CENTRAL REGION SCHOOL INSURANCE GROUP ANNUAL REPORT AS OF JUNE 30, 2017

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1 CENTRAL REGION SCHOOL INSURANCE GROUP ANNUAL REPORT AS OF JUNE 30, 2017

2 Contents Letter from the Executive Director... 3 Governance /17 Membership... 5 Year in Review... 6 Financial Position... 8 Operating Budget... 9 Investment Workers Compensation Program Property and Liability Program Dental Program Vision Program Member Services... 22

3 Letter from the Executive Director Dear CRSIG Members: Thank you for your continued support of CRSIG for the past 36 years! We are pleased to present you with our 2016/17 Annual Report, which provides detailed information on each of our programs. We have had a very busy and productive year diligently working on services and programs to enhance our value to our members, your employees and students. Our Mission The mission of the Central Region School Insurance Group is to pursue excellence in the protection of students, advocacy of staff and the provision of services for the safety and health of all who enter member sites. Adopted December 7, 2007 CRSIG was established in 1980 as a solution for the insurance crisis by creating a self-insured Workers Compensation program. We have evolved to a JPA providing Workers Compensation, Property, Liability, Dental and Vision insurance coverage and risk management services for 31-member school districts, their employees and students in Stanislaus and Merced counties. We have encountered many challenges along the way, however with the guidance and input of our Executive Committee and Board members, we were able to work through these challenges successfully while maintaining our core values and remaining a financially sound entity that has been able to reward its members in the form of dividends over the years. Headed towards our fourth decade, we will be implementing Strategic foresight, bringing a future-forward mindset to assist members with emerging risk exposures resulting from generational, technological, governmental, economic, social, environmental and political trends by understanding how these issues will affect our members and creating services and programs to address those issues. We will continue to evolve to remain a relevant resource for our members in the future. Thank you to each of the CRSIG members, the Executive Committee, Board members, staff and business partners for your efforts, commitment and support of CRSIG. Sincerely, Susan Adams Executive Director

4 Governance Board of Directors CRSIG is governed by a Board of Directors, which is comprised of one representative from each participating member. Each member has one (1) vote. The Board meets twice a year, in May to set rates and in the fall for a Member Forum meeting. Executive Committee The ongoing business of the JPA is carried out by the Executive Committee consisting of seven (7) members and two (2) alternates. These positions are elected biennially, except the Secretary, which is appointed by the Board. The Chief Business Officer of the Stanislaus County Office of Education serves as the Treasurer- Auditor of the Board and the Executive Committee, and is a regular voting member of each of these bodies. The Executive Committee meets regularly throughout the year. Scott Siegel President Twila Tosh Vice President Don Gatti Treasurer Susan Adams Secretary Mike Trainor Member Susan Dyke Member Paul Gardner Member Randy Fillpot Member Robert Perez Member Erik Lee Member Ceres Unified School District Salida Union School District Stanislaus County Office of Education CRSIG Turlock Unified School District Oakdale Joint Unified School District Hickman Community Charter School Newman-Crows Landing Unified School District Riverbank Unified School District Waterford Unified School District

5 2016/17 Membership CRSIG Member Property & Liability Workers' Compensation Vision Dental Central Region School Insurance Group Ceres Unified School District Chatom Union School District Denair Unified School District

6 Dos Palos-Oro Loma Unified School District El Nido School District Empire Union School District Gratton School District Gustine Unified School District Hart-Ransom Union School District Hickman Community Charter District Hughson Unified School District Keyes Union School District Knights Ferry School District Le Grand Elementary School District Le Grand High School District Newman-Crows Landing Unified School Oakdale Joint Unified School District Paradise Elementary School District Patterson Unified School District Plainsburg School District Planada Elementary School District Riverbank Unified School District Roberts Ferry Union School District Salida Union School District Shiloh School District Snelling-Merced Falls Union School District Stanislaus County Office of Education Stanislaus Union School District Turlock Unified School District Valley Home Joint School District Waterford Unified School District Total Participants: Year in Review Over the 2016/17 Program Year, CRSIG enjoyed numerous successes. A few program highlights are as follows: Workers Compensation rates decreased 3% from $1.97 to $1.92 per $100 of payroll.

Property & Liability rates for the self-insured layer remained flat while the excess liability rate increased 64% due to catastrophic liability claims in the national school sector.

7 Property & Liability rates for the self-insured layer remained flat while the excess liability rate increased 64% due to catastrophic liability claims in the national school sector. Dental and Vision rates remained same as the previous year. Total Operating revenues increased 7.35% from the prior year to $20,174,419. Investment Income decreased % or $765,737 to ($74,423). Total operating expenses increased 9.3% or $1,545,007 from the prior years a primarily due to an increase in claim expenses of $1,063,988. Total Assets increased 8.6% an increase of $3,560,461 to $44,976,530. Total Liabilities increased 8.36% an increase of $1,979,994 to $25,665,666. Total Net Position increased 8.91% an increase of $1,580,467 to $19,310,864. JPA Admin, $95,224 Property & Liability, $5,087,535 Vision, $798,464 Dental, $2,535,920 Workers' Compensation $36,459,387 Total Assets by Program June 30, 2017

8 Financial Position Condensed Statement of Net Position June 30, 2017 June 30, 2016 % Change Current assets: $ 12,821,789 $ 10,494,237 22% Non-current assets: 32,154,741 30,921, % Total Assets 44,976,530 41,416, % Current liabilities: 7,324,815 7,363,808 99% Non-current liabilities 18,340,851 16,321, % Total Liabilities 25,665,666 23,685, % Net Position Invested in capital assets 1,078,044 1,106,829 97% Unrestricted 18,232,820 16,623, % Total Net Position $ 19,310,864 $ 17,730, %

9 Condensed Statement of Revenue, Expenses, and Change in Net Position 6/30/2017 6/30/2016 % Change Operating Revenues: $ 20,174,419 $ 18,803,590 7% Operating Expenses $ 18,549,844 $ 17,004,837 9% Operating Income (Loss) $ 1,624,575 $ 1,798,753-10% Non-Operating Income ($74,423) $ 688, % Change in Net Position $ 1,550,152 $ 2,487,067-38% Net Position - Beginning of Year $ 17,760,712 $ 15,243,330 17% Net Position - End of Year $ 19,310,864 $ 17,730,397 9% Operating Budget CRSIG s annual budget utilizes management estimates and actuarial projections to determine necessary funding for it s programs to pay anticipated claims, insurance expense, risk management expense professional fees and general and administrative services. These costs determine the amount of contributions to be collected from the membership at the beginning of each Program Year. The programs included in this annual budget process include: Workers Compensation Property Liability Dental Vision CRSIG Administration The chart below reflects the actual Operating Expenses per program for the Fiscal Year ending June 30, 2017.

10 Program Operating Expenses JPA Admin. 0% Dental 33% Vision 5% Workers' Comp, 40% Property & Liability 22% Workers' Comp, Property & Liability Medical Dental Vision JPA Admin.

Investment Expected Claims CRSIG funds the pooled portion of the coverage programs with projected loss rates calculated by our actuary.

The Workers Compensation program is funded at expected discounted at 3% for investment income on those funds and the Propety & Liability at 70% confidence level, discounting those funds at 2.

Total Assets by Type as of June 30, 2017 Investing CRSIG s funds are invested in compliance with CRSIG s Investment Policy with guidance from an Investment Manager and CRSIG s Treasurer and reviewed

12 Investment Expected Claims CRSIG funds the pooled portion of the coverage programs with projected loss rates calculated by our actuary. The funding includes projected current year expected losses in addition to the projected cost to pay for all prior years expected losses and incurred but not reported (IBNR) claims. The Workers Compensation program is funded at expected discounted at 3% for investment income on those funds and the Propety & Liability at 70% confidence level, discounting those funds at 2.5% for investment income. Total Assets by Type as of June 30, 2017 Investing CRSIG s funds are invested in compliance with CRSIG s Investment Policy with guidance from an Investment Manager and CRSIG s Treasurer and reviewed quarterly with the Executive Committee. The purpose of the Investment Policy is to achieve an optimum rate of return, with consideration to the security of the available funds not obligated for current operations. Funds shall be invested consistent with good fiscal practice and a concern as to the source of the available funds for investment. CRSIG Portfolio Summary June 30, 2017 Prepaid Expenses, 0% Accounts Rec. & Other, 0% Capital Assets, 2% Cash & Equivalents Asset Backed Securities US 15% Government Related 2% Mortgage Obligation 4% US Treasury 62% Investments, Medium Term Corporate Notes 17%

13 In October 2007, CRSIG established a policy for monitoring fund balances above and below specified targeted equity levels. The purpose of the target is to ensure that each program is funded at an ultra-conservative level to avoid future assessments and provide security around the issuance of any rebates or dividends. TARGET EQUITY 2016/17 As of June 30, 2017 TARGET OBJECTIVES IN PRIORITY ORDER WORKERS' COMPENSATION PROPERTY & LIABILITY DENTAL VISION #4 PROGRAM CHANGES: WC- Min. $1 million, Max. $2 million $2,000,000 P&L- Min. $250,000, Max. $500,000 $250,000 Dental - None $0 Vision - None $0 #3 RATE STABILIZATION: WC - 10% of total funding required $863,513 P&L - 10% of total funding required $360,088 Dental - None $0 Vision - None $0 #2 CATASTROPHIC LOSSES: WC - 10 SIR losses $10,000,000 P&L - 4 SIR property & 4 SIR liability losses $1,400,000 Dental Annual $2, $400,000 Vision - $100,000 $100,000 #1 INCREASED CONFIDENCE LEVEL: WC- 90% Confidence Level (prior & current yr) $8,200,000 P&L- 90% Confidence Level (prior & current year) $1,861,000 Dental - 1/2 Total Required Reserves $334,628 Vision - 1/2 Total Required Reserves $54,885 Year End 6/30/17 Net Position: 14,593,035 2,031,795 1,994, ,718 Increased Confidence Level 8,200,000 1,861, ,628 54,885 Catastrophic Losses 10,000,000 1,400, , ,000 Rate Stabiliation 863, , Program Changes 2,000, , Total Target Equity Funding: 21,063,513 3,871, , ,885 Funding Above/(Below) Target Equity: (6,470,478) (1,839,293) 1,259, ,834

14 Workers Compensation Program The Workers Compensation program was the foundation for CRSIG, being the first coverage program offered to members in During the past 36 years, CRSIG s Workers Compensation program has gone through numerous changes, from self-insured to fully insured and back to being self-insured. The current program is a blend of pooling the first $1,000,000 of each claim and purchasing excess statutory coverage. CRSIG currently has 23 members participating in this program. The Workers Compensation program saw a significant improvement in claims expense during the 16/17 year resulting in an increase of $1,434,990 to the Ending Net Position. CRSIG contracted with Pegasus Risk Management effective July 1, 2016 to administer Workers Compensation claims. We have enjoyed a very favorable relationship with the claims administration staff and Status Investigations that has resulted in two insurance fraud convictions. The Company Nurse reporting program continues to return significantly higher self-care results when compared to other Company Nurse employers. For the period July 1, 2016 June 30, 2017, 47% of our employees recorded incident only reports while 53% of the employees were referred for medical care. 98 Employees enter into Temporary Assignments in Our Return To Work program. 90% of our injured employees were returned to full duty within 31 days while 10% that remained in modified assignments the average length of time in modified assignments was 46 days. The success of this program is a direct result of your efforts and support to CRSIG and we are very appreciative. $30,000,000 WC Program Fund Net Position $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Fund Equity Rebates

15 Workers Compensation Program The graph below illustrates the financial positon of the Worker s Compensation Program at the end of the Fiscal Year for each of the last seven Program Years. Workers' Compensation Program Financial Position at the end of Fiscal Year $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- 2010/ / / / / / /17 Revenue Expenses Equity

16 Workers Compensation Program July 1, 2017, CRSIG entered into a contract with Pegasus Risk Management to administer Worker Compensation claims. For the year ending 6/30/17, we saw a decrease in total claims of 464 during the 2015/16 year to 426 in 2016/17 year while employees increased from 14,472 to 15,598 during the same time period. We also experienced a decrease in open claims and indemnity claims. During this past year, we obtained insurance fraud convictions on two claims. 150 Open Claims Inventory / / / / / / /17 First aid Indemnity Medical only Total Comparision of Number of Employees to Number of Workers' Compensation Claims 20,000 15,000 10,000 5, / / / / / / / / / /17 # of Employees # of Claims

17 Workers Compensation Program CRSIG Return to Work Program In October 2008, CRSIG implemented a nurse staffed call-in phone line to triage injured workers into self-care or medical treatment. We also implemented an in-house Return to Work program to assist our injured workers into a temporary or modified position during their recovery, which has resulted in Temporary Disability Savings to our members. $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $ Return to Work Temporary Disability Savings / / / / / / / / /17 TTD Savings # of EE's in RTWA Average Days in RTWA

18 Property and Liability Program The Property and Liability Pool was established July 1, CRSIG self-insures or retains the first $250,000 per Liability claim and the first $100,000 per Property claim. Members have a $1,000 or $2,000 deductible, which is determined on ADA. CRSIG retained layer rates that fund the self-insured layers did not increase during the 2016/17 year. The excess liability rates however did increase 64% due to the reinsurance market, which has incurred catastrophic claims resulting from concussions, sexual molestation and employment practices claims. The excess property insurance rate remained the same as expiring. Overall, the total contributions for all members increased 15.00% due to excess liability rates, an increase in the Total Insured Values (TIV) of 2.5% and an increase in ADA of 3% for the 30 members of the program. July 1, 2014, CRSIG purchased Cyber Liability coverage for members of this program from CSAC-EIA JPA. This program provides members with comprehensive electronic information and security liability coverage. Coverage provided includes Information Security and Privacy Liability, Privacy Notification Costs, Regulatory Defense and Penalties, Website Media Content Liability, Cyber Extortion and First Party Data Protection. Net Position decreased $103,564 to $2,031,795 as of June 30, Claims expense increased $370,384 due to paid claims. $4,100,000 $3,700,000 $3,300,000 $2,900,000 $2,500,000 $2,100,000 $1,700,000 $1,300,000 $900,000 $500,000 $100,000 Property & Liability Program Net Position

Property and Liability Program The graph below illustrates the net position of the Liability Program at the end of the Fiscal Year for each of the last ten Program Years.

19 Property and Liability Program The graph below illustrates the net position of the Liability Program at the end of the Fiscal Year for each of the last ten Program Years. Property & Liability Program Financial Position at end of Fiscal Year $4,500,000 $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- 2007/ / / / / / / / / /17 Revenue Expenses Equity 60,000 ADA (Average Daily Attendance) 2,000,000,000 1,800,000,000 TIV (Total Insurable Value) 1,600,000,000 1,400,000,000 1,200,000,000 1,000,000, ,000, ,000, ,000,000 40, ,000,000 0

20 Dental Program CRSIG Dental pool was established January 1, 1983 with 15 members with Delta Dental. Currently there are 19 members. This has been a very successful program for our members. The program was renewed with Delta Dental without a rate increase for the 6 th straight year. Rates have not increased since Equity increased from $1,853,234 to $1,994,361for the fiscal year ending $3,000,000 Dental Pool Fund Net Position $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $- $(500,000) This graph illustrates the net positions of the Dental Program at the end of the fiscal year for each of the last ten years. $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Dental Program Financial Position at end of Fiscal Year $- 2007/ / / / / / / / / /17 Revenue Expenses Equity

21 Vision Program Due to our continued excellent loss history and financially stable partners, we were able to continue this program with no changes to the rates for the thirteenth year in a row and equity continues to increase to $561,718 as of June 30, $900,000 $800,000 $700,000 Vision Pool Fund Net Position $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- This graph illustrates the net positions of the Vision Program at the end of the fiscal year for each of the last ten years. Vision Program Financial Position at end of Fiscal Year $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $- 2007/ / / / / / / / / /17 Revenue Expenses Equity

22 Member Services WHO TO CONTACT SITE SAFETY Contact Terri Prichard to set up Site Safety Inspections (Terri will conduct) Playground Safety Inspections Science Chemical Inventory / Disposal Contact Angela Jacobson to set up Air Pressure Vessel Inspections (Travelers) StopIt! App program Sharps / Medication Disposal INJURY & ILLNESS PREVENTION PROGRAM Terri Prichard will Provide Quarterly Safety Newsletters Personal Protective Equipment Consultation Angela Jacobson/Susan Adams will provide Safety Committee Consult/Assistance Safety Stickers / Labels/Posters Safety Posters - CRSIG CRSIG WEBSITE Helpful Links to carriers, agencies & codes TRAINING Contact Terri Prichard to set up General Safety Training Safe Lifting Classes Ergonomic Classes Illness & Injury Prevention Program (IIPP) Heat Injury and Illness Prevention Hazardous Comm. Program Contact Angela Jacobson to set up DOT Supervisor/Reasonable Suspicion CPR / First Aid Training Forklift Certification Utility Cart Certification Safety Training Video Library AB 1825 Sexual Harassment Prevention Target Solutions On Line Training EVALUATIONS Contact Terri Prichard to set up Ergonomic Workplace Evaluations Noise Level Testing Indoor Air Quality (IAQ) News & Forms Heads Up/Risk Management Guidelines Hazardous Conditions form for all programs INCENTIVE PROGRAMS Contact Susan Adams for reimbursement Safety Incentive Funding Program Safety Credit Program Contact Angela Jacobson for assistance DOT Random Drug & Alcohol Testing Pre-Employment Physicals Terri Prichard Prichard Health & Safety (209) /(209) Terri@prichardsh.org Angela Jacobson CRSIG (209) ext angela@crsig.com Susan Adams CRSIG (209) ext susan@crsig.com

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