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					Schools Excess Liability Fund




                  a C alifornia Institution

                                2007-2008 Annual Report
                                                    In memoriam




In Memory of Nathaniel “Nat” Lord

The sudden passing of Nathaniel E. Lord in April
2008 deeply saddened us all.

In Nat’s short tenure with SELF, he came to know
many within the joint powers authority and
education communities. He made a powerful
impression with his sense of humor, quick wit,
strong moral character and vast expertise of risk
management and insurance.

Nat will always be remembered for his passion
for schools and his drive to help them succeed.
He will be greatly missed.
CONTENTS




                                               1


To Our Members _______________________2
Our Mission_____________________________3
Goals ___________________________________3
Excess Liability Program __________________4
Optional Excess Liability Program_________4
Excess Workers’ Compensation Program ___7
Member Resources_______________________8
Board of Directors _______________________9
Committees ___________________________ 10
Independent Auditor’s Report ___________ 12
Management’s Discussion And Analysis _ 13
Staff __________________________________ 36
Member JPAs ____________ Inside Back Cover
    To Our Members

    Much like the majestic redwood on the cover of this year’s report, SELF is a symbol – a symbol of strength,
    stability and longevity.

    This organization, now in its 22nd year of partnering with California’s schools, was established with the sole
    purpose of protecting our schools from the financial devastation that a catastrophic loss can bring. We have
    done so, without fail, since inception, paying out more than $148 million is claims to our member schools
    and colleges.

    As we close the books on fiscal 2008, SELF continues to demonstrate both its financial stability and claims
    paying ability. We continue to focus on the future and are working hard to ensure that SELF will adapt
    and evolve to meet the needs of its members for many years to come.

    The 2008/2009 rate package for SELF’s core program, the Excess Liability Program, is just one of the
    many ways that SELF has delivered solid results for our members. At a time when every dollar counts,
    SELF secured more coverage – increasing the core program limit from $20 million to $25 million – at a
    lower contribution than the previous year. The entire program is virtually 100 percent reinsured and
    we have secured a two-year rate guarantee depending upon loss activity.

    Our Optional Excess Liability Program continues to offer members additional protection up to $50
    million or more, if so desired, and that program saw a price reduction in per ADA for the second year in
    a row in 2008.

    In response to the needs of our members, SELF also increased coverage in the Excess Workers’
    Compensation Program to statutory limits, providing added peace of mind for only a few
    cents more per $100 payroll.

    The past year was a time of transition and transformation for SELF. We spent the
2   year exploring and developing new ideas and products for our members. And
    although the organization suffered a blow with the loss of Nat Lord little more
    than a year after he came aboard, our focus did not waiver and we continued to
    fulfill our mission.

    Now, as we enter the fall of 2008, we have welcomed a new chief executive,
    Fritz Heirich, who provides us with the vision and the drive to guarantee that
    SELF will continue in its role as the premier and preferred excess provider for
    California schools.

    Fritz joined the SELF staff in September and has made quick work of
    familiarizing himself with our members and their needs. He comes to us with
    a wealth of experience in both finance and excess insurance with the added
    bonus of a background in member-owned and governed risk pooling
    ventures. Working closely with our dedicated board of 17 representatives
    and their 17 alternates, Fritz and SELF’s management team will continue to
    deliver the leadership and expertise that our members have come to know
    and expect from us.

    We look forward to yet another year working together as an integral part
    of the educational community for the benefit of California’s students.




    Michael D. Gregoryk,
    Chair
Our Mission                         Goals

SELF is a member-owned, statewide   n To maintain prudent fiscal and claims management to conserve member assets
                                                                                                                           3
                                    n To develop and provide the broadest excess coverage programs at the lowest
partnership of public educational
                                      possible premium consistent with sound actuarial principles
agencies providing quality pooled   n To obtain, maintain and disseminate risk management information and

programs for excess coverage          technologies associated with educational agency exposures

                                    n To be a leader and to work with other public agencies in the analysis of exposures
that benefit our students.
                                      impacting educational agencies
    Excess Liability Program                                                                        OPTIONAL EXCESS
                                                                                                    LIABILITY Program
    SELF’s Excess Liability Program continues to be the premier and preferred program statewide     Schools continue to be targets of increasing litigation and costly courtroom verdicts. SELF
    for California’s public schools. The program, which is the centerpiece of SELF’s offerings to   created the Optional Excess Liability Program (OELP) to help protect schools from
    its members, uses established methods of loss funding to provide optimal pricing and            catastrophic liability losses and it has been an excellent tool in that ongoing endeavor.
    coverage: pooling - the sharing of losses amongst pool participants; reinsurance – for
    capacity and protection of pool assets; and direct risk transfer or insurance.                  Even with the increase to the core limits, which brought the entire membership up to $25
                                                                                                    million in coverage, there are still 245 members, representing 20 percent of SELF’s ADA for
    Since its inception in 1986, the program has paid more than $148 million in claims on
                                                                                                    fiscal year 2008/2009 that have chosen to protect their organizations in excess of $25
    behalf of members, and in addition provided in excess of $70 million in dividends.
                                                                                                    million. Members can choose additional protection up to $50 million and even higher
    The 2008/2009 program increases limits to $25 million for all members, and provides the
                                                                                                    limits may be available by contacting SELF.
    coverage at a lower cost than the 2007/2008 rate for $20 million in coverage. The core
    program continues to offer members flexibility in choosing an attachment point that is          SELF is using Lexington to insure all of the OELP coverage. Lexington holds an A, XV rating
    right for their needs, while providing a solid block of capacity:                               from A.M. Best.
    •	 $24	million	in	excess	of	the	member’s	primary	$1	million	retention	level	

    •	 $20	million	in	excess	of	a	$5	million	retention	level

    The negotiated coverage will reinsure the terms and conditions of the SELF Memorandum of
    Coverage, and includes a two-year rate guarantee, based on loss activity. This seamless
    reinsurance provides the pool with risk transfer that is equivalent to a 100 percent
    confidence level, the highest and most conservative confidence level that pools can elect.

    The rates which are established by the Board each Spring are based upon sound actuarial
    principles and studies to provide both adequate funding to the program and financial
4   planning to our members.
                                                                                                                       2007/2008 SELF M EMbErShip
                                                                                                                       C ompared   to   S tate   of   C alifornia
    We are indeed pleased to see the decrease in the base rates for the program for fiscal
    2008/2009, even as the core limit increases.


                                                                                                                                             non - MEMbErS
                                                                                                                                                27%



    $20,000,000                                                                                                              SELF M EMbErS 73%

    $16,000,000


    $12,000,000


     $8,000,000


     $4,000,000


              $0
                   89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

                   E xcESS L iabiLity p rograM payMEntS         by   yEar
                   1989-2008
RELIABLE GROWTH


     Since our formation in 2004, Valley Prep has
     pursued gradual and continuous growth in our
                                                         5
     student population to minimize high-risk safety
     factors. As we evolved into a site-based program,
     ever-changing risk brought new challenges and our
     relationship with our primary JPA, the California
     Charter Schools Association, has been valuable in
     improving our risk management policies and
     providing guidance with insurance matters –
     including the excess layer we purchase from SELF.
     We have yet to experience a loss and that can be
     attributed to our use of prudent risk management
     practices to minimize our risks.

     Shelly Melton
     Executive Director

     Valley Preparatory Academy
     SELF Member for 4 years
    Vigilant


6         The work we do in addressing safety issues with
          our campuses and implementing practices that
          ensure vigilant loss control is one of the reasons our
          District has not yet had a claim reach the SELF
          layer. However, our risk management program
          would not be complete without the excess insurance
          for protection in the event of a catastrophic loss.
          Our JPA administrator and members are actively
          involved in SELF’s board, and our trust in SELF is
          based on the performance of the pool, its members
          and its administrators.

          Tami Oh
          Risk Manager

          North Orange County Community College District
          SELF Member for 22 years
EXCESS WORKERS’ COMPENSATION PROGRAM

                                                 The Excess Workers’ Compensation Program increased its limits from $100 million to
                                                 statutory for the 2008/2009 fiscal year, offering its members substantially more coverage
                                                 for only a few cents more per $100 payroll.

                                                 The SELF program continues to enjoy growing stability as the number of late reported
                                                 claims diminishes and the long term reserving of claims has stabilized. The pattern of
                                                 reimbursements issued by SELF, as reflected in the graph below, is likely to continue into
                                                 the foreseeable future as claims continue to mature and reach the SELF layer.

                                                 The primary layers are still seeing benefits from the 2003/2004 reforms although the cost
                                                 of medical care has now reached pre-reform levels. Administrative recommendations for
                                                 changes to the permanent disability system are projected to increase permanent disability
                                                 costs by roughly 16%. There continue to be sustained challenges to the cost savings
                                                 produced by the reforms. This is likely to continue over the next several years with the
                                                 potential for significant increases in costs to employers.

                                                                         $6,000,000

                                                                         $5,500,000

                                                                         $5,000,000

                                                                         $4,500,000

                                                                         $4,000,000

                                                                         $3,500,000                                                                                         7
                                                                         $3,000,000

                                                                         $2,500,000

                                                                         $2,000,000

                                                                         $1,500,000                           E xcESS WorkErS ’ c oMpEnSation p rograM
                                                                                                              Program Options                 08/09 Rates
                                                                         $1,000,000

                                                                           $500,000                           $350,000 retention              $0.3901 per $100 of payroll
                                                                                   $0                         $500,000 retention              $0.3353 per $100 of payroll
  96   97   98   99   00   01   02   03   04   05     06    07    08                                          $750,000 retention              $0.276 per $100 of payroll
E xcESS WorkErS ’ c oMpEnSation p rograM totaL                                                                $1,000,000 retention            $0.1794 per $100 of payroll
rEiMburSEMEntS by F iScaL yEar 1996-2008

                                                                                                              All rates include a $0.017 administrative fee.

                                                                                                              The rates were developed for current members in the
                                                                                                              2008/09 program year only. Our excess carrier
                                                                                                              individually quotes new members of the program.
    Member Resources

    One of the Board’s continuing efforts is to provide SELF’s members with the resources they need to reduce
    liability in their districts. SELF offers periodic workshops and seminars, interactive websites and distributes
    timely material to accomplish this goal. SELF also partners with our member JPAs through co-sponsorship
    of training events.

    Annual Seminars
    SELF has addressed difficult issues affecting California schools through annual workshops for the past ten
    years. This year’s Good Schools Workshop program’s timely themes focused on employment practices liability
    and overcoming the training barriers we all collide with at times.

    Risk Management Resource Website
    SELF continues to partner with The AGOS Group to provide an interactive risk management resource website
    to SELF members. The SELF Resource Center provides a variety of tools to assist members in addressing
    employment practices issues while also offering a best practices database and online training modules on
    sexual molestation prevention, bullying prevention and Internet and technology safeguards.

    Quarterly Newsletter
    SELF Awareness provides our members with timely updates on SELF’s programs. Nearly half of SELF’s members
    receive this publication by electronic mail.

    Program Fact Sheet
    In the spring, SELF distributes a useful reference card which summarizes each of SELF’s programs and provides

8   current rates and contact information.

    Association Partnering
    SELF continues to establish new relationships with organizations that will be beneficial to its members.

    Legislative Advocacy
    SELF partners with School Services of California, Inc. to keep abreast of pending legislation that could have a
    negative impact on its membership. The SELF Board has taken steps to actively oppose legislation that will
    hurt California’s schools and is committed to pursuing legislative avenues to address concerns of the members.

    SELF’s Website
    SELF maintains a website to provide our members with a convenient source for information and updates on SELF’s
    activities. This tool has proven to be a useful resource for our members. By visiting our website, you’ll be able to
    obtain rate, program, meeting and training information. You can also request certificates of coverage, determine
    when to file a claim and find risk management training opportunities for your district. Currently undergoing a
    redesign, the site will soon sport a fresh new look, better search tools and more intuitive menu offerings.

    WWW. SELFjpa .org
                  board of Directors

                                                      The SELF Board is independent of any member or sponsoring organization. Board membership is made up
                                                      of 17 representatives employed by member districts in varied positions from chief business officials, top-level
                                                      administration, risk management and human resources. The representatives are elected to four year terms by
                                                      districts in their respective SELF Areas.




peace of mind
Risk management principles have become
an integral part of the culture at San Francisco
Unified School District. Through concerted efforts
at internal education, design and implementation
of loss control efforts and coordinated claims
management, we have benefited from active risk
                                                                                                                                                                        9
management processes. As part of that process,
our continued participation as a SELF member gives
us peace of mind that school district resources are
not further threatened as a result of a large loss.

Dave George
Risk Manager
San Francisco Unified School District
SELF Member for 22 years
                     Committees   E xEcutivE
                                  The Executive Committee is
                                                                           M EMbEr S ErvicES
                                                                           and c oMMunication
                                                                                                               WorkErS ’ c oMpEnSation
                                                                                                               c LaiMS and c ovEragE
                                  comprised of Board Officers with         This committee serves as a          This committee oversees the workers’
                                  committee chairs serving as              dynamic resource for developing     compensation claims operations of
                                  alternates. This committee meets         and disseminating risk              SELF. Its responsibilities include
                                  regularly and is kept informed on        management and membership
                                  the workings of the other                information through effective       •	 Reviewing	workers’	
                                  committees with input from each          communication strategies. It is        compensation claims
                                  committee chair. This committee          responsible for:                    •	 Determining	coverage	issues	and	
                                  also reviews financial, claims and
                                                                                                                  other activities relating to
                                  program information. Its regular         •	 Risk	management	
                                  responsibilities include:
                                                                                                                  workers’ compensation claims
                                                                              information
                                                                                                               •	 Annually	reviewing	the	coverage
                                  •	 Personnel                             •	 Training	programs
                                                                                                                  terms and conditions of SELF’s
                                  •	 Organizational	issues                 •	 SELF	website	management             Workers’ Compensation
                                  •	 Policy	review                         •	 Data	collection                     Memorandum of Coverage and
                                                                                                                  prepare changes, if any, with
                                  Left to right: Lynn April Hartline       •	 Membership	marketing,	
                                                                                                                  input from membership,
                                  Member at Large, Michael Gregoryk           procurement and retention
                                                                                                                  insurance consultants and
                                  Chair, Denise Smith Comptroller,         Left to right: Stacy Lane, Nancy       coverage counsel for the review
                                  Wes Combes, Nancy Anderson, John         Anderson Chair, Denise Smith Vice      and approval of the Board of
                                  Falappino, Eric Johnson. Not pictured:   Chair, Becky Slaughter                 Directors
                                  Charlene Minnick Vice Chair, Paula
     M EMbEr S ErvicES            Tanguay Secretary                                                            Left to right: Travis Steagall, Sandra
                                                                                                               Lepley, Wes Combes Chair, not
     and   c oMMunication                                                                                      pictured, Scott Miller, Rick Carr,
                                                                                                               Richard Hare



                                                                                                                          WorkErS ’ c oMpEnSation
                                                                                                                          c LaiMS and c ovEragE



10




                                                                                                                                         E xEcutivE
                     F inancE                                  L iabiLity c LaiMS &                      •	 Annually	reviewing	the	
                     The Finance Committee oversees            c ovEragE                                    coverage terms and
                     the fiscal operations of Schools                                                       conditions of SELF’s
                                                               This committee oversees the
                     Excess Liability Fund and makes                                                        Memorandum of Coverage
                                                               liability claims operations of SELF.
                     recommendations to the Board that         Its responsibilities include:
                                                                                                            and prepare changes, if any,

           Staff     ensure financial stability. It is                                                      with input from
                     responsible for:                          •	 Reviewing	claims	and	                     membership, insurance
                                                                  making recommendations to                 consultant and coverage
                     •	 Financial	and	investment	                 the Board on settlement or                counsel for the review and
                        operations                                defense of claims                         approval of the Board of
                     •	 Operating	budget                       •	 Determining	coverage	issues	              Directors
                     •	 Actuarial	and	financial	                  and other activities relating          Left to right: Eric Johnston Chair,
                          S taFF :
                        audit services                            to those claims                        Karla Rhay, Diane Crosier, John
                          Top from left:
                     •	 Rate-setting	process                   •	 Overseeing	the	third-party	            Didion, Michael Gregoryk,
                                                                                                         Zachary Gifford, not pictured,
                     •	 Equity	distribution	process Director administrator (TPA)
                          •	 Tom	Osborne,	Executive
                                                                                                         Charlene Minnick
                          •	 Kami	Linan,	Claims Manager Workers’
                     •	 Vendor	contracts	                   •	 Facilitating	and	developing	
                          Compensation
                        and evaluations                        cooperative relationships
                                                                  with members and their TPAs
                              right: Teresa Scott, John
                     Left to •	 Alan	Grant,	Accountant/Systems Analyst
                     Falappino Chair, Eva Lueck Vice
                     Chair, Doug Brinkley, LynnFiscal Officer
                             •	 Tim	Kern,	Chief April
                     Hartline, Darren Dang, Peter
                             •	 Toan Nguyen
                     Hardash, Deborah	Cosentino,	Executive Secretary

                           Bottom
                           •	 Gary	Sabol,	Director of Communications




                                                                                                                                               F inancE



                                                                         SELF is always attentive to your risk
                                                                                                                                                          11
                                                                         management needs. Let us know how we can
                                                                         help you today.




L iabiLity c LaiMS
& c ovEragE
     Independent Auditor’s Report


                               The Board of Directors and Members
                               Schools Excess Liability Fund

                               We have audited the accompanying statement of net assets of Schools Excess Liability Fund (“SELF”) as of June 30, 2008 and 2007,
                               and the related statements of revenues, expenses and changes in net assets, and cash flows for the years then ended. These
                               financial statements are the responsibility of SELF’s management. Our responsibility is to express an opinion on these financial
                               statements based on our audits.

                               We conducted our audits in accordance with auditing standards generally accepted in the United States of America, the State
                               Controller’s Minimum Audit Requirements for California Special Districts and the standards applicable to financial audits
                               contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require
                               that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
                               misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
                               statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well
                               as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

                               In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of
                               SELF as of June 30, 2008 and 2007, and the results of its operations and its cash flows for the years then ended in conformity with
                               accounting principles generally accepted in the United States of America as well as accounting systems prescribed by the State
                               Controller’s Office and State regulations governing special districts.


12                             In accordance with Government Auditing Standards, we have also issued our report dated October 2, 2008 on our consideration
                               of SELF’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations and
                               contracts. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and
                               compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on
                               compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should
                               be read in conjunction with this report in considering the results of our audits.

                               Management’s Discussion and Analysis on pages 13 through 17 is not a required part of the basic financial statements but is
                               supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited
                               procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation
                               of the supplementary information. However, we did not audit the information and express no opinion on it.




                               Sacramento, California

                               October 2, 2008
                                                                                                                Management’s Discussion And Analysis
Schools Excess Liability Fund (SELF), a self-insurance pool, has provided coverage to over 1,250 school districts in California
for over 20 years. SELF is a member-owned, statewide partnership of public educational agencies providing quality pooled programs
for excess coverage that benefit our students. SELF operates two independent programs, Excess Liability and Excess Workers’
Compensation. In addition, SELF provides excess claims administration and loss control training to members. SELF has invested
in a building in Sacramento that houses its administrative offices and provides additional office space for commercial lease.

A 17-member Board of Directors, elected for a four-year term by the members governs Schools Excess Liability Fund.
The Board of Directors is comprised of representatives from K-12 districts, community colleges and the California State University
system. From its members, the Board of Directors elects a Chair, Vice Chair, Secretary, Comptroller, and Member-at-Large.

SELF’s daily operations are administered by a Chief Executive Officer. The Chief Executive Officer is responsible for the
administration of policies as set forth by SELF’s organizational documents, Bylaws, and the Board of Directors.



                                                                                                           Description Of Basic Financial Statements
SELF operates as an enterprise fund and uses an accrual basis of accounting. This report includes the basic financial statements
for SELF in accordance with the relevant Governmental Accounting Standards and accounting principles generally accepted in the
United States of America. Financial statements include amounts based upon reliable estimates and judgments. The annual financial
report consists of four parts: Management’s Discussion and Analysis, Basic Financial Statements, Notes to the Basic Financial
Statements and Supplementary Information.

•	 This	is	Management’s	Discussion	and	Analysis	where	SELF’s	financial	activities	are	explained,	based	on	currently	known	                             13
   facts and conditions.

•	 The	basic	financial	statements	include	the	Statement	of	Net	Assets,	Statement	of	Revenues,	Expenses	and	Changes	in	
   Net Assets and the Statement of Cash Flows, using the direct method for the fiscal years ending June 30, 2008 and
   2007. These statements give an overall financial picture of SELF compared to the prior fiscal year. These can be used
   to quickly assess the financial performance over the reported fiscal years.

•	 The	notes	to	the	basic	financial	statements	are	an	integral	part	of	the	financial	statements	and	provide	details	
   on SELF membership, accounting policies, claim reserves and IBNR’s (incurred but not reported), and other information
   in the statements.

•	 The	supplementary	information	provides	data	on	Claims	Liabilities	by	type	of	contract	for	the	fiscal	years	ended	June	
   30, 2008 and 2007 and Claims Development Information for self-insured program years by type of fund for the most
   recent ten years. It also includes a Combining Statement of Net Assets, and a Combining Statement of Revenues,
   Expenses and Changes in Net Assets for fiscal years ended June 30, 2008 and 2007. Accounting for the individual funds
   are maintained internally to show the performance and activity of each fund.
     Condensed Financial Information
     Statement of Net Assets                                                                                                  2008          2007
     June 30, 2008 and June 30, 2007                    ASSETS
     (in thousands)                                     Current assets                                                  $    35,696   $    27,332
                                                        Noncurrent assets                                                   201,071       186,537
                                                        Capital assets, net                                                   1,913         2,034
                                                          Total assets                                                      238,680       215,903
                                                        LIABILITIES
                                                        Current liabilities                                                  21,250        21,720
                                                        Unpaid claims and claims adjustment expense                         168,712       164,073
                                                          Total liabilities                                                 189,962       185,793
                                                        NET ASSETS
                                                        Invested in capital assets, net                                       1,913         2,034
                                                        Net assets, designated                                               46,805        28,076
                                                          Total net assets                                              $    48,718   $    30,110



     Assets                                                                             Liabilities & Net Assets
     June 30, 2008                                                                      June 30, 2008

                                                  Noncurrent Investments 47%            Unpaid Claims and Claims
                                                      Current Investments 5%            Adjustment Expenses 70%
                                                   Prepaid & Other Assets 2%            Current Liabilities 9%

                                                       Cash & Equivalents 9%
14                                                    Capital Assets - Net 1%           Net Assets 20%

                                                      Assessments Receivable-
                                                             Noncurrent 36%
                                                                                        Invested in Capital Assets 1%


     Statement of Revenues,                                                                                                   2008          2007
     Expenses & Changes                                 OPERATING REVENUE
     in Net Assets                                      Member Contributions, net                                       $    31,701   $    39,511
                                                        OPERATING EXPENSES
     For the Years Ended June 30, 2008 and 2007
                                                        Provision for claims & claim adjustment expense                      15,348        32,553
     (in thousands)                                     Commercial excess insurance premiums                                  5,158        10,642
                                                        Contract services/administrative expenses                             2,485          2,672
                                                          Total operating expenses                                           22,991        45,867
                                                          Operating income (loss)                                             8,710        ( 6,356 )
                                                        NONOPERATING REVENUE (EXPENSE)
                                                        Rental income                                                           153          135
                                                        Interest income                                                       6,511        6,723
                                                        Net change in fair market value of investments                        3,223          886
                                                        Other income                                                             11          676
                                                        Total non-operating revenue (expense)                                 9,898        8,420
                                                          Change in net assets                                               18,608        2,064
                                                        Total net assets, beginning of year                                  30,110       28,046
                                                        Total net assets, end of year                                   $    48,718   $   30,110
Breakdown of Expenses
June 30, 2008

Claims Expense 67%

Administrative Costs 7%

Personnel Costs 4%



Commercial Excess
Insurance Premiums 22%




Total assets in SELF increased by approximately by $22.7 million from the prior year. This increase is due to income generated by          Analysis Of Overall
both funds within Schools Excess Liability Fund. Total liabilities increased by approximately $4.2 million due to an increase in the   Financial Position And
actuarially-determined unpaid claims and claims adjustment expense.                                                                                    Results
                                                                                                                                                Of Operations
Total Net Assets for all of SELF’s programs increased approximately $18.6 million. Both the Excess Liability and Excess Workers’
Compensation programs experienced an increase in net assets.

Member contributions (without regard to assessments) for SELF decreased by approximately $12.2 million from the prior year.
This decrease was due to a reduction in membership in both the Excess Liability Program and the Excess Workers’ Compensation
Program. An assessment of approximately $15.4 million was recorded in the Excess Workers’ Compensation Program. Overall,
operating expenses decreased by $22.8 million. This decrease was due to a decrease in the commercial excess insurance premiums
and a decrease in the provision for claims and claims adjustment expense.


                                                                                                                                         Analysis Of Balances    15
E xcESS L iabiLity p rograM                                                                                                                And Transactions
                                                                                                                                         Of Individual Funds
The increase in assets of approximately $6.6 million from the prior year is primarily due to investment revenue and the change
in the fair market value of the investments. In addition to positioning the investment portfolio based on SELF’s cash needs, SELF
utilizes an investment advisor to structure the portfolio. The advisor analyzes the market trends and advises SELF as to investment
strategies. The investment strategy is executed within the investment policy adopted by the Board of Directors.

Long-term liabilities increased by approximately $2.7 million from the prior year due to ultimate loss estimates exceeding the
claims paid. The actuarial estimates of ultimate loss have reflected potential future exposure due to increase severity in SELF’s
experience within the last few years.

Net assets increased by approximately $3.9 million as a result of investment revenue.

Member contributions for the Excess Liability program decreased $6.6 million due to a reduction in membership. The operating
expenses also decreased by $8.4 million due to a decrease in the commercial excess insurance and a decrease in the ultimate
loss development.

E xcESS WorkErS ’ c oMpEnSation p rograM
The increase in assets of approximately $16.2 million is primarily due to the increase in member assessments, investment revenue
and the change in the fair market value of the investments.

Long-term liabilities increased by approximately $.5 million for the year primarily due to the increase in ultimate loss estimates
for prior years outpacing the rate at which claims were paid. The actuarial estimates of ultimate loss have reflected potential
future exposure.
     Analysis Of Balances                         Net assets increased by approximately $14.7 million primarily due to investment revenue and the member assessments.
     And Transactions
                                                  Member contributions decreased approximately $5.6 million due to the decrease in membership and the change in retention of
     Of Individual Funds
                                                  one of the JPA’s. In addition, $15.5 million in operating revenues resulted from a long-term member assessment recognized in the
     E xcESS WorkErS ’                            year ended June 30, 2008. The operating expenses decreased primarily due to a decrease in the provision for claims and claims
     c oMpEnSation p rograM                       adjustment expense of $9 million and a $5.5 million decrease in the commercial excess insurance premium.
     (continued)                                  Discussion of Capital Assets

                                                  The majority of SELF’s capital assets are invested in a building located in downtown Sacramento. The building houses SELF’s
                                                  administrative offices and a 1,000 square foot conference center that is made available to SELF’s members. Excess space in the
                                                  building is currently occupied through a lease agreement with an educational institution.




     Analysis Of Significant Variation Between Original And Final Budget Amounts

     Excess Liability                                                                                                                                                     Budget/
     Program                                                         Original            Final         Dollar        Budget                             Dollar              Actual
     For the Year Ended                                              Budget            Budget        Variance       Variance             Actual       Variance            Variance
     June 30, 2008            REVENUE
     (in thousands)
                              Member Contributions               $    10,859           10,859                 -           0%       $    10,600             (259 )              (2% )
                              Interest Income                          4,462            4,462                 -           0%             5,033              571                13%
                              Other Income                                 3               13                10         333%                 3               (10 )           ( 77% )
                              Total Revenue                          15,324           15,334                 10           0%           15,636               302                 2%
16                            EXPENDITURES
                              Personnel Services                        359               439               80           22%               481              42                 10%
                              Contract Services                         636               526             (110 )        (17% )             487             (39 )               ( 7% )
                              Services & Supplies                       341               341                -            0%               352              11                   3%
                              Self Insurance                          4,500            11,000            6,500          144%            9,789           (1,211 )              (11% )
                              Excess Insurance                        5,278             3,120           (2,158 )        (41% )           3,017            (103 )               (3% )
                              Total Expenditures                     11,114           15,426            4,312           39%            14,126          (1,300 )               (8% )
                              Unrealized Gain (Loss)
                                on Investments                               -                -                -                         2,536            2,536              100%
                              Gain (Loss) on
                                Sale of Investments                          -                -                -                          (104 )           (104 )           (100% )
                              Increase (decrease)
                              in net assets                      $     4,210      $        (92 ) $ (4,302 )          (102% ) $           3,942      $(4 , 0 3 4 )       (1,085% )


                              The increase in interest income is due to the implementation of the current investment strategy which is focusing on providing maximum returns.

                              The increase in expenses is due to the hiring of full time staff which was offset by the decrease in the contract services for the key positions.
                              The decrease in the excess insurance was due to the decrease in the member participation.
                                                                                                                                         Budget/         Excess Workers’
                                       Original            Final         Dollar        Budget                            Dollar            Actual         Compensation
                                       Budget            Budget        Variance       Variance             Actual      Variance          Variance               Program
REVENUE                                                                                                                                                       For the Year Ended
Member Contributions               $    5,922             5,922                0            0%       $     5,622          (300 )             (5% )                 June 30, 2008
Member Assessments                      9,256            14,256           5,000            54%            15,479         1,223                9%                  (in thousands)
Interest Income                         2,100             2,100                0            0%             1,477          (623 )            (30% )
Other Income                               20                10              (10 )        (50% )               8            (2 )            (20% )
Total Revenue                          17,298           22,288            4,990           29%            22,586            298             (46% )
EXPENDITURES
Personnel Services                        447               447                0           97%               433            (14 )            (3% )
Contract Services                         711               361             (350 )        170%               266            (95 )           (26% )
Services & Supplies                       174               174                0          301%               227             53              30%
Self Insurance                         13,200             7,200           (6,000 )        183%            5,559          (1,641 )           (23% )
Excess Insurance                        2,766             2,166             (600 )         37%             2,141            (25 )            (1% )
Total Expenditures                     17,298           10,348           (6,950 )        (40% )           8,626         (1,722 )           (17% )
Unrealized Gain (Loss) on
  Investments                                  -                -                -              -             812          812              100%
Gain (Loss) on Sale of
  Investments                                  -                -                -              -             (21 )        (21 )           (100% )
Increase (decrease)
in net assets                      $           0    $ 11,940         $ 11,940                        $ 14,751         $ (2,811 )           (24% )


The increase in income is due to an increase in the member assessment offset by a decrease in the investment income for the year. Actual interest
income was less than budget due to the amount of investments and related durations.

The decrease in expenses was primarily due to the decrease in the adjustment for claims and claims administration expense recommended by SELF’s
                                                                                                                                                                                   17
actuary. A decrease in the contract services was due to the fact that the program is now fully staffed internally.

In keeping with past practice, SELF’s Finance Committee and Board of Directors will continue to focus attention on the overall funding of the Workers’
Compensation Program by review of SELF’s “Workers’ Compensation Shared Risk Layer Plan Fund Adjustment” as established by the Board in June
2002 and amended in June 2007.
     BASIC FINANCIAL STATEMENTS


     Statement of Net Assets                                                                                      2008          2007
     June 30, 2008 and 2007    ASSETS
     (in thousands)            Current assets:
                                Cash and cash equivalents (Note 2)                                          $    21,112   $    11,356
                                Interest and other receivables                                                    1,588         1,791
                                Member receivables                                                                   12           157
                                Investments maturing within one year (Note 2)                                    12,450        13,556
                                Current portion of assessment receivable (Note 3)                                   490           460
                                Prepaid expenses                                                                     32             2
                                Current portion of note receivable from tenant                                       12            10
                                   Total current assets                                                          35,696        27,332

                               Investments, less portion maturing within one year (Note 2)                      113,518       112,057
                               Reinsurance deposit (Note 8)                                                       2,101           287
                               Note receivable from tenant, less current portion                                     12            25
                               Assessment receivable, less current portion (Note 3)                              85,440        74,168
                               Capital assets (Note 4):
                                 Investment in building, net of accumulated depreciation
                                   of $1,339 and $1,180 for 2008 and 2007, respectively                           1,837         1,960
                                 Furniture and equipment, net of accumulated depreciation
                                   of $414 and $369 for 2008 and 2007, respectively                                  76            74
18                                 Total assets                                                                 238,680       215,903

                               LIABILITIES
                               Current liabilities:
                                Accounts payable                                                                   250           220
                                Current portion of unpaid claims and claim adjustment
                                   expenses (Note 5)                                                             21,000        21,500
                                   Total current liabilities                                                     21,250        21,720
                               Unpaid claims and claim adjustment expenses (Note 5)                             168,712       164,073
                                   Total liabilities                                                            189,962       185,793
                                Contingencies (Note 9)

                               NET ASSETS
                               Net assets invested in capital assets (Note 4)                                     1,913         2,034
                               Net assets (Note 7)                                                               46,805        28,076
                                   Total net assets                                                         $    48,718   $    30,110


                               The accompanying notes are an integral part of these financial statements.
                                                                                  2008         2007     Statement of Revenues,
Operating revenues:                                                                                      Expenses and Changes
 Member contributions                                                        $   16,222   $   28,435              in Net Assets
 Member assessment (Note 3)                                                      15,479       11,076    For the Years Ended June 30, 2008 and 2007
   Total operating revenues                                                      31,701       39,511                                (in thousands)
Operating expenses:
 Provision for claims and claim adjustment
   expenses (Note 5)                                                             15,348       32,553
 Commercial reinsurance premiums                                                  5,158       10,642
                                                                                 20,506       43,195
  General and administrative expenses:
   Contract services                                                                753           932
   Personnel costs (Note 6)                                                         914           867
   Administrative expenses                                                          429           452
   Travel                                                                           137           192
   Office costs                                                                      19            27
   Printing and postage                                                              29            19
   Depreciation (Note 4)                                                            204           183
                                                                                  2,485         2,672
    Total operating expenses                                                     22,991        45,867
    Operating income (loss)                                                       8,710       (6,356)
Non-operating revenues:                                                                                                                              19
 Rental income                                                                      153          135
 Interest income                                                                  6,511        6,723
 Net change in fair value of investments                                          3,223          886
 Other income                                                                        11          676
    Total non-operating revenues                                                  9,898        8,420
Change in net assets                                                             18,608        2,064
Net assets, beginning of year                                                    30,110       28,046
Net assets, end of year                                                      $   48,718   $   30,110


The accompanying notes are an integral part of these financial statements.
     Statement of Cash Flows                                                                                                                                     2008                      2007
     For the Years Ended June 30, 2008 and 2007                   Cash flows from operating activities:
     (in thousands)                                                 Cash received from members and others                                         $            20,555        $            31,817
                                                                    Cash paid for claims and settlements                                                      (11,209 )                 ( 37,223 )
                                                                    Cash paid for reinsurance                                                                  ( 6,972 )                (13,918 )
                                                                    Cash received from reinsurance                                                                                       32,539
                                                                    Cash paid to suppliers for goods and services                                              (1,367 )                   (1,708 )
                                                                    Cash paid to employees for services                                                          ( 914 )                    ( 867 )
                                                                  Net cash provided by operating activities                                                         93                   10,640
                                                                  Cash flows used in capital and related financing activities:
                                                                    Capital expenditures for building, furniture and equipment                                     ( 83 )                   (132 )
                                                                  Cash flows from investing activities:
                                                                    Securities purchased                                                                      ( 68,680 )                ( 56,621 )
                                                                    Securities sold and matured                                                                 71,548                    27,263
                                                                    Note receivable from tenant                                                                     11                        10
                                                                    Rental income received                                                                         153                       135
                                                                    Interest received                                                                            6,714                     6,670
                                                                  Net cash provided by (used in) investing activities                                            9,746                  ( 22,543 )
                                                                  Net increase (decrease) in cash and cash equivalents                                           9,756                  (12,035 )
                                                                  Cash and cash equivalents, beginning of year                                                  11,356                    23,391
                                                                  Cash and cash equivalents, end of year                                          $             21,112       $            11,356
                                                                  Reconciliation of operating income (loss) to net cash
                                                                    provided by operating activities:
                                                                      Operating income (loss)                                                     $              8,710       $           ( 6,356 )
                                                                      Adjustments to reconcile operating income (loss) to
                                                                      net cash provided by operating activities:
20                                                                       Depreciation                                                                             204                        183
                                                                         Decrease in member receivables                                                           145                        731
                                                                         Increase in assessment receivable                                                    (11,302 )                  ( 8,474 )
                                                                         Increase (decrease) in prepaid expenses                                                  ( 30 )                        7
                                                                         Increase (decrease) in reinsurance deposit                                            (1,814 )                  29,263
                                                                         Decrease (increase) in accounts payable                                                    30                       ( 93 )
                                                                         Decrease in rebate payable                                                                                       ( 627)
                                                                         Increase (decrease) in unpaid claims and claim
                                                                         adjustment expenses                                                                     4,139                   (4,670 )
                                                                         Other income                                                                               11                      676

     Notes to Basic                                               Total adjustments
                                                                    Net cash provided by operating activities                                     $
                                                                                                                                                               ( 8,617 )
                                                                                                                                                                    93       $
                                                                                                                                                                                         16,996
                                                                                                                                                                                         10,640
     Financial Statements                                         Supplemental schedule of non cash investing activities:
     (dollars in thousands)                                         Net unrealized gain on investments                                            $              2,152       $               886
                                                                  The accompanying notes are an integral part of these financial statements.

     1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                       of accounting in accordance with Governmental Generally Accepted Accounting Principles.
     General Description                                                                                 Under the accrual basis, revenues and the related assets are recognized when earned, and
     Schools Excess Liability Fund (SELF) is a statewide Joint Powers Agency established as a program    expenses and related liabilities are recognized when the obligation is incurred. Operating
     to pool excess liability and workers’ compensation coverage for participating California public     revenues include member contributions net of any applicable rate credits and member
     educational agencies. Beginning in 1996, SELF sponsored a fully insured life insurance program,     assessments. Operating expenses include the provision for claims and claim adjustment expenses,
     along with group disability and medical stop loss coverage. During the year ending June 30, 2007,   insurance premiums, premium rebates, and general and administrative expenses. All other
     SELF was successful in arranging for the sale of the renewal rights under the life program to       revenues and expenses are considered non-operating. The Group has elected not to apply
     Onesource. Participation in SELF is voluntary, and members must remain in the program for           Financial Accounting Standards Board pronouncements issued after November 30, 1989.
     three fiscal years before they are eligible to withdraw.
                                                                                                         Cash Equivalents
     Basis of Accounting                                                                                 Cash equivalents are investments readily convertible into known amounts of cash with original
     The accompanying financial statements are presented as a proprietary fund on the accrual basis      maturities at date of purchase of less than three months.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                             incurred but not reported. The length of time for which such costs must be estimated varies
                                                                                                          depending on the coverage involved. Estimated amounts of salvage, subrogation and reinsurance
(continued — in thousands)                                                                                recoverable on unpaid claims are deducted from the liability. SELF increases the liability for
Use of Estimates                                                                                          allocated and unallocated claim adjustment expenses. Because actual claims costs depend on
The preparation of financial statements in conformity with accounting principles generally                such complex factors as inflation, changes in doctrine of legal liability, and damage awards, the
accepted in the United States of America requires management to make estimates and                        process used in computing unpaid claims and claim adjustment expenses does not necessarily
assumptions. These estimates and assumptions affect the reported amounts of assets and                    result in an exact amount, particularly for excess coverages. Unpaid claims and claim adjustment
liabilities at the date of the financial statements and the reported amounts of revenues and              expenses are recomputed periodically using a variety of actuarial and statistical techniques to
expenses during the reporting period. Actual results could differ from these estimates.                   produce current estimates that reflect recent settlements, claim frequency, other economic and
                                                                                                          social factors and estimated payment dates. Adjustments to unpaid claims and claim adjustment
Investment in Building, Furniture and Equipment                                                           expenses are charged or credited to expense in the period in which they are made. The current
Building, furniture and equipment are carried at cost. Depreciation is determined using the               portion of the claims liabilities has been estimated by an independent actuary using cash flow
straight-line method, over the useful lives of the related assets. The useful lives of the building       projections and current claims information.
and improvements are estimated to be 30 years. SELF leases 48 percent of the building to third
parties under noncancellable leases.                                                                      Member Contributions
                                                                                                          Under the SELF Joint Powers Agreement, member districts must make a three-year commitment
The useful lives of furniture and equipment are estimated to be five years. When assets are sold          to participate in SELF. Mid-term cancellation or withdrawal is not permitted and members’
or otherwise disposed of, the cost and related accumulated depreciation are removed from the              annual contributions are due in advance. As such, all contributions are earned evenly over the
accounts, and any resulting gain or loss is recognized in the statement of revenues, expenses and         applicable coverage year. Operating revenues and expenses include all activities necessary to
changes in net assets for the period. The cost of maintenance and repairs is charged to expense           achieve the objectives of SELF. Non-operating revenues and expenses include investment activities,
as incurred.                                                                                              building income and expenses and other non-essential activity. Withdrawing districts may be
                                                                                                          entitled to a refund under certain conditions five years after withdrawal. There were no amounts
SELF does not believe there to be any impairment of its capital assets at June 30, 2008.                  held for member withdrawal at June 30, 2008 and June 30, 2007.
Investments and Investment Pools                                                                          In April 2001, the Board discontinued the use of rate credits and approved a new equity
SELF records its cash in Local Agency Investment Fund (LAIF) and its other investments at fair            distribution policy whereby members are eligible for premium rebates in years where they
value. Changes in fair value are reported as non-operating revenue in the statement of revenues,          participated in the Fund. No rebate amounts were declared during the years ended June 30, 2008
expenses and changes in net assets. The effect of recording investments and LAIF at fair value is         and 2007.
reflected as a net change in the fair value of investments on the statement of revenues, expenses
and changes in net assets.                                                                                Commercial Reinsurance Premiums
                                                                                                          It is the policy of SELF to purchase additional insurance which covers losses greater than the
Fair value of investments and LAIF has been determined by the sponsoring government based on
                                                                                                          limits of SELF’s excess coverage. Such additional insurance coverage is offered to members
quoted market prices. SELF’s investment in LAIF has been valued based on the relative fair value of
                                                                                                          through an Optional Excess Liability Program (OELP). The OELP premium is reported as part of
the entire external pool to the external pool’s respective amortized cost.
                                                                                                          Member Contributions.
Provisions for Unpaid Claims and Claim Adjustment Expenses                                                SELF purchased specific excess insurance from $1,000 to $100,000 for workers’ compensation
SELF’s policy is to establish unpaid claims and claim adjustment expenses based on estimates of           coverage and $1,000 to $3,000 for employers’ liability coverage.
the ultimate cost of claims that have been reported but not settled, and of claims that have been
                                                                                                                                                                                                               21

                                                                                Rating                        2008                2007             2. CASH, CASH EQUIVALENTS AND
Cash and cash equivalents:                                                                                                                         INVESTMENTS
  Cash in bank                                                                                        $       3,382    $           608             (in thousands)
  Money Market                                                                                                  777                753
                                                                                                                                                   Cash, cash equivalents and investments as of June 30,
  Commercial Paper                                                                                                               3,213             2008 and 2007 are reported at fair value and are
  Local Agency Investment Fund                                                                              16,953               6,782             shown at left:
Total cash and cash equivalents                                                                             21,112              11,356
Investments:
  United States Agency – FHLB, FNMA, FHLMC                                      A-1+ — AAA            $     76,824     $       70,642
  Corporate Notes                                                               AA- — AAA                   32,766             37,912
  Municipal bonds and notes                                                     A — AA                      16,378              17,059
  Total investments                                                                                        125,968            125,613
  Total cash, cash equivalents and investments                                                        $    147,080     $      136,969
Reconciliation to statement of net assets:
  Current assets:
  Cash and cash equivalents                                                                           $     21,112     $        11,356
  Investments                                                                                               12,450              13,556
                                                                                                            33,562              24,912
Non-current assets:
  Investments                                                                                              113,518            112,057
  Total                                                                                               $    147,080     $      136,969
     2. CASH, CASH EQUIVALENTS AND INVESTMENTS (Continued)                                                governmental agencies in the State and invests the cash. The fair value of SELF’s investment in the
     Custodial Credit Risk                                                                                pool is reported in the accompanying financial statements based upon SELF’s pro-rata share of
     Cash balances held in banks are insured up to $100 by the Federal Depository Insurance               the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost
     Corporation (FDIC) and are collateralized by the respective financial institution. At June 30,       of that portfolio). Because the Group’s deposits are maintained in a recognized Pooled Investment
     2008, the carrying amount of SELF’s accounts was $3,382 and the bank balances were $3,963.           Fund (Fund) under the care of a third party and the Group’s share of the pool does not consist
     The carrying value and the bank balance differ due to deposits in transit and outstanding checks.    of specific, identifiable investment securities owned by the Group, no disclosure of the individual
     Of the bank balances, $3,863 were not covered by FDIC insurance; but are fully collateralized.       deposits and investments or related custodial credit risk classifications is required. The balance
                                                                                                          available for withdrawal is based on the accounting records maintained by LAIF, which are
     Money Market                                                                                         recorded on an amortized cost basis. Funds are accessible and transferable to the master account
     SELF has a portion of its cash and cash equivalents in a money market account at a third party       within 24 hours notice. Included in LAIF’s investment portfolio are collateralized mortgage
     custodian. The money market account is not covered by FDIC insurance, but is fully                   obligations, mortgage-backed securities, other asset-backed securities, and floating rate securities
     collateralized.                                                                                      issued by Federal agencies, government-sponsored enterprises and corporations. LAIF is
                                                                                                          administered by the State Treasurer. As of June 30, 2008, this Fund was yielding approximately
     Local Agency Investment Fund                                                                         2.78% interest annually. LAIF investments are audited annually by the Pooled Money Investment
     SELF places certain funds with the State of California’s Local Agency Investment Fund (LAIF). SELF   Board and the State Controller’s Office. Copies of this audit may be obtained from the State
     is a voluntary participant in LAIF, which is regulated by California Government Code Section         Treasurer’s Office: 915 Capitol Mall; Sacramento, California 95814. The Pooled Money Investment
     16429 under the oversight of the Treasurer of the State of California and the Pooled Money           Board has established policies, goals and objectives to make certain that their goal of safety,
     Investment Board. The State Treasurer’s Office pools these funds with those of other                 liquidity and yield are not jeopardized.




                                                                                                                                Maturity
     Investment Interest Rate Risk                                                                                                                                                           One Year
     SELF’s investment policy limits investment maturities to
     a maximum of five years, with Board approval for any                                                                                                               Less Than            Through
     investment purchase with a maturity beyond five years                                                                                        Fair Value            One Year            Five Years
     as a means of managing its exposure to fair value losses
     arising from increasing interest rates. Maturities of          Investment maturities:
     investments held at June 30, 2008 consist of the                 United States Agency – FHLB, FNMA, FHLMC                                $          76,824                         $        76,824
     following:
                                                                    Corporate Notes                                                                      32,766    $          9,063              23,703
     (in thousands)                                                 Municipal bonds and notes                                                            16,378               3,387             12,991
                                                                                                                                              $       125,968      $         12,450     $      113,518

22
     Investment Credit Risk                                                                               Concentration of Investment Credit Risk
     SELF’s investment policy limits investment choices to obligations of the United States Treasury,     SELF does not place limits on the amount it may invest in any one issuer. At June 30, 2008, SELF
     its agencies and instrumentalities, corporate medium-term notes, commercial paper rated A-1 by       had the following investments that represent more than five percent of SELF’s net investments:
     Standard and Poor’s Corporation or P-1 by Moody’s Commercial Paper Record, bankers’ acceptances
     and repurchase agreements. At June 30, 2008 and 2007, all investments represented governmental         Federal   Home Loan Bank                              27%
     securities which were issued, registered and held by SELF’s agent in the Agency’s name.                Federal   Home Loan Mortgage Corporation              19%
                                                                                                            Federal   Farm Credit Bank                             8%
                                                                                                            Federal   National Mortgage Association                6%




     3. MEMBER ASSESSMENT                                                                                                                                          2008                        2007
     Adverse loss development and increases in the incurred        Current portion of assessment receivable                                          $               490           $             460
     but not reported (IBNR) claims liability resulted in a
     deficit fund position in the Excess Workers’                  Assessment receivable, less current portion                                                    85,440                      74,168
     Compensation Program. Although the program has                                                                                                  $            85,930           $          74,628
     assets for continued operation, the Board of Directors
     found it prudent to address the deficit position through
     assessments as provided in SELF’s JPA Agreement.              The amount of assessments will be recalculated annually based on current actuarial estimates and audited
     Assessments are based on a pro rata share of each             financial statements. Management has determined that no allowance for uncollectable assessments was
     member’s contributions for each year assessed. Any
     deficits occurring as a result of changes to reserves for     needed as of June 30, 2008.
     reported claims will be collected over a seven year
     period. Deficits that occur due to changes in IBNR will
     be assessed for those program years 10 years and older
     and will be collected over a period of not less than
     seven years; however, the most recent assessment was
     calculated to be collected over 15 years. The current
     and long-term portions of the assessment receivable at
     June 30, 2008 and 2007 are to the right. (in thousands)
                                                                                                      2008                      2007                4. CAPITAL ASSETS
Capital assets, net of depreciation –                                                                                                               Activity for capital assets for the years ended June 30,
                                                                                                                                                    2008 and 2007 is shown at left:
  beginning of year                                                                  $                2,034       $             2,085
Purchases                                                                                                 83                      132               (in thousands)
Current year depreciation                                                                              ( 204 )                   (183 )
Capital assets, net of depreciation –
  end of year                                                                        $                1,913       $             2,034
Investment in building, net of accumulated
  depreciation                                                                       $                1,837       $             1,960
Furniture and equipment, net of accumulated
  depreciation                                                                                           76                        74
                                                                                     $                1,913       $             2,034



                                                                                                      2008                      2007                5. UNPAID CLAIMS AND CLAIM
Unpaid claims and claim adjustment expenses,                                                                                                        ADJUSTMENT EXPENSES
  beginning of year                                                                  $              185,573       $          190,243                As discussed in Note 1, SELF established a liability for
                                                                                                                                                    both reported and unreported insured events for the
Incurred claims and claim adjustment expenses:                                                                                                      Excess Workers’ Compensation and the Excess Liability
  Provision for covered events of current year                                                        4,433                    10,780               programs. The table at the left represents changes in
  Change in the provision for covered events of prior years                                          10,915                    21,773               those aggregate liabilities during the years ended June
                                                                                                                                                    30, 2008 and 2007:
    Total incurred claims and claim adjustment expenses                                              15,348                    32,553
Payments:                                                                                                                                           (in thousands)
  Claims and claim adjustment expenses
    attributable to covered events of current year                                                         -                          -
  Claims and claim adjustment expenses
     attributable to covered events of prior years                                                   11,209                    37,223
     Total payments                                                                                  11,209                    37,223                                                                             23
     Total unpaid claims and claim adjustment expenses,
     end of year                                                                     $              189,712       $          185,573

The components of the unpaid claims and claim adjustment expenses as of June 30, 2008 and 2007 were as follows:

                                                                                                       2008                     2007
Reported claims                                                                      $              104,266       $          110,535
Claims incurred but not reported                                                                      81,835                   71,556
Unallocated loss adjustment expenses                                                                   3,611                    3,482
                                                                                                    189,712                  185,573
Less current portion                                                                                ( 21,000 )               ( 21,500 )
                                                                                     $              168,712       $          164,073

At June 30, 2008 and 2007, this liability was reported at present value using an expected future investment yield assumption of 4.25% and
4.75% for the Liability Program and 4.75% and 4.9% for the Workers’ Compensation Program, respectively. The workers’ compensation
discount rate has been adjusted for the years ended June 30, 2008 and 2007 to reflect the fact that a portion of the necessary assets is not
available. The undiscounted liability was $215,355 and $218,705 at June 30, 2008 and 2007, respectively.


                                                                                                          participating public entities within the State of California. State statute and SELF policy establish
6. EMPLOYEE RETIREMENT PLAN                                                                               benefits provisions and all other requirements. Copies of the CalPERS’ annual financial report may
Qualified employees are covered under an agent multiple-employer defined benefit pension plan
                                                                                                          be obtained from the CalPERS Executive Office at 400 P Street, Sacramento, California 95814.
maintained by the California Public Employees’ Retirement System (CalPERS), an agency of the
State of California.
                                                                                                          Funding Policy
                                                                                                          Participants are required to contribute 7% of their annual covered salary. SELF makes the
Plan Description                                                                                          contribution required of certain SELF employees on their behalf and for their account. SELF is
SELF contributes to the California Public Employees Retirement System. CalPERS provides
                                                                                                          required to contribute at an actuarially determined rate. SELF’s contribution rate on covered
retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan
                                                                                                          payroll for all employees for the year ended June 30, 2008 was 13.41%. The contribution
members and beneficiaries. CalPERS acts as a common investment and administrative agent for
                                                                                                          requirement of plan members and SELF are established and may be amended by CalPERS.
     6. EMPLOYEE RETIREMENT PLAN                                                                              Inflation                                   3.00%
     (continued)                                                                                              Payroll Growth                              3.25%
                                                                                                              Individual Salary Growth                    A merit scale varying by duration of
     Annual Pension Cost
     For the year ended June 30, 2008, SELF’s annual pension cost of $78 for CalPERS was equal to                                                         employment coupled with an assumed
     SELF’s required and actual contributions. The required contribution was determined as part of the                                                    annual inflation growth of 3.00% and an
     June 30, 2006 actuarial valuation. A summary of the principle assumptions and methods used to
     determine the annual required contribution is shown below.                                                                                           annual production growth of 0.25%

     Valuation Date                                 June 30, 2006                                         SELF had less than 100 active members as of the June 30, 2006 actuarial valuation. As a result,
     Actuarial Cost Method                          Entry Age Actuarial Cost Method                       SELF members are required to participate in a larger risk pool, Miscellaneous 2% at 55 Risk Pool.

     Amortization Method                            Level Percent of Payroll                              Unfunded liabilities are amortized as a level percent of pay over a closed 20-year period. Gains
                                                                                                          and losses that occur in the operation of the plan are amortized over a rolling period, which
     Average Remaining Period                       16 Years as of the Valuation Date
                                                                                                          results in an amortization of 10% of unamortized gains and losses each year. If the plan’s
     Asset Valuation Method                         15 Year Smoothed Market                               accrued liability exceeds the actuarial value of plan assets, then the amortization payment on the
     Actuarial Assumptions:                                                                               total unfunded liability may not be lower than the payment calculated over a 30-year
                                                                                                          amortization period.
       Investment Rate of Return                    7.75% (net of administrative expenses)
       Projected Salary Increases                   3.25% to 14.45% depending on Age,                     The CalPERS Miscellaneous 2% at 55 Risk Pool Plan has an unfunded liability of $262,170 as of
                                                                                                          June 30, 2006. This liability will be amortized through higher employer pension rates applied
                                                    Service and Type of Employment                        over a 30 year period as determined by CalPERS.




                                                                   Trend Information for CalPERS Miscellaneous 2% at 55 Risk Pool                                      (dollars in thousands)
                                                                     Fiscal Year                                                        Annual            Percentage            Net Pension
                                                                     Ending                                                            Pension                 of APC             Obligation
                                                                     June 30,                                                      Cost (APC)            Contributed                  (Asset)
24                                                                   2006                                                      $              61                100%        $                0
                                                                     2007                                                      $              73                100%        $                0
                                                                     2008                                                      $              78                100%        $                0

                                                                   Funded Status of the Plan
                                                                                                                                                                                                     UAAL
                                                                                           Entry Age                                                                                                   as a
                                                                                              Normal             Actuarial           Unfunded                                         Annual      Percen-
                                                                   Valuation                 Accrued              Value of             Liability              Funded                Covered        tage of
                                                                   Date                       Liability             Assets              (UAAL)                  Status                Payroll       Payroll
                                                                     2004              $ 2,746,096        $    2,460,945       $       285,151                 89.6%        $       743,692         38.3%
                                                                     2005              $ 2,891,461        $    2,588,713       $       302,748                 89.5%        $       755,047         40.1%
                                                                     2006              $ 2,754,396        $    2,492,226       $       262,170                 90.5%        $       699,897         37.5%
                                                                                                                                           7. DESIGNATED NET ASSETS
                                                                                                         2008               2007           The Board of Directors established the designation for
                                                                                                                                           contingency at the actuary’s recommendation, to provide
Designated for contingency                                                                     $         46,703     $        27,874        extra protection to the fund, and to further reduce the
Designated for errors and omissions                                                                          150               150         level of risk to members.

Designated for roof replacement                                                                               52                52         (in thousands)
  Designated net assets                                                                        $         46,805     $       28,076




                                                                                                                                           8. REINSURANCE DEPOSIT EXCESS
                                                                                                                           2007            LIABILITY PROGRAM
                                                                                                                                           SELF entered into a reinsurance finite risk contract with
Balance, beginning of year                                                                                    $           12,775           School, College and University Underwriters, Ltd.
Claims paid                                                                                                              (12,775 )         (SCUUL), an A.M. Best A rated reinsurer, for the period
                                                                                                                                           July 1, 1998 to June 30, 2003. The arrangement allows
Balance, end of year                                                                                          $                -
                                                                                                                                           SELF to transfer losses in excess of $5,000 up to an
                                                                                                                                           aggregate of $20,000 during the contract period.
                                                                                                                                           Subsequent to June 30, 2001, SCUUL merged with
                                                                                                                                           United Educators to become United Educators Insurance.
                                                                                                                                           SCUUL’s charge for the coverage was 15% of the
                                                                                                                                           premium. The remainder is held in an experience
                                                                                                                                           deposit account that accrues interest at 1.5% over the 5
                                                                                                                                           year Treasury Bill rate. The experience deposit account
                                                                                                                                           balance may be remitted to SELF if not used to pay
                                                                                                                                           claims occurring during the coverage period.
                                                                                                                                           Reconciliation of activity in the reinsurance deposit
                                                                                                                                           account of the 1998 through 2003 policy years for the
                                                                                                                                           years ended June 30, 2007 is shown at left.

                                                                                                                                           (in thousands)
                                                                                                                                                                                                        25
                                                                                                   2008                    2007            SELF entered into a reinsurance finite risk contract with
                                                                                                                                           Imagine Insurance Company Limited for the period July
Balance, beginning of year                                                        $                  287      $           16,775
                                                                                                                                           1, 2003 to June 30, 2008. The arrangement allows SELF
Current year contribution                                                                          2,800                   3,160           to transfer losses in excess of $5,000 up to $10,000 per
Reinsurer’s margin                                                                                  (420 )                  (474 )         occurrence and an aggregate of $2,500 plus the actual
                                                                                                                                           premium collected over the coverage period.
Interest earned                                                                                        5                     590
Claims paid                                                                                         (571 )               (19,764 )         The premium was $2,800 and $3,160 for the years ended
                                                                                                                                           June 30, 2008 and 2007, respectively. The insurers’ charge
Balance, end of year                                                              $                2,101      $              287           for coverage for the year was 15% of the premium. The
                                                                                                                                           remainder is held in an experience deposit account that
                                                                                                                                           accrues interest at the 12 month treasury rate, 5% as of
                                                                                                                                           June 30, 2008. The experience deposit account balance
                                                                                                                                           may be remitted to SELF if not used to pay claims
9. CONTINGENCIES                                                                                                                           occurring during the coverage period.
SELF is subject to legal proceedings and claims which arise in the ordinary course of business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially affect the financial position or results of operations of SELF.    Reconciliation of activity in the reinsurance deposit
                                                                                                                                           account of the 2004 through 2008 policy years for the
                                                                                                                                           years ended June 30, 2008 and 2007 is shown at left.

                                                                                                                                           (in thousands)
     Independent Auditor’s Report on Supplementary Information


                              The Board of Directors and Members
                              Schools Excess Liability Fund


                              Our report on our audits of the basic financial statements of Schools Excess Liability Fund for the years ended June 30, 2008 and

                              2007 appears on page 12. Those audits were made for the purpose of forming an opinion on the basic financial statements taken

                              as a whole. The Reconciliation of Claim Liabilities by Type of Contract and Claims Development information on pages 27 through

                              30 are not a required part of the basic financial statements but are supplementary information required by the Governmental

                              Accounting Standards Board. The combining statements of net assets and combining statements of revenues, expenses and changes

                              in net assets on pages 31 through 34 and the schedule of investments on page 35 are presented for purposes of additional analysis

                              and are not a required part of the basic financial statements. We have applied certain limited procedures, which consisted

                              principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information.

                              However, we did not audit the information and express no opinion on it.




                              Sacramento, California


26                            October 2, 2008
                                                                                                 2008         2007
                                                                                                                      Excess Liability Program
Unpaid claims and claim adjustment expenses
  at beginning of year                                                               $       56,963      $   70,656
Incurred claims and claim adjustment expenses:
                                                                                                                                     Reconciliation
                                                                                                                                of Claims Liabilities
  Provision for covered events of current year                                                   3,507        7,739
                                                                                                                                by Type of Contract
  Change in provision for covered events of prior years                                          6,282       10,247
                                                                                                                       For the Years Ended June 30, 2008 and 2007 (in
  Total incurred claims and claim adjustment expenses                                            9,789       17,986
                                                                                                                                                          thousands)
Payments:
  Claims and claim adjustment expenses attributable
    to covered events of current years                                                               -            -
  Claims and claim adjustment expenses attributable
    to covered events of prior years                                                             7,110       31,679
  Total payments                                                                                 7,110       31,679
  Total unpaid claims and claim adjustment expenses, end of year                     $       59,642      $   56,963


The components of the unpaid claims and claim adjustment expenses as of June 30, 2008 and 2007
were as follows:
                                                                                                 2008         2007
Reported claims                                                                      $       29,950      $   38,071
Claims incurred but not reported                                                             28,797          18,223
Unallocated loss adjustment expenses                                                              895          669
                                                                                     $       59,642      $   56,963




                                                                                                                                                                        27
     Excess Workers’                                                                                                                        2008               2007

     Compensation Program       Unpaid claims and claim adjustment expenses at beginning of year
                                Incurred claims and claim adjustment expenses:
                                                                                                                                 $       128,610     $       119,587


                                     Provision for covered events of current year                                                            926               3,041
     Reconciliation of Claims        Change in provision for covered events of prior years                                                  4,633             11,526
     Liabilities by Type             Total incurred claims and claim adjustment expenses                                                    5,559             14,567
     of Contract                Payments:
     For the Years Ended
                                     Claims and claim adjustment expenses
     June 30, 2008 and 2007
                                       attributable to covered events of current year                                            -                   -
     (in thousands)
                                     Claims and claim adjustment expenses
                                       attributable to covered events of prior years                                                       4,099               5,544
                                     Total payments                                                                                        4,099               5,544


                                     Total unpaid claims and claim adjustment expenses, end of year                              $       130,070     $      128,610


                                The components of the unpaid claims and claim adjustment expenses as of June 30, 2008 and 2007
                                were as follows:
                                                                                                                                            2008               2007
                                Reported claims                                                                                  $        74,316     $        72,464
                                Claims incurred but not reported                                                                          53,038              53,333
                                Unallocated loss adjustment expenses                                                                        2,716              2,813
                                                                                                                                 $       130,070     $      128,610




28                              The tables that follow illustrate how the Fund’s earned revenues (net of reinsurance) and investment income compare to related costs of
     Claims Development         loss (net of loss assumed by reinsurers) and other expenses assumed by the Fund as of the end of each of the previous 10 years for the
     Information                Liability and Workers’ Compensation programs. The rows of the tables are defined as follows:
     For the Years Ended        1.  Total of each fiscal year’s gross earned premiums, rate credits, amounts of premiums ceded, and reported premiums (net of reinsurance).
     June 30, 2008 and 2007     2.  Reported investment revenue allocated to each policy year.
                                3.  Member rebates declared.
                                4.  Each fiscal year’s other operating costs of the Program including overhead and loss adjustment expenses not allocable to individual
                                    claims. The change in unallocated loss adjustment expenses (ULAE) is separately identified.
                                5. Program’s gross incurred losses and allocated loss adjustment expense, losses assumed by reinsurers, and net incurred losses and loss
                                    adjustment expense (both paid and accrued) as originally reported at the end of the year in which the event that triggered coverage
                                    occurred (called policy year).
                                6. Cumulative net amounts paid as of the end of successive years for each policy year.
                                7. Latest reestimated amount of losses assumed by reinsurers for each policy year.
                                8. Policy year’s net incurred claims as of the end of successive years. This annual reestimation results from new information received on
                                    known claims, reevaluation of existing information on known claims, as well as emergence of new claims not previously known.
                                9. Compares the latest reestimated net incurred claims amount to the amount originally established (line 5) and shows whether this latest
                                    estimate of claims cost is greater or less than originally thought. As data for individual policy years mature, the correlation between
                                    original estimates and reestimated amounts is commonly used to evaluate the accuracy of incurred claims currently recognized in less
                                    mature policy years.
                                10. Outstanding unpaid claims and claim adjustment expenses as of June 30, 2008 for each policy year.

                                The columns of the tables show data for successive policy years.
Fiscal and Policy Year Ended June 30,                                                                                                                                            Excess Liability
                                                   1999             2000          2001        2002        2003         2004         2005       2006         2007       2008
(1) Premiums revenue:                                                                                                                                                                  Program
    Earned                               $        8,340 $          8,440 $       8,808 $     14,977 $    15,764 $     21,079 $     21,400 $   23,820 $     17,198 $   10,600       c LaiMS d EvELopMEnt
    Rate credit                                  (4,010 )         (5,500 )      (3,991 )
    Ceded                                          (759 )           (780 )        (996 )     (1,188 )    (1,816 )     (2,568 )     (2,188 )   (2,465 )     (2,999 )   (3,017 )             i nForMation
    Net earned                           $        3,571 $          2,160 $       3,821 $     13,789 $    13,948 $     18,509 $     19,212 $   21,355 $     14,199 $    7,583
                                                                                                                                                                                           June 30, 2008
(2) Cumulative interest earned                                                                                                                                                             (in thousands)
    (by policy year)                     $          672 $            344 $          0 $      3,010 $      1,170 $      2,931 $     3,910 $     4,432 $     2,332 $      609
(3) Member rebate
(4) Unallocated expenses                 $        1,007 $          1,212 $       1,269 $     1,312 $      1,202 $      1,178 $     1,636 $     1,460 $     1,509 $     1,320
    Change in ULAE                       $          674 $         (1,011 ) $     (511 ) $      (72 ) $    (137 ) $       (81 ) $      32 $         8 $       135 $       226
(5) Estimated incurred claims and
    expenses, end of policy year:
    Incurred                             $       23,000 $           6,937 $      20,568 $    7,796 $      9,498 $      8,748 $     8,638 $    14,916 $     7,648 $     3.454
    Ceded                                        (9,000 )               0       (10,000 )        0            0            0           0           0           0           0
    Net incurred                         $       14,000 $           6,937 $      10,568 $    7,796 $      9,498 $      8,748 $     8,638 $    14,916 $     7,648 $     3.454

(6 ) Paid (cumulative) as of:
     End of policy year                  $            0    $           0    $        0   $       0   $        0   $        0   $       0 $        0 $          0 $         0
     One year later                      $        8,000    $       2,000    $    2,560   $       0   $        0   $      954   $       0 $        0 $          0
     Two years later                     $        5,482    $       3,700    $    5,897   $       0   $    5,235   $    3,561   $   5,222 $      225
     Three years later                   $        9,644    $       4,794    $    5,897   $   3,074   $   11,771   $    9,224   $   5,232
     Four years later                    $        5,581    $       4,793    $    7,086   $   4,721   $   11,771   $   11,299
     Five years later                    $        5,961    $       4,793    $   15,471   $   4,839   $   11,771
     Six years later                     $        5,581    $      10,760    $   15,530   $   7,389
     Seven years later                   $        6,454    $      10,760    $   15,720
     Eight years later                   $        6,463    $      10,769
     Nine years later                    $        6,474
(7) Re-estimated ceded losses
     and expenses                        $        9,000 $                 0 $   10,000 $         0 $         0 $          0 $          0 $         0 $         0 $         0
(8) Re-estimated incurred claims
     and expenses:
     End of policy year                  $       14,000    $       6,937    $   10,568   $   7,796   $    9,498   $    8,748   $    8,638 $   14,916 $      7,648 $    3,454
     One year later                      $       11,649    $       6,975    $   14,523   $   9,470   $   14,570   $   15,078   $   17,039 $    9,813 $     12,496
     Two years later                     $       11,082    $       6,220    $   16,654   $   8,125   $   18,914   $   19,099   $   19,437 $    7,484
     Three years later                   $       11,534    $       9,267    $   14,553   $   6,445   $   19,665   $   20,387   $   27,910
     Four years later                    $        8,043    $       8,702    $   12,315   $   6,918   $   14,445   $   17,328
     Five years later                    $        7,346    $      11,925    $   17,646   $   5,386   $   12,850
     Six years later
     Seven years later
                                         $
                                         $
                                                  7,459
                                                  6,974
                                                           $
                                                           $
                                                                  10,877
                                                                  10,784
                                                                            $
                                                                            $
                                                                                16,433
                                                                                15,720
                                                                                         $   7,389                                                                                                          29
     Eight years later                   $        6,752    $      10,769
     Nine years later                    $        6,614
(9) (Decrease) increase in esti-
     mated incurred claims and
     expenses from end of policy
     year                                $       (7,386 ) $         3,832 $      5,152 $      (407 ) $    3,352 $      8,580 $     19,272 $   (7,432 ) $   4,848 $         0

(10) Unpaid claims and claim
adjustment expenses
with ULAE                                $          142 $                 9 $      193 $         4 $      1,095 $      6,121 $     23,022 $    7,370 $     12,686 $    3,507

Note: Beginning July 1, 1999, SELF began discounting claim liabilities.
     Excess Workers’   Fiscal and Policy Year Ended June 30,
                                                                         1999             2000        2001         2002         2003        2004        2005         2006         2007        2008
     Compensation      (1) Premium revenue:
                            Earned                              $       1,731 $          2,044 $      2,382 $      4,352 $      8,004 $    15,454 $     1,329 $      9,957 $     11,237 $     5,622
     Program                Ceded                                        (278 )           (254 )       (284 )       (614 )     (3,833 )    (6,808 )    (7,284 )     (5,848 )     (7,643 )    (2,141 )
     c LaiMS           Net earned                               $       1,453 $          1,790 $      2,098 $      3,738 $      4,171 $     8,646 $    (5,955 ) $    4,109 $      3,594 $     3,481
     d EvELopMEnt
                       (2) Cumulative interest earned
     i nForMation           (by policy year)                    $         449 $            702 $       765 $       1,040 $       820 $     1,364 $       943 $        526 $        328 $       164
                       (4) Unallocated expenses                 $         100 $            125 $       117 $         143 $       158 $       330 $       352 $        615 $        946 $       926
     June 30, 2008          Change in ULAE                      $         250 $            149 $      (210 ) $        51 $     1,060 $       827 $        65 $        596 $       (282 ) $     (97 )
                       (5) Estimated incurred claims and
     (in thousands)
                            expense, end of policy year:
                            Incurred                            $       1,736 $          1,675 $      2,688 $      2,665 $     5,781 $     4,789 $      4,516 $      5,057 $     2,974 $       907
                            Ceded                                           0                0            0            0           0           0            0            0           0           0
                            Net incurred                        $       1,736 $          1,675 $      2,688 $      2,665 $     5,781 $     4,789 $      4,516 $      5,057 $     2,974 $       907
                       (6) Paid (cumulative) as of:
                            End of policy year                  $           0    $           0   $       0    $       0    $      0    $      0    $        0 $          0 $         0 $          0
                            One year later                      $           0    $           0   $       0    $       0    $      0    $      0    $        0 $          0 $         0
                            Two years later                     $           0    $           0   $       0    $     113    $      0    $      0    $        0 $          0
                            Three years later                   $          52    $           0   $       0    $     113    $      0    $      0    $        0
                            Four years later                    $         231    $           0   $       0    $     361    $      0    $      0
                            Five years later                    $         730    $          88   $     265    $     569    $      0
                            Six years later                     $       1,007    $         306   $     572    $     846
                            Seven years later                   $       1,387    $       1,472   $     766
                            Eight years later                   $       1,967    $       1,932
                            Nine years later                    $       2,297
                       (7) Re-estimated ceded losses
                            and expenses                        $            0 $             0 $         0 $          0 $         0 $         0 $           0 $          0 $         0 $          0
                       (8) Re-estimated incurred claims
                            and expense:
                            End of policy year                  $       1,736    $       1,675   $    2,668   $    2,665   $   5,781   $   4,789   $    4,516 $      5,057 $     2,974 $       907
                            One year later                      $       1,876    $       2,753   $    2,926   $    4,543   $   6,976   $   4,274   $    5,243 $      2,750 $     3,018
                            Two years later                     $       3,394    $       2,809   $    5,120   $    5,579   $   8,675   $   5,562   $    3,580 $      2,590
                            Three years later                   $       3,045    $       7,144   $    7,483   $    9,387   $   8,994   $   4,981   $    3,349
                            Four years later                    $       5,766    $       8,617   $   10,008   $    8,214   $   6,070   $   5,136
                            Five years later                    $       9,146    $      10,708   $    9,663   $    9,684   $   6,686
                            Six years later                     $      12,122    $      13,655   $   13,190   $   10,049
                            Seven years later                   $      13,185    $      18,007   $   12,736
                            Eight years later                   $      15,942    $      18,599
30                          Nine years later
                       (9) Increase (decrease) in
                                                                $      15,910

                            estimated incurred claims and
                            expense from end of policy year     $      14,174 $         16,924 $     10,048 $      7,384 $       905 $       347 $     (1,167 ) $   (2,467 ) $      44 $          0
                       (10) Unpaid claims and claim
                            adjustment expense with
                            ULAE                                $      13,903 $         17,022 $     12,225 $      9,399 $     6,829 $     5,246 $      3,420 $      2,645 $     3,082 $       926

                       Note: Beginning July 1, 1999, SELF began discounting claim liabilities.
                                                              Excess                                                   Combining Statement
                                                            Workers’                                                          of Net Assets
                                             Excess         Compen-               Life                                              June 30, 2008
                                            Liability          sation       Insurance        Building          Total                (in thousands)
  ASSETS
Current assets:
  Cash and cash equivalents             $    20,013     $      1,049    $                $        50     $    21,112
  Interest and other receivables              1,192              396                                           1,588
  Member receivables                             12                                                               12
  Investments, maturing within one year       9,339            3,111                                          12,450
  Current portion
    of assessment receivable                                     490                                            490
  Prepaid expenses                                32                                                             32
  Current portion of note receivable
    from tenant                                                                                   12             12
  Due from/to other programs                    61                                               (61 )
      Total current assets                  30,649             5,046                               1          35,696
Investments, less portion maturing
  within one year                            69,519           43,999                                         113,518
Reinsurance deposits                          2,101                                                            2,101
Note receivable, long-term                                                                        12              12
Assessment receivable, less current
  portion                                                     85,440                                          85,440
Capital assets:
  Investment in building, net                                                                  1,837           1,837
  Furniture and equipment, net                   57               13                               6              76
      Total assets                          102,326          134,498                           1,856         238,680                                 31
  LIABILITIES
Current liabilities:
  Accounts payable                              227                                               23            250
  Current portion of unpaid claims
    and claim adjustment expenses           15,000             6,000                                          21,000
      Total current liabilities             15,227             6,000                              23          21,250
Unpaid claims and claim adjustment
  expenses                                  44,642           124,070                                         168,712
      Total liabilities                     59,869           130,070                              23         189,962
  NET ASSETS
Net assets invested in capital assets           57                13                           1,843           1,913
Net assets - designated                     42,400             4,415                             (10 )        46,805
      Total net assets                  $   42,457      $      4,428    $            -   $     1,833 $        48,718

(Continued)
     Combining                                                                      Excess
     Statement                                                                    Workers’
     of Net Assets                                                 Excess         Compen-              Life
     ( Continued)                                                 Liability          sation      Insurance            Building           Total
     June 30, 2007      ASSETS
     (in thousands)   Current assets:
                        Cash and cash equivalents             $     9,554     $      1,778                    $            24      $    11,356
                        Interest and other receivables              1,323              468                                               1,791
                        Member receivables                             30              127                                                 157
                        Investments maturing within one
                          year                                     10,167            3,389                                              13,556
                        Current portion of assessment
                          receivable                                                   460                                                460
                        Prepaid expenses                                 2                                                                  2
                        Current portion of note receivable
                          from tenant                                                                                       10             10
                        Due from/to other programs                     89                                                 (89 )
                            Total current assets                   21,165            6,222                                ( 55 )        27,332
                      Investments, less portion maturing
                        within one year                            74,171           37,886                                             112,057
                      Reinsurance deposits                            287                                                                  287
                      Note receivable, long term                                                                           25               25
                      Assessment receivable, less current
                        portion                                                     74,168                                              74,168
                      Capital assets:
                        Investment in building, net                                                                     1,960            1,960
32                      Furniture and equipment, net                  57                11                                  6               74
                            Total assets                          95,680           118,287                              1,936          215,903
                        LIABILITIES
                      Current liabilities:
                          Accounts payable                            202                                                  18             220
                        Current portion of unpaid claims
                          and claim adjustment expenses           15,000             6,500                                              21,500
                            Total current liabilities             15,202             6,500                                 18           21,720
                      Unpaid claims and claim adjustment
                        expenses                                   41,963          122,110                                             164,073
                            Total liabilities                      57,165          128,610                                 18          185,793
                        NET ASSETS
                      Net assets invested in capital assets           57                11                              1,966            2,034
                      Net assets - designated                     38,458           (10,334 )                              (48 )         28,076
                            Total net assets                  $   38,515      $    (10,323 ) $            -       $     1,918 $         30,110
                                                           Excess                                                    Combining Statement
                                                         Workers’                                                              of Revenues,
                                         Excess          Compen-                Life                                 Expenses and Changes
                                        Liability           sation        Insurance        Building          Total            in Net Assets
Operating revenues:                                                                                                  For the Year Ended June 30, 2008
 Member contributions               $    10,600      $      5,622                                       $   16,222                      (in thousands)
 Member assessment                                         15,479                                           15,479
    Total operating revenues             10,600            21,101                                           31,701
Expenses:
 Provision for unpaid claims and
  claim adjustment expenses               9,789             5,559                                           15,348
 Commercial reinsurance
  premiums                               3,017              2,141                                            5,158
                                        12,806              7,700                                           20,506
 General and administrative
  expenses:
   Contract services                         487              266                                              753
   Personnel costs                           481              433                                              914
   Administrative expenses                   201              147                      $        81             429
   Travel                                     86               51                                              137
   Office costs                               11                8                                               19
   Printing and postage                       19               10                                               29
   Depreciation                               35               11                               158            204
                                           1,320              926                               239          2,485
     Total operating expenses            14,126             8,626                               239         22,991
     Operating (loss) income             ( 3,526 )         12,475                             ( 239 )        8,710
Non-operating revenues:                                                                                                                                  33
 Rental income                                                                                 153             153
 Interest income                          5,033             1,477                                1           6,511
 Net change in fair value of
   investments                            2,432               791                                            3,223
 Other income                                 3                 8                                               11
     Total non-operating revenues         7,468             2,276                              154           9,898
Change in net assets                      3,942            14,751                              (85 )        18,608
Net assets, beginning of year            38,515           (10,323 )                          1,918          30,110
Residual equity transfer
Net assets, end of year             $    42,457      $      4,428     $            -   $     1,833      $   48,718

(continued)
     Combining Statement                                                                          Excess
     of Revenues,                                                                               Workers’
     Expenses and Changes                                                        Excess         Compen-              Life
     in Net Assets                                                              Liability          sation      Insurance        Building           Total
     For the Year Ended June 30, 2007   Operating revenues:
     (Continued)                         Member contributions               $    17,198     $     11,237                                     $   28,435
     (in thousands)                      Member assessment                                        11,076                                         11,076
                                            Total operating revenues             17,198           22,313                                         39,511
                                        Expenses:
                                         Provision for unpaid claims and
                                          claim adjustment expenses              17,986           14,567                                         32,553
                                         Commercial reinsurance
                                          premiums                                2,999            7,643                                         10,642
                                                                                 20,985           22,210                                         43,195
                                         General and administrative
                                          expenses:
                                           Contract services                       628               304                                            932
                                           Personnel costs                         454               413                                            867
                                           Administrative expenses                 253               129                    $        70             452
                                           Travel                                  120                72                                            192
                                           Office costs                             15                12                                             27
                                           Printing and postage                     12                 7                                             19
                                           Depreciation                             27                 9                            147             183
                                                                                 1,509               946                            217           2,672
                                             Total operating expenses           22,494            23,156                            217          45,867
                                             Operating (loss) income            (5,296 )            (843 )                         (217 )        (6,356 )
34                                      Non-operating revenues:
                                         Rental income                                                                              135             135
                                         Interest income                          5,188            1,531                              4           6,723
                                         Net change in fair value of
                                           investments                              675              211                                            886
                                         Other income                               674                2                                            676
                                             Total non-operating revenues         6,537            1,744                            139           8,420
                                        Change in net assets                      1,241              901                            ( 78 )        2,064
                                        Net assets, beginning of year            37,523          (11,201 ) $        (272 )        1,996          28,046
                                        Residual equity transfer                   (249 )            (23 )           272
                                        Net assets, end of year             $    38,515 $        (10,323 ) $           - $        1,918      $   30,110
                                                                       Par Value       Fair Value   Schedule of Investments
FHLB Notes:                                                                                                         June 30, 2008
  4.25% note, matures June 2013                                    $       5,000   $       5,022                    (in thousands)
FNMA Notes:
  5.00% note, matures April 2010                                          5,000            5,163
  5.625% global note (callable), matures September 2012                   3,000            3,015
                                                                          8,000            8,178
FHLMC Notes:
  4.50% global note, matures July 2010                                    4,000            4,099
  5.250% note (callable), matures February 2011                           5,000            5,062
  5.30% global note, matures January 2012                                 5,000            5,049
  5.0% note (callable), matures December 2012                             5,000            5,025
  5.0% note (callable), matures December 2012                             5,000            5,048
                                                                         24,000           24,283
FFCB Notes:
  3.75% bond (callable), matures February 2012                            5,000            4,980
  3.98% bond (callable), matures April 2013                               5,000            4,947
                                                                         10,000            9,927
FHLB Bonds:
  5.6% bond, matures June 2011                                            5,000             5,281
  4.75% tap bond, matures December 2011                                   5,000             5,145
  4.375% tap bond, matures June 2012                                      5,000             5,075
  5.0% tap bond, matures September 2011                                   4,000             4,163
  3.5% tap bond, matures March 2013                                       5,000             4,875
  3.5% tap bond, matures March 2013                                       5,000             4,875
                                                                         29,000            29,414                                    35
Corporate Notes:
  Wells Fargo Financial, 5.875% matures August 2008                        3,000           3,005
  Associates Corp., 6.25%, matures November 2008                           3,000           3,025
  Bank of America Global, 5.875%, matures February 2009                    3,000           3,033
  Walmart Stores Inc., 6.875%, matures August 2009                         3,500           3,629
  Wells Fargo & Co Global Note, 4.625%, matures August 2010                5,000           5,050
  Goldman Sachs Note, 5.00%, matures January 2011                          3,000           2,989
  JP Morgan Chase & Co Corp. Global, 5.6%, matures June 2011               2,000           2,027
  General Electric Cap Corp. Global, 5.25%, matures October 2012           5,000           5,049
  General Electric Cap Corp. Global, 5.25%, matures October 2012           2,650           2,676
  Bank of America Global, 4.25%, matures October 2010                      2,300           2,283
                                                                          32,450          32,766
Other:
  National City CA, 4.0%, matures August 2008                             1,765            1,766
  San Jose California, 4.23%, matures August 2008                         1,620            1,621
  San Diego County California Pension, matures August 2009                5,000            4,798
  Solano County California (MBIA), 5.26%, matures January 2012            1,505            1,508
  California Statewide CMNTYS, matures June 2010                          1,145            1,043
  San Diego County California Pension, matures August 2010                5,000            4,540
  California Statewide CMNTYS, matures June 2011                          1,280            1,102
                                                                         17,315           16,378
                                                                   $    125,765    $     125,968
     Staff
     SELF is always attentive and responsive
     to your risk management needs. Let us
     know how we can help you.
     Left to right: Jessica Vega, WC Claims Examiner
     Steve Schempp, Director of Workers’ Compensation
     Pat Moody, Chief Fiscal Officer
     Fritz Heirich, Chief Executive Officer
     Athena Aaron, Senior WC Claims Examiner
     Alan Grant, Systems Analyst
     Lois Gormley, Director of Communications
     Melissa Willingham, Office Technician




36
Member JPAs



Region 1                                                Region 5
North Coast Schools Insurance Group                     Alameda County Schools Insurance Group

                                                                                                                                  2
                                                        Bay Area Community Colleges
Region 2                                                East Bay Schools Insurance Group
Butte Schools Self-Funded Programs                      Marin Schools Insurance Authority
Golden State Risk Management Authority
Northern California Schools Insurance Group
                                                        Monterey County P/L Self-Insurance Authority
                                                        San Mateo County Schools Insurance Group
                                                                                                                      1
Shasta-Trinity Schools Insurance Group                  South Bay Area Schools Insurance Authority
                                                        Southern Peninsula Region Insurance Group
Region 3
Schools Insurance Authority                             Region 6
                                                                                                                                        3
Schools Insurance Group Placer/Nevada Counties          Alliance of Schools For Cooperative Insurance Programs
Tri County Schools Insurance Group                      North Orange County Schools Insurance Authority

                                                                                                                            5
                                                        San Diego County Schools JPA
Region 4
                                                        Self-Insured Risk Management Authority
Central Region Schools Insurance Group
                                                        Southern California Schools Risk Management
Fresno County Self-Insurance Group
Modesto, Stanislaus, Sylvan JPA
                                                        Southern Orange County P/L JPA
                                                        W San Gabriel Liability Schools Insurance Group
                                                                                                                                            4
Organization of Self-Insured Schools
San Luis Obispo County SIPE                             Multiple Regions
Tuolumne JPA                                            California Charter Schools JPA
Valley Insurance Program                                California State University
                                                        Northern California Community Colleges JPA
                                                        Northern California ReLiEF                                                                                   6
                                                        Southern California ReLiEF
                                                        Statewide Association of Community Colleges




                 Our experienced and professional business partners            Actuary                                          Claims Auditor
                 can provide you with the same great service that SELF         Bickmore Risk Services                           Risk Management Services, Excess Liability Program
                 enjoys everyday.                                              Excess Liability and Workers’ Compensation
                                                                                                                                Warren, McVeigh & Griffin Inc., Excess Workers’
                 Independent Auditors                                          Counsel                                          Compensation Program
                 Perry-Smith LLP                                               Kronick, Moskovitz, Tiedemann & Girard
                                                                                                                                Reinsurers/Excess Insurers
                                                                               General Legal Counsel
                 Cash & Investment Management                                                                                   Imagine International Reinsurance Limited
                 Public Financial Management, Inc.                             Insurance Consultants
                                                                                                                                Everest National Insurance Co.
                                                                               Marsh Risk & Insurance Services
                 Claims Consultants
                                                                                                                                Insurance Company of the State of Pennsylvania
                 George Hills Company, Inc., Excess Liability Program          Legislative Advocate
                                                                               School Services of California, Inc.              Lexington Insurance Company
                 Donald Moore, Excess Workers’ Compensation Program
                                                                               Risk Management Consultants                      ACE American Insurance
                                                                               The AGOS Group, LLC
                                                                                                                                Annual Report
                                                                                                                                McCarthy Designs
     r iSk M anagEMEnt a SSociationS
     Association of Government Risk Insurance Pools (AGRIP)

     California Association of Joint Powers Authorities (CAJPA)

     Public Agency Risk Management Association (PARMA)

     Public Risk Database Project (PRDP)

     Public Risk Management Association (PRIMA)



     p roFESSionaL o rganizationS

     Association of California School Administrators (ACSA)

     California Association of School Business Officials (CASBO)

     California Chamber of Commerce

     California Coalition on Workers’ Compensation

     California School Board Association (CSBA)

     Coalition for Civil Justice

     National Safety Council

38




     S chooLS E xcESS L iabiLity Fund
     Sacramento, CA 95814

     Toll-free telephone (866) 453-5300

     Facsimile (916) 321-5311

     E-mail info@selfjpa.org

     Website www.selfjpa.org

				
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