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Reasonable Cost Guidelines

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Reasonable Cost Guidelines

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    1. Reasonable Cost Guidelines September 19, 2008

    2. Colorado’s Reimbursement Program Number of Facilities Covered: 4,441 Number of Tanks Covered: 11,647 Deductible: $10,000 ($25,000 for Third Party Claims) Significant Decrease in the Environmental Response Surcharge in 2012 (major source of fund revenue)

    3. Claims Received: 17,429 Processed: 16,128 Annual Amount Paid: $33.4 million Total Paid: $325 million Estimated Processing Time (CO): 1.9 months Average Processing Time (US): 3.25 months

    4. Comparison to Other States 8 States have no State Fund. All costs paid through insurance or by Owner/Operator 24 States have sunset dates for their funds before 2010 Several states (AZ, FL, MN, NV) have deductibles of 10-25% of total costs

    5. Other States Flat Rate Deductibles California – up to $20,000 Florida – up to $30,000 Idaho – up to $100,000 Illinois – $10,000 to $100,000 Indiana - $20,000 to $35,000 Maine – up to $97,500 Montana – up to $17,500 North Carolina - $20,000 to $75,000 New Hampshire – up to $30,000 Ohio – $11,000 to $55,000 Rhode Island - $20,000 South Carolina - $25,000 Tennessee - $20,000 Texas – up to $80,000 Virginia – up to $1,000,000

    6. New Releases No Longer Eligible Alaska (6/30/1993) Arizona (6/30/2006) Florida (12/31/1998) Iowa (10/26/1990) Maryland (12/1998) Maine (10/1/1998 non-conforming sites) Michigan (6/29/1995) Texas (12/23/1998) West Virginia (9/30/2000)

    7. New Releases Losing Eligibility Kansas (7/1/2014) Maine {10/1/1998 (12/31/2010)} Minnesota (6/30/2012) Missouri (12/31/2010) North Dakota (7/31/2011) Nebraska (6/30/2012) New Jersey (6/30/2010) South Carolina (12/31/2026) Vermont (7/1/2009)

    8. RCG Philosophy/Rationale Section 1, 2, and 3: Obtained quotes from 4-5 vendors Section 4: Identified activities and estimated labor and equipment costs to complete. Allows 1-hour per well (initially allowed 45 minutes per well) Section 5: Looked at both increases to other State’s reimbursement rates and CPI data. Blended results. Added 1% for office supplies. Section 6: Obtained quotes from 14 labs Sections 8, 11, 13, 14: developed from quotes but most RCGs not set (obtain bids/submit backup) due to extreme variability between season, location, and other factors. Section 9: Tie mileage to IRS mileage rate for dates of travel. Tie lodging and meals to GSA rate for date and location. Section 10: Eliminate most of section (include in labor rates) – Historically office expenses account for 0.86% of labor cost. Increased labor costs by 1% over rates developed from CPI and other state rates Section 12: Developed from daily rental rates and other state’s reimbursement rates

    9. Issues Related to Increasing RCGs May Cause Delays in Reimbursement May Drive the Fund Into Insolvency

    10. Source of Revenue for State Fund Tank Registration And Annual Renewal Fees Civil Penalties Penalties On Delinquent Registration And Renewal Fees Environmental Response Surcharge Reimbursement Of Emergency Response Charges Once A Responsible Party Has Been Identified Moneys Appropriated To The Fund By The General Assembly Moneys Granted To The Department For Administration Of The UST Program By Federal Agencies Money From Bonds

    11. Environmental Response Surcharge (Based on Fund Balance)

    12. Current Environmental Surcharge Environmental Response Surcharge Has Been $100 since July 1, 2005 Fund Balance was $2.8 million as of 6/30/2008 (There were unpaid claims of $3.8 million for companies that were over the $3 million aggregate amount paid per State Fiscal Year 2007-2008)

    13. July 1, 2012 If Fund Balance > $8 million, no surcharge will be imposed If Fund Balance < $8 million, surcharge of $25 per tank truckload Result: 0-25% of current revenue stream would pay the same percentage of cleanups

    14. Possible Solutions To Funding Issues No Change to Reasonable Costs guidelines Set new Reasonable Cost Guidelines that do not cover all the increase in costs (salary, fuel, etc.) since 2002 Industry led change to Statute to allow higher Environmental Response Surcharge based on State Fund balance Industry led change to increase deductible and/or increase tank registration fees Limit time allowed to request reimbursement to ensure all relevant costs are properly encumbered in an appropriate timeframe.

    15. Comments/Questions All comments/questions should be provided in writing to the following email address: RCG.Comments@state.co.us

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