Dental Self-Insurance Fund
2022-2027 Financial Plan
Introduction
The City of Minneapolis (the City) is self-insured for its dental insurance. The City is self-insured and will use its own fund to pay for employees’ dental expenses and administrative services. The City uses an internal billing process to collect premiums from employees to pay those expenses.
Historical financial performance
Over the last three years, the Dental Self-Insurance Fund had an increase in net position from $56,674 at the end of 2018 to $1.2 million at the end of 2020. The increase was primarily due to a reduction in claims during the pandemic.
For the year ending 2020, the cash balance was $1.3 million, an increase of $1.0 million from the 2018 cash balance of $310,000. The 2020 target cash reserve was $427,000, an increase of $177,000 from $250,000 in 2018. The fund was above the target by $922,000 in 2020. This is an increase of $523,000 from the 2018 target of $399,000.
Revenues
The 2021 revenues for the Dental Self-Insurance Fund are projected to be $3.3 million, or $1.0 million less than the budgeted revenue of $4.3 million. The primary reason for the decrease is due to staff reductions resulting in the collection of less premium revenue.
Expense
The projected expenses for 2021 are $3.2 million or $1.1 million less than the budgeted amount of $4.3 million. The primary reason is due to the dental claims and reimbursements being less than expected.
Net position and cash balance
The net position in 2021 is projected to be $1.3 million, an increase of $72,000 from a budgeted amount of $1.2 million at year end 2021. The increase in net position is primarily due to dental premiums which were greater than the expected to be paid out by $72,000.
For the year ending 2021, the cash balance is projected to be $1.4 million, an increase of $72,000 from the budgeted amount of $1.3 million. The 2021 target cash reserve is projected to be $854,000 and the fund is projected to be above its target by a $567,000.
2022 Budget
Revenues
The 2022 budgeted revenue is $4.4 million, an increase of $1.1 million from the 2021 projected amount of $3.3 million and an increase of $128,000 from the 2021 budgeted revenue of $4.3 million. The increase in the 2022 budget amount is primarily due to an increase in dental premium revenue due to staff increases.
Expenses
The expense budget for 2022 is $4.4 million, an increase of $1.2 million from the projected 2021 expenses of $3.2 million and an increase of $128,000 from the 2021 budgeted expense of $4.3 million. The primary reason for the increase is due to an increase in dental claims and reimbursements.
Transfers
There are no transfers budgeted for 2022.
Debt Service
This fund does not have any long-term debt.
Net position and cash balance
The financial reserve policy relating to the internal service funds states that the net position for the Self-Insurance Funds should not fall below zero. The net position at year-end 2022 for the Dental Self-Insurance Fund is projected to be $1.3 million, representing no changes from the 2021 projection of $1.3 million.
The financial reserve policy states that the Dental Self-Insurance Fund shall maintain a minimum cash balance of 20% of total annual claims. For year ending 2022, the Dental Self-Insurance Fund cash balance is projected to be $1.4 million and remain constant for 2021. The 2022 target cash reserve is projected to be $880,000, an increase of 3.0%, or $26,000 from the 2021 projected amount of $854,000. The fund is projected to above its target by $567,000 in 2021 and projected to be $542,000 above its target in 2022.
Dental Self-Insurance Fund financial plan
