California Code of Regulations
Title 8 - Industrial Relations
Division 1 - Department of Industrial Relations
Chapter 8 - Office of the Director
Subchapter 2 - Administration of Self-Insurance Plans
Article 3.1 - Alternative Composite Deposits
Section 15220.8 - Requirements for Use and Investment of Cash Generated from Deposit Assessments

(a) The Security Fund shall provide the Director with a detailed accounting report of the monies collected for each deposit assessment within 90 days of the payment due date of the assessment.

(b) The accounting report shall include a summary of all funds collected, costs of each instrument posted as alternative composite deposit, all commissions and costs due or paid related to the alternative deposit system for that cycle, and any remaining excess funds.

(c) Following the purchase of any non-cash financial instruments to secure the liabilities of the alternative composite deposit, excess funds collected by the Security Fund in any deposit assessment and any additional funds subsequently collected shall be posted with the Director.

(d) All remaining cash collected from the assessments shall be deposited with the Director or as provided in subsection (f).

(e) All Security Fund cash deposits posted with the Director shall be held in the name of "Director of Industrial Relations in Trust for Self Insurers' Security Fund".

(f) The Director shall deposit and invest the Security Fund's cash in the Surplus Money Investment Fund pursuant to Labor Code Section 3702.5(b) and subject to the restrictions of use contained in Labor Code Section 3701.8, or the Director may permit the Security Fund to hire its own funds manager and invest the deposited cash on behalf of the Security Fund outside of the State Treasury subject to the following:

(g) Whenever the Director initially turns over the compensation liabilities of a private self insured employer to the Security Fund pursuant to Labor Code Section 3701.5 and such liabilities are covered in whole or part by the cash portion of an alternative composite deposit, the Director shall order the Manager to release enough cash to fund the payment of expected workers' compensation benefits for the remainder of the calendar year. If the amount released is inadequate, the Manager in consultation with the Security Fund shall advise the Director and request the Director to authorize the release of an additional amount to fund the payment of benefits and expenses for the period.

(h) The Security Fund shall annually notify the Manager and the Director in writing of the amount of funds that it will need to operate for the next calendar year for payment of benefits due, legal and administrative expenses, and other expenses of the Security Fund that will be funded from alternative composite deposits. The Manager shall be authorized to release the cash portion of the funds to the Self Insurers' Security Fund's possession.