact on the Fund’s financial position. Based on responses to our survey, we anticipate unemployment compensation claims may be as much as $70 million this fiscal year. That amount far exceeds this year’s contributions to the UC program, which are approximately $14 million. Fortunately, the Fund is in a very strong financial position with over $186 million in Members’ Equity and the Fund Board is prepared to use as much Members’ Equity as feasible to meet our members’ unemployment compensation benefit obligations for this year.
The Fund Board is prepared to use as much Members’ Equity as feasible to meet our members’ unemployment compensation benefit obligations for this year.
However, if legislative budget cuts require greater layoffs than expected and unemployment compensation claims over the summer exceed current projections, the Fund may be required to recalculate current year contributions as permitted by the Interlocal Participation Agreement. If such a recalculation were required, members will be notified no later than mid-July, and the additional payment would be due in November 2011 after the final Fund year claim payments are calculated by the Texas Workforce Commission. The adjusted contribution would be based on each district’s claims and not those of other members of the Fund. If the Fund does adjust contributions, members will have the option of terminating membership in the UC program in lieu of paying the adjusted contribution.
We believe this action is highly unlikely, but wanted to alert UC members of the possibility so you can plan accordingly. TASB staff can assist in determining whether your district is likely to be impacted by the possibility of a contribution adjustment based on staffing and layoff plans.
Timeline for Delivery of Renewal Proposals
The TASB Risk Management Fund Board of Trustees will meet in a special Board meeting on June 2, 2011, to approve the final funding plan and renewal rates for 2011-12. Renewal proposals for all coverage renewing on September 1, 2011, will be delivered no later than July 1st. Information about unemployment compensation coverage for 2011-12 will be available the first week of August.
We are pleased to be able to provide budgetary relief and stability for workers’ compensation, property, and liability coverage to our members during these very challenging times and we remain optimistic that no contribution adjustments will be needed for the UC program in the current year. As always, please feel free to contact us at 800.482.7276 if you have questions or need additional information. We value your participation in the TASB Risk Management Fund and look forward to continuing to work with you in the coming year!
