Self-insurance fund called $12 million underfunded Unfunded liability expected to rise

August 19, 1993|By Andrea F. Siegel | Andrea F. Siegel,Staff Writer

Anne Arundel County's $14.5 million self-insurance fund is underfunded by at least $12.2 million, according to a consultant's report the county received yesterday.

The report, by the firm of William M. Mercer Inc., evaluates the condition of the self-insurance fund as of June 30, 1992, and estimates that the unfunded liability -- the amount of money it would take to pay all outstanding, unsettled or expected claims, beyond what is in the fund -- will grow to $15.3 million by the end of the current fiscal year. It now stands at $12.2 million.

It recommends that the county embark on a five-year plan to get the fund into shape.

The county should nearly triple the $3.58 million it put into the fund this year and contribute about $9.9 million a year for the next two years, the report says. For the following three years, it should continue to put in about $3 million beyond whatever it needs to cover immediate risks.

The report does not take into account any claims that have come in over the past year, or address what the county's liability could be from lawsuits filed by alleged sexual abuse victims of Northeast High School teacher Ronald W. Price.

Mr. Price, who resigned amid criminal charges that he had sexual trysts with three female students, has admitted on television to having had liaisons with at least twice that many students.

Two other teachers are also facing sexual abuse charges.

Exactly what the county's liability might be is not known, in part because the Board of Education was insured by a commercial insurance carrier during most of the period during which the offenses allegedly occurred, said Donna Goins, the county's safety and insurance manager.

The public school system joined the government's self-insurance fund in the fiscal year ending June 30, 1992. It was that merger that created the bulk of the underfunding, the report states.

When the Board of Education signed on, it did not bring the approximately $5.1 million that it estimated would be required to cover its workers' compensation exposure for 1980 to 1991, the report states. The Board of Education's liability accounts for $6.79 million of the county's unfunded liability.

Jerome Klasmeier, central services officer, said yesterday that he and other county officials will meet today with their counterparts in the school system to discuss that and the rest of the report.

The report -- the first such evaluation since 1986, when the county's unfunded liabilities topped its reserves -- praises management of the fund that contained about $14.5 million a year ago. The county will seek an update of this report to use in preparing the coming year's budget.

Where additional money will come from despite tight budgets -- this year's is $663 million -- a tax cap and a rainy day fund of $12 million is another question, Mr. Klasmeier said.

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