With one month to go, the expenses of the Surplus Lines Stamping Office of Texas trailed the budget by about 27 percent. As of the end of November, SLTX had $1.86 million more in revenue than expenses, despite the decrease in the stamping fee that went into effect in January this year.
The adopted budget for 2021 anticipated a $1.1 million deficit in the revenue/expense ratio by the end of November, said Donna Aug, SLTX director of finance, during the Dec. 15 hybrid board meeting. Some members attended in person; others by a video conference.
The result, said Aug, is the unrestricted, undesignated fund grew by $1.86 million as of the end of November, instead of declining, as the reduced stamping fee anticipated. At year end, the unrestricted fund balance is expected to be $28.72 million or about $20.97 million more than is allowed under the agency’s Plan of Operation.
The board must consider adjustments to the stamping fee to bring their finances into compliance with the TDI-approved Plan of Operation either during the annual board meeting in March or within 30 days thereafter. According to SLTX Executive Director Greg Brandon, at that time the board must submit a written plan to TDI, whether or not it recommends a change to the stamping fee.
The budget for 2022, which was approved by the board during its September meeting, anticipates stamping fee revenue to reach $7.56 million next year, with budgeted expenses creating a $1.2 million deficit for the year.
Brandon is looking for more operational savings in the coming years, as the pandemic has provided insight into the actual office location and space needs of the agency. “This location is not optimal,” said Brandon as “everyone (who works for the SLTX) has a long commute.” The agency also learned that combining a work-from-home model with work at the office is feasible for the agency in the future. With the current lease expiring in March 2023, Brandon said, staff will begin looking into smaller, more conveniently located options that can also offer a more suitable space for public meetings of the board of directors.
The board authorized Brandon to procure cyber insurance for the policy that is expiring in January. The 2022 budget anticipates a doubling of the premium for the coverage, as such is typical of today’s market, said Brandon.
Sholonda Stone, IT director, said SMART and EFS will run concurrently until the full feature set for SMART is delivered in 2022. The acquisition of Headspring, the contracted developer for SMART, by Accenture on Dec. 1, is expected not to upset the scope or cost of the SMART features still in development, said Cheyenne Herrera, director of operations.
In other action, the board approved a procurement policy that permits director level employees to approve purchases up to $5,000, and the executive director to approve purchases up to $25,000. Expenditures greater than $25,000 must be approved by the board chairman. The procurement policy exempts routine items such as rent, postage, utilities and consulting services that are included in the approved annual budget.
In its final action for the year, the board approved a year-end $52,000 bonus for Brandon, along with a 30 percent raise and additional deposits into Brandon’s deferred compensation benefit of $26,500.