Risk Management
Annual Report
Fiscal Year Ended June 30, 2008

COCONINO
MOHAVE

APACHE
NAVAJO

YAVAPAI

LA PAZ

MARICOPA
COUNTY

GILA

GREENLEE

PINAL

GRAHAM

YUMA

PIMA
COCHISE

SANTA CRUZ

MARICOPA COUNTY
RISK MANAGEMENT ANNUAL REPORT
FISCAL YEAR 2007-08

TABLE OF CONTENTS

I.

EXECUTIVE SUMMARY

II.

CLAIMS DIVISION

III.

SAFETY DIVISION

IV.

ENVIRONMENTAL DIVISION

V.

ADMINISTRATIVE DIVISION

VI.

STATISTICS AND COVERAGE

EXECUTIVE
SUMMARY

EXECUTIVE SUMMARY

RISK MANAGEMENT ANNUAL REPORT
EXECUTIVE SUMMARY

Presented herein is the Maricopa County Risk Management Annual Report, for the fiscal year July 1,
2007 through June 30, 2008.
This report contains summaries of the fiscal year’s losses and costs for Maricopa County’s auto
liability, auto physical damage, general liability, medical malpractice, property damage, workers’
compensation, and unemployment exposures. This report, along with ongoing quarterly reports to
County departments during the year, are intended to assist departments in recognizing the nature and
extent of their losses, and to lead departments to consider implementation of effective loss control
and prevention programs.
Structure and Mission
As of June 30, 2008, the Risk Management Department completed its 27th year administering the
County’s self-insurance program. Risk Management’s mission is to provide claim management,
safety consultations and training, environmental consultations and insurance coverage services to
Maricopa County departments, districts, and Trust members so they can reduce or eliminate losses.
Its vision is to be recognized as a leader, and to be relied upon for a Countywide risk management
philosophy and culture. Risk Management’s primary activities are:
•
•
•
•
•
•
•
•
•

Risk consulting
Insurance procurement above self-insured retention levels
Maricopa County Self-Insured Trust Fund management and financing
Administration and monitoring of third party administrators’ adjusting
workers’ compensation and unemployment claims
Investigation and disposition of casualty and property claims and lawsuits
Safety training, reporting, and compliance
Loss control programs
Environmental investigation, remediation, and reporting
Contractual indemnification and insurance requirement language drafting and review

The Risk Management Department is divided into three operating divisions, Claims, Safety, and
Environmental, and one Administration division. Highlights for each division are contained in this
report. The Department strives to accomplish its mission with assistance and direction from the
Maricopa County Board of Supervisors, the Maricopa County Self-Insured Trust Fund Board of
Trustees, and the Office of the County Attorney. The Risk Manager reports to the Chief Financial
Officer of Maricopa County.

I-1

Self-Insured Trust Fund
Arizona law (ARS § 11-981) authorizes Maricopa County to self-insure, procure insurance from any
insurer authorized by the State of Arizona Department of Insurance, or both. Insurance (defined in
Title 20 Arizona Revised Statutes) includes, but is not limited to, auto liability, auto physical
damage, general liability, medical malpractice, property, workers’ compensation, and
unemployment insurance.
Upon establishment of a self-insurance program, Maricopa County is required to designate a Trust
Administrator (Risk Manager), and establish a Trust. The Trust is funded by an allocation of funds
from General Fund and Non-General Fund departments and Special Districts, or such other funding
techniques permitted by state statute and authorized by the Trust’s Board of Trustees.
A Board of Trustees manages and directs the Trust’s activities and affairs. Trustees must be United
States citizens and residents of Maricopa County, and are appointed by the Maricopa County Board
of Supervisors (BOS) and County Manager. During FY07-08, the following individuals were
members of the Board of Trustees:
Trustee District/Appointment

Trustee

BOS District One
BOS District Two
BOS District Three
BOS District Four
BOS District Five
BOS Chairman
County Manager

Michael Liburdi
Joel Sterrett
Vacant
David Tierney, Chairman
Richard “Joe” Lugo
BOS Chairman
Tom Manos
FY07-08 Results

Maricopa County enjoyed good results this fiscal year in the risk/exposure area. Total dollars paid
plus open reserves were $10,702,417, down 6.43% for this fiscal year compared to the prior fiscal
year. The Cost of Risk also decreased slightly. Risk Management’s costs decreased $2,554,559
8.18%, resulting in the Cost of Risk (Risk Management’s costs compared to total County and MIHS
expenditures) coming in at a close to acceptable 1.12%. (Note that the number of claims filed this
fiscal year decreased 15.37%, from 1,483 to 1,255. This claims figure represents the number of
claims filed in the fiscal year. This figure is not based on event date, and does not include
unemployment or workers compensation claims.) The County realized $2,857,147 in net savings in
FY07-08 through the use of in-network medical providers and a medical bill review service, and
collected $1,385,407 through subrogation, restitution, and deductible recovery efforts (the Claims
and Environmental divisions, and our Third Party Administrator for Workers’ Compensation).
Maricopa County has a population of over 3.9 million people. It is the 4th most populous County in
the United States, larger in population than 21 states, and larger geographically than 7 states. The
County has seen some significant growth rate in population, though this growth rate has receded
somewhat in later part of the fiscal year due to the negative economical conditions nationwide. Size
I-2

and growth, while economically positive, can result in an increase in the number of claims. Risk
Management’s emphasis on responsible claim handling and a strong proactive loss prevention and
safety program is designed to keep any increase to a minimum.
The number of Maricopa County and MIHS employees varies from month to month. For FY06-07
and FY07-08, the numbers of actual positions were 18,563 and 19,155, respectively. (Note that we
are using “actual positions” not “actual budgeted positions” as we have used in the past.) Workers’
compensation claims with an event date in FY06-07 were 1,420, while Workers’ Compensation
claims with an event date in FY07-08 were 1,380. (Note, here we use event dates for these claims as
these figures better reflect safety issues within the fiscal year.) This reflects an increase in the
number of actual positions of 3.09% over the previous fiscal year, and a decrease in the number of
workers’ compensation claims of 2.82% over this period. This highlights improvement with safety
concerns in the County this fiscal year.

I-3

Cost of Risk
Cost of Risk is a comparison of the County's expenditures of the risk management program to the
County’s overall expenditures in the fiscal year. The effectiveness of a risk management program
can be reflected in this comparison since the cost of a risk management program includes paid
claims (amounts paid in the fiscal year without regard to the year the claim arose), insurance
premiums, safety and loss control programs, and operational and administrative expenses, against
total County's expenditures. During the past three fiscal years, Cost of Risk for the County has
decreased from 1.22% to the present 1.12%. This is a positive step toward Risk Management’s
commitment to reduce this measure to below 1%.
FY05-06

FY06-07

FY07-08

Claims and Premiums
Auto Liability

$565,241

$1,275,627

$1,245,872

General Liability

$3,808,717

$4,072,737

$3,168,264

Medical Malpractice

$3,439,084

$4,242,501

$3,675,378

$508,957

$1,169,794

$608,084

$3,857,860

$3,756,153

$4,420,652

$776,128

$633,685

$769,150

$4,370,784

$4,308,288

$4,069,441

$17,326,771

$19,458,785

$17,956,841

$8,039,308

$8,407,981

$7,329,475

$42,253

$44,366

$93,488

$145,000

$54,575

Consulting and Management Fees

$179,516

$284,036

$212,109

Claims Administration Service Fees

$470,081

$556,856

$601,337

$526,586

$404,940

$2,325,865

$1,821,241

$2,084,536

$11,108,258

$11,783,953

$10,731,338

$28,435,029

$31,242,738

$28,688,179

$2,322,075,397

$2,529,353,568

$2,557,866,240

1.22%

1.24%

1.12%

Property/Auto Physical Damage
Workers' Compensation
Unemployment
Premiums
Subtotal
Other Costs
Legal Expenses
Actuary Fees
Broker Fees

Workers’ Compensation Taxes
Administrative
Subtotal
Total Risk Management Costs
Total County Expenditures
TOTAL COST AS A PERCENTAGE
OF COUNTY EXPENDITURES
Notes:

1.
2.
3.
4.

Paid claims represents the amount paid in the fiscal year regardless of occurrence date and
does not include Reported But Not Paid (RBNP) or Incurred But Not Reported (IBNR) reserves.
Amounts as valued on June 30, 2008, as reported in the Advantage Financial System.
Total County Expenditures includes Maricopa County Special Health Care District (d/b/a MIHS) as
reported in the MIHS Audited Financial Statements on June 30, 2008.
Actuary Fees and Workers’ Compensation Taxes are listed separately starting FY06/07. In previous years,
these were included in the Administrative line item.

I-4

Acknowledgment
The Risk Management Department would like to thank the Maricopa County Board of Supervisors,
Elected Officials, County Manager, Chief Financial Officer, Self-Insured Trust Fund Board of
Trustees, County Attorney’s Office, County departmental management, employees, and volunteers
for their demonstrated interest in reducing claims and lawsuits, and their commitment to safety.
Respectfully submitted,

Peter J. Crowley
Risk Manager
Bill Warren, Assistant Risk Manager, Safety Division
Milli Lee, Acting Safety Manager, Safety Division
Ted Howard, Manager, Claims Division
Samantha Wright-Sprague, Manager, Administration Division
Rita Neill, Manager, Environmental Division
Norma Vega, Administrative/Insurance Coordinator
Michelle Black, Accountant
Jenny Durda, Information Specialist
and the entire Risk Management Staff
Notes:

For presentation purposes only, the dollar amounts and associated percentages in all of the charts and tables
presented herein, have been rounded to the nearest whole dollar or percent.

I-5

CLAIMS
DIVISION

CLAIMS DIVISION

CLAIMS DIVISION
The Claims Division of Risk Management handles all property and liability claims filed against
Maricopa County and its employees. The Division is staffed with five full time adjusters, a
manager and support staff. In addition to handling the claims described above, the Division
oversees the adjustment of workers’ compensation and unemployment claims by third party
administrators. These claims are handled by Pinnacle Risk and Talx Employer Services.
Claims are investigated and evaluated, then either paid or denied on their merits. Litigated
claims are assigned to either the County Attorney’s Office or outside counsel. This Division
works with assigned attorneys to obtain the most favorable result possible for the County. We
are committed to reducing the cost of risk to the County through proper claims management.
FY07-08 Summary
The Claims Division handled 2,417 new worker’s compensation, general liability, medical
malpractice, automobile and property claims in FY07-08, a fairly substantial decrease over the
previous fiscal year. This is the second consecutive fiscal year decrease in new claims. The
County had otherwise experienced a significant upward trend annually.
Due to the efforts of the Claims Division, the County continues to realize substantial savings
from its property and liability exposures. The Division is committed to work to further improve
in these areas and help reduce the cost of risk to the taxpayers of Maricopa County.
In addition to handling claims, the Division provides the following services to the County:
• Subrogation, restitution, and deductible recovery. In FY07-08, the Division collected
$791,893 from parties at fault for damage to County personnel and/or property.
•

Consultation services. We report to and consult with County departments on coverage
issues, pending claims, and litigation. This is done as both an informational tool and as a
means to find ways to reduce claims or exposures.

•

Review and management of the third party administrator providing adjustment of
workers’ compensation claims for County employees. For FY07-08, 1,380 worker’s
compensation claims were filed by County employees. In addition to adjustment of these
claims, Pinnacle Risk Management Services and its affiliated vendors conduct bill
reviews, and employ discounts available to the County for participation in a PPO
network. As a result, the County has realized significant savings in its worker’s
compensation exposure. The most recent data available indicates that the County paid
$124 per employee in compensation benefits for FY05-06, far less than other Counties
comparable by size of workforce. Further, the County realized a net savings of
$2,857,147 in medical expense as a result of bill review and $593,514 through
subrogation, restitution, and deductible recovery efforts.

•

Review of indemnity and insurance language in County contracts.

•

Oversight of outside contractors providing automobile and property appraisal services,
vehicle repair services, and structured settlement services to the County.

•

Coordinate recovery for County agencies from our excess property and liability insurance
policies.

II-1

SAFETY DIVISION

SAFETY
DIVISION

SAFETY DIVISION
The primary objective of the Maricopa County Safety & Loss Control Program is to protect the
County against losses which would significantly affect our personnel, operation, property, budget
and ability to fulfill our responsibilities to the public. Objectives of the Safety Division’s
programs are, on behalf of management, to direct all efforts toward reducing occupational and
operational risks that can threaten the continuity of the service we provide and to maintain
budget integrity. These objectives can be accomplished by:
1.
2.
3.
4.

Full management support of our safety policies
Maintaining an effective, comprehensive safety program
Identifying potential risks and hazard awareness
Training employees in safe work practices

In reviewing departmental safety performance, workers compensation data this fiscal year,
claims showed a decrease of 3 percent over last year (1,420 claims in FY06-07, and 1,380 claims
in FY07-08, see page VI-9 of the statistics and coverage section). The numbers of claims
decreased and were less severe. Workers’ Compensation payments and reserves (see page VI-1
of the statistics and coverage section) were decreased from $4,068,530 in FY06-07 to $3,385,371
in FY07-08, a $683,159 or 17 percent reduction in cost.
Injury Incident Rates
8.00
5.80

6.00

5.50
4.60

3.90

5.00

5.05

07

08

3.70

4.00

2.00

0.00
02

03

04

05

MC Inj Inc Rate
06-08 Inc Year Avg

06

Linear (MC Inj Inc Rate)

Working to improve workplace safety and ensure OSHA compliance, the Division:
•
•
•
•
•

Trained six County employees to operate the new computerized Caterpillar M Motor
Grader, the most technological advanced machine in the last 40 years
Partnered with MCSO Bomb Squad to develop the new bomb squad training area
Attended the world-wide CON Expo for the latest in equipment, product innovations and
technological advances for the construction industry
Completed a new 5 year Educational Services Agreement with Gateway Community
College
Conducted a County-wide three-day Employee Safety Fair and Equipment ROADEO,
with more than 500 employees participating in 93 Safety Classes along with events
testing operator skills and knowledge of equipment operations

Safety is a corporate effort! As Maricopa County continues to develop its future strategies in
safety management systems, it is necessary that each level of management take a proactive role
in safety development. Management commitment and front line supervision accountability is the
key to sustaining the safety process and reducing unsafe work practices.
III-1

ENVIRONMENTAL DIVISION

ENVIRONMENTAL
DIVISION

ENVIRONMENTAL DIVISION
The Environmental Division of Risk Management conducts remedial investigations and takes
action to minimize County environmental liability as determined by law, regulation, statute,
and/or court order. The Division provides leadership in the area of pollution prevention and
environmental management, and has developed a proactive assessment and action process that
mitigates environmental liabilities, saving the County in the cost of remedial action and
regulatory penalties. Possible environmental liability costs of known sites have been reduced
from previous estimates of over $500 million for FY95-96, to approximately $6 million for
FY07-08.
This fiscal year the Division:
•
•
•
•

•

•

•
•
•
•

Completed Phase I, II and III pre-purchase environmental evaluations for former Phoenix
Newspaper, Inc. properties in Mesa.
Completed drinking water potability certifications for 5 County facilities which use water
from on-site wells.
New monitoring well installed at the New Cave Creek Landfill. Continued groundwater
monitoring and completed site characterization field work.
Continued preparation of new Stormwater Pollution Prevention Plans (SPPPs) for 15
County properties. New Spill Prevention Containment and Countermeasure Plans for 7
County sites completed and site specific training conducted.
Completed Phase I and II environmental assessments for 5 facilities. Completed
assessments for indoor air quality (20), asbestos and lead paint (11) and mold (7) at
additional facilities.
Assisted Parks and Recreation, Facilities Management, Superior Courts, Real Estate,
MCSO, MCDOT, Juvenile Probation, Flood Control, Legal Defender, Environmental
Services, Animal Control, MCAO, Assessor, Agricultural Exchange, WIC, Solid Waste
and Air Quality in preparing Requests for Proposals for environmental studies, and
conducting indoor air quality review, asbestos and lead paint surveys, and air permit
reviews.
Participated in Hassayampa Superfund Steering Committee.
Continued environmental monitoring of a former County landfill. Replaced damaged
landfill gas monitoring at the site. Drainage options for site considered.
Worked with APS to allow continued access to County property to conduct USEPA
mandated sampling to characterize contamination from APS facility.
Continued to provide sound environmental compliance information to requesting
departments.

The Division recognizes that environmental risks are capable of being managed through risk
control and prevention measures. These measures include separation of hazardous materials,
effective pollution prevention and loss control techniques, redundant controls and safety
mechanisms, double and triple containment of tanks and flow tubes, emergency response plans,
and effective training of employees. The Division will continue to seek to implement these
measures.
IV-1

ADMINISTRATIVE DIVISION

ADMINISTRATIVE
DIVISION

ADMINISTRATIVE DIVISION
The Administrative Division is responsible for procuring the insurance policies above the County’s
self-insured retention, providing certificates of insurance to County departments, preparing the
annual user charges for services, preparing the annual budget and financial statements for the Trust,
and providing administrative support to the other divisions within the department. Included in this
report is a comparison of the assets and liabilities of the Trust over a three-year period, the trend of
the current insurance market, a budget summary, and the financial statements through fiscal year
ended June 30, 2008.
Self-Insured Trust Fund
Combined Balance Sheet Comparison
FY05-06, FY06-07, and FY07-08

Assets
Liabilities
Net assets (deficit)

FY05-06
$36,624,674
$57,458,078
($20,833,404)

FY06-07
$33,194,501
$59,207,749
($26,013,248)

FY07-08
$44,847,793
$59,277,021
($14,429,228)

During the FY05-06 through FY07-08 period, the Trust’s assets increased $8,223,119, or 22.45%,
from $36,624,674 to $44,847,793. During the same period, the Trust’s liabilities increased
$1,818,943, or 3.17%, from $57,458,078 to $59,277,021. Net assets (deficits) are a result of a spend
down of the self-insured trust fund in a prior period, where user departments were only charged for
administrative costs while claims and insurance were still being paid by Risk Management on behalf
of these user departments. FY07-08 balance sheet details are provided in the financial section. The
Trust began billing user departments for the full costs of claims and insurance in FY99-00.
Insurance Policies
Risk Management continues to analyze current insurance market trends. It is expected that
insurance premiums in all lines of coverage will increase somewhat, but the “hard” market of the last
few years may be abating. It is projected that potential increases in annual premium costs will not be
as great as in the past years. Risk Management will continue working closely with our insurance
broker to aggressively pursue reasonable insurance coverages to protect Maricopa County.
At the close of this fiscal year, the County’s major insurance policies are as follows:
Coverage

Policy Period

Limits

Deductible/SIR

General Liability
(Excess Liability)

3/1/08 – 3/1/09

$5 million
$25 million

$5 million SIR

Medical Malpractice

12/4/07 – 12/4/08

$25 million

$5 million SIR

Workers’ Compensation

7/1/07 – 7/1/08

$25 million

$2 million SIR

V-1

Property Damage

7/1/07 – 7/1/08

$300 million

$100,000 per occ.

Budget Summary
The expenditure budget for the Risk Management Department for FY07-08 was $35,886,328. Of
this amount, $1,758,004 was for personnel costs, $492,471 was for supplies and services, and
$33,635,853 was for insurance, legal, and claims and claims related expenditures. On a percentage
basis, 93.73% of Risk Management’s budget is for insurance, legal, and claims and claim related
expenditures.
The revenue budget for the Risk Management Department for FY07-08 was $39,272,014. Of this
amount, $38,272,014 was from user charges and $1,000,000 was from interest earnings. On a
percentage basis, 97.45% of the revenue is from user charges. These user charges are based on
actuarially estimated claims payments and insurance projections for what the Risk Management
Department will pay out on behalf of County departments.
Financial Statements
The actual expenditures for the Risk Management Department for FY07-08 were $29,039,909. Of
this amount, $1,727,685 was for personnel costs, $323,901 was for supplies and services, and
$26,988,323 was for insurance, legal, and claims and claims related expenditures. On a percentage
basis, 92.94% of Risk Management’s actual expenditures are for insurance, legal, and claims and
claims related expenditures.
The actual revenue for the Risk Management Department for FY07-08 was $40,623,929. Of this
amount, $38,272,014 was from user charges, $557,129 was from other income, and $1,794,786 was
from interest earnings. On a percentage basis, 94.21% of the revenue was from user charges.
Notes:

1.

The financial statements presented in this section have been audited and are included in the Maricopa
County Comprehensive Annual Financial Report (CAFR) and the Risk Management and Employee
Benefits Trust Report on Audit of Financial Statements for FY07-08. The auditors have not reviewed and
are not providing an opinion as to the information disclosed in the annual report with the exception of the
audited financial statements.

V-2

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Statements of Net Assets—Internal Service Funds
June 30, 2008
Risk
Management
Assets
Current assets:
Cash and cash equivalentsRisk management
Employee benefits
Interest receivable
Accounts receivable
Prepaid insurance
Total current assets
Noncurrent assets:
Capital assets
Less: accumulated depreciation
Total noncurrent assets
Total assets

Employee
Benefits

$ 43,085,804
$

1,482,692
44,824,776

52,151,574
310,800
2,155,995
115,270
54,733,639

108,666
85,649
23,017
44,847,793

63,407
53,746
9,661
54,743,300

1,079,364
125,563
24,568,575
25,773,502

4,804,943
182,179
10,546,651
15,533,773

33,503,519
33,503,519
59,277,021

15,533,773

256,280

Liabilities
Current liabilities:
Accounts payable
Employee compensation payable
RBUC and IBNR claims
Total current liabilities
Noncurrent liabilities:
RBUC and IBNR claims
Total noncurrent liabilities
Total liabilities
Net Assets
Invested in capital assets
Unrestricted (deficit)
Total net assets (deficit)

23,017
(14,452,245)
$ (14,429,228)

The accompanying notes are an integral part of the financial statements.

V-3

$

9,661
39,199,866
39,209,527

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Statements of Revenues, Expenses, and
Changes in Fund Net Assets—Internal Service Funds
Year Ended June 30, 2008
Risk
Management
Operating revenues:
Charges for services
County and employee premiums
Other income
Total operating revenues
Operating expenses:
Personal services
Supplies and services
Accounting and auditing fees
Actuary fees
Consulting and management fees
Brokers' fees
Claims administration service fees
Legal expenses
Workers' compensation taxes
Claims and insurance:
Auto liability claims paid
Auto liability RBUC and IBNR claims decrease in estimate
Total auto liability
General liability claims paid
General liability RBUC and IBNR claims increase in estimate
Total general liability
Workers' compensation claims paid
Workers' compensation RBUC and IBNR claims increase in estimate
Total workers' compensation
Medical malpractice claims paid
Medical malpractice RBUC and IBNR claims decrease in estimate
Total medical malpractice
Auto physical damage claims paid
Auto physical damage RBUC decrease in estimate
Total auto physical damage
Property claims paid
Property claims RBUC increase in estimate
Total property
Medical claims paid
Medical IBNR claims increase in estimate
Total medical
Pharmacy claims paid
Pharmacy IBNR claims increase in estimate
Total pharmacy

$ 38,272,014
557,129
38,829,143
1,727,685
323,901
32,950
44,366
212,109
54,575
601,337
7,329,475
404,940

$ 122,704,164
101,675
122,805,839
2,051,888
84,483
72,266
7,452,035

1,245,872
(611,320)
634,552
3,168,264
176,003
3,344,267
4,420,652
936,836
5,357,488
3,675,378
(218,492)
3,456,886
396,496
(31,716)
364,780
211,588
90,764
302,352

The accompanying notes are an integral part of the financial statements.

V-4

Employee
Benefits

68,650,914
7,956,999
76,607,914
12,817,563
218,459
13,036,022

(Continued)

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Statements of Revenues, Expenses, and
Changes in Fund Net Assets—Internal Service Funds
Year Ended June 30, 2008
(Continued)
Risk
Management
Short-term disability claims paid
Short-term disability IBNR claims increase in estimate
Total short-term disability
Dental claims paid
Dental IBNR claims decrease in estimate
Total dental
Behavioral health claims paid
Behavioral health IBNR claims increase in estimate
Total behavioral health
Vision claims paid
Vision IBNR claims decrease in estimate
Total vision
Incentives paid
Wellness claims/incentives paid
Unemployment claims
General liability insurance premiums
Workers' compensation insurance premiums
Crime insurance premiums
Property insurance premiums
Malpractice insurance premiums
Dental premiums paid
Life insurance premiums paid
Flexible spending accounts claims paid
Cigna for seniors claims paid
Other benefit premiums paid
Employee assistance program
Depreciation
Total operating expenses
Operating income
Nonoperating revenues:
Investment income
Total nonoperating revenues
Income before transfers

Employee
Benefits
1,641,587
223,527
1,865,114
2,263,319
(31,000)
2,232,319
899,922
149,777
1,049,699
1,176,009
(33,466)
1,142,543
3,202
89,981

769,150
1,163,376
396,412
29,891
853,239
1,626,523

9,655
29,039,909

5,662,667
4,715,987
2,353,201
598,553
229,721
187,220
4,586
119,439,401

9,789,234

3,366,438

1,794,786
1,794,786

2,587,109
2,587,109

11,584,020

5,953,547

Capital contribution
Transfer to other County funds

14,247
(3,000,000)

Net transfers

(2,985,753)

Increase in net assets
Total net assets (deficit), July 1, 2007
Total net assets (deficit), June 30, 2008

11,584,020

2,967,794

(26,013,248)

36,241,733

$ (14,429,228)

$ 39,209,527

The accompanying notes are an integral part of the financial statements.

V-5

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Statements of Cash Flows—Internal Service Funds
Year Ended June 30, 2008

Cash flows from operating activities:
Receipts from employees and other funds
Other receipts
Payments for fees, supplies, and services
Payments for insurance claims
Payments for insurance premiums
Payments to employees
Net cash provided by operating activities
Cash flows from non-capital financing:
Interest payments
Transfers from (to) other funds
Net cash used for non-capital financing activities
Cash flows from capital and related activities:
Purchase of capital assets
Cash flows from investing activities:
Interest received on investments

Risk
Management

Employee
Benefits

$ 38,272,014
557,129
(9,256,363)
(13,887,400)
(3,934,830)
(1,747,777)
10,002,773

$121,684,820
101,675
(7,608,784)
(90,310,287)
(13,624,405)
(2,015,603)
8,227,416

(51,951)

(37,468)
(3,000,000)
(3,037,468)

(51,951)
(21,715)
1,794,786

2,587,109

11,723,893

7,777,057

31,361,911

44,374,517

$ 43,085,804

$ 52,151,574

$

$

Net increase in cash and cash equivalents
Cash and cash equivalents, July 1, 2007
Cash and cash equivalents, June 30, 2008
Reconciliation of operating income to net cash
provided by operating activities:
Operating income
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation
Net change in RBUC and IBNR claims, noncurrent portion
Changes in assets and liabilities:
Increase in:
Accounts receivable
Employee compensation payable
RBUC and IBNR claims, current portion
Decrease in:
Prepaid insurance
Accounts payable
Employee compensation payable
Use tax
RBUC and IBNR claims, current portion
Net cash provided by operating activities

9,789,234
9,655
2,851,538

4,586

(1,019,344)
36,285
8,340,583
134,612
(251,581)
(20,092)
(1,130)
(2,509,463)
$ 10,002,773

Noncash investing, capital, and noncapital financing activities:
Capital contributions
Captial asssets transferred from governmental activities
Accumulated depreciation transferred from governmental activities

The accompanying notes are an integral part of the financial statements.
V-6

3,366,438

122,944
(2,624,076)

$

8,227,416

($14,247)
63,407
(49,160)

MARICOPA COUNTY
RISK MANAGEMENT TRUST FUND
Statements of Revenues, Expenses, and
Changes in Fund Net Assets—Internal Service Fund
Budget and Actual
Year Ended June 30, 2008
Actual

Budget
Operating revenues:
Charges for services
Intergovernmental charges
Internal service charges
Other income
Total operating revenues

$

8,339,342
29,932,672
38,272,014

Operating expenses:
Personal services
Supplies and services
Accounting and auditing fees
Actuary fees
Consulting and management fees
Brokers' fees
Claims administration service fees
Legal expenses
Workers' compensation taxes
Total auto liability
Total general liability
Total workers' compensation
Total medical malpractice
Total auto physical damage
Total property
Unemployment claims
General liability insurance premiums
Workers' compensation insurance premiums
Crime insurance premiums
Property insurance premiums
Malpractice insurance premiums
Depreciation
Total operating expenses

1,758,004
492,471
13,000
50,500
250,000
126,460
475,774
8,422,725
650,000
659,032
8,943,147
5,198,317
2,015,252
672,992
416,651
800,000
1,590,000
552,000
31,000
980,000
1,789,000
35,886,328

Operating income

$

7,851,314
488,032
29,932,668
557,129
38,829,143
1,727,685
323,901
32,950
44,366
212,109
54,575
601,337
7,329,475
404,940
634,552
3,344,267
5,357,488
3,456,886
364,780
302,352
769,150
1,163,376
396,412
29,891
853,239
1,626,523
9,655
29,039,909

Variance
$

7,851,314
(7,851,310)
(4)
557,129
557,129
(30,319)
(168,570)
19,950
(6,134)
(37,891)
(71,885)
125,563
(1,093,250)
(245,060)
(24,480)
(5,598,880)
159,171
1,441,634
(308,212)
(114,299)
(30,850)
(426,624)
(155,588)
(1,109)
(126,761)
(162,477)
9,655
(6,846,416)

9,789,234

Nonoperating revenues:
Investment income
Total nonoperating revenues

1,000,000
1,000,000

Increase in net assets

1,794,786
1,794,786
11,584,020

Total net deficit, July 1, 2007

(26,013,248)

Total net deficit, June 30, 2008

$ (14,429,228)

V-7

794,786
794,786

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

NOTE 1 - Organization and Summary of Significant Accounting Policies
Maricopa County, Arizona (the County), in the exercise of the authority granted by Arizona
Revised Statutes (A.R.S.) §11-981, has established a trust fund and declares itself selfinsured. For financial statement presentation purposes, the Self-insured Trust Fund is
reported as Risk Management and Employee Benefits Trust Funds (Funds) and all monies
held in these Funds are considered unrestricted. The Funds’ financial statements are
prepared in conformity with accounting principles generally accepted in the United States of
America applicable to governmental units adopted by the Governmental Accounting
Standards Board (GASB). The accompanying financial statements are those of the funds and
do not represent the financials statements of the County. The Maricopa County, Arizona
Comprehensive Annual Financial Report as of and for the year ended June 30, 2008, will
report the Funds as governmental activities on the government-wide financial statements
since they predominantly service the County’s governmental funds. A summary of the
Funds’ significant accounting policies follows.
A.

Reporting Entity

The Funds are accounted for as internal service funds of Maricopa County, Arizona, under
the direction of an administrator appointed by the County Board of Supervisors. In addition,
the Funds are administered by no less than six joint trustees, all of whom shall be citizens of
the United States of America and residents of Maricopa County. The County Board of
Supervisors also appoints the trustees. However, the ultimate financial accountability for the
Funds remains with the County. The County is responsible for the management and
operations of the financing of the uninsured risks of loss related to torts; theft of, damage to,
and destruction of assets; errors and omissions; injuries to employees; natural disasters; and
for certain health benefits (pharmacy, medical, dental, short-term disability, medical
incentives, and wellness incentives) to eligible employees and their dependents.
B.

Fund Accounting

The Funds’ accounts are maintained in accordance with the principles of fund accounting to
ensure that limitations and restrictions on the Funds’ available resources are observed. The
principles of fund accounting require that resources be classified for accounting and
reporting purposes into funds in accordance with the activities or objectives specified for
those resources. Each fund is considered a separate accounting entity, and its operations are
accounted for in a separate set of self-balancing accounts that comprises its assets, liabilities,
net assets, revenues, and expenses.

V-8

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

The Funds’ financial transactions are recorded and reported as internal service funds since
their operations are financed and operated in a manner similar to private business enterprises.
The intent of the County Board of Supervisors is that the costs (expenses, including
depreciation) of providing goods or services to other departments within the County on a
continuing basis be financed or recovered primarily through user charges.
C.

Basis of Presentation and Accounting

The financial statements include statements of net assets; statements of revenues, expenses,
and changes in fund net assets; and statements of cash flows.
The statements of net assets provide information about the assets, liabilities, and net assets of
the Funds at the end of the year. Assets and liabilities are classified as either current or
noncurrent. Net assets are classified according to the availability of assets to satisfy the
Funds’ obligations. Invested in capital assets represents the value of capital assets, net of
accumulated depreciation. Unrestricted net assets represent the balance of monies held in the
Funds.
The statements of revenues, expenses, and changes in fund net assets provide information
about the Funds’ financial activities during the year. Revenues and expenses are classified as
either operating or nonoperating, and all changes in net assets are reported. Generally,
charges for services and premiums are considered to be operating revenues. Other revenues
such as investment income are not generated from operations and are considered to be
nonoperating revenues. The cost of services, administrative expenses, and depreciation on
capital assets are considered to be operating expenses.
The statements of cash flows provide information about the Funds’ sources and uses of cash
and cash equivalents during the year. Increases and decreases in cash and cash equivalents
are classified as either operating, noncapital financing, capital and related financing, or
investing.
Basis of accounting relates to the timing of the measurements made, regardless of the
measurement focus applied, and determines when revenues and expenses are recognized in
the accounts and reported in the financial statements. The financial statements of the Funds
are presented on the accrual basis of accounting using the economic resources measurement
focus. Revenues are recorded when earned and expenses are recorded at the time liabilities
are incurred, regardless of when the related cash flows take place.

V-9

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

The Funds apply applicable Financial Accounting Standards Board (FASB) Statements and
Interpretations issued on or before November 30, 1989, Accounting Principles Board
Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with
GASB pronouncements. The Funds have chosen the option not to follow FASB Statements
and Interpretations issued after November 30, 1989.
D.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make a number of
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
E.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Funds consider cash on hand, demand
deposits, cash on deposit with the County Treasurer, and highly liquid investments with a
maturity of 3 months or less when purchased to be cash equivalents.
F.

Capital Assets

Equipment is initially recorded at cost. Depreciation of equipment is charged as an expense
against operations. These assets are depreciated over their estimated useful lives using the
straight-line method. The estimated useful lives of equipment range from 3 to 10 years.
G. Liability for Unpaid Claims
The Trust establishes claims liabilities based on estimates of the ultimate cost of claims
(including future claim adjustment expenses) that have been reported but not settled, and of
claims that have been incurred but not reported. The length of time for which such costs
must be estimated varies depending on the coverage involved. Estimated amounts of
subrogation and reinsurance recoverable on unpaid claims are deducted from the liability for
unpaid claims. Because actual claim costs depend on such complex factors as inflation,
changes in doctrines of legal liability, and damage awards, the process used in computing
claims liabilities does not necessarily result in an exact amount, particularly for coverages
such as general liability. Claims liabilities are recomputed periodically using a variety of
actuarial and statistical techniques to produce current estimates that reflect recent
settlements, claims frequency, and other socioeconomic factors. A provision for inflation in
the calculation of estimated future claims costs is implicit in the calculation because reliance
V-10

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

is placed both on actual historical data that reflect past inflation and on other factors that are
considered to be appropriate modifiers of past experience. Adjustments to claims liabilities
are charged or credited to expense in the periods in which they are made.
H. Employee Compensation Payable
Compensated absences consist of vacation leave and a calculated amount of sick leave
earned by employees based on services already rendered. Employees may accumulate up to
240 hours of vacation leave, but any vacation hours in excess of the maximum amount that
are unused at calendar year-end convert to sick leave. Upon termination of employment, all
unused vacation benefits are paid to employees. Accordingly, vacation benefits are accrued
as a liability in the financial statements.
Employees may accumulate an unlimited number of sick leave hours. Generally, sick leave
benefits provide for ordinary sick pay and are cumulative but are forfeited upon termination
of employment. Because sick leave benefits do not vest with employees, a liability for sick
leave benefits is not accrued in the financial statements. However, upon retirement, County
employees with accumulated sick leave in excess of 1,000 hours are entitled to a $10,000
nontaxable investment in a Post Employment Health Plan established pursuant to Internal
Revenue Code §501(c)(9). The obligations vested at June 30, 2008, under this policy are
accrued as a liability.
Compensated absences are substantially paid within one year from fiscal year-end and,
therefore, are reported as a current liability.
I.

Income Tax

The Trust Funds are a component unit of Maricopa County, Arizona, a governmental agency,
and are exempt from federal and state income taxes.

V-11

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

NOTE 2 - Deposits and Investments
Arizona Revised Statutes (A.R.S.) authorize the Funds to invest public monies in the State
Treasurer’s investment pool; obligations issued or guaranteed by the United States or any of
the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations, or
instrumentalities; specified state and local government bonds; interest earning investments
such as savings accounts, certificates of deposit, and repurchase agreements in eligible
depositories; and specified commercial paper, bonds, debentures, and notes issued by
corporations organized and doing business in the United States. In addition, the County
Treasurer may invest trust funds in fixed income securities of corporations doing business in
the United States or District of Columbia.
Credit risk
Statutes have the following requirements for credit risk:
1. Commercial paper must be rated P1 by Moody’s investors service or A1 or better by
Standard and Poor’s rating service.
2. Corporate bonds, debentures, and notes must be rated A or better by Moody’s investors
service or Standard and Poor’s rating service.
3. Fixed income securities must carry one of the two highest ratings by Moody’s investors
service and Standard and Poor’s rating service. If only one of the above-mentioned
services rates the security, it must carry the highest rating of that service.
Custodial credit risk
Statutes require collateral for demand deposits, certificates of deposit, and repurchase
agreements at 101 percent of all deposits not covered by federal depository insurance.
Interest rate risk
Statutes require that public monies invested in securities and deposits have a maximum
maturity of 5 years and that public operating fund monies invested in securities and deposits
have a maximum maturity of 3 years. Investments in repurchase agreements must have a
maximum maturity of 180 days.
Deposits—At June 30, 2008, the carrying amount of the Funds’ deposits was $739,891, and
the bank balance was $739,921. The Funds follow the County’s policies requiring
collateralization of all deposits by at least 101% of the deposits not covered by depository
insurance. At a minimum, the collateral is to be held by the pledging financial institution or
its agent, but does not have to be held in the County’s name.

V-12

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

Investments—The Funds’ investments at June 30, 2008, consisted of monies invested in the
Maricopa County Treasurer’s Investment Pool. The Funds’ investments in the pool represent
a portion of the County Treasurer’s pool portfolio. There is no oversight provided for the
County Treasurer’s investment pool, and the pool’s structure does not provide for shares.
The Funds’ portion in the pool is not identified with specific investments.
Credit Risk—The Funds follow the County’s policy to preserve the principal value and the
interest income of an investment. The County can invest in obligations issued or guaranteed
by the United States or any of the senior debt of its agencies, sponsored agencies,
corporations, or instrumentalities. The County can also invest in commercial paper and
corporate bonds with ratings that meet the statutory requirements specified above. At
June 30, 2008, the Funds’ investments consisted of monies invested in the Maricopa County
Treasurer’s Investment Pool which is unrated.
Interest rate risk—It is the County’s policy to hold investments to maturity, where practical,
and avoid any loss on investments resulting from an early sale or retirement of an
investment. Additionally, securities should be invested for a shorter duration, where
applicable. At June 30, 2008, the Funds had investments of $94,497,187 in the Maricopa
County Treasurer’s Investment Pool with a weighted average maturity of 537 days, of which
35% (in excess of $1 billion) of pooled investments have maturities of 90 days or less. The
County invests the pooled investments primarily in U.S. government agency securities.
A reconciliation of cash, deposits, and investments to amounts shown on the Statements of
Net Assets follows:
Cash, deposits, and investments:
Cash on hand
Amount of deposits
County Treasurer’s Investment Pool
Total

$

300
739,891
94,497,187
$95,237,378

NOTE 3 - Liabilities for Unpaid Claims
The Funds provide for claims liabilities based on estimates of the ultimate cost of claims,
including future claims adjustment expenses, that have been reported but unpaid (RBUC),
and of claims that have been incurred but not reported (IBNR).
The County is liable for any single claim up to the insurance deductible or self-insurance
retention (SIR), whichever is applicable, and the excess over insurance limits.
V-13

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

The following insurance deductibles, self-insurance retentions (SIR), and insurance limits
were in effect during fiscal year 2007-08:
Policy Type

Deductible

General and auto liability, and public
officials’ E&O
Excess liability
Property/inland marine
$
Boiler and machinery
Earth movement
Flood and water damage; low hazard
Flood and water damage; moderate hazard
Flood and water damage; high hazard
Difference in conditions low hazard
Difference in conditions moderate hazard
Difference in conditions high hazard
Difference in conditions low hazard
Difference in conditions moderate hazard
Difference in conditions high hazard
Employee dishonesty
Faithful performance of duty
Theft, disappearance and destruction
Robbery and safe burglary
Computer and wire transfer fraud
Workers’ compensation
Employer’s liability
Excess medical malpractice

SIR
$ 5,000,000

100,000
100,000
100,000
500,000
500,000
500,000
50,000,000
25,000,000
15,000,000
55,000,000
30,000,000
20,000,000
100,000
100,000
10,000
10,000
100,000
2,000,000
5,000,000

Limit
$ 5,000,000
25,000,000
300,000,000
50,000,000
50,000,000
50,000,000
35,000,000
15,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
5,000,000
10,000,000
1,000,000
1,000,000
1,000,000
10,000,000
25,000,000
2,000,000
25,000,000

Settled claims have not exceeded the above commercial insurance coverage limits over the
past 3 years.

Risk Management Trust Fund
Liabilities for unpaid claims are estimates of the ultimate cost of claims that include the
insurance deductible, the SIR, and the excess over insurance limits. The estimates are
determined by an independent actuary using the following actuarial methods: reported loss
development, paid loss development, Bornhuetter-Ferguson reported loss and paid loss,
frequency times severity, expected loss, incremental paid-workers’ compensation, paid
V-14

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

allocated loss adjustment expense to paid loss development-automobile liability, and tail
liability for medical malpractice. Total liabilities are equal to the sum of:
1. Reported but unpaid claims (RBUC), which represent the estimated liability on reported
claims established by the Risk Management department and
2. Incurred but not reported (IBNR) reserves, which include known loss events that are
expected to become claims and expected future development on claims already reported.
Therefore, IBNR is largely an estimate of loss and claim adjustment expenses associated
with future likely claims activity based on historical actual results that establish a reliable
pattern.
Accrued actuarial liabilities are based on a discounted 55 percent confidence level assuming
a 4.0 percent annual rate of return on investments.
The total liabilities reported at June 30, 2008, categorized by insurable area follow:

Auto liability
General liability
Workers’ compensation
Medical malpractice
Auto physical damage
Property
Total

Total Liabilities
$ 1,528,702
32,356,132
10,643,934
12,875,708
258,259
409,359
$58,072,094

The total estimates of unpaid claim liabilities of $58,072,094 at June 30, 2008, increased by
$342,075 from last year’s balance of $57,730,019. The areas that increased were general
liability and workers’ compensation.
Changes in the liabilities for unpaid auto, general, workers’ compensation, medical
malpractice, auto physical damage, and property claims follow:

Balance
July 1
2005-06
2006-07
2007-08

$50,490,551
55,916,393
57,730,019

Current-Year
Claims and
Changes in
Estimates

Claims
Payments

Balance
June 30

$17,605,701
16,330,438
13,460,325

$(12,179,859)
(14,516,812)
(13,118,250)

$55,916,393
57,730,019
58,072,094

V-15

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

Of these liabilities, $24,568,575 were actuarially estimated to be payable within the next 12
months.

Employee Benefits Trust Fund
The liability for pharmacy (Coinsurance Plan), medical, dental, and short-term disability
claims as shown below is based on the fiscal year 2007-08 actuarial reports. The Consumer
Choice Plan portion of the liability for pharmacy is based on the unused portion of the
members’ pharmacy accounts administered by Walgreens Health Initiatives.
Accrued claims liabilities at June 30, 2008, for each insurable area follow:
Medical
Pharmacy
Dental
Short-term disability
Vision
Behavioral Health
HealthSelect
Total

$7,957,000
1,545,000
247,000
357,000
100,000
259,000
81,651
$10,546,651

Changes in the liabilities for unpaid pharmacy, medical, dental, and short-term disability
claims follow:

Balance
July 1
2005-06
2006-07
2007-08

$4,080,935
2,771,985
2,206,068

Current-Year
Claims and
Changes in
Claims
Estimates
Payments
$25,846,873
16,022,997
95,933,611

$(27,155,823)
(16,588,914)
(87,449,314)

Other
Payments
$

(143,714)

Balance
June 30 .
$ 2,771,985
2,206,068
10,546,651

It is estimated that the June 30, 2008, liabilities balance of $10,546,651 will be paid within
the next 12 months.

V-16

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

NOTE 4 - Net Assets Deficit
The County Board of Supervisors elected not to fund the Risk Management Trust Fund’s
unpaid claims in fiscal years 1995-96 through 1998-99. Consequently, the Risk Management
Trust Fund only billed user departments for operating costs and administrative expenses for
those years. This resulted in a total net assets deficit of $23,321,519 at June 30, 1999.
Starting July 1, 1999, the Risk Management Trust Fund implemented a funding plan that
calls for the fiscal year ending cash balance to equal the next year’s estimated claims and
claims related expenses. As of June 30, 2008, the total net assets deficit was $14,429,228.
This is primarily due to the Risk Management Trust Fund not being funded for noncurrent
accrued claim liabilities which are not considered when determining funding for each fiscal
year.
NOTE 5 - Letter of Credit
On July 1, 2007, the County renewed its workers’ compensation insurance with a selfinsured retention of $2,000,000 for the policy period July 1, 2007 through June 30, 2008. As
a result, the Industrial Commission of Arizona required the County to secure an irrevocable
letter of credit in the amount of $5.9 million with a financial institution to cover unfunded
workers’ compensation claims for that policy period. During fiscal year 2007-08, the letter
of credit had not been drawn upon. The letter of credit was renewed on July 1, 2008 to June
30, 2009 for $4.2 million.
NOTE 6 - Retirement Plan
Plan Description—The Risk Management Trust Fund contributes to a cost-sharing multipleemployer defined benefit pension plan administered by the Arizona State Retirement System
(ASRS). Benefits are established by state statute and generally provide retirement, death,
long-term disability, survivor, and health insurance premium benefits. The System is
governed by the Arizona State Retirement System Board according to the provisions of
A.R.S. Title 38, Chapter 5, Article 2.
The System issues a comprehensive annual financial report that includes financial statements
and required supplementary information. The most recent report may be obtained by writing
the ASRS, 3300 North Central Avenue, P.O. Box 33910, Phoenix, AZ 85067-3910 or by
calling (602) 240-2000 or (800) 621-3778.
Funding Policy—The Arizona State Legislature establishes and may amend active plan
members’ and the Risk Management Trust Fund’s contribution rates. For the year ended
V-17

MARICOPA COUNTY
RISK MANAGEMENT AND EMPLOYEE BENEFITS TRUST FUNDS
Notes to Financial Statements
June 30, 2008

June 30, 2008, active plan members and the Risk Management Trust Fund were each
required by statute to contribute at the actuarially determined rate of 9.6 percent (9.1 percent
retirement and 0.5 percent long-term disability) of the members’ annual covered payroll.
The Risk Management Trust Fund’s contributions to the System for the years ended June 30,
2008, 2007, and 2006 were $126,790, $107,105, and $79,608, respectively, which were equal
to the required contributions for the year.

V-18

STATISTICS AND COVERAGE

STATISTICS
AND COVERAGE

TOTAL COST SUMMARY
FY05-06 TO FY07-08

$8,000,000

A uto Liability Paid
A uto Liability Res erved
A uto Phys ical Damage Paid
A uto Phys ical Damage Res erved
General Liability Paid
General Liability Res erved

Medical Malpractice Paid
Medical Malpractice Res erved
Property Damage Paid
Property Damage Res erved
W orkers ’ Compens ation Paid
W orkers ’ Compens ation Res erved

$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0

FY05-06

$ Paid
Open Reserves
FY 05-06 Total Incurred5
$ Paid
Open Reserves
FY 06-07 Total Incurred5
$ Paid
Open Reserves
FY 07-08 Total Incurred5

FY06-07

General
Liability

FY07-08

Auto Liability

Auto Physical
Damage

Medical
Malpractice

Workers’
Compensation

$2,137,990

$773,691

$2,502,882

$1,316,479

$174,133

$148,287

$1,060

$2,474,185

$821,783

$0

$2,286,277

$774,751

$4,977,067

$2,138,263

$174,133

$7,218,241 $17,568,731

$401,316

$613,982

$1,072,154

$1,301,427

$373,028

$3,167,711

$6,929,618

$679,194

$19,943

$2,299,111

$601,491

$8,601

$900,819

$4,509,159

$1,080,510

$633,925

$3,371,266

$1,902,919

$381,629

$184,950

$430,776

$151,674

$2,546

$57,188

$1,831,356

$2,658,489

$157,821

$219,369

$5,351,515

$598,761

$162,448

$1,554,015

$8,043,929

$342,770

$650,145

$5,503,188

$601,307

$219,636

$3,385,371 $10,702,417

Property

Total

$4,363,878 $11,269,053
$2,854,363

$6,299,678

$4,068,530 $11,438,778

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Number of claims paid represents the amount of claims for the year in which the event occurred.
3. Amounts as valued on June 30, 2008, as reported by the RiskMaster system except for Workers’ Compensation
amounts as valued on June 30, 2008, as reported by the Pinnacle system.
4. Unemployment not included.
5. Total Incurred = $ Paid plus Open Reserves, minus Total Recoveries.

VI-1

TOTAL CLAIMS SUMMARY TABLE
FY05-06 TO FY07-08
FY05-06
Department

# Claims

FY06-07

$ Paid

# Claims

FY07-08

$ Paid

# Claims

$ Paid

ADULT PROBATION

62

$1,139,741

123

$220,568

88

$69,233

AIR QUALITY

12

$22,568

25

$122,610

34

$28,450

102

$159,283

124

$86,535

117

$31,900

CLERK OF SUPERIOR COURT

19

$54,072

29

$16,703

19

$10,845

CORRECTIONAL HEALTH

54

$1,104,494

61

$530,694

64

$36,847

COUNTY ASSESSOR

12

$13,517

9

$1,023

14

$15,695

COUNTY ATTORNEY

45

$83,925

51

$130,407

39

$62,005

DEPT OF TRANSPORTATION

205

$792,133

209

$227,874

173

$171,323

ENVIRONMENTAL SERVICES

60

$1,101,894

52

$77,383

45

$39,007

EQUIPMENT SERVICES

10

$28,766

11

$46,345

15

$107,122

FACILITIES MANAGEMENT

45

$166,996

39

$54,761

36

$49,408

FLOOD CONTROL

51

$71,513

45

$48,629

43

$65,299

HUMAN SERVICES

41

$151,219

56

$55,189

62

$51,693

JUVENILE PROBATION

65

$133,072

107

$369,525

85

$85,791

MEDICAL EXAMINER

16

$194,579

21

$15,365

15

$12,848

291

$1,171,126

420

$1,727,113

505

$571,236

PARKS & RECREATION

31

$42,411

24

$113,045

26

$87,273

PLANNING AND DEVELOPMENT

19

$10,200

20

$37,560

15

$27,526

PUBLIC DEFENDER

19

$58,597

12

$44,588

22

$40,966

PUBLIC HEALTH

61

$82,609

81

$128,626

54

$35,991

RISK MANAGEMENT

16

$435

23

$3,834

11

$0

1332

$4,341,801

1041

$2,531,632

818

$885,500

7

$0

2

$34,284

3

$0

TRIAL COURTS

59

$188,145

77

$124,095

67

$132,954

ALL OTHERS

79

$155,959

70

$181,231

47

$39,575

2713

$11,269,053

2732

$6,929,618

2417

$2,658,489

ANIMAL CONTROL

MIHS

SHERIFF
SUPERINTENDENT OF SCHOOLS

TOTAL

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Number of claims paid represents the amount of claims for the year in which the event occurred.
3. Amounts as valued on June 30, 2008, as reported by the Advantage Financial System, the Pinnacle system, or by the
RiskMaster system.

VI-2

TOTAL NUMBER OF CLAIMS SUMMARY
FY05-06 TO FY07-08

1600
1400
1200
1000
800
600
400
200
0
FY05-06

Automobile Liability
Medical Malpractice

FY06-07

FY07-08

Auto Physical Damage
Property

General Liability
W orkers' Compensation

FY05-06

FY06-07

FY07-08

Automobile Liability

106

118

96

Auto Physical Damage

520

583

459

General Liability

827

503

371

Medical Malpractice

63

38

30

Property

82

70

81

Workers' Compensation

1115

1420

1380

TOTAL

2713

2732

2417

Notes:

1. Number of claims paid represents the amount of claims for the year in which the event occurred.
2. Amounts as valued on June 30, 2008, as reported by the RiskMaster system except for Workers’ Compensation
amounts as valued on June 30, 2008, as reported by the Pinnacle System.
3. Unemployment not included.

VI-3

AUTO LIABILITY LOSS SUMMARY
FY05-06 TO FY07-08
FY05-06
Department

# Claims

FY06-07

$ Paid

# Claims

FY07-08

$ Paid

# Claims

$ Paid

ADULT PROBATION

1

$2,230

3

$0

2

$0

AIR QUALITY

1

$1,500

3

$98,330

7

$11,343

ANIMAL CONTROL

5

$14,171

7

$14,705

6

$1,129

CLERK OF SUPERIOR COURT

0

$0

3

$0

0

$0

CONSTABLES

1

$2,100

0

$0

0

$0

COUNTY ATTORNEY

3

$16,071

0

$0

3

$5,606

DEPT OF TRANSPORTATION

9

$7,411

21

$16,212

12

$37,063

ELECTIONS DEPARTMENT

0

$0

2

$0

0

$0

ENVIRONMENTAL SERVICES

7

$1,016,446

4

$4,377

4

$2,737

EQUIPMENT SERVICES

0

$0

0

$0

2

$2,986

FACILITIES MANAGEMENT

5

$9,198

2

$26,766

2

$15,284

FLOOD CONTROL

2

$854

0

$0

3

$6,837

HUMAN SERVICES

6

$13

3

$20,951

5

$3,203

JUVENILE PROBATION

0

$0

3

$0

0

$0

MIHS

4

$11,111

0

$0

1

$0

PARKS & RECREATION

2

$2,663

1

$10,570

1

$1,137

PLANNING AND DEVELOPMENT

4

$4,582

3

$12,102

2

$7,644

PUBLIC HEALTH

0

$0

0

$0

2

$2,233

RISK MANAGEMENT

6

$0

4

$494

2

$0

49

$1,041,477

57

$194,317

42

$87,746

SOLID WASTE MANAGEMENT

0

$0

2

$2,492

0

$0

TELECOMMUNICATIONS

1

$8,162

0

$0

0

$0

106

$2,137,990

118

$401,316

96

$184,950

SHERIFF

TOTAL

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Number of claims paid represents the amount of claims for the year in which the event occurred.
3. Amounts as valued on June 30, 2008, as reported by the RiskMaster system.

VI-4

AUTO PHYSICAL DAMAGE LOSS SUMMARY
FY05-06 TO FY07-08
FY05-06
Department
ADULT PROBATION

# Claims

FY06-07

$ Paid

# Claims

FY07-08

$ Paid

# Claims

$ Paid

18

$10,490

24

$47,093

22

$10,655

7

$18,275

16

$20,738

13

$5,865

23

$6,960

37

$18,699

28

$7,498

CLERK OF SUPERIOR COURT

1

$0

4

$0

1

$2,328

CONSTABLES

4

$0

0

$0

2

$0

COUNTY ASSESSOR

3

$0

2

$250

1

$250

COUNTY ATTORNEY

11

$5,786

6

$4,980

8

$4,122

DEPT OF TRANSPORTATION

56

$271,028

58

$49,041

37

$70,763

ENVIRONMENTAL SERVICES

22

$21,118

23

$2,000

24

$9,350

FACILITIES MANAGEMENT

15

$14,497

10

$3,559

9

$1,103

FLOOD CONTROL

27

$32,183

26

$8,152

28

$5,972

HUMAN SERVICES

14

$37,130

21

$3,075

19

$4,749

JUVENILE PROBATION

3

$9,506

9

$3,911

9

$3,003

MIHS

9

$9,491

2

$0

2

$0

OFFICE OF ENTERPRISE TECH

3

$0

1

$144

1

$120

PARKS & RECREATION

14

$5,501

4

$1,205

6

$2,882

PLANNING AND DEVELOPMENT

11

$5,025

12

$21,639

8

$7,611

PUBLIC DEFENDER

1

$0

2

$11,023

0

$0

PUBLIC HEALTH

7

$494

9

$3,877

10

$750

RISK MANAGEMENT

3

$0

3

$0

0

$0

261

$315,046

296

$400,661

217

$219,444

SOLID WASTE MANAGEMENT

1

$8,741

4

$9,921

2

$17,599

SUPERINTENDENT OF SCHOOLS

2

$0

0

$0

1

$0

TRIAL COURTS

2

$2,336

0

$0

0

$0

ALL OTHERS

2

$85

14

$4,014

11

$56,714

520

$773,691

583

$613,982

459

$430,776

AIR QUALITY
ANIMAL CONTROL

SHERIFF

TOTAL

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Number of claims paid represents the amount of claims for the year in which the event occurred.
3. Amounts as valued on June 30, 2008, as reported by the RiskMaster system.

VI-5

GENERAL LIABILITY LOSS SUMMARY
FY05-06 TO FY07-08
FY05-06
Department

# Claims

FY06-07

$ Paid

# Claims

FY07-08

$ Paid

# Claims

$ Paid

ADULT PROBATION

6

$0

3

$0

4

$0

ANIMAL CONTROL

19

$719

20

$462

23

$1,270

BOARD OF SUPERVISORS CLERK

3

$1,816

0

$0

0

$0

CONSTABLES

2

$12,667

0

$0

0

$0

CORRECTIONAL HEALTH

2

$0

3

$9,340

3

$0

11

$16,091

21

$80,504

14

$46,539

104

$412,457

96

$37,226

82

$1,737

2

$0

4

$10,485

0

$0

12

$5,455

5

$1,668

7

$0

FLOOD CONTROL

4

$11,816

3

$0

3

$0

HUMAN SERVICES

3

$5,248

0

$0

2

$0

LEGAL DEFENDER

2

$0

1

$10,754

2

$1,012

MEDICAL EXAMINER

4

$166,656

3

$1,319

0

$0

14

$24,139

26

$27,606

24

$13,794

OFFICE CONTRACT COUNSEL

2

$2,908

1

$0

1

$0

PARKS & RECREATION

4

$1,580

5

$0

4

$4,342

PLANNING AND DEVELOPMENT

2

$0

0

$0

0

$0

PUBLIC DEFENDER

4

$1,414

3

$7,844

9

$21,573

10

$0

17

$7,009

2

$0

RECORDER

4

$0

1

$0

1

$0

RISK MANAGEMENT

5

$0

15

$3,340

9

$0

583

$1,839,620

238

$803,619

155

$61,366

4

$0

2

$34,284

2

$0

14

$296

19

$21,351

11

$40

7

$0

17

$15,344

13

$0

827

$2,502,882

503

$1,072,154

371

$151,674

COUNTY ATTORNEY
DEPT OF TRANSPORTATION
ENVIRONMENTAL SERVICES
FACILITIES MANAGEMENT

MIHS

PUBLIC HEALTH

SHERIFF
SUPERINTENDENT OF SCHOOLS
TRIAL COURTS
ALL OTHERS
TOTAL

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Number of claims paid represents the amount of claims for the year in which the event occurred.
3. Amounts as valued on June 30, 2008, as reported by the RiskMaster system.

VI-6

MEDICAL MALPRACTICE LOSS SUMMARY
FY05-06 TO FY07-08
FY05-06
Department

# Claims

FY06-07

$ Paid

# Claims

FY07-08

$ Paid

# Claims

$ Paid

CORRECTIONAL HEALTH

39

$1,092,199

24

$469,667

25

$2,546

MARICOPA HEALTH PLAN

2

$0

0

$0

0

$0

22

$224,280

14

$831,760

4

$0

0

$0

0

$0

1

$0

63

$1,316,479

38

$1,301,427

30

$2,546

MIHS
PUBLIC HEALTH
TOTAL

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Number of claims paid represents the amount of claims for the year in which the event occurred.
3. Amounts as valued on June 30, 2008, as reported by the RiskMaster system.

VI-7

PROPERTY DAMAGE LOSS SUMMARY
FY05-06 TO FY07-08
FY05-06
Department

# Claims

FY06-07

$ Paid

# Claims

FY07-08

$ Paid

# Claims

$ Paid

ADULT PROBATION

0

$0

0

$0

4

$1,062

AIR QUALITY

3

$2,693

1

$0

5

$9,368

10

$0

7

$4,167

16

$0

DEPT OF TRANSPORTATION

9

$29,997

12

$50,691

17

$2,568

ELECTIONS DEPARTMENT

0

$0

3

$15,134

0

$0

ENVIRONMENTAL SERVICES

8

$8,759

4

$0

3

$6,254

EQUIPMENT SERVICES

3

$5,681

1

$3,297

0

$0

FACILITIES MANAGEMENT

1

$0

3

$711

5

$23,443

FINANCE

1

$0

0

$0

0

$0

FLOOD CONTROL

9

$12,043

5

$8,163

2

$1,865

HUMAN SERVICES

2

$0

2

$0

1

$2,010

INTEGRATED CRIML JUSTICE

1

$5,116

0

$0

0

$0

JUVENILE PROBATION

2

$2,867

0

$0

1

$0

MIHS

5

$66,364

6

$163,934

0

$0

PARKS & RECREATION

4

$3,931

6

$92,894

7

$4,716

PLANNING AND DEVELOPMENT

0

$0

1

$0

1

$0

PUBLIC HEALTH

8

$1,717

4

$3,100

2

$0

14

$34,964

13

$30,936

14

$5,901

SOLID WASTE MANAGEMENT

0

$0

1

$0

1

$0

SUPERINTENDENT OF SCHOOLS

1

$0

0

$0

0

$0

TRIAL COURTS

1

$0

1

$0

2

$0

82

$174,133

70

$373,028

81

$57,188

ANIMAL CONTROL

SHERIFF

TOTAL

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Number of claims paid represents the amount of claims for the year in which the event occurred.
3. Amounts as valued on June 30, 2008, as reported by the RiskMaster system.

VI-8

WORKERS COMPENSATION LOSS SUMMARY
FY05-06 TO FY07-08
FY05-06
Department

# Claims

FY06-07

$ Paid

# Claims

FY07-08

$ Paid

# Claims

$ Paid

ADULT PROBATION

37

$1,127,021

93

$173,475

56

$57,516

ANIMAL CONTROL SERVICES

45

$137,433

53

$48,502

44

$22,003

3

$270

0

$0

0

$0

CLERK OF SUPERIOR COURT

18

$54,072

22

$16,703

18

$8,517

CORRECTIONAL HEALTH

13

$12,295

34

$51,687

35

$33,802

COUNTY ASSESSOR

8

$13,517

4

$773

8

$15,445

COUNTY ATTORNEY

20

$45,977

24

$44,923

14

$5,738

COUNTY MANAGERS OFFICE

3

$3,450

0

$0

0

$0

DEPT OF TRANSPORTATION

27

$71,241

22

$74,704

25

$59,191

ENVIRONMENTAL SERVICES

21

$55,571

17

$60,521

14

$20,666

7

$23,085

9

$43,048

7

$52,920

FACILITIES MANAGEMENT

12

$137,846

19

$22,055

13

$9,579

FLOOD CONTROL DISTRICT

9

$14,616

11

$32,314

7

$50,625

HEALTH CARE MANDATES

3

$6,738

2

$514

0

$0

HUMAN SERVICES

16

$108,828

30

$31,163

35

$41,730

JUVENILE PROBATION

59

$120,698

95

$365,613

73

$82,788

MEDICAL EXAMINER

12

$27,923

17

$13,065

12

$10,512

237

$835,742

372

$703,812

474

$557,442

7

$28,735

8

$8,376

8

$74,195

PUBLIC DEFENDER

14

$57,183

7

$25,721

13

$19,393

PUBLIC FIDUCIARY

3

$12,792

1

$188

0

$0

36

$80,398

51

$114,641

37

$33,008

425

$1,110,693

437

$1,102,099

390

$511,044

TRIAL COURTS

42

$185,513

57

$102,744

54

$132,914

ALL OTHERS

38

$92,241

35

$131,069

43

$32,328

1115

$4,363,878

1420

$3,167,711

1380

$1,831,356

BOARD OF SUPERVISORS

EQUIPMENT SERVICES

MIHS
PARKS & RECREATION

PUBLIC HEALTH
SHERIFF

TOTAL

Notes: 1. Dollars paid listed above represents payments on claims by event date, not actual payment date, and does not include
RBNP or IBNR reserves. Due to lag time in resolution and payment of claims, the figures from FY05-06 give a truer
picture as these claims have had time to mature.
2. Amounts as valued on June 30, 2008, as reported by the Pinnacle system.

VI-9

UNEMPLOYMENT LOSS SUMMARY
FY05-06 TO FY07-08

Department
ADULT PROBATION

FY05-06

FY06-07

FY07-08

$ Paid

$ Paid

$ Paid

$11,127

$14,925

$31,507

$257,467

$125,200

$0

$16,586

$838

$5,957

$6,203

$4,459

$0

$24,045

$37,489

$22,561

$6,287

$9,432

$26,769

COUNTY ASSESSOR

$10,230

$20,536

$10,298

COUNTY ATTORNEY

$13,126

$5,626

$17,131

DEPT OF TRANSPORTATION

$8,411

$2,331

$9,503

ELECTIONS

$9,704

$13,982

$18,446

ENVIRONMENTAL SERVICES

$19,428

$25,362

$22,468

FACILITIES MANAGEMENT

$15,365

$11,557

$972

$2,948

$6,900

$3,875

$122,240

$99,235

$174,303

$30,658

$34,848

$40,147

LEGAL DEFENDER

$7,907

$3,661

$0

LIBRARY DISTRICT

$3,120

$0

$2,213

MIHS

$99,234

$73,412

$176,729

PUBLIC DEFENDER

$15,768

$9,864

$16,404

PUBLIC FIDUCIARY

$7,138

$667

$2,974

PUBLIC HEALTH

$12,654

$19,487

$34,954

SHERIFF

$41,686

$51,935

$61,247

SOLID WASTE

$8,299

$1,652

$0

TRIAL COURTS

$33,660

$34,435

$50,648

ALL OTHERS

$32,051

$51,243

$64,793

$815,341

$659,077

$793,900

ALTCS
ANIMAL CONTROL
CALL CENTER
CLERK OF SUPERIOR COURT
CORRECTIONAL HEALTH

HOUSING
HUMAN SERVICES
JUVENILE PROBATION

TOTAL

Notes: 1. Dollars paid represents the amount paid for the fiscal year. There are no reserves for unemployment.
2. Amounts as valued on June 30, 2008, as reported by the Advantage Financial System.

VI-10