A2520 RISK MANAGEMENT TRUST FUNDING REVISED.PDF

MARICOPA COUNTY INTERNAL POLICY 
 
Policy Title: 
RISK MANAGEMENT TRUST FUNDING 
Policy Number: 
A2520 
Current Adoption Date: 
03-15-2023 
Current Implementation Date: 
03-15-2023 
Approved by: 
BOARD OF SUPERVISORS 
Board Agenda Number: 
C-##-##-###-#-## 
Original Adoption Date: 
03-15-2023 
 
I. PURPOSE 
To establish guidelines and priorities for funding the Risk Management Trust. 
II. AUTHORITY 
The County is insured through a Self-Insured Trust Fund established by the Board of Supervisors pursuant 
to Arizona Revised Statutes §11-981 for the funding and payment of claim expenses. 
III. APPLICATION 
 
This policy applies to the funding of the Risk Management Trust which is administered by the Risk 
Management Department (Department) and is overseen by a Board of Trustees appointed by the Board of 
Supervisors. 
 
IV. DEFINITIONS 
A. Cost-Reimbursement Basis: setting of charges so that costs are systematically recovered on 
a break-even basis over time.  
B. Current Liability: a financial obligation that is due to be paid within 12 months. 
C. General Fund: accounts for all financial resources not accounted for in another governmental 
fund. 
D. Internal Service Fund: a fund type used to report any activity that provides goods or services 
to other funds, departments, or agencies of the primary government on a cost-reimbursement 
basis. 
E. Non-Current Liability: a financial obligation that is expected to be paid in the future (i.e. greater 
than 12 months).  
V. POLICY 
A. The Board of Supervisors established a Self-Insured Trust Fund (Fund) for the funding and 
payment of claims expenses. The Fund is treated as an Internal Service Fund in the County’s 
financial reporting system. Internal Service Funds are reported using the full accrual basis of 
accounting which includes recognizing expenses in the current year for future (Non-Current) 
liabilities.  
B. The Fund establishes claim liabilities based on estimates of the ultimate cost of claims that 
have been reported (RBUC) and of claims that have been incurred but not reported (IBNR). 
The Department relies on estimates determined by an independent actuary and records claim 
liabilities as current or Non-Current Liabilities based on the estimate.

Policy Title: 
RISK MANAGEMENT TRUST FUNDING 
Policy Number: 
A2520 
Current Adoption Date: 
03-15-2023 
 
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C. In accordance with Policy B1011: Budgeting and Accountability, the County’s policy is to 
establish a Structurally Balanced Budget with the operating standard that revenues will at all 
times equal expenditures over the economic cycle (i.e., fiscal year).  As such, the County 
budgets the Fund’s annual operating revenues and expenses based on estimated cash flows 
for the year.  
D. The County’s budget process is to ensure that cash inflows are equal to cash outflows in a 
given fiscal year. Thus, Non-Current Liabilities that may not be paid within the near-term or 
current year are not included in the annual budgeting process as they will not be paid using the 
current cash inflows. 
E. As the Fund operates as an internal service fund on the full accrual basis, which includes long-
term liability estimates that may not be paid within the year, the Fund’s accounting basis differs 
from the County’s budgetary basis of accounting. 
F. It is the County’s policy to ensure that the Risk Management Trust is adequately funded and 
that all claims and liabilities are properly paid. If cash outflows are greater than cash inflows in 
a given fiscal year, the following year’s budget will be adjusted to cover the deficit. In addition, 
if the Risk Management Trust outflows are less than the inflows resulting in excess cash 
balance, the Fund’s internal service fund charges may be adjusted to ensure excess cash 
balances are not inappropriately created. 
G. The General Fund will provide additional resources to the Risk Management Trust in the event 
that cash in the Fund is insufficient to pay claims in any given year. 
 
 
Revision History 
Version 
Revision Date 
Description of Revision 
1 
MM-DD-YYYY 
Initial version. (C-##-##-###-#-##)