State of Alaska
Bill Version: SB 88
2021 Legislative Session
Fiscal Note Number: 1
(S) Publish Date: 2/22/2021
Identifier: 0689-1-DOA-DRM-2-3-2021 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
Note: Amounts do not include inflation unless otherwise noted below. (Thousands of Dollars)
Appropriation FY2022 Out-Year Cost Estimates
OPERATING EXPENDITURES FY 2022 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 FY 2027
Services (3,033.0) (5,033.0) (5,033.0) (6,000.0) (6,000.0) (6,000.0)
Grants & Benefits
Total Operating 0.0 (3,033.0) (5,033.0) (5,033.0) (6,000.0) (6,000.0) (6,000.0)
Fund Source (Operating Only)
1007 I/A Rcpts (Other) (3,033.0) (5,033.0) (5,033.0) (6,000.0) (6,000.0) (6,000.0)
Total 0.0 (3,033.0) (5,033.0) (5,033.0) (6,000.0) (6,000.0) (6,000.0)
Change in Revenues
Total 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Estimated SUPPLEMENTAL (FY2021) cost: 0.0 (separate supplemental appropriation required)
Estimated CAPITAL (FY2022) cost: 0.0 (separate capital appropriation required)
Does the bill create or modify a new fund or account? 0
(Supplemental/Capital/New Fund - discuss reasons and fund source(s) in analysis section)
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If yes, by what date are the regulations to be adopted, amended or repealed?
Why this fiscal note differs from previous version/comments:
Not applicable, initial version.
Prepared By: Scott Jordan, Director Phone: (907)465-5723
Division: Risk Management Date: 02/12/2021 09:00 AM
Approved By: Leslie Isaacs, Director Date: 02/12/21
Agency: Office of Management and Budget
Printed 2/22/2021 Page 1 of 2 Control Code: zhpeE
SB 88 - Fiscal Note 1
FISCAL NOTE ANALYSIS
STATE OF ALASKA BILL NO.
2021 LEGISLATIVE SESSION
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 self-insure property loss, which is
estimated to save $3 million in the first year and up to $6 million within four years.
In FY2021, the State experienced a 30% increase in its property loss premiums and is expecting another 5-8% increase for
FY2022 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 self-insuring property losses would result in a savings of $3 million per year and increase to up to $6
million per year by fiscal year 2025 depending on actual claim experience.
The State cannot self-insure 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 inter-agency billing to other departments. The savings enabled by this legislation will
result in reduced RM charges to other agencies.
(Revised 1/13/2021 OMB/LFD) Page 2 of 2
0689-1-DOA-DRM-2-3-2021 Page 2 of 2 Control Code: zhpeEStatutes affected:
SB0088A, AM SB 88, introduced 02/22/2021: 37.05.289, 37.25.010