TRAILBLAZING THE ROAD TO SUCCESS

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1 Annual Report TRAILBLAZING THE ROAD TO SUCCESS 550 Ellinwood Way, Pleasant Hill, CA Phone: 1 (866) Fax: (925)

2 JPA ADMINISTRATION 2016/17 Member Letter Contra Costa County Schools Insurance Group (CCCSIG) reached a milestone in July - celebrating the 40 th anniversary since the formation of the Group in 1977, and the 22 nd anniversary of self-administration. The success CCCSIG has experienced over the years is due to the commitment and dedication of our member districts, who continue to embrace the many education, prevention and cost containment programs and services offered by the Group. Also key to our success and longevity is the strength and expertise of the internal resources of CCCSIG s staff and management team. This year, CCCSIG will continue to explore and implement enhancements to many of the internal work functions within the workers compensation claims system. The changes will streamline many aspects of the workers compensation claims process and will enhance communication between CCCSIG and the District Claim Coordinator when an injured employee is eligible for the Early Return-to-Work Program. On the prevention side, the Health & Safety Services department remains proactive in identifying injury trends, along with being responsive to members education and prevention needs. Through technological opportunities, the Post Offer Pre-Employment Strength Testing Program will also experience enhanced workflow efficiencies. With the implementation of the new Oasis application, the registration and tracking of CCCSIG s Health and Safety on-demand videos and trainings will be a much more user friendly process. The Group s continued financial strength has provided much stability to our members through the years and CCCSIG is committed to maintaining its financial strength well into the future. CCCSIG is looking forward to another productive and positive year working collectively with its members in providing a safe and healthy school workplace! Eugene Huff, Board President, Executive Vice-Chancellor, Administrative Services/CCC College District Bridget Moore, Executive Director/Contra Costa County Schools Insurance Group Claims per Million $ of Payroll Workers Compensation Premium Contributions (Millions) *Estimated

3 JPA ADMINISTRATION Ultimate Estimated Incurred Costs & Total Incurred Costs (as of 6/30/17) FINANCIAL UPDATE 2016/17 It s been ten years since the economic downturn started, and our Member Districts have dealt with the budget cuts and other financial issues that have ensued over the following years. Things are starting to look up, but the effects of the downturn are still being felt, and may continue to be for the next couple of years or more. CCCSIG is proud to have been able to help our members during these difficult times, returning just under $15.6 million of equity, and we are hoping to continue to be a bright spot for the districts financially in the future! Since ending the 2008/09 year with a Net Position (Equity) of $24.7 million, CCCSIG has dealt with multiple issues that have affected the equity of our agency. Due to the fact that it may take 35 years or more for CCCSIG to pay out the claims costs for any given fiscal year, CCCSIG is able to invest the remaining premiums to increase the funds available for future payments. This allows us to discount our claims liabilities, which lowers the liabilities to account for the anticipated future year interest earnings. CCCSIG had used a discount rate of 4% up until 2009/10 (with historical investment earnings being even higher than that rate); however the investment market was obviously greatly affected by the downturn, and this resulted in having to lower our discount rate over the next few years to 2.79%. This reduction resulted in an increase in our claims liabilities, which decreased our equity by $4.8M. In 2014/15, GASB 68 required agencies to record pension liabilities on their financial statements, which for CCCSIG meant a reduction in equity of an additional $3.4 million. Having returned the equity to our members, along with the lowering of the discount rate, and the GASB 68 liabilities, CCCSIG could have had our equity lowered by $23.8 million over this time period. Fortunately, we continued to have strong operational results through these years, which resulted in our Net Position only being lowered by $412,000 since 2008/09, ending 2016/17 at $24.2 million! For 2017/18, CCCSIG s Executive Committee has chosen to set the base rate at $2.12, which is lower than the 80% Confidence Level actuarially determined rate of $2.41, and returns an additional $3.0 million in equity to our members. As we are owned by our Member Districts, CCCSIG s Executive Committee and Board of Directors can continue to make the decisions that are the most beneficial to our members.

4 C C C S IG F IN A NC I A L OV E R V IE W F I S C A L Y E AR / 1 7 CCCSIG is a JPA (Joint Powers Authority) which allows government agencies to pool their purchasing power to achieve lower costs in areas such as Workers Compensation insurance. Our rates are determined by an Actuary, who takes a look at the historical loss rates of the Group, along with the Districts estimated annual payroll, to determine how much premiums need to be collected to cover the anticipated claims for that year. The Actuary will discount the total expected claims costs to recognize that the claims may not be fully paid out for up to 35 years or even longer, which means that a good portion of the premiums will be available to earn interest over that time. By discounting, the Actuary may calculate that it is necessary to collect $20M in premiums, even though the total expected claims costs may be $24M, recognizing that the funds will earn $4M in interest before all the claims must be paid. Each District s premiums are calculated based on the formula on page 2. The Actuary determines the Ex-Mods (Experience Modification factors) for the individual Districts by looking at their claims experience history for the previous 5 years and comparing it to the Group s average over that same period. The base rate for the Agency is determined by applying the individual Ex-Mods to generate the necessary premiums. Once the estimated premiums are determined for each district, they are collected based on the following schedule: 1 st Installment = 50% of estimated premium due July 1 st 2 nd Installment = 30% of estimated premium - due December 1 st 3 rd Installment = 20% of estimated premium due March 1 st At the end of each fiscal year, the Districts report their actual payroll to CCCSIG, who then either generates an invoice for additional premiums if the payroll ended up being higher than estimated, or gives a refund if the payroll was lower than estimated. In 2005 CCCSIG ended the year with a Net Asset Deficit of $10M. This deficit was caused by several events over the prior 10 years. The first was that the CA Workers Compensation market, as well as the nationwide market, experienced a huge unexpected increase in claims costs beginning in the late 90 s. These additional costs created a large financial strain on all WC insurance companies, as past policy years experienced claims costs that were far greater than the amount of premiums that had been collected for those years. These unexpected costs were not immediately noticeable as claims develop over several years. At the same time that this downturn began, there was a trend with JPA s of giving rebates to their members, as they found themselves with what appeared to be excess funds because the prior years costs had not developed as high as originally expected. CCCSIG declared rebates in 1997, 1998 and 2000 totaling $20M. What is important to remember is that the agencies rely not only on having the premiums they collected available to pay claims costs, but on the interest those premiums earn in the interim. So not only did the rebates reduce CCCSIG s equity by $20M, but there was over $5.0M of additional Interest (assuming an interest rate of 3.5%) that would have been earned over that time (through 2005) which would have increased its equity position. It is obviously not possible to go back, but it is important to understand that had the rebates not been given, CCCSIG not only would have weathered the severe downturn in the WC market without having a deficit, but would have still had close to $15M in Net Assets at the end of This helps in illustrating that it was not an operational shortcoming of CCCSIG, or its funding model, that created this deficit, which would typically be the case for most insurance organizations. In response to the Net Asset Deficit position that CCCSIG found itself in, CCCSIG s Board of Directors voted to declare a Net Asset Deficit Assessment in March of This began by re-characterizing $2.2M that had been collected in 05/06 for a Rate Stabilization Fund as the 1 st installment of the Assessment. The remaining $7.9M was to be collected over the next 10 years. After collecting an additional $1.6M over the following two years, CCCSIG ended the 07/08 fiscal year with excellent news. Due to very positive results in the March 26, 2008 actuarial study, along with a focus on settling claims for less than the liabilities reserved for those claims, the Board of Directors voted to suspend the Deficit Assessment! Even after removing the remaining $6.3M Assessment Receivable from the books, CCCSIG ended the 2008 fiscal year with $16.3M in Total Net Assets. CCCSIG had some more positive news in the 2009 fiscal year, adding an additional $8.4M in surplus, bringing the Groups Net Assets to $24.7M.

5 This remarkable turnaround over a 4 year period provided the Group with a strong level of Net Assets, large enough that the Board of Directors decided to declare a $3.5M rebate in the 2010 fiscal year! Even after providing this rebate to the members, CCCSIG ended the year with $24.6M in Net Assets, due to a surplus for 2009/10 of $3.4M prior to the rebate. With the Net Assets remaining at such a strong level after 09/10, the Executive Committee decided to lower the 10/11 base rate from $2.43 to $1.95, with the intent of returning an additional $4.0M of equity growth/equity to the members. There was an additional lowering of the Net Assets as of 6/30/11 due to the deterioration of the investment market, which necessitated lowering the discounting of claims liabilities by $3.4M (from 4% to 3.13%), which was partially offset by some positive ultimate claims cost development, leaving $17.8M in Net Assets. The Executive Committee decided to lower the base rate again in 11/12, from $2.41 to $1.95, with the intent of returning an additional $3.8M of equity growth/equity to our members during these difficult financial times. The continued poor performance in the investment market resulted in another lowering of the claims liabilities discounting of $1.1M (from 3.13% to 2.89%), but we had some more positive claims results during the year which helped offset these, allowing us to end the year with $14.7M in Net Assets. For 12/13 the Executive Committee decided to start moving the rate back towards the actuarially determined rate, but still wanted to help the members by returning some more equity growth/equity. They reduced the base rate from $2.58 to $2.32, returning another $2.1M. The deterioration of the investment market had slowed during this fiscal year, so we only had to lower the discounting of claims liabilities by $98k (from 2.89% to 2.79%). CCCSIG continued to have strong operational results in 12/13, which was evidenced by the equity only being reduced by $21k for the year, when it could have been lowered by as much as $2.2M($2.1M equity return + $98k discount rate reduction). For 13/14, the Executive Committee chose to set the base rate at the $2.52 rate that was determined by the Actuarial Report. CCCSIG had another strong year, ending with a $3.3M surplus from operations. The investment market stabilized this year, which allowed CCCSIG to keep our discount rate at 2.79%, so we ended the fiscal year with an $18.0M Net Position (Net Assets). For 14/15, the Executive Committee again set the base rate to the rate determined by the Actuarial Report, which was $2.62. The investment market remained stable, so we maintained the 2.79% discount rate. CCCSIG had another operational surplus, $2.2M for this fiscal year, which was offset by the requirement of GASB 68 to record the outstanding pension liability through a prior period adjustment. Overall this resulted in a $200k increase to our Net Position, ending the year with $18.2M in Net Assets. The Executive Committee set the base rate for 15/16 at $2.47, choosing to go half way between last year s rate of $2.62 and the $2.32 rate determined by the actuarial study. This was done to capture some of the indicated positive development, while recognizing that the study was completed by a new actuarial firm, with the thought being that we should give the new firm time to make sure the study is stable. The investment market remained much the same, with some indications of improvement, so CCCSIG has stayed with the 2.79% discount rate. CCCSIG generated an operational surplus in 15/16 of $5.1M, increasing our Net Position to $23.3M. The base rate for 16/17 was set by the Executive Committee at $2.32, which used an estimated $2.2M of Equity Growth/Equity to lower the actuarially determined rate of $2.54. Part of the reason this was done is that we changed our payroll reporting from the 941 payroll tax returns to the Gross Payroll paid(an increase of approximately 7-9% in payroll), which means expected losses will be spread over a higher amount of payroll, effectively lowering the actuarially determined rate. CCCSIG stayed with the 2.79% discount rate in 16/17, remaining conservative about the investment market s future earnings. CCCSIG generated an operational surplus of $955k in 16/17, which increased our Net Position to $24.2M. It is important to note that since 09/10, CCCSIG has been able to return $15.6M to our members during these difficult financial times, as well as absorb the effects of the deterioration of the investment market which negatively impacted our equity by $4.8M, and further reducing equity by another $3.4M due to the new requirement to book the pension liability, with our equity ultimately only being reduced by $412k during that time!

6 Premium Formula FY18 Estimated Payroll / 100 X Base Rate X Ex-Mod Factor = FY18 Estimated Premium

7 $750k SIR APPROVED WC Overall Rate of $ PAYMENT SCHEDULE EX-MOD 1-Jul-17 1-Dec-17 1-Mar-18 PAYROLL FACTOR BASE ESTIMATED PREMIUM ESTIMATE (2017 WCIRB RATE PREMIUM Premium Advance DISTRICT formula) $ % 30% 20% Acalanes 41,716, % , , , , ,723 Antioch 98,928, % ,123,992 3,123,992 1,561, , ,798 Brentwood 53,076, % ,033,755 1,033, , , ,750 Byron 10,392, % , , ,878 74,927 49,951 Canyon 460, % ,497 8,497 4,249 2,549 1,699 CCC Office of Ed. 35,688, % , , , , ,709 John Swett 10,448, % , ,427 80,714 48,428 32,285 Knightsen 3,458, % ,385 65,385 32,693 19,616 13,076 Lafayette 24,500, % , , , ,271 76,847 Liberty 46,522, % ,233,445 1,233, , , ,688 Martinez 25,729, % , , , ,097 67,398 Moraga 12,885, % , ,895 98,448 59,069 39,378 Oakley 27,353, % , , , , ,841 Orinda 18,100, % , , ,482 91,489 60,992 Pittsburg 65,856, % ,526,920 1,526, , , ,384 Walnut Creek 22,398, % , , , ,617 81,744 COE Total $497,514,982 $11,116,351 $11,116,351 $5,558,181 $3,334,907 $2,223,263 CCC College 121,500, % ,364,753 1,364, , , ,950 San Ramon 201,900, % ,406,053 3,406,053 1,703,027 1,021, ,210 West Contra Costa 200,535, % ,737,561 5,737,561 2,868,781 1,721,268 1,147,512 TOTAL $1,021,450,729 $21,624,718 $21,624,718 $10,812,366 $6,487,417 $4,324,935 $2.41 actuarially determined base rate at 80% Confidence Level(CL) $24,624,718 Estimated use of Equity $2.12 base rate $3,000,000

8 PR PR % PR % PR % DISTRICT Actual Actual CHANGE Actual CHANGE ESTIMATE * CHANGE Acalanes Antioch Brentwood Byron Canyon CCC College CCC Office of Ed. John Swett Knightsen Lafayette Liberty Martinez Moraga Oakley Orinda Pittsburg San Ramon Walnut Creek West Contra Costa TOTALS 34,424,037 36,454, % 41,364, % 41,716, % 88,952,259 95,913, % 111,473, % 98,928, % 41,140,814 45,349, % 54,358, % 53,076, % 8,979,388 9,814, % 11,821, % 10,392, % 402, , % 522, % 460, % 109,046, ,681, % 133,950, % 121,500, % 30,909,437 31,780, % 34,770, % 35,688, % 8,096,354 9,178, % 10,214, % 10,448, % 2,439,867 2,692, % 3,129, % 3,458, % 18,928,504 19,443, % 24,610, % 24,500, % 36,637,978 39,455, % 48,858, % 46,522, % 22,042,591 24,026, % 27,233, % 25,729, % 10,665,586 10,977, % 13,349, % 12,885, % 24,974,150 26,291, % 32,713, % 27,353, % 15,390,807 16,040, % 18,860, % 18,100, % 56,192,930 62,799, % 76,423, % 65,856, % 160,444, ,932, % 200,770, % 201,900, % 17,033,594 19,656, % 22,356, % 22,398, % 157,410, ,874, % 194,587, % 200,535, % $ 844,111,496 $ 903,742, % $ 1,061,366, % $ 1,021,450, %

9 DISTRICT EX-MOD EX-MOD % CHANGE Acalanes 68.2% 71.1% 4.3% Antioch 161.8% 149.0% -7.9% Brentwood 90.2% 91.9% 1.9% Byron 132.7% 113.4% -14.5% Canyon 73.1% 87.0% 19.0% CCC College 55.3% 53.0% -4.2% CCC Office of Ed % 118.8% -7.2% John Swett 65.0% 72.9% 12.2% Knightsen 69.8% 89.2% 27.8% Lafayette 76.6% 74.0% -3.4% Liberty 124.6% 125.1% 0.4% Martinez 79.1% 61.8% -21.9% Moraga 73.5% 72.1% -1.9% Oakley 87.4% 95.6% 9.4% Orinda 75.8% 79.5% 4.9% Pittsburg 112.3% 109.4% -2.6% San Ramon 75.7% 79.6% 5.2% Walnut Creek 87.2% 86.1% -1.3% West Contra Costa 125.9% 135.0% 7.2%

10 Millions Selected CCCSIG Historical Financial Data Analysis of Audited Statements of Net Assets $120 $100 $80 $60 $40 $20 $- $(20) * 2006* 2007* Total Assets Total Liabilities Net Assets * CCCSIG adopted the SIP reserving policy in 2005, which resulted in a large increase in reserves, but were not adjusted for in the Actuarial Study until 2008.

11 Millions Selected CCCSIG Historical Financial Data Analysis of Audited Statements of Activity(WC Only) $40 $30 $20 $10 $- $(10) $(20) *2011 *2012 * *2017 Revenues Expenses Rebates Annual Surplus/(Deficit) *Equity Growth/Equity was used during these years to lower the premiums for members.

12 Fiscal Year Budget WC HB TOTAL Contributions $21,624,718 $20,850,000 $42,474,718 Miscellaneous 359,500 7, ,000 Total Income $21,984,218 $20,857,500 $42,841,718 Claims and Operating $20,629,355 $20,850,000 $41,479,355 Salaries and Benefits 3,326, ,326,787 Other Administrative 863, ,076 H&S Incentive Rebate 165, ,000 Total Expense $24,984,218 $20,850,000 $45,834,218 Net Asset Increase (Decrease) -3,000,000* 7,500-2,992,500 *Estimated use of Equity Growth/Equity to reduce premiums

13 Fiscal Year Budget WC PROGRAM INCOME WC PROGRAM EXPENSES WC Premiums 98.4% Claims Costs 76.7% Miscellaneous Income 1.6% BR Dept Admin Dept 1.1% 7.6% General Dept 1.5% H&S Dept 2.7% Claims Dept 10.4%

14 CCCSIG Rates & Equity History One of the main benefits of a JPA versus a commercial insurer is that if the cost of a policy year turns out to be less than the amount of premiums that were paid in, the additional funds remain with the JPA and can be used to benefit the members. This can be done through rebates, lowering rates for future policy years, or building up equity to be used by the members in the future. A commercial insurer will use these additional funds to increase their profit. CCCSIG has been able to do all 3 of these things over the years, with the rebates and rate reductions having a direct effect of lowering the amount of premiums the members ultimately pay in. For example, CCCSIG has provided rebates to our members totaling $23.5M since 1997 and has returned an additional $12.1M in equity from lowering the base rate (with another $3.0M being returned in ). If you look at all of the premiums our members have paid in since the inception of CCCSIG in 1977, the return of these funds result in an average decrease of 7.0% in their workers compensation insurance costs. Even after returning the $35.6M to our members, CCCSIG ended fiscal year 2017 with equity of $24.2M. While it is important for the Group to maintain equity to be able to weather any negative market developments or cost increases, this equity ultimately belongs to our members and can be used to help them in the future as they see fit. The chart below shows a ten year history of the rates determined by the Actuarial Study at the 80% confidence level, the rate that was adopted by CCCSIG, the estimated amount of equity growth/equity that was used to reduce the premiums paid in by the members, the rebate that was distributed to the members, and the change in the equity balance over that time period. If you look at the beginning and ending equity balance, you ll see that equity has only gone down by $412k during this time, while almost $15.6M was returned to our members(with an additional $3.0M expected to be returned in ). Also within this period, the deterioration of the investment market has resulted in CCCSIG having to reduce the discount rate for our claims liabilities(discounting recognizes that the premiums that were collected but haven t been paid towards expenses yet are earning interest), which resulted in raising the net claims liabilities(reducing equity) by almost $4.8M. In , GASB 68 required us to book our pension liability on our Financial Statements, which has resulted in a lowering of our equity by $3.4M. So between returning equity to our members, lowering of the discount rate, and recording the pension liability, equity could have been lowered by as much as $23.8M over the past 10 years, instead of the $412k that it was actually lowered, which reflects some very strong operational results. CCCSIG 10-Year Rate History 80% CL Policy Actuarial Adopted Est. Equity Growth/ Ending Equity Year Rate Rate Equity Used Rebate Balance $ 2.52 $ 2.52 $ - $ - $ 24,659, $ 2.39 $ 2.39 $ - $ 3,500,000 $ 24,577, $ 2.43 $ 1.95 $ 3,992,096 $ - $ 17,786, $ 2.41 $ 1.95 $ 3,761,279 $ - $ 14,681, $ 2.58 $ 2.32 $ 2,116,797 $ - $ 14,660, $ 2.52 $ 2.52 $ - $ - $ 17,959, $ 2.62 $ 2.62 $ - $ - $ 18,160, $ 2.32 $ 2.47 $ - $ - $ 23,292, $ 2.55 $ 2.32 $ 2,219,531 $ - $ 24,247, $ 2.41 $ 2.12 $ 3,000,000 $ - Total $ 15,089,703 $ 3,500,000

15 CONTRA COSTA COUNTY SCHOOLS INSURANCE GROUP STATEMENT OF NET POSITION JUNE 30, 2017 AND ASSETS Current Assets Cash and cash equivalents $ 20,869,322 $ 12,642,994 Investments maturing within one year 11,909,490 8,365,270 Interest receivable 311, ,564 Accounts receivable 2,456,455 1,480,381 Prepaid expenses 1,159,219 1,131,367 Total Current Assets 36,706,126 23,885,576 Noncurrent Assets Investments, less portion maturing within one year 69,503,901 78,058,964 Capital assets, net 3,726,791 3,855,533 Total Noncurrent Assets 73,230,692 81,914,497 Total Assets 109,936, ,800,073 DEFERRED OUTFLOWS OF RESOURCE Deferred outflow on pensions 1,218,506 2,414,930 LIABILITIES Current Liabilities Accounts payable 1,292,996 1,565,552 Accrued expenses 115, ,702 Current portion of assessment payable 347, ,071 Current portion of unpaid claims and claim adjustment expenses 13,000,000 13,000,000 Total Current Liabilities 14,755,380 15,019,325 Noncurrent Liabilities Unpaid claims and claim adjustment expenses 68,061,708 65,680,817 Pension liability 799,130 1,823,648 Assessment payable 1,768,205 2,100,531 Total Noncurrent Liabilities 70,629,043 69,604,996 Total Liabilities 85,384,423 84,624,321 DEFERRED INFLOWS OF RESOURCE Deferred inflow on pensions 1,523, ,653 NET POSITION Net investment in capital assets 3,726,791 3,855,533 Unrestricted 20,520,220 19,436,496 Total Net Position $ 24,247,011 $ 23,292,029 The accompanying notes are an integral part of these financial statements.

16 CONTRA COSTA COUNTY SCHOOLS INSURANCE GROUP STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION FOR THE FISCAL YEARS ENDED JUNE 30, 2017 AND OPERATING REVENUES Member contributions $ 45,359,341 $ 43,367,671 Other revenues 211, ,433 Total Operating Revenues 45,571,097 43,605,104 OPERATING EXPENSES Provision for claims and claims adjustment expenses 17,298,664 14,170,456 Insurance premiums 21,827,949 21,879,688 Program salaries and benefits 4,597,753 2,491,544 Professional and consulting fees 178, ,230 Depreciation expense 217, ,930 Other general and administrative expenses 994,373 1,015,165 Total Operating Expenses 45,114,739 39,945,013 Operating Income (Loss) 456,358 3,660,091 NONOPERATING REVENUES Investment income 498,624 1,471,676 Change in Net Position 954,982 5,131,767 Net Position Beginning of Period 23,292,029 18,160,262 End of Period $ 24,247,011 $ 23,292,029 The accompanying notes are an integral part of these financial statements.

17 WORKERS COMPENSATION 2016/17 Workers Compensation Overview The one constant in the Workers Compensation Industry is Change. Even though change seems to come faster than we ve ever seen before, we in the workers compensation industry say Bring it on. This is because we know the workers compensation industry has a solid foundation and the flexibility to adapt to whatever comes its way. Over the years, there have been changes in technology, the economy, legislation and the nature of the workforce in general, which in turn triggers different employer and employee needs. How does CCCSIG handle these changes? By being flexible and adaptable in order to remain supportive to our members and their employee s needs, now and into the future. A few examples of how CCCSIG s Claims Department has adapted to change over the years: Implemented Company Nurse several years ago, which has assisted employees in reporting injuries, while ensuring through the medical triage process if treatment is necessary, to direct employees to the appropriate medical facilities. This is the first step in assisting the employee in the injury recovery process. In the fall of this year, through the Company Nurse medical triage process, employees with specific types of injuries that require treatment will be offered a Telemedicine Physician Visit! Implemented mymatrixx, a Pharmacy Benefit Manager Program (PBM) and Homelink, which provides a variety of ancillary services from physical therapy to catastrophic care. These service providers have had a positive impact on expediting medical care and managing medications, while containing medical costs for member districts. Evaluated new technology, which as we all know is changing faster than most industries. We are currently taking steps to upgrade CCCSIG s claims software system and various work flow processes. Our focus is to streamline communications between our members and service providers at the claim level; enhancing the Early Return-to-Work Program coordination for districts, as well as maximizing the new features for greater efficiencies groupwide. The Claims Department uses a variety of educational resources, to stay abreast of proposed legislative changes and researches alternative approaches for the delivery of medical treatment, then applies these changes based on the needs of our members. An example of an alternative approach to medical treatment trending now is on-site physical therapy. With on-site physical therapy, instead of the injured employee travelling to a physical therapy facility for treatment, the physical therapist travels to the employee s location to provide treatment. CCCSIG plans to further explore this medical treatment option in 2018, to determine if it would be a good fit for our member districts. A Crisis Under Control in 2018 The quantity of opioid medication manufactured and prescribed in the U.S. has placed us in an Opioid Crisis. Opioids are not only addictive and very costly, but could potentially be deadly. As a result, starting in 2018, the U.S. Drug Enforcement Administration (DEA) is proposing a 20% reduction in the amount of opioids and other controlled substances manufactured in the U.S. Along with this measure, Government officials at the national, state and local levels have agreed that another step in the right direction is to develop a Drug Formulary around these types of drugs. A Drug Formulary is a predetermined list of prescription medications that specifies which drugs, both brand name and generic, are approved for treatment of certain conditions. They anticipate the Drug Formulary to be finalized by the end of 2017, with an anticipated effective date of January 1, This is a huge move in the right direction for the workers compensation industry, as this will reduce the number of patients being prescribed opioids. In claims resulting from an industrial injury, most settlements include lifetime future medical care. Approximately 95% of future medical recommendations include medications and although the percentage of those patients being prescribed opioids is somewhat less than 50%, the longer the claim remains open, the greater the exposure is for the physician to request authorization for opioids. It is within those ongoing open claims where the claims administrators, employers and injured workers have everything to gain, as the DEA and Government officials work together in efforts to get this crisis under control. California's state average weekly wage (SAWW) rose by 3.6% during the last 12 months ending in March This triggered an increase from the current 2017 workers compensation average weekly minimum/ maximum rates of $ and $1,172.57, to the minimum/maximum rates of $ and $1,215.27, for all dates of injury on or after 1/1/2018.

18 WORKERS COMPENSATION ESTIMATED COUNTYWIDE SAVINGS IN 2016/17 UTILIZATION REVIEW $129,264 EARLY RETURN-TO-WORK $1,133,015 BILL REVIEW $228,282 PHARMACY BENEFIT MANAGEMENT $91,648 FUTURE MEDICAL/ COMPROMISE & RELEASE CLAIM SETTLEMENTS $931,495 COMBINED TOTAL $2,513,704 COMPANY NURSE 42% (Calls with no Medical) A big THANK YOU to the West Contra Costa and Pittsburg Unified School Districts, who agreed to pilot Concentra Telemedicine through Company Nurse. Their involvement helped to evaluate and further streamline the Telemedicine process. As a result of all efforts combined, effective 10/1/17, Company Nurse is extending the option of a Telemedicine visit Countywide, if the injury qualifies. The Claims Department is gearing up for our bi-annual Independent Claims Audit, in order to maintain our Excellence Accreditation with CAJPA and very possibly a State Mandated Audit in 2018, which occurs every five years. Strategies for Controlling Claims Costs Include: Prompt, thorough claims investigation to determining compensability. Working closely with District Claims Coordinators to ensure prompt and accurate payment of workers compensation benefits. Monitoring progress of medical treatment and work status determinations. Connecting with medical providers to discuss medical treatment and strategies for returning injured employees back to work, when medically appropriate. Contacting the injured employee periodically to see how they are doing, update them with the status of their claim and address any questions they may have regarding the workers compensation benefit system. Prompt claims resolution. Workers Compensation Claims

19 HEALTH & SAFETY SERVICES Mission of the Health & Safety Services Department To provide districts with a variety of services that will assist in reducing the frequency of employee injuries and enhancing the overall health of the workforce. Top 3 Occupations Countywide All Reported Incidents by Claim Type, Average Cost per Claim & Total Incurred Top 3 Incident Types Countywide All Reported Incidents by Claim Type, Average Cost per Claim & Total Incurred Overview of Core Health & Safety Services Overall Participation: 18 districts; 1,651 services; 10,370 employees Post Offer, Pre-Placement Evaluation Program (PEP) 16 districts; 9,694 applicants; 6% Fail; 1% Medical Clearance Purpose: To determine if new hires in the occupations listed below possess the minimum level of strength necessary to perform the essential physical tasks of the job. Occupations: Custodians, Food Service Workers, Special Education Instructional Assistants, Building & Grounds Maintenance Workers, Delivery Drivers, Warehouse Workers and Bus Drivers. Health & Safety Trainings (In-Person) ANNUAL HEALTH & SAFETY SUMMER PROGRAM 18 districts; 918 employees; 28 programs; 73 Blood Pressure Screenings Purpose: To provide interactive, job-specific safety, wellness and CalOSHA trainings that teach new skills, reinforce existing knowledge and motivate employees to make sound safety/health decisions on the job and at home. Occupations: Custodians/Building & Grounds Maintenance Topics: CalOSHA Refresher (Heat Illness, Hazard Communication, Bloodborne Pathogens, Lock Out/ Tag Out, Ladder Safety, Safe Lifting, Slip Trip Fall Prevention, IIPP); Integrated Pest Management; Wellness (Nutrition, Fitness, Sleep Health). Average Overall Evaluation Rating: 4.9 out of 5 (1=Poor; 5=Excellent) CPI NONVIOLENT CRISIS INTERVENTION TRAINING 15 districts; 586 employees; 55 trainings (33 full trainings/22 refresher trainings) Purpose: To provide opportunities for discussing and practicing key concepts while learning proven, practical skills to de-escalate disruptive or assaultive students. Occupations: Administrators, Campus Supervisors, Instructional Assistants, Psychologists and Transportation Staff. Average Overall Evaluation Rating: 4.8 out of 5 (1=Poor; 5=Excellent) NEW HIRE TRAINING 13 districts; 214 employees; 14 trainings Purpose: To assist districts in reducing injuries and maintaining CalOSHA compliancy. Occupations: Custodians, Maintenance & Operations and Grounds. Average Overall Evaluation Rating: 4.9 out of 5 (1=Poor; 5=Excellent)

20 HEALTH & SAFETY SERVICES Health & Safety Trainings (Online) ON-DEMAND VIDEO TRAININGS 12 districts; 5,372 views; most viewed: Slip Trip Fall Prevention Purpose: To provide additional training options that complement our in-person trainings and assist districts in reaching a greater number of employees with important health and safety information. NEW IN 2017/18 New On-Demand Video Tracking/ Reporting System (Oasis) Fall Just Go! Exercise Challenge Spring Fitness/Wellness Challenge (Watch for Details!) Adopting Mindfulness as a Lifestyle Choice Part II Conflict Theater Part II 24 Hour Fitness Discounted Gym Membership for Member District Employees Ergonomic Evaluations 14 districts; 306 ergonomic evaluations conducted Purpose: To identify risk factors that may lead to musculoskeletal disorders (MSDs), determine any feasible engineering or administrative control measures to reduce or prevent employee exposure to MSDs and identify appropriate types of personal protective equipment where effective engineering controls are not feasible. Occupations: Office/Clerical/Administrative, Teachers, Maintenance & Operations, Grounds and Food Service Outcomes: Of the 27% who completed a 30-day follow up, 60% improved, 32% stayed the same and 1% worsened. Healthy Lifestyle Programs 18 districts; 861 participants (699 online/162 poster) Programs: Energize Your Workday, Holiday Hustle Fitness Challenge, 100 Mile Fitness Challenge Purpose: To motivate employees to increase and/or maintain their current level of fitness, eat healthier and/or improve health and safety behaviors. Occupations: Office/Clerical, Teachers/Faculty, Maintenance & Operations, Custodians, Instructional Assistants & Administrators Outcomes: 98% of those who completed an evaluation enjoyed the program and 96% would like the programs to continue being offered. District Health & Safety Incentive Program: 18 districts completed at least one element of the program (Brentwood, COE, Liberty, Pittsburg & West Contra Costa completed 100%) Purpose: To assist districts in building/maintaining a health and safety culture, mitigating high risk trends and maintaining CalOSHA compliancy. Participating districts may receive up to 1% of their premium back to apply toward their employee health and safety programs. CPI Instructor Certification Training at CCCSIG: 27 attendees (9 from CCCSIG member districts: COE, Liberty, Pittsburg, San Ramon Valley & West Contra Costa) Purpose: To assist member districts in certifying select district individuals as CPI instructors which serves to further mitigate the increase in employee incidents involving student behaviors. Countywide H&S Coordinator Meetings: 3 conducted; attendees at each meeting October 2015/16 Countywide Injury Trends & HSS Utilization; Summer Program Results; Asthma-Free Workplace Speaker from CA Department of Public Health; Review of 2016/17 Incentive Program January Mid-Year Countywide Incident Trends; Fall Fitness Challenge Results; Integrated Pest Management Speaker from CA Department of Pesticide Regulation; Bloodborne Pathogens Program Review; Sit Stand Workstation Update April End of Year Trash Handling Best Practice (Liberty M&O Director, Al Wilright, Jr.); 17/18 Incentive Program Review/Q&A; Heat Illness Prevention Plan Review Purpose: To provide Health & Safety Coordinators with networking opportunities and pertinent health and safety information and resources that they can promote and implement within their respective districts. CPI Forum at CCCSIG: 1 conducted in March CPI Instructors representing two of our member districts (Liberty and San Ramon Valley) attended and discussed benefits and challenges in using the CPI Best Practice Training Model; and, shared ideas/strategies and training resources. All present indicated their support for additional forum opportunities that enhance their respective CPI Training Programs, as well as staff and student safety. The next forum will be scheduled for March 2018.

21 CCCSIG New Health & Safety Programs (2017/18) HEALTHY LIFESTYLE PROGRAMS The Just Go! Exercise Challenge: This is an 8-week online and poster-based program designed to assist member district employees in maintaining/increasing their physical activity at work and/or home. All forms of exercise count. Member district employees who obtain and log at least 24 hours of exercise by the end of the program will be entered into a countywide drawing to win a $100 gift card to REI. The district with the highest average number of hours completed will win the CCCSIG Perpetual Fitness Challenge trophy to display in their district office until/if there is a new district winner for the Spring 2018 program. The Spring 2018 program will be announced mid-year. Both challenges are part of a year-round, online wellness program that allows employees to continue tracking healthy activity between challenges and year-round; receive health tips, recipes and other wellness-related information; and cheer on their colleagues. CCCSIG HEALTH & SAFETY TRAININGS (In-Person) All of our in-person trainings can be customized to district and occupation-specific needs. We can also create new health and safety trainings by request with at least 1-2 months notice. Adopting Mindfulness as a Lifestyle Choice Part II: The purpose of this training is to help participants manage stress, improve focus and create more happiness in life! In this 1-2 hour training, we define Mindfulness, review the benefits of practicing mindfulness and unplugging from technology, try different Mindfulness activities/techniques, such as creative visualization/guided imagery, progressive muscular relaxation and meditation. Part II expands on these concepts. Conflict Theater Part II: At the heart of any good story is conflict, a problem to be solved or dispute to be settled. In this session we look at examples of conflict in film as a starting point to discuss ways to better manage conflict. In this 1-2 hour training we explore how to better identify the needs of all parties with conflict mapping, and how to better communicate those needs in an effort to achieve a mutually beneficial resolution. Part II expands on these concepts. DISCOUNTED GYM MEMBERSHIP PROGRAM We have renewed our partnership with 24 Hour Fitness to offer our member districts a discounted gym membership to all of their employees and their families! For questions or information, please contact CCCSIG s dedicated, 24 Hour Fitness Account Manager: Joseph Herrera at jherrera@24hourfit.com or (760) ON DEMAND VIDEO PROGRAM In Fall of 2017, CCCSIG began using a new, more secure Learning Management System with greater functionality for delivering, tracking and reporting CCCSIG On-Demand Video Trainings. New videos will continue to be added in 2017/18 and the program s features include: District designated contacts can log in anytime to view and run employee progress reports Ability to track how long an employee viewed a video (entire video must be viewed to receive credit) Ability to skip ahead in the video can be turned on or off Bookmarking is included in all videos (this allows you to exit the video and resume viewing later on) Each video training can include a short quiz District-specific, written programs/plans can be included in the courses CCCSIG can easily modify/edit existing video trainings Ability to upload video trainings your district has created or released for use by a third party vendor

22 CCCSIG 2016/17 Health Benefit Program Highlights PLAN YEAR 2018 RATES AND INSURANCE CARRIER CHANGES As the Health Benefits Program enters its 14th program year, the participating member districts are Arcohe Union School District, Brentwood Union School District, Byron Union School District, Canyon School District, Castro Valley Unified School District, Moraga School District, Oakley Union Elementary School District, Travis Unified School District and Walnut Creek School District. Effective January 1, 2018, Western Health Advantage will be offered alongside Sutter Health Plus and Kaiser Permanente. Western Health Advantage is part of the John Muir and Hills Physicians Provider Networks, which is prominent in Contra Costa County. All plan renewal rates for 2018 have increased, which continues to be the industry trend. Sutter Health Plus increased 5%, while Kaiser increased 14%. The Western Health Advantage Plan, which is being offered for the first time in 2018, has very comparable rates. EDUCATION, WELLNESS AND PREVENTION EFFORTS Health education, wellness and prevention outreach continues to be a focus for the Health Benefits Program for member districts as noted below: CCCSIG Monthly Harmony for Health, an e-communication that includes education and prevention information, is provided to district coordinators to share with employees. These communications promote the healthcare providers services, which are included in the health plans offered to employees. Annual Fall Flu Vaccination Clinics available during open enrollment offer free on-site flu shots sponsored by the Health Benefits Program for employees who elect coverage through one of the participating member districts health plans through CCCSIG. CCCSIG Health and Safety Services provide access to online healthy lifestyle programs for members who participate in the JPA s Workers Compensation program. This year s Fall program is the Just Go! Exercise Challenge, which has member districts competing for the CCCSIG Perpetual Fitness/Wellness Challenge Trophy! LEGISLATIVE UPDATE Throughout the year, as part of the Health Benefits Program Committee meetings, the members receive information on changes in the healthcare arena, State and Federal legislation and webinars. These updates are also provided electronically by CCCSIG s Health Benefits Broker, Debra De Spain, with Keenan and Associates.

23 CCCSIG Employee Assistance Program through MHN CCCSIG, in partnership with Schools Insurance Authority, offers its member districts an Employee Assistance Program through MHN. Effective July 1, 2017 the rate is $1.70 per employee per month (rate is guaranteed for two years). MEMBER DISTRICTS Acalanes Union High SD CCC Office of Education Moraga SD Orinda Union SD Pittsburg USD West Contra Costa USD BENEFITS OF AN EAP THROUGH MHN Some of the quality and valued core EAP services include: Clinical support that can be delivered face-to-face, over the phone or even via web-video technology Expert work & life services including legal consultations, financial counseling, identify theft assistance, and more A secure member website with useful self-help programs, tools, and information Great client services, including management consultations, job performance referrals, and critical incident stress management in the event of traumatic incidents at the workplace Some of the EAP resources most commonly utilized and valued by CCCSIG members since July 2011 have been: #1 utilized service: Legal Consultations Clinical coaching and support Financial Counseling Organizational services including 1 critical incident response If you are interested in additional information, have questions or if you would like a MHN representative to provide a presentation at your district on the benefits of the EAP, please contact Erica Williamson, HR/Communications Manager at ewilliamson@cccsig.org.

24 HISTORY OF CCCSIG CCCSIG History The Contra Costa County Schools Insurance Group (Agency) is a Joint Powers Authority organized in 1977 for the purposes of self-insuring workers compensation and provision of health & safety services to its 20 member public school districts in Contra Costa County. Today, it is a self-insured, self-administered public agency, which is one of the largest of its kind in the State of California. Of the 23 member districts, 21 are K-12 school districts, one County Office of Education and one Community College District. The Agency s workers compensation program encompasses greater than 22,000 employees and more than $1.1 billion in payroll, which translates to approximately $24.5 million in workers compensation premium. Of the 23 member districts in the JPA, effective January 1, 2016, 9 are also members of the insured Health Benefits Program. The Agency has been recognized for success in leadership by its peers. First accredited by the California Association of Joint Powers Authorities (CAJPA) in 1993, the Agency currently is Accredited with Excellence. Due to the success of the program since it became self-administered in 1995, the member Superintendents and Governing School Boards supported and implemented changes to the JPA Agreement in 2003 to incorporate the potential for provision of other areas of insurance coverages, the first of which was the Health Benefits Program. CCCSIG continues to look into other avenues and potential areas of coverage to best serve the member s interests. CCCSIG is committed to customer service, education, prevention and cost containment services for its member districts. Some of the programs implemented by CCCSIG that have assisted in decreasing the cost and number of workers compensation claims are a structured early return-to-work program; a post offer, pre-employment strength testing program; in-house bill review program; an in-house Nurse; Company Nurse new claims reporting; wellness, health and safety services, which include ergonomic evaluations, in-person and video trainings and presentations in all areas of health, wellness and safety; as well as many other resources. CCCSIG was recognized in 2005 by the State of California with a Fit Business Award, which was presented in an awards ceremony to CCCSIG by Senator Tom Torlakson, who was also the Chairperson for the California Task Force on Youth and Workplace Wellness. CCCSIG was recognized in the small business category, for being on the forefront of providing employees a worksite environment that supports healthy choices, as well as recognizing the many programs and procedures that CCCSIG has in place for overall employee wellness. CCCSIG s overall culture of employee health, wellness and safety carries over to its member districts in our commitment to caring for, empowering and supporting all employees of its member districts to keep them safe, healthy and productive through excellence in programs, leadership and administration and striving towards a safe and healthy school workplace. CCCSIG Historical Tidbits California authorized the formation of Joint Powers Authorities (JPAs) in the mid-70 s in response to the hard insurance market, during which time Contra Costa County districts either couldn t find workers compensation insurance or were charged exorbitant rates for it. In 1977 Contra Costa County school districts formed CCCSIG, which is self-insured (fully governed and owned by the members) to provide affordable and stable rates for workers compensation. In 1995, CCCSIG moved from third party administration to self-administration for workers compensation, which improved outcomes for districts and services for employees through claims administration and health and safety services, and eliminated involvement by a for-profit administrator.

25 TOGETHER EVERYONE ACHIEVES MORE CCCSIG s Board of Directors, Management and staff work closely together to continue to trail blaze the road to success. Vision Statement: Our vision is a safe and healthy school workplace. Mission Statement: CCCSIG cares for, empowers and supports all employees of its member districts to keep them safe, healthy and productive through excellence in programs, leadership and administration. Strategic Priorities (1-3 Years): Maintain Financial Stability Continued Education about CCCSIG Increase District Participation and Responsibility Workers Compensation/Health & Safety Services Outreach Leverage CCCSIG Assets and Administrative Structure Monitor Legislative/Regulatory Developments and Create Strategy if Needed Maintain and Celebrate CCCSIG s Positive Work Environment CCCSIG would like to thank Sheri Gamba (recently retired from West Contra Costa USD) for her dedicated service on the Board, Executive Committee and as Board President. CCCSIG would also like to thank and recognize Lenee Cadottee (recently retired from Lafayette SD) as one of CCCSIG s longest term Executive Committee members. CCCSIG s CORE VALUES: COMMITMENT to proactively evaluate opportunities to enhance services and programs offered to benefit school district employees while lowering workers compensation costs. FLEXIBILITY through the exchange of ideas adapt to new situations and change to achieve success in our programs and enhance what we are today and into the future. TEAMWORK working together as one, collaborating with member districts focused on a common purpose to achieve excellence. QUALITY a characteristic defining what we continuously strive to achieve, representing the highest standards in our field and our individual areas of expertise, devoted to our purpose and foundation. CCCSIG s Board of Directors CCCSIG s Board of Directors includes one representative from each district to serve the needs of all members. Nine members of the Board serve as the Executive Committee*. CCCSIG Board of Directors (as of 10/17): *Eugene Huff, President/CCC College District *Norma Gonzales, Vice-President/Pittsburg USD *Bill Clark, Secretary/CCC Office of Education *Julie Bautista, Acalanes Union High SD *Jessica Romeo, Antioch USD *Liz Robbins, Liberty Union High SD *Daniela Parasidis, Moraga SD *Audrey Katzman, Walnut Creek SD *Christopher Mount-Benites, West Contra Costa USD Roxane Jablonski-Liu, Brentwood Union SD Debbie Gold (Superintendent), Byron Union SD Gloria Faircloth, Canyon SD Derek Pinto, John Swett USD Cindy Friedmann, Knightsen Elementary SD Diane Deshler, Lafayette SD Helen Rossi, Martinez USD Cindy Peterson, Oakley Union Elementary SD Teresa Sidrian, Orinda Union SD Keith Rogenski, San Ramon Valley USD Troy Miller, Acohe Union SD Candi Clark, Ed. D., Castro Valley USD Deborah Cooksey, Mt. Diablo USD Sonia Lasyone, Travis USD CCCSIG Staff CCCSIG s staff is experienced and dedicated to providing excellent customer service to member districts and their employees. CCCSIG s staff as of 10/17: