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Recently Asked Questions (RAQs)

After more than 20 years serving California school districts and colleges, SELF at times has found itself the subject of unsubstantiated and incorrect statements. Once repeated, these statements can often be misconstrued as fact and lead to confusion for our members.

In an effort to combat misinformation, the following has been prepared by SELF's executive director in regard to various statements currently circulating about SELF. “For the Record” is designed to fortify our members with the facts about SELF's programs, policies and procedures.

If you hear other statements or challenges not addressed here, please contact the SELF office for more information. We are always happy to address any concerns our members may have.

• That members of SELF's excess liability program will be required to pay the liabilities in SELF's excess workers' compensation program.
  • Bylaws, Article X, G: No claim or obligation shall be paid from one program to meet the obligation of another program.
  • Since the focus is on SELF's workers' compensation program and its ongoing assessment, it should be noted that as of March 31 the asset position in the program is $40M. That is more than adequate to pay current obligations.

• That the Excess Liability Finite Risk Transfer program (Imagine Re, $10M x $5M) has an aggregate and when the aggregate is exhausted there'll be no money to pay losses within that layer and therefore any claim presented to SELF after exhaustion of the aggregate will be returned to the member with a “tough luck” note attached.
  • It is true that the Im Re program has an aggregate limit and should that aggregate limit be exhausted the liability remains with SELF on a de facto self-funded basis. The board has created in its 2006/07 rate projection a contingency margin to address this possibility. Should that contingency fund become exhausted as well, then assessments are always a possibility as they are in any JPA as a result of depletion of self-funded balances, insolvency of an insurer, etc. There are several JPAs that have aggregate coverage limits, just examine their coverage documents!

• That SELF's board members do not have term limits.
  • To an extent this is true. There are no term limits on SELF's board members. However, SELF's board members must run for election every 4-years, as well as meet certain employment and geographic requirements. In nearly all other JPAs the board members are appointed – SELF's board members are elected.

• That SELF has unfunded liabilities and assessment prospects.
  • I'm not sure what this is intended to achieve other than to suggest that SELF has issues it is hiding from its members. SELF does have certain actuarially determined future unfunded liabilities in its workers' comp program and these are being addressed through assessments. Of course the potential for future unfunded liabilities and assessment prospects exist in every JPA where there is a self-funded component to its risk finance model(s). Examine your own JPA governance documents and you will find a provision for assessment. The ability to assess its membership is the financial integrity of every JPA.

• That SELF is losing money on its investment portfolio.
  • In SELF's Investment Portfolio Information as provided by its Asset Manager, PFM, there is a category entitled “Unrealized Gains / Losses” which does show negative entries. These negative entries illustrate the loss that would occur were the instrument to be sold in advance of maturity date. This is also known as “net increase or decrease in fair market value”. Quite simply, people get hold of this document and seeing a negative entry jump to conclusion that SELF is losing money. It is not.

• SELF is burdened by an onslaught of litigation that is affecting its ability to operate.
  • There are 2 suits filed against SELF, both related to the excess worker's compensation program: CCCSIG v. SELF ; Garden Grove USD v SELF .
  • There is an additional suit of which SELF is the moving party and that is: SELF v. Westchester Ins .
  • As is typical to the discussion of any litigation active or pending – it is inappropriate to comment on activity or speculate as to outcome.

• Actuary studies are inaccurate and incomplete.
  • The actuary studies, Excess Liability and Excess Worker's Compensation, have been peer reviewed and approved. There were loss data gaps in the most recent Excess Liability study but they have been corrected and the study is now completed. In addition SELF is one of only a handful of JPAs that commission mid-year actuary studies in both its programs to afford the board a “snapshot” of activity and to gain a timely perspective on program activity and loss development.

• SELF's definition of “occurrence” in its Excess Liability MOC is inconsistent in its application to sexual harassment and molestation cases.
  • This issue is well known to the board and has been discussed at length at various board and committee meetings as well as the annual strategic planning session. There are variances in coverage terms and conditions between member's underlying forms, both MOCs and commercial policies, and SELF's MOC. Since every claim/suit is case and facts specific it is near impossible to issue a universal statement that “don't worry, it's covered”.

• SELF's retained earnings have decreased in recent years.
  • The board is aware of it, it is driven by losses, and although there is nearly $100M in SELF's investment portfolio, SELF's auditor wanted to alert the board to this development/trend.