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Program A: Administrative

Program Authorization: R.S. 39:1527-1544

PROGRAM DESCRIPTION

The mission of the Office of Risk Management (ORM), in the Division of Administration, is to develop, direct, and administer a cost-effective and comprehensive risk management program for all state agencies, boards, and commissions of the State of Louisiana and any other entity for which the state has an equity interest, in order to preserve and protect the assets of the State of Louisiana.

The goals of the Office of Risk Management are:

1. Improve accountability.

2. Improve efficiency of standard procedures.

3. Minimize losses and achieve financial stability.

4. Identify exposure and losses, actual and potential methods of outcome-based management which focus on the results of reducing the exposure and managing.

5. Maintain sound principles of insurance and management by providing training to entry level adjusters and examiners to instruct them in basic principles and techniques of claims adjusting.

The Administrative Program includes the following activities: Administration, Accounting, Audit/Statistics, Underwriting, and Loss Prevention.

The Administration Unit is charged with directing the primary focus of the agency, the self-insurance program of the state.

The Accounting Unit directs all fiscal operations of the agency, which include cash receipts and disbursements, accounts receivable and payable, payroll, budget, financial statement preparation, special fiscal studies or requests, reports for actuarial analysis, contract preparation and approval, distribution of claims payments, and quality control on the computerized claims management system.

The Audit/Statistics Unit is responsible for all functions required to develop and analyze statistical data for use in premium determination and engineering of risks to reduce losses. It obtains information from accounting, claims, and underwriting and develops statistical data to provide information to management for decision making. In addition, it is responsible for claims writing functions, premium development, and records management.

The Underwriting Unit is responsible for commercial insurance purchases through a competitive bid process and for billings for all coverages to all state agencies. The unit's goal is to obtain the most effective coverage that is cost-beneficial to the state. All insurance coverages are mandatory, which means that coverage is required by either the ORM, legislative auditors, legislative statues, or agency rules and policies.

The Loss Prevention Unit assists all state agencies in the prevention and reduction of employee job-related accidents, injuries, and loss of state property, thereby reducing the direct and indirect costs to the state. The unit analyzes loss experience data for each risk, identifies various causes of losses, and isolates critical causes and locations. It communicates analyses to safety coordinators of various agencies; develops and coordinates a comprehensive loss prevention program for the state, which includes loss control management, facility inspection, accident investigation, rules and regulations, and communications; and trains all state agency safety personnel incidental to facility inspections and accident investigations.

The Claims Unit is responsible for all adjusting functions of including investigation, management, and payment of claims.

OBJECTIVES AND PERFORMANCE INDICATORS

1. In FY 1998-99, the Administrative Program will provide all state agencies with adequate insurance coverage at a price that is less than the equivalent commercial coverage cost.

1 The Office of Risk Management develops premiums that would cover costs. However, this figure is largely controlled by the governor (through budget recommendations) and the legislature (through the amounts appropriated). Ideally, there should be a balance between the percentage of savings, percentage of claims costs covered, and percentage of increase/decrease in liabilities. Savings above 30%, percentage of costs covered above 100%, and decrease in liabilities below 0% would reflect that ideal.

2 A survey instrument is under development. However, data will not be available for this performance indicator until FY 1998-99.

2. In FY 1998-99, the Administrative Program, through the Loss Prevention activity, will conduct safety audits on all state agencies.

1 Performance data are being collected, beginning in FY 1997-98. Performance indicator data will be reported in the future.

RESOURCE ALLOCATION FOR THE PROGRAM

SOURCE OF FUNDING

This program is funded with Fees and Self-generated Revenues. Fees and Self-generated Revenues are derived from premiums billed for insurance provided by this Office and from interest earnings from the self-insurance fund. State and quasi-state entities obtain insurance through the Office of Risk Management.

ANALYSIS OF RECOMMENDATION

GENERAL FUND

TOTAL

T.O.

 

DESCRIPTION

 

 

 

 

 

$0

$6,702,864

139

 

ACT 1430 FISCAL YEAR 1997-1998

 

 

 

 

 

 

 

 

 

BA-7 TRANSACTIONS:

$0

$0

0

 

None

 

 

 

 

$0

$6,702,864

139

 

EXISTING OPERATING BUDGET - December 10, 1997

 

 

 

 

 

$0

($4,479)

0

 

Equipment/Major Repairs Adjustments (Nonrecurring: -$113,300; Replacement/New: +$108,821)

$0

$49,098

0

 

Annualization of 1997 -'98 Merit Pay Adjustment(s)

$0

$88,614

0

 

1998 -'99 Merit Pay Adjustment(s)

$0

$231,922

0

 

Attrition Adjustment(s)

$0

($24,263)

0

 

Retirement Rate Adjustment(s)

$0

($63,621)

(2)

 

Personnel Reduction(s)

$0

$1,798

0

 

Adjustments for Civil Service, Training and Other Statewide Interagency Transfer Activities

$0

($213,596)

0

 

Reductions in various Expenditure Categories; Including Reductions to fully fund Salaries

$0

$16,888

0

 

Risk Management Adjustment(s)

$0

$11,509

0

 

Rent in State-owned Buildings Adjustment(s)

$0

($2,950)

0

 

Maintenance of State-owned Buildings Adjustment(s)

$0

($557)

0

 

UPS Fees

$0

$4,463

0

 

Legislative Auditor Fees

 

 

 

 

 

$0

$6,797,690

137

 

TOTAL RECOMMENDED

 

 

 

 

 

$0

$94,826

(2)

 

DIFFERENCE (TOTAL RECOMMENDATION AND EXISTING OPERATING BUDGET

The total means of financing for this program is recommended at 101.4% of the existing operating budget. It represents 85.9% of the total request ($7,906,984) for this program. At the recommended level of funding, approximately the same level of services will be provided by this program.

PROFESSIONAL SERVICES

$103,400

 

Reserve analysis and statistical forecasting, etc.

$25,850

 

Training sessions for Underwriting/Auditing Units, Insurance, and Classifying Rating, etc.

$130,998

 

Loss prevention safety - Training courses to teach professional safety and health courses

$20,000

 

State Police inspections - Contract for accident reconstruction and investigative services involving fatalities

 

 

 

$280,248

 

TOTAL PROFESSIONAL SERVICES

OTHER CHARGES

$16,275

 

Treasurers' Office - Pro-rata share of the State's Central Depository Banking cost

$12,480

 

Division of Administration - Legal Services

$13,763

 

Pro-rata share of the cost of operations of the Department of Civil Service

$1,276

 

Pro-rata share of the cost of operations of the Comprehensive Public Training Program

$2,654

 

Pro-rata share of the cost of operations of the Uniform Payroll System

$34,987

 

Legislative Auditor expense

$67,220

 

Division of Administration - Executive Management

 

 

 

$148,655

 

TOTAL OTHER CHARGES

ACQUISITIONS AND MAJOR REPAIRS

$6,811

 

Replacement of broken obsolete office equipment

$102,010

 

Replacement of office personal computers and printers

 

 

 

$108,821

 

TOTAL ACQUISITIONS AND MAJOR REPAIRS


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