SCORE Funding Calculations FOR THE LIABILITY AND WORKERS

SCORE Funding Calculations FOR THE LIABILITY AND WORKERS’ COMPENSATION PROGRAMS FY 2017/18 SCORE BOARD MEETING PRESENTATION, OCTOBER 26, 2017 1

Purpose Explain how the General and Auto Liability (GL) And Workers’ Compensation (WC) funding is calculated per the Master Plan Documents for each Program 2

Outline § Exposure Base – “Projected Payroll” § Experience Base – “Experience Modification Factor” (EMF) §GL - Funding Calculations § WC – Funding Calculations 3

Exposure Base For BOTH Programs = Projected Payroll SCORE has traditionally used the DE 9 payroll for the most recent calendar year and added an inflation factor of 3%. A Formula/Allocation For FY 2017/18 payroll we use 2016 Calendar Year Payroll adjusted 3% for inflation = Projected Payroll (PP). See Column B in Both Funding Spreadsheets MEMBER ENTITY Rate/Amount Biggs Colfax Dunsmuir Etna Fort Jones Isleton B CY 2016 x 3% Inflation Factor Projected Payroll (PP) 1. 03 $398, 466 $664, 432 $655, 259 $376, 289 $311, 071 $200, 376 4

BOTH Programs Use Experience Modification Factors to Adjust Projected Payroll Ex-Mod Adjusted Payroll (Ex. P) is used for the remaining loss funding calculations A Formula/Allocation MEMBER ENTITY Rate Per $100 or Amount Biggs Colfax Dunsmuir B C D Relative Loss Rate x CY 2016 Payroll x Credibility Projected Payroll 3% Inflation Factor x Ex Mod Projected Payroll (PP) 1. 03 Ex Mod Ex-Mod Adjusted Payroll (Ex. P) Calc $398, 466 0. 96 $384, 101 $664, 432 0. 89 $590, 566 $655, 259 1. 57 $1, 025, 854 5

Liability Funding – Ex Mod Calculation § Divide member losses for last five complete years, capped at $50, 000, by the corresponding member payroll to (Total Member Losses/ Total Member Payroll) X 100 obtain the Member’s Loss Rate (LR). Member Loss Rate Per $100 Payroll Relative Loss (LR) Rate (RLR) § Divide the Member Loss Rate by the total SCORE Loss Rate ($1. 82) to obtain the Relative Loss Rate (RLR) for member. § Multiply the Relative Loss Rate by a Credibility Factor - See next page Member LR/ Total Pool LR MEMBER ENTITY Biggs $0. 56 0. 31 Colfax Grand Total SCORE $1. 10 0. 61 $1. 82 $1. 00 6

Liability Funding – Credibility Factor § Multiply the Relative Loss Rate by a Credibility Factor § Credibility Factor = Member Payroll/ (Member Payroll + Largest member Payroll) ◦ Susanville at $3, 784, 518 payroll is largest § Ex Mod = Member Relative Loss Rate x Member Credibility Factor + (One - Member Credibility Factor) Q R S T Member RLR PP/PP + x Member Cred + Member CY 2016 x 1. 03 Largest Member (1 - Member Projected LR/Total Pool Inflation Factor Payroll) LR Cred) Relative Loss Projected Credibility MEMBER ENTITY Rate (RLR) Payroll(PP) Factor (Cred) Biggs 0. 31 $391, 965 9. 39% Colfax 0. 61 $458, 398 10. 80% Susanville 0. 57 $3, 784, 518 50. 0% Grand Total $1. 00 $20, 569, 511 Ex Mod 0. 93 0. 96 0. 78 1. 00 7

Liability Funding- Banking Layer ($0 to $25, 000) Banking Layer – we divide the Ex Mod Adjusted Payroll (Ex. P) by 100 and multiply x the Rate per $100 of payroll at the 70% Confidence Level (CL) as calculated by the actuary ($1. 37 for FY 17/18). See Column E in the Funding Spreadsheet – (Ex. P/$100) x Rate A B C D E CY 2016 Relative Loss Payroll x Rate x Projected 3% Inflation Credibility Payroll x Ex (Ex. P/$100) Factor Formula/Allocation Factor Mod x Rate BANKING LAYER at 70% CL Ex-Mod $0 to Projected Adjusted MEMBER ENTITY Payroll (PP) Ex Mod Payroll (Ex. P) $25, 000 Rate Per $100 or Amount 1. 03 Calc $1. 37 Biggs $398, 466 0. 96 $384, 101 $5, 334 Colfax $664, 432 0. 89 $590, 566 $8, 202 Dunsmuir $655, 259 1. 57 $1, 025, 854 $14, 247 8

Liability Funding – Shared Layer ($25, 001 to $500, 000) Shared Layer – we multiply the Ex-Mod Adjusted Payroll (Ex. P)/100 times the Rate A D F Formula/Allocation Projected Payroll x Ex Mod (Ex. P/$100) x Rate per $100 of payroll at the 70% Confidence Level (CL) as calculated by the actuary ($2. 12 for FY 17/18) to obtain the Shared Layer Funding. See columns D & F MEMBER ENTITY Rate/Amount Biggs Colfax Dunsmuir SHARED LAYER Ex-Mod at 70% CL $25, 000 to Adjusted Payroll (Ex. P) $500, 000 $2. 12 $384, 101 $8, 211 $590, 566 $12, 624 $1, 025, 854 $21, 929 9

Liability Funding – Excess Layer ($500, 001 to $40 million) CJPRMA Premium Excess Layer – we multiply the Ex-Mod Adjusted D Payroll (Ex. P)/100 times the Rate per $100 of payroll as calculated by the CJPRMA actuary Formula/Allocation ($0. 63 for FY 17/18) to obtain the Excess Layer Funding. See column G MEMBER ENTITY Rate/Amount Biggs Colfax G Projected Payroll x (Ex. P/$100) x Ex Mod Rate EXCESS LAYER $500 k TO $40 M Ex-Mod Adjusted CJPRMA Payroll (Ex. P) PREMIUM $0. 62 $384, 101 $590, 566 $2, 426 $3, 731 10

Pollution Coverage We multiply the Projected Payroll (PP) times the Rate per $100 of payroll L § Total CSAC/CPIE Premium = $6, 614 § Total participating member payroll = $16, 699, 057 Formula/Allocation (PP/100) x Rate § Premium converted to rate per $100 of payroll ($6, 614/$16, 699, 057) x 100 = $0. 03670579 § Charged to members based on Projected Payroll x Rate (J) MEMBER ENTITY Rate/Amount Biggs Colfax CSAC/CPIEA Pollution Coverage $0. 03670579 $146 $244 11

Liability Funding – Administrative Expenses § Multiply fifty (50) percent of the Admin Expenses by Member projected payroll divided by the total projected payroll of all Members, Column N; plus § A share of the remaining “Administrative Expenses” that is equal among all the members. Column M 18 total members M (Total Admin/2)/ Formula/Allocati Number of Members on 50% ADMIN EQUAL MEMBER ENTITY SHARES Rate/Amount Total Admin is shown in Column O N (Total Admin/2)/ %PP O U Member (M) + (N) PP/ Total PP Proposed 50% ADMIN % FY 16 -17 % Payroll PAYROLL Admin Total (%PP) $238, 368 Biggs $13, 243 $4, 310 $13, 243 1. 81% Colfax $13, 243 $7, 187 $13, 243 3. 02% 12

Liability Funding – Total & Comparison Banking, Shared, Excess, Pollution and Admin Expenses are totaled P in Column P Comparison to FY 16 -17 funding In Columns (Q), (R) and (S) Formula or Allocation MEMBER ENTITY Rate or Amount Biggs Colfax Dunsmuir Q Loss Funding + Refund + Pollution + Admin Proposed FY 1718 TOTAL FINAL FY 16 -17 TOTAL DEPOSIT 70% CL $32, 949 $44, 028 $62, 041 R S $ Change Overall % Change Overall 70% CL $33, 168 $37, 054 $50, 678 (219) 6, 974 11, 364 -0. 7% 18. 8% 22. 4% 13

WC Funding – Mini-Cities Pool For purposes of Loss Funding, such “Mini-Cities” pool shall be treated as if it were a single “Participating Member”. “Deposit Premiums” for the “Mini-Cities” pool shall be distributed to its members in the proportion the member’s payroll is to the total payroll of all the members of the “Mini-Cities” pool. See Column (U) for Member % of Total Payroll See Column (V) For Mini-Cities Members % of Mini-Cities Pool Total Payroll 14

BOTH Programs Use Experience Modification Factors to Adjust Projected Payroll Ex-Mod Adjusted Payroll (Ex. P) is used for the remaining loss funding calculations A B C D (Projected Payroll x Ex Mod)/Ex. P CY 2015 Payroll + Relative Loss Rate Adjustment Formula/Allocation 3% Inflation Factor x Credibility Factor Ex-Mod Projected Payroll Adjusted MEMBER ENTITY (PP) EX MOD Payroll (Ex. P) Rate/Amount 1. 03 Calc Dunsmuir $501, 483 1. 03 $500, 254 Subtotal Members $15, 457, 669 0. 92 $14, 420, 575 Biggs $391, 965 1. 25 $475, 000 Subtotal Mini Cities $4, 895, 573 1. 25 $5, 932, 667 Grand Total $20, 353, 242 1. 03 $20, 353, 242 15

WC Funding – Ex Mod Calculation § Divide member losses for last four complete years, less 4850 N salary continuation, capped at $50, 000, by the corresponding member payroll to obtain the Member’s Loss Rate. (Column N) FORMULA § Divide the Member Loss Rate by the total SCORE Loss Rate = Relative Loss Rate for member (Column O) § Multiply the Relative Loss Rate (O) by a Credibility Factor – See next page MEMBER ENTITY Dunsmuir Yreka Subtotal Members Biggs Colfax Subtotal Mini Cities Grand Total O Total Member losses/Total LR/Total Pool Member Payroll LR Relative Loss Rate Per $100 (LR) (RLR) $2. 36 $2. 12 $1. 96 $0. 04 $0. 07 $3. 23 $2. 26 16 $1. 05 $0. 94 $0. 87 $0. 02 $0. 03 $1. 43 $1. 00

WC Funding – Credibility Factor § Multiply the Relative Loss Rate (O) by a Credibility Factor (Q) § Credibility Factor = Member Payroll/ (Member Payroll + Largest member Payroll) ◦ Susanville at $4, 091, 391 payroll is largest § Ex Mod = Member Relative Loss Rate x Member Credibility Factor + (One - Member Credibility Factor) See Column R 17

WC Funding- Banking Layer ($0 to $25, 000) Banking Layer – we multiply the Ex Mod Adjusted Payroll (Ex. P)/$100 times the Rate per $100 of payroll D E (Projected Payroll x Ex Mod)/Ex. P Adjustment Factor (Ex. P/$100) x Rate at the 75% Confidence Level (CL) as calculated by the actuary ($1. 73 for FY 17/18). See Column E in the Funding Spreadsheet – (Ex. P/$100) x Rate MEMBER ENTITY Rate/Amount Colfax BANKING Ex-Mod Adjusted LAYER 75% CL Payroll (Ex. P) $0 to $25 K $1. 73 $500, 254 $8, 504 18

WC Funding – Shared Layer ($25, 001 to $250, 000) Shared Layer – we multiply the Ex Mod Adjusted A F Formula/Allocation (Ex. P/$100) x Rate Payroll (Ex. P)/$100 times the Rate per $100 of payroll at the 75% Confidence Level (CL) as calculated by the actuary ($4. 03 for FY 17/18). See Column F in the Funding Spreadsheet – (Ex. P/$100) x Rate MEMBER ENTITY Rate/Amount Yreka Subtotal Members Biggs Subtotal Mini Cities Grand Total SHARED LAYER 75% CL $25 K to $250 K $4. 03 $134, 554 $814, 401 $15, 552 $73, 699 $888, 101 19

WC Funding – Excess Layer ($250, 000 to Statutory Limit) LAWCX Premium Excess Layer – we multiply the Ex Mod Adjusted Payroll (Ex. P)/$100 times the Rate per $100 of payroll as calculated by the LAWCX actuary ($1. 27 for FY 17/18). See Column G in the Funding Spreadsheet – (Ex. P/$100) x Rate A G Formula/Allocation (Ex. P/$100) x Rate MEMBER ENTITY Rate/Amount Dunsmuir Yreka Subtotal Members Biggs Tulelake EXCESS LAYER $250 K TO STATUTORY LAWCX PREMIUM $1. 27 $8, 589 $41, 738 $252, 623 $4, 824 $4, 425 Subtotal Mini Cities Grand Total $23, 519 $276, 000 20

WC Funding – Administrative Expenses § Multiply seventy percent (70%) of the Admin Expenses by Member projected payroll divided by the total projected payroll of all Members, Column M; plus § A share of the remaining “Administrative Expenses” (30%) that is equal among all the members. Column L A L M (Total Admin x. 3)/ (Total Admin x Number of Formula/Allocation Members. 7)/ %PP N (L) + (M) 30% ADMIN FIXED 70% ADMIN % Proposed Admin MEMBER ENTITY EXPENSE PAYROLL Total FY 17 -18 Rate/Amount $109, 794 $256, 187 $365, 981 Dunsmuir $6, 458 $7, 698 $14, 157 Yreka $6, 458 $36, 137 $42, 595 Subtotal Members $71, 043 $234, 003 $305, 047 Biggs $6, 458 $4, 681 $11, 140 Colfax $6, 458 $4, 421 $10, 879 Subtotal Mini Cities $38, 751 $22, 183 $60, 934 Grand Total $109, 794 $256, 187 $365, 981 Total Admin is shown in Column M 21

WC Funding – Total & Comparison Banking, Shared, Excess, and Admin Expenses are totaled in Column (Q) Comparison to FY 16 -17 funding In Columns (R) and (S) A Q R Formula/Allocation (H) + (K) + (N) Proposed FY 17 Prior Year FY 16 -18 TOTAL MEMBER ENTITY DEPOSIT 17 DEPOSIT Rate/Amount 75% CL 70% CL Dunsmuir $60, 425 $62, 262 S T $ Change Overall % Change Overall ($1, 837) 3. 2% Subtotal Members Biggs Tulelake $1, 259, 294 $38, 207 $35, 578 $1, 292, 610 $37, 503 $34, 613 ($33, 316) $704 $966 36. 8% 1. 9% 2. 8% Subtotal Mini Cities Grand Total $189, 857 $1, 912, 268 $462, 801 $1, 722, 095 ($272, 944) $190, 172 -59. 0% 11. 0% 22

Comments & Questions? 23

Liability Funding – Adjusted Shared Layer § Shared Layer x Ex Mod = Unadjusted Shared Layer. Column F A Total unadjusted funding does not balance with original funding total ($427, 475 v. $448, 415). To balance the amount the Unadjusted Shared Layer is divided by a Weighted Ex Mod G Shared Layer x SL x EX Mod/ (Tot. Formula/Allocation Ex Mod Weighted Ex Mod) MEMBER ENTITY Rate/Amount § Weighted Ex Mod = unadjusted shared layer/shared layer = 0. 9533 F UNADJUSTED SHARED LAYER* Calculation Biggs $7, 989 $8, 380 Colfax $9, 570 $10, 039 $16, 037 $16, 823 $427, 475 $448, 415 Dunsmuir Grand Total § Adjusted Shared Layer = SL x Ex Mod/Total Weighted Ex Mod. Column G Adjusted Shared Layer balances with the original funding amount per actuary 24

WC Funding – Adjusted Shared Layer § Shared Layer x Ex Mod = Unadjusted Shared Layer. Column F A F G Total unadjusted funding does not balance with Formula/Allocation SL x EX Mod/ Shared Layer x Total Weighted Ex Mod MEMBER ENTITY Rate/Amount Dunsmuir Subtotal Members Biggs Subtotal Mini Cities Grand Total UNADJUSTED SHARED LAYER* Calculation $17, 798 $17, 695 $513, 053 $510, 086 $16, 847 $16, 749 $210, 415 $209, 198 $723, 468 $719, 284 original funding total ($723, 468 v. $719, 284). To balance the amount the Unadjusted Shared Layer is divided by a Weighted Ex Mod § Weighted Ex Mod = unadjusted shared layer/shared layer = 1. 00582 § Adjusted Shared Layer = SL x Ex Mod/Total Weighted Ex Mod. Column G Adjusted Shared Layer balances with the original funding amount per actuary 25