Florida’s Risk Management Trust Fund cash balance faces projected financial strain

by | Dec 7, 2023

  • Florida’s State Risk Management Trust Fund (SRMTF) is projected to see a negative cash balance of -$5.7 million by Fiscal Year 2027-28.
  • The negative balance is a downward revision from the initially forecasted -$0.4 million at the beginning of the fiscal year.
  • The downtick of the SRMTF’s cash reserves is primarily attributed to a combination of increasing expenditures and fluctuating income, as well as an uptick in both non-operating and operating expenses.

The State Risk Management Trust Fund (SRMTF) of Florida is facing forthcoming financial challenges, evidenced by its dwindling cash reserves, which is expected to hit nearly $6 million in the red by Fiscal Year 2027-28

Data released by the Florida Office of Economic and Demographic Research (EDR) this week shows that the fund’s cash balance exhibits a declining trend pattern projected to continue through FY 2027-28, where it is estimated to reach a point of financial juncture that will see its cash balance dip into negative territory, estimated to be -$5.7 million.

The expectation of a negative balance was originally forecasted at the beginning of the fiscal year, at -$0.4 million, though it has been adjusted to the current -$5.7 million figure in the new data report.

The downtick of SRMTF’s cash reserves is partially attributed to a combination of increasing expenditures and fluctuating income in the current Fiscal Year, as well as an uptick in both non-operating and operating expenses. An inquiry to the state’s Department of Financial Services regarding the figure was not immediately responded to.

For example, the non-operating expenditures for FY 2023-24 are projected at $181.7 million, an increase from the original estimate of $175.0 million, partly due to increased claims, including those related to natural disasters and the COVID-19 pandemic.

In a broader purview, however, projected non-operating expenses between FY 2024-25 and FY 2027-28 have been lowered on an annual basis, with each year moving forward seeing depressed costs for casualty and total loss payments, per new projections.

“The upward revision [is] mostly related to projected property damages related to Hurricane Idalia,” the EDR wrote in its executive summary. “Including the other minor upward and downward adjustments, total non-operating expenditures will be $6.7 million higher in the current year, but between $1.5 and $1.7 lower in each of the following years.”

On the income side, while there is a slight increase in steady positive streams like casualty premiums, other sources such as investment returns and governmental transfers exhibit less predictability. Other expenditure categories, such as Worker’s Compensation (both Indemnity and Medical), General Liability, Automotive Liability, and Federal Civil Rights, have also seen various adjustments, both upward and downward.


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