Risk Management for School District’s SCSBIT Risk Management for School District’s Steve Mann, CPA Director of Insurance Services

What is risk Management ?? Risk management is the identification, assessment, and prioritization of risks followed by coordinated application of financial resources to minimize ,monitor , and mitigate the adverse effects of a loss.

WORKER’S Compensation Review claims for previous 2-3 years to identify the type of losses that are costing the school district. Focus on the type of the types of claims that are most frequent. Claims by location can also assist provide District leadership with some possible insights. What is the district’s experience mod ? The District needs to know basic historical information before developing strategies and moving forward.

WORKER’S Compensation District leadership must support efforts to promote safety in all areas of operations. Once the assessment is complete then an action plan can be developed to improve risk of being injured on the job. Every staff member must be aware that improved safety lowers district cost which helps the overall school district budget in the long run. Safety awareness should be mentioned at district level staff meetings with the Superintendent, school level meetings with the Principal, along with meetings with the food service, maintenance, and transportation staffs.

WORKER’S Compensation District level and school safety committee’s need to be formed and meet on a regular basis. The purpose of both groups is to develop strategies that will improve safety and reduce claims. Accidents need to be reviewed in order to determine the cause of the accident, and to see if a repair or a quick fix is available to stop future accidents from happening. Return to Work Policy –Light Duty - Getting the employee back to work with a medical release is imperative in trying to control cost. Plantiff’s lawyers advertise on TV during the day for a reason. The more daytime TV that the employee watches the more likely they are “ to try and win the lottery “.

WORKER’S Compensation Claims FILED With SCSBIT Since July 2014 –present : Admin/ Instructional - 4,809 65.64 % of claims filed Food Service - 852 - 11.62% of claims filed Custodial Staff - 730 - 9.9% of claims filed Transportation - 598- 8.15% of claims filed Maintenance - 344 - 4.69% of claims filed Total 7,333 claims Total incurred Value - $ 49.9 million

WORKER’S Compensation top 5 causes of INJURY Filed With SCSBIT Since July 2014 –present : Slips/Trips/Falls - 2,533 34.54 % of claims filed Struck by Objects - 536 - 7.31 % of claims filed Cut/Puncture/ Scrape 433 - 5.90% of claims filed Lifting - 390 5.32 % of claims filed Special Needs Interac. 313 4.69% of claims filed Subtotal 4,205 claims -57.34% of claims All other causes (29 types) 3,128 Total 7,333

Trending Matters in WORKER’S Compensation Costliest trend in worker’s comp. is lifetime medical claims. SCSBIT currently has 98 lifetime medical claims with a total incurred value of $ 45.5 million . Lifetime medicals are driving up the liability for SCSBIT as determined by the actuary which impacts our financial statements.

WHY W/c Loss experience MATTERS ? District A - Payroll $ 50 million, approx. 6,300 students Poor loss experience = High Mod. Premium - $ 610,000 District B– Payroll is $ 51 million, approx. 8,600 students Good loss experience = Low Mod. Premium = $ 427,671 Premium Difference - $ 182,329 Losses impact the bottom-line of the school district !

WHY W/c Loss experience MATTERS ? District C - Payroll $ 28 million, approx. 4,000 students Poor loss experience = High Mod. Premium - $ 493,000 District D – Payroll is $ 30 million, approx. 5,000 students Good loss experience = Low Mod. Premium = $ 232,896 Premium Difference - $ 260,100 Losses impact the bottom-line of the school district !

Good LOSS Experience is not Luck! Management is the key. - Develop strategies ,discuss safety issues at staff meetings. Leadership must stress safety awareness . Policies and procedures need to be reviewed Attitude- committing time and resources to risk control

Risk Control AT scsbit Tim Hinson, Risk Control Manager At SCSBIT…. Risk Control matters as we provide the following ; On-site visits Training Safety grants totaling close to $ 1 million per year given back to school districts

2016-2017 Property and cASUALTY Hurricane Matthew - approx. $ 3.2 million in losses for SCSBIT customers Marion County School District was hit the hardest (out of the SCSBIT’S clients) totaling $ 881,000 SCSBIT has minimal property exposure on the coast of South Carolina

Latest SCAM

Scsbit – What is Phishing ? The attempt to acquire sensitive information such as user names ,passwords, and credit card details for malicious reasons by masquerading as a trustworthy entity in an electronic communication.

PHISHING WITH scsbit District’s – 3 known Cases CASE # 1 County Treasurer receives an email that appeared to be from school district’s CFO. Requested to wire funds on behalf of school district. Treasurer sends email to District notifying them that the wire is about to take place. CFO never receives Notification. Wired funds of $ 60k was fraudently obtained.

PHISHING WITH scsbit District’s – 3 known Cases CASE # 2 Finance staff of school district receives an email from CFO asking if W’2s were complete. Upon receiving a response, CFO request that they be sent to them before distributing. CFO never requested the w’2s , and was away from the office on the day of the false request. Identity theft with salary information was hijacked.

PHISHING WITH scsbit District’s – 3 known Cases CASE # 3 Finance Director of school district receives an email from the district’s superintendent requesting that funds be wired to a specific account. The email looked to be legitimate and authentic. Funds were wired based on the request. It wasn’t a large amount of $$ but it still happened.

PHISHING WITH scsbit District’s – Common Elements of 3 cases All 3 cases involved electronic mail and the communication appeared to be legitimate. Request were routine in nature which did not lead to suspicion on the person receiving the request. In at least 2 of the cases, communication was attempted to verify the request. All Scams were caught timely, but no arrest.

Internal CONTROLS

INTERNAL controls The fraud triangle represents 3 things are usually present when fraud takes place internally; 1. Opportunity 2. Rationalization 3. Need Focus on reducing the opportunity by reviewing all internal controls and implementing any changes that may strengthen the process. Collusion is hard to catch though.

Closing SCSBIT continually monitors and assesses losses with the help of our broker… Willis, Towers, Watson . Last year we increased our Cyber coverage without passing the increased cost to our members. The main focus of SCSBIT is to render exceptional service , assist with risk prevention, and provide coverage at a reasonable and competitive price.

The insurance partner schools trust. Since 1984. SCSBIT The insurance partner schools trust. Since 1984.