Page 81 - Hudson City Schools CAFR 2017

HUDSON CITY SCHOOL DISTRICT
SUMMIT COUNTY, OHIO

NOTES TO THE BASIC FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2017

NOTE 11 - RISK MANAGEMENT - (Continued)

Changes in claims activity for the past two fiscal years are as follows:

Fiscal Beginning Current Claims Ending
Year Balance Year Claims Payments Balance
2017 $ 613,495 $ 8,387,228 $ (8,293,452) $ 707,271
2016 $ 509,862 $ 7,974,174 $ (7,870,541) 613,495

Post-employment health care is provided to plan participants or their beneficiaries through the
respective retirement systems discussed in Note 13.

D. Workers’ Compensation

Effective January 1, 2012, the District participates in the Ohio SchoolComp Group Rating Program
(GRP), an insurance purchasing pool (See Note 1.A). The GRP is co-sponsored by the Ohio School
Boards Association and the Ohio Association of School Business Officials. The intent of the GRP is to
achieve the benefit of a reduced premium for the District by virtue of its grouping and representation
with other participants in the GRP. The workers’ compensation experience of the participating school
districts is calculated as one experience and a common premium rate is applied to all school districts in
the GRP. Each participant pays its workers’ compensation premium to the state based on the rate for
the GRP rather than its individual rate. Total savings are then calculated and each participant’s
individual performance is compared to the overall savings percentage of the GRP. A participant will
then either receive money from or be required to contribute to the “equity pooling fund”.

This “equity pooling” arrangement insures that each participant shares equally in the overall
performance of the GRP. Participation in the GRP is limited to school districts that can meet the
GRP’s selection criteria. The firm of CompManagement, Inc. provides administrative, cost control
and actuarial services to the GRP.

Prior to January 1, 2012, the District participated in the Ohio Bureau of Workers’ Compensation
(Bureau) Individual Retrospective Rating program. In the program, the District assumed a portion of
the risk in return for a reduction in premium.

The District’s Retrospective Rating program is accounted for in the general fund which pays for all
claims, claim reserves and administrative costs of the program. The general fund generates revenues
by charging each fund a percentage rate determined by the Bureau for the payroll during the reporting
period.

The District is liable for a portion of claims incurred while under the Retrospective Rating program.
The claims liability is recorded based on an actuarial determination of future claims, review of five
years of claim liabilities and claim payment trends. The change in claims activity for the past two
fiscal years is as follows:

Fiscal Beginning Claims and Changes Claims Ending
Year Balance In Estimates Payments Balance
2017 $ 4,855 $ 22,753 $ (16,733) $ 10,875
2016 47,128 (5,187) (37,086) 4,855

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