Bill Summary – FastDemocracy

State of Alaska
                                                               Fiscal Note
                                                                                                  Bill Version:                     SCS HB 102(FIN)
 2022 Legislative Session
                                                                                                  Fiscal Note Number:               2
                                                                                                  (S) Publish Date:                 4/27/2022
 Identifier:        HB102-DOA-DRM-1-24-22                                           Department:       Department of Administration
 Title:             STATE INSUR. CATASTROPHE RESERVE                                Appropriation: Risk Management
                    ACCT.                                                           Allocation:       Risk Management
 Sponsor:           RLS BY REQUEST OF THE GOVERNOR                                  OMB Component Number:                71
 Requester: Governor
 Expenditures/Revenues
 Note: Amounts do not include inflation unless otherwise noted below.                                                                     (Thousands of Dollars)
                                                 Included in
                                    FY2023       Governor's
                                Appropriation      FY2023                                                Out-Year Cost Estimates
                                  Requested       Request
 OPERATING EXPENDITURES                FY 2023       FY 2023        FY 2024                         FY 2025             FY 2026           FY 2027        FY 2028
 Personal Services
 Travel
 Services                             (3,033.0)                    (3,033.0)                       (5,033.0)            (6,000.0)        (6,000.0)       (6,000.0)
 Commodities
 Capital Outlay
 Grants & Benefits
 Miscellaneous
 Total Operating                      (3,033.0)           0.0      (3,033.0)                       (5,033.0)            (6,000.0)        (6,000.0)       (6,000.0)
 Fund Source (Operating Only)
 1007 I/A Rcpts (Other)                       (3,033.0)                         (3,033.0)          (5,033.0)            (6,000.0)        (6,000.0)       (6,000.0)
 Total                                        (3,033.0)              0.0        (3,033.0)          (5,033.0)            (6,000.0)        (6,000.0)       (6,000.0)
 Positions
 Full-time
 Part-time
 Temporary
 Change in Revenues
 None
 Total                                              0.0              0.0               0.0                0.0                 0.0              0.0             0.0
 Estimated SUPPLEMENTAL (FY2022) cost:                                        0.0            (separate supplemental appropriation required)
 Estimated CAPITAL (FY2023) cost:                                             0.0            (separate capital appropriation required)
 Does the bill create or modify a new fund or account?       Yes
 (Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
 ASSOCIATED REGULATIONS
 Does the bill direct, or will the bill result in, regulation changes adopted by your agency?                     No
 If yes, by what date are the regulations to be adopted, amended or repealed?                                     N/A
 Why this fiscal note differs from previous version/comments:
 Updated for current fiscal year form.
 Prepared By:               Ken Truitt, Legislative Liaison                                                               Phone:        (907)465-8464
 Division:                  Office of the Commissioner
                                                                      REPORT                                              Date:         01/24/2022
                                                                                    ED
                                                                       SFC 04/2 OUT OF
 Approved By:               Leslie Isaacs, Administrative Services Director                                               Date:         04/15/2022
 Agency:                    Department of Administration
                                                                                     7/2022
Printed 6/22/2022                                                       Page 1 of 2                                                              Control Code: RwdhS
                                                                                                          SCS HB 102(FIN) - Fiscal Note 2
                                                 FISCAL NOTE ANALYSIS
STATE OF ALASKA                                                                  BILL NO. HB 102
2022 LEGISLATIVE SESSION
Analysis
   This proposed legislation will allow the Division of Risk Management (RM) to reduce costs by increasing the maximum
   reserve level for the Catastrophic Reserve Account. This change will enable RM to selfinsure property loss, which is
   estimated to save $3 million in the first year and up to $6 million within four years.
   In FY2022, the State experienced a 54% increase in its property loss premiums and is expecting another 510% increase for
   FY2023 unless changes are made. In response to these increasing property premium costs, RM conducted an analysis of
   the past ten years of claims and developed an average cost per year for anticipated claim costs. Based on this analysis, RM
   determined that selfinsuring property losses would result in a savings of $3 million per year and increase to up to $6
   million per year by fiscal year 2026 depending on actual claim experience.
    The State cannot selfinsure property without an adequate balance in the Catastrophe Reserve Account (CRA) to cover
   potential losses. This legislation will increase the maximum alloweable fund balance in the CRA to $50 million which gives
   RM the safety net necessary for large unexpected losses while also allowing flexibility in managing claims resulting in
   better management of property losses. The CRA balance is currently capitalized by operating budget appropriations of
   lapse balances at the end of the fiscal year.
   RM's budget authority is based on interagency billing to other departments. The savings enabled by this legislation will
   result in reduced RM charges to other agencies.
(Revised 11/23/2021 OMB/LFD)                                                                                       Page 2 of 2
HB102-DOA-DRM-1-24-22                                            Page 2 of 2                                               Control Code: RwdhS
Statutes affected: 
HB0102A, AM HB 102, introduced 02/18/2021, passed House 05/18/2021: 37.05.289, 37.25.010
HB0102B, AM SCS HB 102(FIN), introduced 04/27/2022: 37.05.289, 37.25.010
HB0102Z, AM Enrolled HB 102, introduced 05/18/2022: 37.05.289, 37.25.010
HB0102A, AM HB 102, introduced 02/18/2021: 37.05.289, 37.25.010