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28. SHORT-TERM DISABILITY REFUND TO ALL POLICYHOLDERS FROM FY 2008 TO FY 2011 Approve the refund of $6,178,953 in excess contributions from the Short-Term Disability Plan to all employees participating in the Plan for the Fiscal Years 2008 to 2011. Refunds will be calculated on a pro rata basis based upon the total premiums paid. Approve timing of payment to be made after July 1, 2013. Short-Term Disability is entirely employee funded. Short-Term Disability Claims paid in FY 2008, 2009, 2010 and 2011 were substantially below budgeted expectations. This resulted in Net Margin (“profit”) earned by the short-term disability plan as shown below: Net Margin FY 2008 1,830,018 FY 2009 1,959,820 FY 2010 1,549,142 FY 2011 839,960 FY 2012 196,668 Net margin by year caused the plan’s fund balance to increase significantly to the point where it is far over reserved. The recommended reserve calculated by Mercer as of 6/30/2012 was $511,427 which means that the plan currently holds $8,096,314 in excess reserves. This plan will bring reserve levels down to approximately $2,000,000. This level is considered in line with fluctuating claims as required reserves are expected to rise with the more generous provisions within the plan for changes made during the FY 2013 and the FY 2014 plan design process. Several alternate methods of lowering the excess reserves were considered. Based on legal advice received it was decided that all policy holders, for the period of time from FY 2008 to FY 2011, should be treated equally in the refunding process. This equates to all policyholders whether active employees or not would receive a refund based upon their pro rata share of total premiums paid during that time period. (C-39-13-035-2-00)