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r m""N KFHhI 4189642292 P. 09 . E Fund Update � _2_ t increase the fee and extend the life of the program. Because the program is still in the early stages of implementation, we decided not to seek an increase of the fee during this 1993-94 legislative session. The program may seek legislation in the next legislative session which would increase the fee, extend the life of the program, as well as other needed changes. I d. At this early stage, it is very difficult to estimate what the average claim will cost. Our experience' to date is that claimants tend to over estimate eligible costs on the applications. In fact, there are a number of claimants who have estimated the maximum cost of $1M even though they have not started work. The 400 Letters of Commitments issued as of May 28, 1993 committed a total of $26.5 million or about $66,000 per claim. However, for money management purposes, we consider the 400. Letters_.of -Commitment.-to.-be..a-potentia-•ob3 a.-gati an-en-.the ----- -�-- Fund of $60. 0 million or about $1.50,000 per claim. In summary, I believe that based on the experience to date, there will be funding f-pr all priority "A" and "B" claims. Depending upon the number of future priority "A" and "B" claims submitted and depending upon the average cost per claim, I believe that under the current program funding, there will be funding for most of the priority "C" claims. It is not likely that many, if any, of the priority "D" claims can be funded under the current fee structure. However, as previously mentioned, the program: will seek additional funding at the appropriate time. We continue to get questions about whether the money in the Fund is protected from being used for other purposes. AB3188 (Hauser) was signed by the Governor on September 30, 1992. This bill placed the Fund in the state Treasury rather than the General Fund. This insures that any funds borrowed from the account for other state needs must be paid, back. All funds previously borrowed have been repaid with interest, All claims submitted for payment have been paid with absolutely no delay. LETTERS OF COMX7M WT AND PAY 'S' REQUESTS As of May 28, 1993, staff had completed detailed verification reviews of the claims with the regulatory agencies on 583 claims, and issued 400 Letters of Commitment. The face value of these 400 Letters of Commitment add up to about $26 .5 million. However, these 400 claims have an estimated $60.0 million obligation on the Fund since we must reserve funds to see these Claims through completion of cleanup. We have processed 1.63 payments and paid out a total of $6 .50 million. X-Ii RRNAL RSVE74UH SERVICE - E We have received a number of inquiries from claimants on whether they must pay taxes on funds received. The answer is that "it depends" and you should check with your tax specialist . I can tell you that there will be Forms 1099 issued on all payments made and that the Internal Revenue Service has already � expressed an interest in the payments being made.