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<br />Using 2004-05 payroll as a basis, San Leandro's $1 million liability self-insured retention <br />compares to five other California cities as shown in Table IV-I. <br /> <br />Table IV-1 <br />liability Self-Insured Retention Comparison <br /> <br /> <br />San Leandro 31.4 $1,000,000 32,000 <br />Mountain View 51.9 1,000,000 19,000 <br />West Covina 33.1 1,000,000 30,000 <br />San Buenaventura 46.7 1,000,000 21,000 <br />Alameda 59.6 500,000 8,000 <br />Redwood City 46.8 250,000 5,000 <br /> <br />Given all of the factors discussed in this section, we judge that the current $1 million <br />self~insured retention is at the high end of the City's reasonable capacity to retain risk. <br /> <br />B. Accounting and Funding <br /> <br />The City engages a qualified actuary to calculate the outstanding liabilities of its liability <br />self-insurance program and recognizes that amount on its balance sheet. This is generally <br />considered a best practice and complies with Governmental Accounting Standards for <br />self-insurance programs. <br /> <br />The City also funds the outstanding liabilities through an internal service fund, keeping <br />the balance of the fund approximately equal to the outstanding liabilities. This practice <br />matches the funding year with the fiscal year in which the liability~causing events took <br />place. Full funding of outstanding liabilities is considered a best practice, but is not an <br />accounting standard or legal requirement. <br /> <br />Like the City, some self-insured public agencies even fund their self-insurance programs <br />with a margin for contingencies. In contrast, very large public entities (e.g., City of Los <br />Angeles, State of California) tend to fund self-insured losses only at the rate at which <br />they are paid. Of course, there are partial funding plans that fall between these two <br />extremes. So, each self-insured entity can exercise a high level of discretion in <br />establishing its funding plan. While we have no precise data on the funding practices of <br />self-insured California cities, our experience supports that most such cities, similar in size <br />to San Leandro, fund either the full or discounted (for investment income) amount of the <br />outstanding liability detennined by their actuaries. <br /> <br />38 <br /> <br />ARM <br /> <br />Tee h <br />