11. Self Insurance:

The self-insurance liabilities represent the State's liability for its various self-insurance programs. The State is
self-insured for general liability, property and casualty, workers' compensation, environmental and anti-trust
liabilities and certain employee health benefits. All funds, agencies, and authorities of the State participate in the
self-insurance program (the Program). The Program, which is accounted for in the general fund, allocates the cost
of providing claims servicing and claims payment by charging a "premium" to each fund, agency or public
authority, based on a percentage of each organization's estimated current-year payroll or based on an average loss
experienced by each organization. This charge considers recent trends in actual claims experience of the State as a
whole and makes provision for catastrophic losses.

The Program's liabilities are reported when it is probable that a loss has occurred and the amount of that loss
can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported
Because actual claims liabilities depend on such complex factors as inflation, changes in legal doctrines, and
damage awards, actual claims paid could differ from these estimates. Claims liabilities are reevaluated periodically
to take into consideration recently settled claims, the frequency of claims, and other economic and social factors.
Liabilities for incurred workers' compensation losses to be settled by fixed or reasonably determinable payments
over a long period of time are reported at their present value using a 4% discount rate. The workers' compensation
and property and casualty costs are based upon separately determined actuarial valuations for the fiscal year
ending June 30, 1997. The employee health benefits liability is calculated based on claims subsequently reported
and claims trends.

Changes in the self-insurance liabilities during fiscal year 1997 were as follows (amounts expressed in
thousands).

	Beginning-of-	Claims and		End-of-
	Fiscal-Year	Changes in	Claim	Fiscal-Year
	Liability	Estimates	Payments	Liability
Property, Casualty and General Liability ....................................................	$ 10,500	$ 6,127	$ 6,371	$ 10,256
Workers' Compensation .................................................................................	146,415	32,566	28,981	150,000
Employee Health Benefits .............................................................................	28,321	254,285	256,344	26,262
Total Self-Insurance Costs................................................. ............................	$185,236	$292,978	$291,696	$186,518

As of June 30, 1997, the Program held $92,397,589 in cash and investments designated for payments of these
claims.

Changes in the self-insurance liabilities during fiscal year 1996 were as follows (amounts expressed in
thousands).

	Beginning-of-	Claims and		End-of-
	Fiscal-Year	Changes in	Claim	Fiscal-Year
	Liability	Estimates	Payments	Liability
Property, Casualty and General Liability ....................................................	$ 8,627	$ 8,000	$ 6,127	$ 10,500
Workers' Compensation .................................................................................	126,565	48,224	28,374	146,415
Employee Health Benefits.............................................................................	25,670	238,911	236,260	28,321
Total Self-Insurance Costs....................................................... ......................	$160,862	$295,135	$270,761	$185,236

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