DATE: June 12, 2018
SUBJECT:
Title
RESOLUTION APPROVING A FY 2018 BUDGET TRANSFER OF $800,000 FROM SAVINGS IN NON-PERSONNEL EXPENSE APPROPRIATION TO THE PERSONNEL EXPENSE APPROPRIATION PURSUANT TO BOARD OF PORT COMMISSIONERS POLICY NO. 90
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EXECUTIVE SUMMARY:
Pursuant to Board of Port Commissioners (BPC) Policy No. 90, a transfer of an amount between appropriated items requires Board approval. Staff is recommending the FY 2018 Personnel Expense Appropriation be increased by $800,000 to fund unanticipated increases in workers’ compensation expenses incurred during the fiscal year.
The increase of $800,000 to Personnel Expense Appropriation will be funded by transferring $800,000 from Non-Personnel Expense Appropriation.
RECOMMENDATION:
Recommendation
Adopt resolution approving a budget transfer increasing the FY 2018 Personnel Expense Appropriation by $800,000 by transferring $800,000 from the FY 2018 Non-Personnel Expense Appropriation, pursuant to BPC Policy No. 90.
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FISCAL IMPACT:
Approval of this resolution transferring funds to the Personnel Expense Appropriation in the amount of $800,000 will increase the Personnel Expense budget from $97,805,700 to $98,605,700.
This budget amendment will adjust the FY 2018 budget as follows:
Compass Strategic Goals:
This agenda item supports the following Strategic Goal(s).
• A Port that the public understands and trusts.
• A Port that is a safe place to visit, work, and play.
• A Port with an innovative and motivated workforce.
DISCUSSION:
Staff is recommending the FY 2018 Personnel Expense Appropriation be increased by $800,000 to fund unanticipated increases in workers’ compensation expenses incurred during the fiscal year. This transfer is a precautionary measure to ensure the District does not exceed the Personnel Expense Appropriation at year-end. Staff’s estimate for year-end varies from month to month depending on the impact of changes to the workers’ compensation reserve. Since the fiscal year end occurs after the June 12, 2018, Board meeting, staff is taking precautions to ensure there is sufficient budget available to record all the year-end adjustments for workers’ compensation costs.
Since July 1, 2004, the District has participated in a loss-sensitive workers’ compensation program administered by AIG Insurance. When a workers’ compensation claim is filed with the District, AIG establishes a claim reserve which is an estimate of the unpaid amount for which a particular claim will ultimately be settled or adjudicated. Claims reserves include medical expenses, lost wages, permanent disability benefits, administrative fees and any other expenses that AIG must pay on behalf of the injured worker.
Workers’ compensation expenses have exceeded budget by $516,000 as of April 30, 2018, and are projected to be over budget by $800,000 by close of the fiscal year primarily due to steadily rising medical costs as well as injuries sustained by Harbor Police officers, some of which are deemed to be presumptive injuries under the California Labor Code.
Based on AIG’s estimated increase in workers’ compensation expenses, staff is recommending that the FY 2018 Personnel Expense Appropriation be increased by $800,000 by using funds from savings in the FY 2018 Non-Personnel Expense Appropriation.
General Counsel’s Comments:
The Office of the General Counsel has reviewed and approved the agenda as to form and legality. Pursuant to Port Act, Section 86, and Board Policy No. 090, approval of this transfer between appropriated items requires a two-thirds vote of the Board.
Environmental Review:
The proposed Board direction or action, including without limitation, approving a budget transfer from Non-Personnel Expense Appropriation to Personnel Expense Appropriation does not constitute a “project” under the definition set forth in California Environmental Quality Act (CEQA) Guidelines Section 15378 because it will not have a potential to result in a direct or indirect physical change in the environment and is, therefore, not subject to CEQA. No further action under CEQA is required.
In addition, the proposed Board direction or action complies with Section 35 of the Port Act, which allows the Board to do all acts necessary and convenient for the exercise of its powers. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the proposed Board direction or action is consistent with the Public Trust Doctrine.
The proposed Board direction or action does not allow for “development,” as defined in Section 30106 of the California Coastal Act, or “new development,” pursuant to Section 1.a. of the District’s Coastal Development Permit Regulations. Therefore, issuance of a Coastal Development Permit or exclusion is not required.
Equal Opportunity Program:
Not applicable.
PREPARED BY:
Robert DeAngelis
CFO/Treasurer