SCORE Funding Calculations FOR THE LIABILITY AND WORKERS

SCORE Funding Calculations FOR THE LIABILITY AND WORKERS’ COMPENSATION PROGRAMS FY 2016/17 SCORE BOARD MEETING PRESENTATION, APRIL 1, 2016 1

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

Outline § Exposure Base – “Projected Payroll” § GL – funding and Ex Mod calculations § WC – funding and Ex Mod 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 CY 2015 x Inflation Factor (CYPa) MEMBER ENTITY Rate/Amount Biggs Colfax Dunsmuir Etna Fort Jones Isleton CY 2015 with Inflation Factor (CYPa) 1. 03 $391, 965 $458, 398 $501, 535 $382, 228 $316, 012 $216, 217 For FY 2016/17 payroll we use 2015 Calendar Year Payroll adjusted 3% for inflation (CYPa). See Column B in Both Funding Spreadsheets B 4

Liability Funding- Banking Layer ($0 to $25, 000) Banking Layer – we multiply the Projected Payroll/$100 times the Rate per $100 of payroll A B C at the 70% Confidence Level (CL) as calculated by the actuary ($1. 44 for FY 16/17). See Column C in the Funding Spreadsheet – (CYPa/$100) x Rate Formula/Allocation MEMBER ENTITY Rate/Amount Biggs Colfax CYP 2015 x Inflation (CYPa/$100) x Factor (CYPa) Rate CY 2015 with BANKING LAYER Inflation Factor (CYPa) at 70% CL 1. 03 $1. 44 $391, 965 $5, 644 $458, 398 $6, 601 5

Liability Funding – Shared Layer ($25, 001 to $500, 000) Shared Layer – we multiply the Projected Payroll/$100 times the Rate per $100 of payroll at the 70% Confidence Level (CL) as calculated by the actuary ($2. 18 for FY 16/17) A Unadjusted Shared Layer Funding. See columns D, E & F E F Member RLR x (CYPa/$100) x Member Cred + Shared Layer x Formula/Allocation Rate (1 -Member Cred) Ex Mod Times the Member’s Experience Modification Factor (Ex Mod) to obtain the D MEMBER ENTITY Rate/Amount Biggs Colfax Dunsmuir SHARED LAYER at 70% CL $25, 001 to $500, 000 $2. 18 $8, 545 $9, 993 $10, 933 UNADJUSTED EX MOD SHARED LAYER Calculation 0. 93 $7, 989 0. 96 $9, 570 1. 47 $16, 037 6

Liability Funding – Ex Mod Calculation Refer to Liability Experience Modification Calculation Spreadsheet § Divide member losses for last five complete years, capped at $50, 000, by the corresponding member payroll to P (Total Member Losses/ Total Member Payroll) X 100 obtain the Member’s Loss Rate (LR). Column P § Multiply the Relative Loss Rate (Q) by a Credibility Factor - See next page Member LR/ Total Pool 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. Column Q Q MEMBER ENTITY Biggs $0. 56 0. 31 Colfax Grand Total SCORE $1. 10 0. 61 $1. 82 $1. 00 7

Liability Funding – Credibility Factor Refer to Liability Experience Modification Calculation Spreadsheet § Multiply the Relative Loss Rate (Q) by a Credibility Factor (S) § 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 x Member Cred + Member CY 2015 x 1. 03 CYPa/(CYPa + LR/Total Pool Inflation Factor Largest Member (1 - Member LR Payroll) Cred) CY 2015 with Relative Loss Inflation Factor Credibility MEMBER ENTITY Rate (RLR) Ex Mod (CYPa) Factor (Cred) Biggs 0. 31 $391, 965 9. 39% 0. 93 Colfax 0. 61 $458, 398 10. 80% 0. 96 Susanville 0. 57 $3, 784, 518 50. 0% 0. 78 Grand Total $1. 82 $20, 569, 511 1. 00 8

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 9

Liability Funding – Excess Layer ($500, 001 to $40 million) CJPRMA Premium The cost of excess coverage shall be charged to each “Participating Member” in the same proportion as the projected payroll is to the total payroll. Member share of total payroll (% Payroll) in Column R. Formula/Allocation H Premium x (Member CYPa/Total Pool CYPa) I Refund x (Member CYPa/Total Pool CYPa) R (Member CYPa/Total Pool CYPa) Total CJPRMA Premium = $127, 592 Charged to members based on % Payroll (H) CJPRMA Refund = $37, 310 Credited to members based on % Payroll (I), per Board direction MEMBER ENTITY Rate/Amount Biggs Colfax EXCESS LAYER $500 k TO $40 M CJPRMA PREMIUM $127, 592 $2, 431 $2, 843 CJPRMA REFUND $37, 310 $711 $831 % Payroll 10 1. 91% 2. 23%

Pollution Coverage Charged to each “Participating Member” in the same proportion as the projected payroll is to the total payroll. J Not all members participate § Total CSAC/CPIE Premium = $6, 614 § Total participating member payroll = $16, 699, 057 § Premium converted to rate per $100 of payroll ($6, 614/$16, 699, 057) x 100 = $0. 03960703 Formula/Allocation MEMBER ENTITY Rate/Amount Biggs Colfax (CYPa/100) x Rate CSAC/CPIEA Pollution Coverage $0. 03960703 $155 $182 § Charged to members based on Payroll x Rate (J) 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 L; plus § A share of the remaining “Administrative Expenses” that is equal among all the members. Column K 18 total members K L M R (Total Admin/2)/ (Member Number of CYPa/Total Pool Formula/Allocation Members CYPa) MEMBER ENTITY Rate/Amount Biggs Colfax 50% ADMIN FIXED EXPENSE $240, 000 $13, 333 Proposed 50% ADMIN FY 16 -17 % PAYROLL Admin Total % Payroll $240, 000 $480, 000 $4, 573 $17, 907 1. 91% $5, 348 $18, 682 2. 23% Total Admin is shown in Column M 12

Liability Funding – Total & Comparison Banking, Shared, Excess, Pollution and Admin Expenses are totaled in Column N Comparison to FY 15 -16 funding In Columns (O), (P), and (Q) MEMBER ENTITY Rate/Amount Biggs Colfax Dunsmuir N O P Q Proposed FY 16 -17 TOTAL FINAL DEPOSIT FY 15 -16 TOTAL DEPOSIT $ Change Overall % Change Overall $33, 807 $37, 515 $45, 630 $33, 516 $36, 036 $51, 532 $291 $1, 479 ($5, 902) 0. 87% 4. 11% -11. 45% 13

WC Funding – Mini-Cities Pool For purposes of 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 (T) for Member % of Total Payroll See Column (U) For Mini-Cities Members % of Mini-Cities Pool Total Payroll A MEMBER ENTITY Rate/Amount Dunsmuir Isleton (does not participate) Live Oak Mt. Shasta Lake Susanville Weed Yreka Subtotal Members Biggs Colfax Etna Fort Jones Loomis Loyalton Montague Portola Rio Dell Tulelake Subtotal Mini Cities T % Payroll U % Total MC Payroll 2. 5% N/A 6. 5% 8. 9% 17. 4% 18. 6% 7. 8% 14. 3% 75. 9% 1. 9% 2. 3% 1. 9% 1. 6% 3. 7% 0. 7% 1. 6% 3. 7% 4. 9% 1. 8% 24. 1% 14 N/A 8. 0% 9. 4% 7. 8% 6. 5% 15. 5% 2. 9% 6. 8% 15. 2% 20. 6% 7. 4% 100. 0%

WC Funding- Banking Layer ($0 to $25, 000) Banking Layer – we multiply the Projected Payroll/$100 times the Rate per $100 of payroll A at the 70% Confidence Level (CL) as calculated by the actuary ($1. 56 for FY 16/17). See Column C in the Funding Spreadsheet – (CYPa/$100) x Rate B C Formula/Allocation CY 2015 with 3% Inflation Factor (CYPa) (CYPa/$100) x Rate MEMBER ENTITY Rate/Amount Dunsmuir Subtotal Members Biggs Subtotal Mini Cities Grand Total CY 2015 with Inflation BANKING LAYER Factor (CYPa) (BL) $0 to $25 K 1. 03 $1. 56 $501, 483 $7, 823 $15, 457, 669 $241, 140 $391, 965 $6, 115 $4, 895, 573 $76, 371 $20, 353, 242 $317, 511 15

WC Funding – Shared Layer ($25, 001 to $250, 000) Shared Layer – we multiply the Projected Payroll/$100 times the Rate per $100 of payroll at the 70% Confidence Level (CL) as calculated by the actuary ($3. 534 for FY 16/17) Times the Member’s Experience Modification Factor (Ex Mod) to obtain the Unadjusted Shared Layer Funding. See columns D, E & F (B) x (D) x (E) = (F) A B D E F Member RLR x CY 2015 with Member Cred 3% Inflation (CYPa/$100) x + (1 -member Shared Layer x Formula/Allocation Factor (CYPa) Rate Cred) Ex Mod CY 2015 with SHARED LAYER UNADJUSTED Inflation Factor (SL) $25 K to MEMBER ENTITY (CYPa) $250 K EX MOD SHARED LAYER Rate/Amount 1. 03 $3. 534 Calc Yreka $2, 912, 180 $102, 916 0. 98 $100, 549 Subtotal Members Biggs Subtotal Mini Cities $15, 457, 669 $391, 965 $546, 274 $13, 852 0. 94 1. 22 $513, 053 $16, 847 $4, 895, 573 $173, 010 1. 22 $210, 415 Grand Total $20, 353, 242 $719, 284 1. 00 $723, 468 16

WC Funding – Ex Mod Calculation Refer to WC Experience Modification Calculation Spreadsheet § 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 17 $1. 05 $0. 94 $0. 87 $0. 02 $0. 03 $1. 43 $1. 00

WC Funding – Credibility Factor Refer to WC Experience Modification Calculation Spreadsheet O § Multiply the Relative Loss Rate (O) by a Credibility Factor (Q) § Credibility Factor = Member Payroll/ (Member Payroll + Largest member Payroll) ◦ Mini Cities at $4, 895, 572 payroll is largest § Ex Mod = Member Relative Loss Rate x Member Credibility Factor + (One - Member Credibility Factor) See Column R P FORMULA Member LR/Total Pool LR MEMBER ENTITY Relative Loss Rate Per $100 (RLR) Dunsmuir Yreka Subtotal Members Biggs Colfax Subtotal Mini Cities Grand Total $1. 05 $0. 94 Q R CYPa/(CYPa+ largest Member RLR x CY 2015 Payroll x member Member Cred + payroll) (1 -member Cred) 3% Inflation Factor CY 2015 with Credibility Inflation Factor (CYPa) Factor (Cred) Ex MOD 1. 03 $501, 483 0. 09 1. 00 $2, 912, 180 0. 37 0. 98 $0. 87 $0. 02 $0. 03 $15, 457, 669 $391, 965 $458, 398 0. 76 0. 07 0. 09 0. 90 1. 22 $1. 43 $1. 00 $4, 895, 572 $20, 353, 241 0. 50 0. 81 1. 22 1. 00 18

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 19

WC Funding – Excess Layer ($250, 000 to Statutory Limit) LAWCX Premium The cost of excess coverage shall be charged to each “Participating Member” in the same proportion as the projected payroll is to the total payroll. Total LAWCX Premium = $246, 511 (Column H) Charged to members based on % Payroll LAWCX Assessment = $15, 902, estimated (Column J) Charged to members based on % Payroll per Board direction A H J Assessment x (Member CYPa/Total Pool CYPa) Premium x (Member Formula/Allocation CYPa/Total Pool CYPa) EXCESS LAYER $250 K TO STATUTORY LIMIT MEMBER ENTITY LAWCX ASSESMENT LAWCX PREMIUM Rate/Amount $246, 511 $15, 902 Dunsmuir $6, 074 $456 Yreka $35, 271 $2, 464 Subtotal Members $187, 218 $14, 076 Biggs $4, 747 $313 Tulelake $4, 358 $254 Subtotal Mini Cities $59, 293 $1, 826 Grand Total $246, 511 $15, 902 20

WC 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 L; plus § A share of the remaining “Administrative Expenses” that is equal among all the members. Column K 8 total members A K Formula/Allocation L (Total Admin/2)/ (Member CYPa/Total Pool Number of CYPa) Members MEMBER ENTITY Rate/Amount Dunsmuir Yreka Subtotal Members Biggs Colfax Subtotal Mini Cities Grand Total 50% ADMIN FIXED EXPENSE $185, 000 $23, 125 $161, 875 $2, 313 $23, 125 $185, 000 N (K) + (L) 50% ADMIN Proposed Admin % PAYROLL Total FY 16 -17 $185, 000 $370, 000 $4, 558 $27, 683 $26, 470 $49, 595 $140, 502 $302, 377 $3, 563 $5, 875 $4, 167 $6, 479 $44, 498 $67, 623 $185, 000 $370, 000 Total Admin is shown in Column M 21

WC Funding – Total & Comparison Banking, Shared, Excess, and Admin Expenses are totaled in Column (P) Comparison to FY 15 -16 funding In Columns (Q), (R), and (S) A P Q Proposed Prior Year FY 16 -17 MEMBER ENTITY TOTAL DEPOSIT FY 15 -16 DEPOSIT Rate/Amount Dunsmuir $59, 731 $62, 262 Yreka $232, 728 $255, 617 Subtotal Members $1, 254, 896 $1, 292, 610 Biggs $33, 800 $32, 187 Tulelake $31, 185 $26, 093 Subtotal Mini Cities $414, 312 $379, 785 Grand Total $1, 669, 207 $1, 672, 395 R S $ Change Overall % Change Overall ($2, 531) ($22, 889) -4. 1% -9. 0% ($37, 714) $1, 613 $5, 092 -2. 9% 5. 0% 19. 5% $34, 527 ($3, 188) 9. 1% -0. 2% 22

Comments & Questions? 23