Item 9 Preliminary Official Statment Dated February 25, 1994

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NOTES TO THE FINANCIAL STATEMENTS (Continued) 8D. Self-Insurance Program. In July, 1975, the City elected to operate a self-insurance program: (1) for any liability to City employees pursuant to the Workers' Compensation Laws of the State of California, (2) for employee's group dental insurance, and (3)in July, 1976, for liabilities which may arise out of claims filed against the City for datnages caused by City employees, equipment, or property. The City has entered into contract with Pacific Coast Administrators who supervise and administer the self-funded dental program and act as representatives of the City. The City's Liability and Workers' Compensation programs are self- administered (staffed by City employees). City claims staff estimate total losses for each claim and determine reserve requirements for the Liability and Workers' Compensation claims programs. This Program was audited in June 1993 by an independent claims auditor. The risks self-insured under these programs are: workers'compensation and employer's liability losses under the state law up to $350,000 each occurrence. From July 1, 1986 to October 1, 1988, the City was self- insured for all liability claims. On September 23, 1988, Santa Ana became one of five forming members of the Big Independent Cities Excess Pool(BICEP), a joint powers authority. BICEP's excess liability program began on October 1, 1988. Each BICEP city assumes the first$1 million of each occurrence. The BICEP cities risk share amounts between$1 million and$2 million and from$20 million to$25 million. Reinsurance covers amounts from$2 million to$20 million. Also,under the employee group dental self-funded program, the City pays $1,000 limit per participant. The City also carries paid insurance to cover the claims and pay benefits to employees participating in the "HMO"plans. At June 30, 1993 accrued self-insured liabilities for workers' compensation, general liability and employee health claims were $12,973,524, $7,636,145 and $100,000 respectively. These accruals meet GAAP loss contingency criteria. 8E. Retirement Health Benefits. Article XIV,Section 6,of the Memorandum of Understanding between the City and the Santa Ana Firemen's Benevolent Association (FBA) for the period July 1, 1992 through June 30, 1994 provides that the City shall administer a "flat rate' retiree Health Insurance Premium Reduction Program, available to retirees of the FBA. Employees who are members of the FBA retiring on or after July 1, 1989 are eligible to participate regardless of whether or not they are participating in a City sponsored medical plan on their date of retirement. If the retiree does not elect coverage on their date of retirement they will not be eligible for coverage at any other time in the future. In addition, to be eligible, an employee must have at least ten years of service on the date they retire. This requirement will be waived for any employee retiring due to disability. The City's monthly contribution is based on a flat dollar amount per year of service. Beginning in 1989, the flat dollar levels were$2.20 for single coverage and$5.50 for family coverage. These amounts increase by 5% each year. When the employee dies, the City's contribution ceases regardless of whether or not the dependents are still living. Currently, their are eleven retirees participating in the program. The program is advance funded and the City has made available in the fund beginning October 1, 1990 which was the start of the health insurance benefit year, an amount equal to one percent of the unit's current salary base. Balance available in the fund through June 30, 1993 totalled $314,090. This is reported as part of our Self-Insurance Internal Service Fund.