Navigating Today’s Nonprofit Challenges with Arnulfo Manriquez

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Human Services Group Vice President Sam Brown interviews Arnulfo Manriquez of the Manriquez Group to explore the evolving challenges facing nonprofit leaders, from funding pressures and board governance to leadership transitions. With his decades of experience in the nonprofit world, Arnulfo shares practical insights on adaptability, strategic decision-making, and how nonprofits can position themselves for long-term sustainability in a changing environment.

Sam Brown: Hello, everybody. You're listening to Rancho Mesa's StudioOne™ podcast, where each week we break down complex insurance and safety topics to help your business thrive. I'm your host today, Sam Brown, Vice President of the Human Services Group at Rancho Mesa.

Today, I am joined by Arnulfo Manriquez of Manriquez Group. I'm really excited about our guest today. So, Arnulfo, welcome to Rancho Mesa and StudioOne.

Arnulfo Manriquez: Good morning, and thank you for having me here to join you in this conversation.

SB: Of course. Yeah, long overdue. You're a guest that we've wanted to invite in for many years, so I'm glad we're able to make it happen.

I really thought it would be timely to have you in today because our nonprofit clients and all of, say, San Diego's nonprofit leaders are facing a changing environment. I don't know if it's unique or not. I'm sure there are some differences and some unique characteristics, but someone of your experience, I feel like could speak to past lessons, maybe the role that the board could play in assisting leaders today or what that relationship should look like between C-suite and the board.

And as well as, hey, what are the skills that today's nonprofit leaders need to really sharpen, to adjust to decisions that they need to be making, perhaps some tough ones. So first of all, again, welcome. And hey, what's going on? What's new with you, Manriquez Group, and your personal life?

AM: Well, so the Manriquez Group is new. I've been working with nonprofit organizations for over 33 years. Actually, June was when I graduated from college, and my very first day at work was with a nonprofit.

SB: Nice.

AM: And so it is timely being able to then go off on my own, but really more focused on the reasons why you just talked about why I wanted to do this work. So from a personal perspective, it was the right timing for me as I have three children. All three children are out of the house for the most part. My oldest is in Scotland on their last year of veterinary school. My middle daughter lives in Long Beach Works in Disneyland as a hairstylist with the characters and also with the wigs out there, getting everybody ready out there. And my son has just completed his second year at UC Davis. And so when you look at what's been going on in my own personal life and the shifts, it was really timely for me to be able to go off on an adventure like this.

So in my own personal world the last couple of years I've taken a big interest and learning about wines. Not just going out and drinking them but really learning about the history of the wines the regions understanding where they come from why they taste the way they do and so I've been taking a lot of classes on there and so ultimately my passion has become a little bit more than just a passion. And Tonight, I'll be taking my level three certification for the Wine and Spirits Education Trust, WSET. So I'm a little excited, nervous for the exam. It's going to be a difficult one.

SB: Yeah. So just so everybody knows, I offered Arnulfo coffee and he said, no, he had to keep his palate clean today. So that's how serious this exam is. And I respect it. Nothing but water until this exam, probably. So that's exciting. And you've said that previously you've done some of your studying south of the border. In Mexico's wine region. So what have you learned there?

AM: Well, I've learned one is that I got enamored with the Valle de Guadalupe, with the overall region just by itself. Just going out there and enjoying the environment, the rustic and the rural feel of it, right? It's not fully developed. And then just enjoying meeting the winemakers and the wines. So for me has been, the last 11 years have been, it's the reason why I got so involved with the actual studies of my wines. And from all my classes were done in Spanish. This most recent exam is the only one I've taken in English. But what excited me is and what I've learned about is that Mexico is a very young winemaking region up here in the northern part. And when you compare them to those in France and Italy where they've been making wine for over a thousand years, it is something new and different. And I do actually think that all my lessons and classes and certifications are going to help me have an impact in the winemaking industry and out here as well, because that's the vision I have out here.

SB: Right. Well, that's exciting. I mean, love to see people fall on their passions, whether they be new or ones that have remained dormant for many years. So kudos to you. I wish you the best of luck on the exam today. I'm sure you'll crush it.

AM: Thank you.

SB: So regarding the environment that nonprofit leaders are facing today, what are some things that you feel like maybe are presenting some new challenges? And then maybe what are some challenges that you're seeing that maybe have always been there?

AM: I think the funding crisis that we're seeing right now, and I think crisis is the right word to use. It didn't just happen today. This has been in the building for the last couple of years. When you started looking at what was happening with the state of California budgets, and you started looking at the situations of the city of San Diego, the impacts of these funds, and then some of the referendums that they had on elections that they didn't pass. And so we knew that some of these things were happening. I was seeing them happen within the industry while I was there. It shouldn't be new for most nonprofit leaders, right? But it is.

People are treating it as if it just happened upon us. And so people do need to have, you know, all these government pressures that, you know, we've been feeling it, and they play a big role with the rest of the funding that's coming along, as well as the, with the federal changes that we've had. And we always know when a new administration comes on, we're going to see some changes, sometimes favorable to the nonprofit world, sometimes unfavorable. But we're in that latter part that we have seen a lot of flat funding in the funding sources. And we have seen where there are opportunities to pull back that's being pulled back. And so these are things that we needed to be prepared for, right? We had seen what happened back in 2016 in that administration. And so I kept thinking, that was the practice. And then this time around, it's going to be when the influences do happen and make bigger changes there. And so it's happening.

SB: I find that there's a phrase that has been used called mission creep. And that would be sort of a practice where an organization may venture away from its original roots to pursue maybe programs that are in need in the community or some funding that has become available and is sort of riding a wave of popularity. What would you say to an organization that wants to broaden its revenue streams, but also maybe not put itself in peril by doing a poor job if it's accepting new contracts?

AM: That's a great example because I see it often. It's that mission creep is what we know. Sometimes we call it, we're chasing the money.

SB: Yes.

AM: We're chasing where the money is so that we can make that next payroll for the next year or two. And really what an organization has to be doing right now is, normally, organizations only look at one year to year for the next year of their budgets. But ultimately, we should always be looking at three to five years. We should be planning out where these contracts that we have are going to go, how the fundraising and what changes in the government we might be seeing that might impact us. And so really focus on doing at least a three-year projection of your budgets.

And pay attention to that mission creep, the chasing the money, because it's what gets us in trouble sometimes, right? When we get cuts in certain areas, sometimes we can get a temporary fix by doing some fundraising until we re-stabilize again. But there's a phrase that people use that say, stick to your knitting, like really stay good, you know, focus on what you're good at. If you're going to venture out, it needs to be a strategic venture out it needs to be focused on this was part of our plan this was part of our strategic plan this is where we wanted to go and grow and if it's not there stay away from it.

There are moments right now where in this current environment that we are receiving cuts organizations are receiving their cuts and sometimes it's to the point where you're not getting cut fully but you're getting 60% of what you got in previous years. And pay close attention to what that's going to do with your operations, right? We are not going to fundraise our way out of this. This is not just going to be an anomaly for this year. And so if you can operate at that 60%, if you can pull back and operate it, then do that and begin to look at how you diversify your funding, not chase it. But you also might need to make a decision of saying, Can I do a good job with this 60%? Am I going to chase my tail trying to do the fundraising to keep the rest of the staff that we had going? And we are in an environment where you're going to have to focus somewhere. And if you start going out there and saying, we're going to increase what we are already fundraising to keep this program going, this year and next year might be the time where you say, this is not a viable program for us. And we need to pull back.

And have conversations with your peers, right? If there's another organization that's operating the same program and they also got cut 60%, figure out how you can do this work. It might just be where they've been doing a much better job. You can pull back, maybe they can get that funding or you can subcontract some of the work to them so that you're not having to do that fundraising for now. So there are maybe some temporary solutions that might be two, three years, but don't try to make, this is not the year to try to make it all work because there's more coming.

AM: Yeah, I think that's sage advice. And I've seen where clients and other organizational leaders in town are having to make tough decisions about which of their contracts are financially viable to say, well, if this contract has been a loss leader, then is that maybe first on the chopping block or maybe you don't pursue the renewal or participate in the RFP when it comes up for renewal.

But speaking of RFPs and given the financial crisis or funding crisis, as you mentioned, do you feel like this is going to become a more competitive environment for these various contracts or RFPs that maybe organizations have always felt like they sort of owned the contract without much competition previously?

AM: Yes. And they will, it's always been competitive, right? We've always had the, even if it's the contract that organizations have had for decades, it's always been a competitive process. But I think it's going to be a different type of competitive process. There are bodies of government that are shifting their strength, where they can make and vote decisions where they couldn't before. You've got the county that's been looking at how they're going to subcontract a lot of their programs, but they're also receiving cuts from the state and the federal government. So sometimes it may feel like we're just getting all these county contracts, but they're really tied into the overall picture. And so those are the places where you need to be paying attention to.

And it's a time where you have new leadership there. And they may be saying, you know what, maybe it's time for a change. If there's an organization that's been doing that work for 20, 30, 40 years, and there have been, that there are other organizations that can look at it in a different perspective and look at our current environment and that can adapt a lot quicker than organizations that have some. calcification in them.

SB: Okay. So I think you and I talked about this yesterday a little bit. Sounds like with those changing government bodies, you have new representatives in those roles. Maybe those longstanding relationships that were once very strong are getting a little bit of a shakeup as well. And so the new governmental leaders may be bringing a new perspective and saying, well, you know, what does this other organization have to offer? And maybe taking a closer look at other entrants into the RFP process.

AM: Yes. And we all belong to a certain generation, right? You know, I'm Generation X. We've got the Boomers. We have the Millennials. Gen Z is playing a big role in what's happening in the overall environment, right? In the political environment, but also in they're beginning to fill a lot of these roles. And you are seeing some of these stepping into, like, let's start our own nonprofit. Let's start doing this work and think in a very different way. It's not a bad thing that these changes are coming or that these changes may come, right? But it does behoove us to take a step back and say, okay, we are, you know, if you're a leader that has been doing this for many years, are you listening to your staff, are you listening to the different conversations that are coming up of to what they're seeing out in the community what they're facing day in and day out and how they're looking at the overall environment because um Sometimes we get stuck in our ways and this is something, it happens every generation and happens every time. When you talk about, we used to have real music back when, right? I don't know that I've ever really used that phrase because I am stuck in my own music and I've tried to go find new music to listen to. But that's what leaders have to do. They have to go in and understand out there, how this generation is perceiving their realities, right? And what are some of the ideas that they have to be able to shift? I think that's going to be important to stay competitive in this process.

SB: Okay. So the board of any nonprofit organization should play a role in some of these tough decisions. But what should the process look like whereby the C-suite, the CEO, the chief operating officer, the CFO are informing the board to a degree where everybody, board member, finance committee, governance committee, C-suite can make some of these tough decisions?

Because I imagine I would bet you that not all board members feel informed, which that should be a concerning feeling if that is true. So how does an organization avoid that?

AM: Well, it is a two-way street, right? You join a board because you're passionate about it. You care about it. You care about the work. You care about the community that it serves. And you want to make sure that first that you attend the board meetings. That you read the information ahead of time, that you participate in the committees because that's where the biggest work happens. And if you feel as a board member that you're not fully informed, you have the ability to ask all these questions and over ask sometimes, right? But do understand your role as governance, right? You're asking governance questions. You're not asking about how are we doing the intake on these forms when the participants walk in, right?

SB: Right.

AM: And so stay at the level of governance for the organization. And do be prepared to have the conversations about we just received a 60% cut on these funds. How is it that we want to work this through? And the board can provide that direction generally about saying, you know what, maybe it is time that we pull back from this program. It's not going to kill the organization. It is going to shift. You may have to do some layoffs, but you are looking at the long-term viability of the organization, right?  Sometimes these temporary fixes can pull you away from that overall vision.

And so board members need to be prepared to have those conversations. And when they come to the board, right, I think that's important when the CEO and leadership staff are having this conversation with the board, be thoughtful and understand that they have gone through several iterations, right? So when an opportunity comes up and says, I think we need to pull back, it's not an easy thing for any executive to say that, right? So it comes with a lot of difficult process to get there. Nobody really wants to do that. So be thoughtful of that and then plan out how you're going to be communicating this.

SB: Right. When you've been the leader of previous organizations, was it a priority of yours to make sure that You had board members that had previous board experience with other organizations so they could bring those experiences into the room and decision-making process?

AM: Well, not necessarily. It's not always the case, right? Because there has to be a first time for somebody to step into a role. And the organizations that I've led more recently are complicated. Complex organizations. Multiple programs, federal funds, different roles that the boards have to do and approve and move forward. And many times they are technical decisions that they are approving that they don't necessarily understand, right? Real estate transactions and surveys with the participants of the child care programs or the preschool programs and so forth.

But it is important that we also build board leaders. Future board members that may be able to also go and sit on other boards. And I am a big proponent of organizations and people and individuals that care about their communities, that they get involved in their own boards. And so while I've been executive and I've had board members and I've reported to boards, for the last 32 years, I have sat on boards. Not the same board, but there are term limits in many of these organizations, but I've consistently sat on different boards that I care about of the work that they do, making sure there is no conflict of interest with the work that I'm doing.

But all of that experience has taught me governance, right? Understanding how my board works with me and understanding how I can work better with the executive as a board member. And I've had the role of board chair on multiple occasions. And these have been local organizations, regional, statewide boards and national boards. So to me, it is that experience matters and it's important. If you're interested in being a board member, you don't necessarily have to start out at the biggest organization or the one where everybody wants to be a board member. Go find the ones that you care about and you start then connected and understanding the roles. But be present, right? Be there and always ask the questions.

SB: Right. Yeah. Be present. Be active. Probably the worst term we could ever use is “sitting” on the board. We don't want sitters. We want doers.

AM: Perfect word.

SB: So in your role then as interim CEO, are there any commonalities regarding the various challenges that you've accepted? Or do you think that there's a certain maybe set of circumstances that makes an organization ripe for bringing in an interim CEO?

AM: Well, there's two things. One, when there is an existing CEO, I think it is important to start looking at kind of collaborating and sharing some of this work with other organizations, right? We talked about mergers of organizations, but merger is not always the answer, right? Sometimes it is, you're going to have a shared CFO, you're going to have a shared grant writer, you might have a shared compliance officer or HR that are going to help the organizations. But when boards are beginning to look at a transition and when they're looking at whether it's their decision to exit the CEO or the CEO has given notice and they're going to be leaving. On some occasions they're going to be left without a CEO and then they may promote an internal person to the CEO role or as an interim role. But the boards need to be strategic about what's going to happen with that role. You don't want somebody that's going to sit there or maybe, you know, we used the word sitting right now but yeah there's going to be able to sit there and kind of like do status quo and keep the operations until the new permanent person comes on board.

I think it's the moment of opportunity for boards to be able to bring in an experienced CEO that is not interested in being there for the long term, but that someone that can come in day one and start not just keeping the organization stable, but looking at all the places that need to be addressed, that need to be fixed, that need to be shifted or restructured. And every organization will have it.

Successful organizations with successful CEOs that are on their way out. The boards are still going to have some form of limited information because it's what they get. But it's always great to have that third party come in and they can give them and paint the picture of what exactly is in front of them so that when they hire the new individual coming in, that new individual is not going to come back two, three, four months later and say, I discovered this, I found this out, and we have to make these decisions or we didn't do X, Y, Z. And it happens a lot more often than you think. So if you sat on a board and you've had transition, you know what I'm talking about. So be very intentional, right? Interim roles are not somebody that's going to come and step in and keep just normal operations. You want to make sure that they're going to come in and they're going to be able to understand the structure and they can share with the board. So then the board will know exactly who they need to go out and hire.

SB: No, that's interesting. So it sounds like there could be a very intentional decision to when there's a CEO transition rather than going from, say, a long tenured CEO to the next hire, the next permanent, quote unquote, permanent CEO to say, hey, let's bring in an interim CEO who may uncover some things or look at it from an impartial perspective and educate the board as well as other stakeholders.

When it is time to actually get that new, hopefully long tenured CEO in place, maybe a maybe a middle step to say, OK, maybe we're not ready for that, quote unquote, permanent hire. So let's get there with maybe a different perspective first.

AM: Yes. And it does really it will make it easier for the board to make a decision of who that individual is once they know exactly what they have in front of them, right? If there's a problem and the fix is going to be long-term, they will understand that they're going to need to bring somebody with those strengths that can move that organization, right? You don't want the interim providing the vision of how the organization is going to move forward. They are going to bring a vision, but it's a short-term vision, right? This is the time that I'm going to be here, and this is what I plan and can do with this timeframe that I have. But I do feel it will make it a lot easier for board members to identify that next leader. And it may be a leader that has not been an executive director before, but because they know what's in front of them and they know how they can put the guardrails to help this new person coming in, they can now provide opportunities and open doors to people that normally would not have been looked at before.

SB: That makes sense. So given what you've seen, the various organizations that you've sort of ushered into a changing landscape, or as you're paying attention to headlines and talking to leadership, both at the state level and local; what are some skills that you feel like today's nonprofit CEOs ought to at least have or be working on to ensure their success today and then in the future?

AM: Well, you're going to, you know, leaders now, they have to be okay with bringing difficult decisions forward, right, for the board members if it needs a board decision. And being able to implement them themselves, right? So it is always important to be present it is important to be, to communicate it, right? Don't dismiss when questions come up from difficult decisions that you've made and it is a moment of adaptability those that are going to succeed those that are going to be able to keep their organization strong it may not be as big as the organization as they were operating a year ago but those that are able to adapt and make those shifts are preparing themselves for the long-term success. So adaptability is important. And being prepared to look at a merger. I think that right now, the opportunities are more ripe for a merger. And this is something, you know, mergers have, conversations have happened over the past many years. Funders sometimes will say, why don't you guys just go together because you're all asking me for the same type of money. And so there was a time and a place when it was right, when it wasn't right. We're at a moment right now where it does make that important strength for that organization.

You look at the corporate world out there and you see some of the stronger corporations out there are the ones that have merged, that have bought other corporations and so forth. Not that it's a model that is aligned for non-profit organizations but they do it because it strengthens them moving forward and when you look at it from that perspective boards need to be paying attention to where it matters, right? And so from the leadership of the board, boards should not be rubber stamp boards, right? That they follow whatever the CEO says, that they do need to pay attention. They do need their own separate time. They do need their own closed sessions. And they need to be having some of these conversations because boards have a lot of power. Not many boards use that power. And I'm not saying go out and use it every day because then it's going to be crazy for the executives there that are reporting to those boards. But boards do have the ability to influence and to make these decisions. And so have the thoughtful conversations, have the data that you need to be able to make those decisions. So leadership at a board level is ultra-important right now because they may bring over the change that the CEO may not be thinking about or may not want to be doing.

SB: Okay. So we've talked a lot about the current environment. We've talked about how some challenges that maybe have always been there, maybe some challenges that folks would consider new, although they may have been in the building for a couple of years now. So we've talked about the role of the board, as well as how maybe an interim CEO could influence in a positive way the path of the organization. And then as well as some skills that existing leadership should either work on or hone and maybe a future path and maybe some opportunities.

So we've talked a lot about some really important subjects that I know I'm talking with my clients about. Sometimes we might be talking about insurance on the same conversation. Other times they may be giving me a call and saying, hey, we're thinking about going in this direction. So this has been a helpful conversation for me. And I know our audience will gain a lot from it as well.

Going to a lighter side, I don't know if you've ever seen the movie City Slickers, but there's a scene where they're sitting around the campfire and there's two characters who are supposed to be sort of the Ben and Jerry's Ice Cream founders. They don't use those words. I think it's Ira and Barry. If I'm not, I think it's Ira and Barry. And they're sitting around the campfire and Billy Crystal's character says, “All right, I'm going to give you a meal and you need to tell me what ice cream. I should consider on that meal.” And it's a pretty funny scene.

So coming from somebody who is not a connoisseur of fine wines, these might be softball questions for you. And you might be wrong and none of us would know, but I'm going to ask you anyway. So, okay, I'm sitting around, I'm going to have a filet mignon, heavy on the pepper, with maybe grilled asparagus and maybe some, and a baked potato. Let's go real simple here. Just a baked potato. Yes. What would be the glass of wine of choice for you?

AM: Well, that's a big heavy cut of meat and with the peppers out there, with the spices. So you don't want a wine that is going to get lost, right? Because that flavor can take away a lot of the flavors of the wine. So you want to bring in a wine that is going to pair up and have a couple rounds against that steak that you're looking at. So my own personal favorite and my go-to would be a 2020 or older Barolo. And because it has the right amount of tannins, it has the right amount of acidity and the fruit that is going to be able to really pull out and enhance the flavors of that steak out there. It's not everybody's wine, but you can have a Pinot, a nice Pinot Noir that's going to be if you're looking for a little bit lighter. But I think the average of what most people will be going to is getting a Bordeaux blend. That Bordeaux blend is going to be very, it's a lot more palatable to a lot of people. I personally like the stringency of the Barolos. A nice Bordeaux blend is going to be doing great with that state.

SB: Okay. I like that answer. Thank you. Good explanation too. All right. One more for you. So I'm going to, let's see, I'm going to grill up some swordfish and maybe some scallops as well. My vegetable would probably be some green beans that I would probably just throw some lemon juice on there and some sea salt. And then let's say we have some air fried sweet potatoes with a little bit of cinnamon on there. What would be a glass that you might or a bottle you might reach for?

AM: Oh, right. Well, you're going to be looking for a white. You're going to be looking for acidity, right, to match that acidity of some of the citric and some of the seasoning that you'll be using, and that swordfish and the scallops there. So there's a couple ways that you can start, right, depending on how many people are going to be there eating, right? If you only have a glass of wine or a bottle of wine that you're going to go have for this dinner, I would go with a Sauvignon Blanc, a Sancerre from France or a Sauvignon Blanc from New Zealand. It's going to, that crispness, that the acidity is, if you're going to be looking at Sauvignon Blanc from New Zealand, you're going to be looking at a little bit more fruit forward, a little bit riper grapes out there. If you want to look at more of the mineral, style of the Sauvignon Blanc, then you can go with the Sancerre from France.

SB: Well, those are, I do like a good Sauvignon Blanc. I really do. So I'm glad you said that. So if my wife's listening to this, maybe we can make that happen.

AM: Thanks.

SB: Well, I've enjoyed this conversation. I know that you come from such a broad background, leading different organizations. You and I had the pleasure of working together in your last role for, shoot, I don't know, maybe 12 years or so before you decided to found the Manriquez Group. So I know that the future is bright. I know your future clients and current clients will benefit greatly from the knowledge and expertise that you bring, as well as your ability to communicate.

So this is a good opportunity for me to say from all of Rancho Mesa, thank you for entrusting us as the insurance agent at your last role. But then also, if there's anything that we can do to support you moving forward, we'd be happy to do so and really appreciate you coming in today.

AM: Great. Thank you so much. And, you know, I do want to, and I did want to add that there are ways that you can go raise money. There are go, you know, ways that you can kind of structure some things. But insurance can play a big role in savings, in being able to manage your organization.

And I want to use the example that you and I experienced when we had to go in and look at our insurance brokers for the workers' comp situation of the organization. Insurance can be one of those where organizations are not paying attention to. It is something that we just all have to pay and we go in and day out. But if your insurance broker is not spending time with you. If they're not keeping you up to speed of the changes that are going out there, they're not consistently coming up with you and saying, we need to do this training with staff because in the long run, this is going to save you money, right? Because you know the industry, you know what's happening moving forward.

So if that's not happening, you need to then switch to a broker that is doing that, that is paying that attention because the experience that you and I had at MAAC where we looked at the workers comp many years ago where we consistently save money every single year we started really having those efforts that then evolve into the rest of the insurance world out there. So I want to one is that pay attention to that I want to do the appreciation and thank you because that played a big role in the budget planning for us as an organization and so listen to Sam because he knows what he's talking about.

SB: I appreciate that. That was a great partnership was formed when MAAC selected Rancho Mesa. And we took that very seriously. We felt very prepared to take on the role of insurance agent and advisor for MAAC. And we were correct. I think both parties were correct.

AM: Yes, absolutely.

SB: No, I appreciate you bringing that up. And the successful partnership continues. Really want to appreciate or send words of appreciation to Arnulfo for spending time with us today. And if anybody has any questions or concerns or would like further information about the content here, I can be reached at sbrown@ranchomesa.com or 619-937-0175.

And Arnulfo, what's the best way to get in touch with you?

AM: Best way to get a hold of me is themanriquezgroup.com. And my phone number is 619-726-4441. You can get out there. And my email is arnulfo@tmgleads.com.

SB: Excellent. Well, this has been fun. Thanks, Arnulfo. And thanks, everybody. Thanks for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at ranchomesa.com and subscribe to our weekly newsletter.

Supplement Electronic Visit Verification Data with SafetyOne™

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Federal law mandates Medicaid-funded personal care services and home health service companies use the Electronic Visit Verification (EVV) system to ensure patients actually received the care they need. However, companies providing these service may want to collect additional information above and beyond the minimum that is required.

The 21st Century Cures Act requires caregivers to digitally clock in and out of a home visit and collect and verify six pieces of information from each visit. The information can be collected via GPs-enabled mobile applications, interactive voice response or telephonic systems, or in-home devices. Then, the data must be submitted to the state’s designated EVV system.

In California, employers can use CalEVV or an alternate EVV system. Each state manages EVV differently, so be sure to check your state’s requirements to ensure compliance.

The employee conducting the visit is required to document the following data:

• Type of service performed

• Who is receiving the service

• Date of the service

• Location of the service

• The individual providing the service

• The time the service begins and ends

Use SafetyOne™ to Supplement EVV Data

Rancho Mesa’s SafetyOne Platform allows clients to easily collect supplemental data about in-home visits.

Using custom mobile forms, Rancho Mesa clients create patient-specific QR codes that are placed at a patients’ residence, room, or bedside. Caregivers scan the patient-specific QR code using a mobile device to record supplemental information like cognitive condition, diet, incidents, mobility, mood, vital signs, or any other data that is needed.

Using these QR codes, employers can verify that the caregiver is awake throughout the shift automatic date and time-stamped reports.

Built-in user security ensures only authorized users have access to patient data on the platform once data is submitted.

Any caregiver can scan the patient-specific QR code and complete the check-in data without being a platform user, eliminating the need to manage a flexible workforce. 

Contact your client technology team to learn more about using the mobile forms in SafetyOne to document supplemental patient visit data.

The Real Reason Sureties Require Fund Control (And Why It Matters)

Author, Josh Hill, Surety Account Executive, Rancho Mesa Insurance Services, Inc.

When a surety company issues a bond, the main goal is simple, to make sure the job gets finished and no one loses money. Even if a company has deep experience and strong finances, that does not always mean project money will be handled the right way. Because of this, a surety may ask for fund control when there is more risk.

One major reason projects run into trouble is poor cash flow management. Contractors often work on several jobs at once and must pay for labor, materials, and everyday business expenses. Without controls, money from one job may be used on another. This can leave a project short of cash and cause delays or failure. Fund control helps prevent the comingling of funds by ensuring that  funds are only used exclusively for their designated project.

Another concern a surety wants to avoid is money being used in the wrong way, especially on private jobs where there is much less oversight than on a public project. Fund control helps by placing money into a special account, requiring proof before payments are made, and making sure work is done before money is released. This helps ensure funds go toward the right things, like workers and materials.

Sometimes there is no lender or outside party tracking how money is spent. In these cases, fund control acts like a financial checkpoint. It tracks spending, requires documentation, and adds structure. This helps everyone stay organized and reduces mistakes.

Sureties also use fund control to support higher-risk companies, such as newer contractors, companies with less cash, or businesses taking on bigger jobs. Instead of turning the work down, the surety can approve the bond with controls in place. This gives companies a chance to grow while lowering risk.

Even though fund control may seem strict, it can help the business. It keeps finances organized, helps ensure subcontractors get paid on time, reduces disputes, and can make it easier to get bonds in the future.

Fund control is not meant to make things harder. It helps projects succeed by making sure money is used the right way at the right time. In the end, it protects the surety, supports the contractor, and helps the job get done successfully.

Rancho Mesa is happy to assist you with any questions regarding your bonding needs. Please content me with your questions at jhill@ranchomesa.com or (619) 798-2819.

Safety First: Protecting New Employees from Day One

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

As high schools and colleges let out for the summer months, your organization may be looking to hire young workers as interns or full-time employees. For many of these individuals, it may be their first job, or first time working in a professional setting. So, it will be necessary to ensure they understand the potential hazards they may face, their rights in the workplace, and how to address safety concerns that may arise.

Proper Training and Education

Young workers entering a jobsite or office environment for the first time will not have experienced most of the training and preparation seasoned employees may take for granted. Employers should ensure thorough training is provided to new employees before they face any potential hazards.

For example, in California all employees, no matter the industry, must be trained in Sexual Harassment Prevention and Workplace Violence Prevention.

In addition, Cal/OSHA also requires employers to provide training on job-specific hazards to all employees.

Industry-specific safety trainings can be assigned to both new and seasoned employees through the SafetyOne™ platform’s Learning Management System. And, weekly toolbox talks can be used to reinforce proper safety practices.

Rights in the Workplace

Employers are required to notify employees of their rights in the workplace, often through a combination of written notices and posters displayed in the workplace.

State-specific recruiting and new hire toolkits are available through the RM365 HRAdvantage™ portal. These toolkits include payroll documents, benefits notices, discrimination and accommodation notices, leave notices, and more.

Federal law also requires employers to report basic new-hire information within 20 days of hire, although some states require it sooner. New hire reporting resources are also available through the HR portal.

Addressing Safety Concerns

New employees should understand the process your organization has in place for reporting unsafe conditions. New employees should be encouraged to report any hazards they may see on the job without fear of retaliation.

Employees can use the SafetyOne’s QR Code-enabled forms to report issues.

Proper training, notification of workplace rights, and a well-established reporting process are three key pieces of a strong workplace safety culture. Employers should prioritize establishing and communicating the importance of safety to new employees at the start of employment to get them up to speed. Regular training and reminders should then be implemented following initial trainings to ensure all employees stay safe on the job.

The Hidden Shift in Workers’ Compensation Pricing

Author, Raysan Benito, Account Executive, Rancho Mesa Insurance Services, Inc.

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) recently proposed a pure premium rate increase of about 17% for non-profit and human services organizations, which is higher than the overall state-wide average of 10.4%.

If approved by California Insurance Commissioner Ricardo Lara, these changes will go to take effect starting September 1, 2026.

Rising claim severity, wage inflation, and higher medical costs are causing carriers to adjust pricing and eligibility requirements.

Affects to Your Organization

While some class codes will see increases of only 1%, others could feel a 28% jump in the premium base rate. With the expected higher base rates, renewal pricing will likely increase with little advanced notice if you are not working with an advisor who specializes in your industry.

With the increase in pricing, credits, dividends, or discounts may be reduced or eliminated completely. And, coverage terms may become more restrictive.

The chart below outlines the increases for each classification code.

Class Code	Industry	Pure Premium Rate Increase
9085	Residential Care for Developmentally Delayed	28%
8868	Day Services for Developmentally Delayed	27%
8868	Private Schools	27%
8875	Charter Schools	27%
9015	Building Operations Including Janitorial	25%
9011	Apart/Condo Complex Operations	16%
8804	Shelters/Recovery	13%
9059	Child Care	13%
8823	Residential Care for Children (Group Homes)	11%
9070	Residential Care for Adults	8%
8834	Physicians & Clinic	6%
8839	Dentistry	5%
8827	Hospice & Home Care	1%

Act Now

Many organizations will not know about the change in pure premium until it is too late to prepare. Early action gives you more options, more control, and better outcomes. Waiting could mean higher premiums and fewer choices.

Schedule a quick 15-minute workers’ compensation checkup with me at (619) 798-2823 or rbenito@ranchomesa.com.

Time Off from Work: Principles for Structuring PTO Policies

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Paid time off (PTO) policies play an important role in how employers structure and support time away from work. Clear and well-documented PTO policies are a necessity for organizations to stay compliant, avoid employee confusion, and ensure proper use of leave time.

In California, the Department of Industrial Relations maintains that there is no legal requirement for an employer to provide PTO to employees (i.e., vacation time), not to be confused with California’s required paid sick leave. However, if an employer chooses to provide PTO, they must adhere to certain restrictions including: PTO accrues as it is earned, and “cannot be forfeited, even upon termination of employment, regardless of the reason for the termination.”

Employers can place a “reasonable cap” on PTO benefits and, “unless otherwise stipulated by a collective bargaining agreement, upon termination of employment all earned and unused vacation must be paid to the employee at his or her final rate of pay.”

Additional California exceptions to PTO:

• Employers can prevent employees from earning PTO during a specific period of time at the start of employment.

• Employers can exclude certain classes of employees including part-time, seasonal, or probationary workers.

• Employers can control the amount of PTO taken at a particular time.

• Employers can pay out employees for all PTO not taken at the end of each year.

Additional California restrictions to PTO:

• Employers cannot enforce “use it or lose it” policies in regards to PTO, the unused balance must either be paid out or rolled over into the following year. However, employers may limit PTO accrual once an employee has hit the established cap.

• Employers cannot deduct “advanced” vacation from an employee’s final paycheck if they quit/are terminated before that vacation is accrued.

Rancho Mesa’s RM365 HRAdvantage™ portal provides PTO resources for businesses across all states. Sample policies are available to be customized to your organization’s protocols and state regulations. Individual states may have additional requirements, so consult an HR expert or attorney who is knowledgeable about your state’s laws.

Fleet Safety is Evolving: How Telematics and AI Are Changing Fleet Risk

Author, Rory Anderson, Partner, Account Executive, Rancho Mesa Insurance Services, Inc.

Fleet safety technology is rapidly shifting from reactive to proactive. Modern telematics and artificial intelligence (AI) tools now give companies real-time visibility into driver behavior, helping identify and correct risky habits before they turn into accidents.

I recently attended a webinar titled Telematics, AI & the Future of Fleet Risk hosted by the Insurance Journal, and one of the biggest takeaways was that many companies are seeing immediate value from these tools through reduced claims, improved driver performance, and better operational efficiency which all lead to greater returns on revenue-generating assets like the company’s fleet of vehicles.

Interestingly, many organizations initially implement telematics for safety reasons, but quickly discover benefits across multiple areas of the business. In addition to improving fleet safety, which ultimately leads to fewer out-of-service vehicles, companies often report:

• Reduced fuel costs

• Improved maintenance tracking

• Better workflow efficiency

• Greater asset (vehicle) utilization

One analogy from the webinar stood out to me. The speaker compared drivers to professional athletes reviewing game film. Just as athletes use video to improve performance, drivers can now use dash cameras and AI insights to improve driving habits through more personalized coaching.

Of course, implementation is not without challenges. Employee buy-in is often the biggest hurdle, particularly when drivers feel the technology creates a “big brother” environment. Transparency is critical. Companies that clearly explain what the system tracks, how the data is used, and why it is being implemented typically see much stronger adoption.

Another challenge is information overload. Many organizations are surprised by the amount of data available when they first launch a telematics platform. A gradual rollout focused on a few key metrics at a time often leads to the best results.

There was also strong discussion around the impact telematics and AI are having on claims and litigation. Dash camera footage and telematics data can help piece together accidents more accurately, improve claim investigations, and provide objective evidence during litigation. In many cases, these tools help reduce the total cost of risk while improving defensibility.

Fleet technology continues to evolve quickly, and while telematics is not a replacement for a strong safety culture, it is becoming an increasingly valuable tool for contractors looking to improve safety, reduce losses, operate more efficiently, and improve return on assets.

To learn more about how telematics and AI tools can help your company manage risk, contact me at randerson@ranchomesa.com or (619) 486-6437.

Frontline Safety: Working in Wildfire Conditions

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Rising temperatures in the summer months bring a greater risk of wildfires across the country. California in particular is especially vulnerable to high heat and dry conditions, making wildfire preparedness a necessity for employers who work outdoors.

Working in areas where wildfires are burning exposes employees to unhealthy air conditions including smoke containing harmful chemical or fine particles. Even after a wildfire has been extinguished, workers can still be exposed to electrical hazards caused by power outages.

Proper training and identification of harmful exposures along with providing employees with the correct personal protective equipment (PPE) when necessary can help reduce injury and illness in the case of a wildfire.

Cal/OSHA requires employers to implement protections for their workers if the current Air Quality Index is greater than 151, or if employees are expected to be exposed to wildfire smoke. This includes creating and administering a system for hazard communication, providing adequate training, implementing engineering controls, and providing proper respiratory protection equipment. Specific training and PPE guidelines can be found on the DIR website.

Employers with indoor workers may also be required to adhere to specific ventilation requirements. Maintaining HVAC systems is an important but often overlooked part of protecting workers from wildfire smoke.

Wildfire safety regulations may differ by region, so be sure to check individual state guidelines for clarification. For additional safety information, register for Rancho Mesa’s Wildfire Prevention and Wildfire Smoke Regulations webinar.

CA Workers’ Compensation Market Faces Increased Pressure Beneath Stable Surface

Author, Jeremy Hoolihan, Partner, Rancho Mesa Insurance Services, Inc.

Recently, the Workers’ Compensation Insurance Rating Bureau (WCIRB) of California released its Quarterly Experience Report that offers insight into the state of the California workers’ compensation market. While at a glance, the market may seem stable, there are evolving claim patterns that are creating challenges for insurers and employers alike.

Premiums Hold Steady as Rates Bottom Out

Since the pandemic, written premium in California has remained steady while average rates have reached historically low levels. However, recent data suggests this decline may be slowing. Modest rate changes over the past two years and the upcoming proposed increases signal that pricing may have reached a breaking point and insurers will be responding with higher rates.

Profitability Under Strain

Combined ratios, which are a key measure of underwriting performance, rose again in 2025, hitting its highest level in over 20 years at 129%. For the fifth consecutive year, combined ratios have exceeded 110%, indicating that insurers are paying out significantly more in claims and expenses than they are collecting in premium.

Cumulative Trauma Claims Reshape the Landscape

A major driver behind many of these trends is the rise in cumulative trauma (CT) claims. Since 2021, CT indemnity claim frequency has increased from 15.7% to 23.7%, clearly making these claims a significant threat to the health of the industry. CT claims typically involve repeated stress or wear and tear injuries rather than single incidents. They are often more complex, slower to resolve, and more likely to involve litigation. As a result, they contribute to longer claim durations and increased administrative and legal costs.

Looking Ahead

The WCIRB report highlights a workers’ compensation system at a critical juncture. On the surface, stable premiums and low rates may suggest a healthy market. But beneath that stability, rising claim frequency, increasing litigation, and escalating medical and legal costs are putting sustained pressure on the system.

As we look to the future, we should expect insurance companies to focus on rate adequacy, cost containment, and claims management strategies. We should also expect legislative changes relating to the increased frequency and costs associated with CT claims. Rancho Mesa has taken a leadership position in pushing for legislative reform from our state representatives to help prevent the growing abuse of the system. 

Without pricing and legislative changes, the California workers’ compensation market is a ticking time bomb. If you would like to know how you can get involved to push CT claim reform, please feel free to reach out to me at (619) 937-0174 or jhoolihan@ranchomesa.com.

California’s Workers’ Comp Rates Poised to Increase Again: What the 10.4% Proposal Means for Landscape Employers

Author, Greg Garcia, Account Executive, Rancho Mesa Insurance Services, Inc.

The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) recently released a proposed pure premium rate increase of 10.4% across all class codes. As a reminder, the proposed increase does not mean every class code will see a 10.4% increase on their specific class code, rather that is the blended average increase across all class codes. These proposed rate increases will be reviewed by California’s Insurance Commissioner Ricardo Lara sometime in mid-July for the new rates to go into effect September 1, 2026.

Last year, the WCIRB proposed an 11.2% pure premium increase, but Lara ultimately adopted a lower increase of 8.7% in July. We will learn more about the Commissioner’s decision on this year’s proposal in the coming months.

Looking specifically at the 0042 class code, the proposed pure premium rates are recommended to increase from $5.30 to $5.77, which is a 9% increase. For context, last year, the 0042 class code had an 8% increase on the pure premium rates. If this increase is approved again this year, it will mark the fifth consecutive year that the 0042 class code has seen an increase on the pure premium rates. These trends point toward a continuing hardening workers’ compensation market, which could result in higher annual workers’ compensation premiums for employers.

So, why has the 0042 class code pure premium rates continue to increase? Many factors go into this increase, including surging medical costs, high litigation rates, and a rise in costly cumulative trauma claims to name a few.

To help combat these potential increases, I encourage all landscape companies to really hone in on their current safety program. Invest in technologies, safety certification, trainings, stretch and flex programs, anything that can create a safer environment for your employees and thus lowering the chances of worker’s compensation claims. Additionally, implementing quarterly claim reviews with your broker, claims advocate advisor, and workers’ compensation carrier adjuster is a critical step in managing claim outcomes that helps to control your Experience Modification Rate.

Ultimately, staying proactive through strong safety practices and disciplined claims management will be the most effective way for landscape companies to help mitigate the potential increases to the 0042 pure premium rates.

Reach out to me should you have further questions on the pure premium rate increases and/or an interest in refreshing your approach to safety. I can be reached at ggarcia@ranchomesa.com.

Employee Health Insurance Benefit Protections under the Family and Medical Leave Act

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

When an employee takes leave provided to them by the Family Medical Leave Act (FMLA), an employer may be left with a number of questions concerning what protections they are required to give to said employee. ‍

The FMLA allows employees to take up to 12 weeks of leave from work for personal or family medical reasons, and return to the same job or an “equivalent job” when their leave ends. An equivalent job is a role where the pay, benefits, employment terms, and often schedule and location are identical to the employee’s original job.

FMLA leave is unpaid leave, but employee health insurance benefits can continue while the employee is on leave, so long as the employee continues to make regular contributions to insurance premiums.

The U.S. Department of Labor states these contributions can be made by the employee in a number of ways. Most commonly, these payments are made through payroll deductions when an employee has elected to take paid leave along with FMLA leave. If an employer does not require an employee take paid leave and the employee opts to take only FMLA leave, an employer may make payments on the employee’s behalf that the employee will then need to repay upon returning to work.

The terms under which an employee receives health insurance coverage through an employer must also remain the same while on FMLA leave. For example:

• Employees who have family member coverage must continue to receive family member coverage.

• All forms of benefit coverage including medical care, surgical care, hospital care, dental care, eye care, mental health counseling, and substance abuse treatment must adhere to pre-FMLA leave terms.

• Employees must be notified and given the opportunity to make changes to plans or benefits.

An employee can also elect not to continue coverage through an employer’s group health plan. However, upon returning to work the employee has the right to return to the same coverage levels as before and, “no qualifying periods or physical examinations may be required, and no exclusions based on pre-existing conditions may be applied.”

An employee returning from FMLA leave must also be allowed to resume receiving benefits at the same level and manner as before the FMLA leave began including: life insurance, disability insurance, sick leave, vacation, educational benefits, pensions, and retirement or 401(k) benefits.

For more information on FMLA leave requirements, login to the RM365 HRAdvantage™ portal or visit the U.S. Department of Labor website. Individual states may have additional requirements, so consult an HR expert or attorney who is knowledgeable about your state’s laws.

For a list of Rancho Mesa FMLA resources, read or listen to FMLA Made Easier: Tools and Resources for Employers Navigating Leave Laws.

Update on California Workers’ Compensation Reform Efforts: APCIA Launches Public Awareness Campaign

Author, David Garcia, President & CEO, Rancho Mesa Insurance Services, Inc.

As part of Rancho Mesa’s ongoing efforts to support meaningful reform around cumulative trauma claims, I want to share an important update on recent developments within the California workers’ compensation system.

The American Property Casualty Insurance Association (APCIA), in collaboration with a broad coalition of business organizations, has launched a new public awareness campaign: “Fix CA Workers’ Comp Now.” This initiative includes a dedicated website, media outreach, and targeted digital advertising across social media, streaming services, and connected TV platforms.

What this means for California businesses:

1. The coalition is advocating for practical reforms aimed at improving the stability, fairness, and long-term sustainability of California’s workers’ compensation system.

2. The current campaign is focused on building awareness and support, and is not yet tied to a specific piece of legislation.

3. More detailed updates on potential legislative proposals and timelines will be shared as the effort progresses.

You can learn more and share the initiative at the Fix CA Workers' Comp Now website.

We will continue to closely monitor these developments and keep our clients informed as additional details emerge. If you have questions or would like to discuss how this may impact your organization, please reach out to Rancho Mesa at any time.

2026 National Safety Month: Protecting People, Preventing Risks

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Since 1996, June has been recognized by the National Safety Council (NSC) as National Safety Month.

National Safety Month is a reminder that workplace injuries and fatalities are often preventable. In 2024, preventable injuries were the third leading cause of death in the United States, with falls and motor vehicle accidents showing some of the highest concentrations among the most frequent and deadly incidents.

June is an opportunity for employers and employees to address common causes of preventable injuries at work. The NSC offers free safety resources through the month of June that can be used independently or alongside regular weekly safety trainings.

Week 1 (June 1-6): Moving Safety Forward

Advance a culture of safety with forward-thinking strategies and tools.

Rancho Mesa provides our clients with the necessary resources to be proactive rather than reactive when it comes to addressing jobsite risk. Conducting proper safety training using the RM365 HRAdvantage™ portal and SafetyOne™ platform.

Week 2 (June 7-13): Staying Safe on the Roads

Help reduce crashes with practical guidance for drivers, pedestrians and fleets.

A strong fleet safety program is one of the best ways to protect employees from motor vehicle accidents. This can include regular trainings, updated policies, and data collected from telematics. Rancho Mesa’s library of 52 driver-specific toolbox talk topics can be used for weekly training. For an in-depth overview on building a fleet safety program using Rancho Mesa’s tools and resources, watch our latest webinar.

Week 3 (June 14-20): Promoting Holistic Worker Health

Support total worker wellbeing with insights on mental, physical and emotional health.

Worker health encompasses more than just safe practices on the jobsite. Mental health resources are available through the RM365 HRAdvantage™ portal, including Q&As and ways to support employees’ mental health. Listen to our Mental Health Awareness Month podcast episode for more ways to support overall wellness in your organization.

Week 4 (June 21-20): Preventing Slips, Trips, and Fall

Reduce common workplace and home hazards with targeted prevention resources.

Slips, trips, and falls are one of the most common causes of workplace injury. But the good news is, they are often preventable. Fall prevention and protection toolbox talks are available through the SafetyOne™ platform. Rancho Mesa’s Ladder Safety workshop also address common causes of ladder-related falls and how to prevent them.

In addition to the resources offered by Rancho Mesa, the NSC offers free safety tools and resources including:

• Campaign Poster & Participant Guide

• Weekly Fact Sheets & 5-Minute Safety Talks

• Weekly Curated Videos, Articles and Research

• Go Green for Safety Sign

• SafeAtWork Pledge

• Member Exclusive Webinars

From RFI to Payment: Navigating the Full Change Order Lifecycle

Author, Anne Wright, Surety Relationship Executive, Rancho Mesa Insurance Services, Inc.

I recently had the pleasure of interviewing Luke Thompson, Esq. who is uniquely qualified to help us understand the nuances of change orders. Based on our conversation, I’ve put together an overview of what all subcontractors should know about change orders.

First, it is important to know what is in the general contract, whether it is a public or a private job, and whether it is a design-build or design-bid-build project.

Most subcontractors understand the basics of a change order, but often times they fail to fully understand how they affect the job’s contract.

A change order is an amendment to an original construction contract or a subcontract that alters a given project’s scope, cost, materials, design, or schedule. These changes are sometimes also called contract modifications or contract supplements. There are subtle differences, but for the purposes of this discussion, “change order” is sufficient.

For most subcontractors, they may only use the change order process when they are seeking additional money for work that was not in the original scope (i.e. scope changes). But, there is a lot more that can and should be done when there is a change order.

The Change Order Process

First, it is important to document all change orders for the entire project. Sometimes, the change request comes from the owner; sometimes, it comes from the general contractor; and sometimes, it is the subcontractor who initiates the change order process. Regardless, there are specific contractual and sub contractual processes that must be followed.

In a typical fixed price, fixed scope project, the owner/agency is usually responsible for the design. Any changes to the original scope, design, or schedule of the project need to be approved by both the design team and the owner (who is typically responsible for the costs related to the change order). However, if the change is the result of the prime or general contractor’s actions (e.g. scope gap in the general contractor’s bid or delays not caused by the owner/agency), then, the general contractor might be responsible for any resulting costs.

In a design-build arrangement, the prime or general contractor is often responsible for the costs if the change is initiated by the owner or agency.

There are budget allocations, contingencies, and many other factors that can affect who is paying for the change. It is critical that the subcontractor understands who is paying for the change order and what other impacts the change will have on the scope, design, or schedule. In the end, the subcontractor ultimately needs to sell the change order to the general contractor, even the zero-dollar ones. And, if the general contractor needs to sell the change order to the project owner, it can be a recipe for delaying payment or even having the change order rejected. While a subcontractor may be able to pursue a claim for the change order, this is often a costly and time-consuming process.

In general, when a subcontractor submits a change order, it goes to the general contractor for initial review. Because the general contractor has to submit the change order request (COR) to the design team and get approval from the owner/agency, a poorly drafted COR will need to be redrafted by the general contractor, something that invites scrutiny and often skepticism. It is much more efficient to have the COR properly formatted and supported than go through the revision process.

If the general contractor accepts the COR, that does NOT mean it is approved. The general contractor must then submit it to the owner/agency for approval. Typically, a general contractor will need to pitch the COR to the owner and design team. A properly structured and supported COR makes this process much easier. Once the owner/agency approves the COR, they issue a change order to the general contractor, often times that change order is bundled with other CORs that were approved. Then, the general contractor issues a change order to the subcontractor. Until that subcontract change order is executed by both parties, there is no official change to the subcontract. That is why a subcontractor cannot bill against a change order until the cycle is complete.

The whole cycle rarely takes less than a month, and often takes much longer to complete. In the meantime, the subcontractor is likely to have been directed to perform and may have already completed the work. Since most subcontracts require subcontractors to perform when directed, a subcontractor needs to be mindful that payment for the subcontract change order may take 30, 60, or 90 days, or longer. The labor costs alone (assuming a subcontractor is holding off on paying vendors until it gets paid) can be crippling.

Change Order Procedures

Perhaps the single biggest mistake subcontractors make when dealing with change orders is that they drag their feet in issuing CORs. The failure to timely submit a COR can result in a rejection of the COR outright, even if the work has been completed. Most contracts and subcontracts have strict timelines (often 5 days or less) when notice and the COR itself must be submitted. Few project managers are aware of these timelines. In most cases, it ends up not being a major problem, especially when it is clearly additional work. But sometimes, particularly with respect to disputed issues involving significant schedule impacts, this can create an enormous problem for everyone.

Read the subcontract carefully. Talk to the on-site foreman daily. And, send notice as soon as the issue is known. When the costs cannot yet be determined, send an email anyway letting the general contractor know that a changed condition has been discovered and that the cost and schedule impact are being investigated. The best way to send notice is typically through a carefully designed request for information (RFI). The RFI is what primes the pump for most change orders and many subcontractors fail to take the opportunity to draft their RFIs in a way that compels the general contractor, owner/agency, and design team to acknowledge that a change order is inescapable.

The Full Potential of a Change Order

The change order does much more than simply capture additional costs for the subcontractor. It can be used to capture additional time, scope changes that favor the subcontractor’s installation, or even credits (i.e. deductive change orders) that might advantage the subcontractor.

While not every change warrants a change order (sometimes it is cheaper to just roll with the change), every change does warrant analysis. Many times, subcontractors are only capturing the direct costs of the changed condition but fail to properly assess the impact on the schedule or the subcontractor’s overall performance. Of course, being overbroad in a COR can get a lot of pushback and skepticism, leaving money or time on the table should never be an option.

What A Proper Change Order Request Should Capture

A proper COR should have all material, equipment, and labor hours involved, obviously. It should also include the schedule impact, which is almost always more than just the time to complete the work. A COR should also include, when allowable, supervision, delivery costs/fees, cleanup, planning, and project management. In addition, a subcontractor should include the allowable overhead and profit.

It is also important to consider that when the frequency or size of the change orders begin to stack up (e.g. more than 10% of the original subcontract value), it is time to meet with the general contractor and discuss inefficiencies. There is a meaningful difference between a project that was bid at $1M and one that is $1.5M, for example. If additional time is provided and the impact is minimal, then there may not be the need to push the issue, but subcontractors should not allow general contractor s to force them into performing subcontracts that are materially different in size or scope without expecting someone to pay for the impact on the subcontractors operations.

CA New Change Order Law

Civil Code 8850 or the Private Works Change Order Fair Payment Act (Senate Bill 440) is designed to establish clear deadlines for change order reviews to prevent contractors and subcontractors from financing disputed extra work. The law requires (in part) that:

1. The owner must provide a written response within 30 days, identifying approved and disputed items.

2. Undisputed amounts must be paid within 60 days of the owner’s response.

3. If the owner fails to respond within 30 days, the contractor or subcontractor may have the right to suspend work without penalty.

This law does require that the claim for extra work be submitted via registered or certified mail, which is an uncommon practice in the digital age but subcontractors should be aware of this requirement.

The full impact of the law on industry practices is yet to be determined. But, if a subcontractor is having a difficult time getting change orders approved, it might be worth evaluating whether or not this law can be used to get the owner to timely respond, approve, and ultimately pay the subcontractor’s change order.

In California, the construction industry has moved, in recent years, to some very specific standards when it comes to change orders. It is critical that subcontractors read their subcontracts and the prime contract carefully to understand the change order requirements. Most subcontracts have very stringent requirements for notices like what can be included and allowable markup. Sadly, in many situations these restrictions make it difficult, if not impossible, to capture all the true costs involved for a subcontractor. In most cases, subcontractors are probably losing money on change orders. The earlier that a subcontractor can submit a properly supported change order request, the greater likelihood of getting it approved as submitted.

This makes it all the more important to try and get ahead of the curve and use the RFI and COR process to your advantage. Set your general contractor up for success by carefully articulating why the COR includes all the costs and impacts it does and then provide as much supporting documentation as possible. Then follow up with friendly phone calls and emails, building relationships and trust. Good luck out there.

Cash in the Bank Is Not Profit: What Home Care Owners Need to Know About Margins

Account Executive Raysan Benito sits down with Dana Charumbira, CPA and founder of Home Care CPAs, to explore how home care leaders can use financial insights to drive smarter decisions and sustainable growth. They break down key concepts like gross margin, automation, and financial clarity, offering practical ways to turn numbers into meaningful strategies for scaling a business.

Raysan Benito: You're listening to Rancho Mesa's StudioOne™ Podcast, where each week we break down complex insurance and safety topics to help your business thrive. My guest today is Dana Charumbira, a CPA, MBA, and business leader behind Home Care CPAs, who brings a unique blend of corporate and international experience to the home care industry. With a passion for conscious business and social impact, Dana combines analytical expertise with a deep belief in human connection to help leaders scale in a meaningful and sustainable way.

Dana, welcome to the show.

Dana Charumbira: Thanks, Raysan, and thank you for that great introduction. I sound so professional and put together. I love it.

RB: Well, you are so professional and put together. You're very well known. I would have even added that you are going to be a conference speaker at CAHSAH as well. And we, I, yeah, there's so many, I get the list could go on, but I at least wanted to make sure that I had that locked in. So welcome to the show.

Dana, I appreciate you being available. You survived tax season. I think I want to jump into that. There's a little bit of a path I'd like to go on, but you survived tax season, so well done on that. How is that for you?

DC: Thank you. Thanks for having me on.

Yeah, we made it. It was, you know, each year we get better and better. Each year has its nuances. We support a lot of like the business returns. So once we get through that March deadline, there's a little bit of a sigh of relief. And then there's a couple of, you know, April 15th deadlines that we really support. But

Our team was really good this year about being proactive in Q4 prior quarter, just to kind of make sure we had a good start to 2026 to get filings done. So not too many sleepless nights. Yeah, and shout out to the team, shout out to the clients too that worked with us to make sure we got everything that we needed.

RB: Yeah, that is absolutely crucial. Having that team of people to work alongside you and then having your clients bringing things in a timely manner. I know that challenge all too well. So I am glad that it went well for you. You know, I was thinking about this beforehand. I'll jump into the problem and some of the solutions that we have, but it was so interesting to me because when I was preparing for this podcast.

I asked a couple of business owners about their profit and loss statement and how often they review it. So I talked to one business owner and I said, how often are you looking at your P&L? And their response was, almost never. My accountant. That's my accountant's job. My accountant does that. And so I want to address some of the, I want to address that statement, but I also want to address some of the individuals that may be listening. What I'm really excited from our conversation from yesterday and preparing for this was that I really believe that there's going to be something for everyone. So you can have the startup, home care agency that's learning as they're going and they have a heart to serve, but they're not entirely sure how financials fit into it or how to leverage it. And then you have people who are scaling and then some of the more legacy agencies that are there. But I want to camp a little bit on that phrase and I'd love to hear your perspective on it. When someone says, I don't usually look at my P&L, that's the accountant's job.

DC: Yeah, so there is. I think first, let's say just acknowledge that home care is, you know, a business or an industry that pulls people in a lot of directions. So home care agency owners or home care leadership vault has a lot on their plate at all times. And even if they're not actively doing something, they're probably thinking about their business and, you know, maybe it's marketing, maybe it's recruitment, maybe it's a shift that needs to be staffed. So I think a lot of the times, you know, the accounting piece of it, because it's not so in your face every day does kind of fall into that list of like, I'm going to engage with it when I'm filing my taxes and it becomes more of this like passive, I say compliance based activity and that it's just something that needs to get done when you're filing your taxes at the end of the year. And so I don't think that's an uncommon approach or sort of, you know, comment that we do here. And sometimes it's just easier to manage your business from your bank account. So like if you have the money to make payroll and there's some leftover to, you know, pay whatever else you need to like workers comp and rent and utilities, you know, sometimes that can feel like that's enough.

And it can be scary because you know if that number on the bottom isn't where you want it to be, sometimes not engaging with it or just like hoping it's going to get better might feel safer. But really it's just kind of kicking that can down the road a little bit for like that inevitable day that comes when there isn't the cash in the bank or that number just really starts to become zero or negative. So yeah, that's not an uncommon, you know, starting point. But and even, I mean, I would say that's agencies of all size. And there's a lot of different ways you can look at your numbers that aren't looking at your profit and loss, which we, you know, we encourage. But for us, the profit and loss really brings everything together. And for me, it really tells the story of the business and you can see like operational decisions that the business is making and how they play out in the financials

RB: I agree. And it's interesting that you bring that up because as we work with home care agencies as well, you're talking to these CEOs or owners or what have you, and they're going, listen, I've got an intake to do. I probably have to do some type of marketing.

There's networking that needs to be done. I also need to look at operations. Also, we're constantly hiring, so I have to do that as well. And interestingly enough, I was talking to another owner and they were going, I'm also HR, so I'm handling that as well. To your point, I think it's helpful for us to just take a beat and go, okay, well, we acknowledge a lot of the aspects of actually leading a home care agency and the difficult conversation that needs to be had around the profit and loss statement. It can be daunting. It can be scary. I think of the quote by Tim Ferriss, right, where he says that your success, and I think it's Tim Ferriss, and he says, your success in life is predicated upon how you can have difficult conversations.

Now, I think about that phrasing in with others, but as I was preparing for this podcast, I was thinking, oh my gosh, well, I think it's difficult conversations even with yourself and using the profit and loss statement as a guide, really, not as a guide, but as a helpful barometer to have that conversation. It's a conversation starter and it sounds like for you and your organization, you really act more as a guide to help people look at that story and be able to have that conversation. I'm wondering, because you had a phrase that resonated with me when we talked about this, and I'm hoping you can elaborate on it. What do you mean when you say that many agency owners feel like if they can make payroll and have money in the bank, then that's all they need to do when it comes to the profit and loss statement?

DC: I think it's really just probably one of the... When you're being pulled in a bunch of different directions, like you just described, it's probably one of the easiest, like most accessible way to like gauge the financial success of the business because you can open your banking app on your phone and say like, hey, there's this many dollars left over after payroll came out. Like, okay, that's where I need to be right now.

And that's, that is, I mean, looking at that cash balance and also, you know, not to get into the accounting vault weeds, but sometimes the profit and loss isn't telling you that cash story as well. So there's like different, there's the cash aspect of it, then there's like the profitability aspect of it, but understanding like how those work together. You know, really take some of that fear of the unknown away and I would say the more you engage with it, the more that it becomes familiar and easier to look at the profit and loss. And then going back to...Just, you know, thinking about like a home care agency owner, a lot of the times that is like their livelihood. So their personal and their professional like success and wealth are like very closely intertwined. And so the performance of that business oftentimes like can impact lifestyle.

And I think as part of that, there's this feeling around like the books, as people will say, of like pride or like, I don't want maybe something to be seen that, you know, is happening or, you know, just this guarded feeling towards it, which is completely understandable. And I always say that we're accountants, but we and we were like strategic partners and we lead strategy sessions with our clients. But sometimes it feels like we become therapists because we're seeing like things that are going on in those books that like family members might not even know about. So there's balancing like, yes, there's the business aspect of things and like responsibly we should be looking at, you know, the financial statements. But then there's also like that personal piece of it that we have to tap into and understand like, this person did this, this and this to get to this place right now in terms of like financial success. And so we need to like appreciate that, understand it. And then like, how do we help guide them, as you said, you know, to continue to grow and build on that success.

RB: That's so good. I'm thinking already in my brain, I'm going, oh my gosh, we need to make another podcast on personal stories around and how they're crafted through the profit and loss statement. That's actually what I thought of when I thought of a P&L. I go in, okay, sure, there's numbers and that can be daunting, but really, it's a story.

It is a story and thankfully you have individuals like yourself that are able to hold people's stories well. Not what I was originally intending to talk about, but so glad that we went to that, we went down that way because what I, if I was to go back to the path that I was thinking of originally, I think the word I want to go back to is clarity. That's what I have found with our conversation together is really for you, Dana Charumbira, is you are looking to provide clarity. And it's interesting you bring up some of the differences, right? You were talking about cash and then income and some of the differences between that.

And I want to get into the meat potatoes of it, which is a phrase that may be, you know, that may not be as noticed, but is absolutely important, which is gross margin. I mean, if you were to stand on a soapbox and from some of the interactions that we've had, I'm almost sure that that is one of the soapboxes that you're going to stand on and really let people know about is the correlation between gross margin and the fact that it is truly the driver for everything. So can you explain a little bit more about that and why this is a hill for you and why it's so important to you?

DC: Yeah, so kind of just to reinforce the reason I find it to be so important is we looked at profitability. So like bottom line return on sales, which is just a measure of like income relative to your revenue, which is a lot of the times like a measure of success, you know, after you've paid all your bills. And so the higher the return on sales, the better the business is doing.

And one of the drivers of higher return on sales was a higher gross margin, which makes sense because that's like a bulk of home care, right? It's the people that are delivering the care. And so the more that we can improve our gross margin, the more that we have to cover our overhead costs and grow the business or, you know, do it, what needs to be done to improve the bottom line.

And so we focus heavily on gross margin as the industry does, and I'll just define it quickly just to kind of make sure we're on the same page with how we think about it, which is pretty in line with industry standards. So it's caregiver wage, the employer tax on that, which we assume to be 7.5 to 10, sometimes 11% depending on the state, and then your workers' compensation associated with that wage that's being paid.

There's like other minor things that'll flow through there. So like if there's supplies or, you know, merchant fees that you're paying, but the bulk of it is like that caregiver wage and the associated cost for delivering care. And so focusing on getting that, we like to see that 40 to 45%, which is usually you're taking your caregiver wage and doubling it as like your sort of starting point for what you're charging clients. And again, that varies based on like the tax and your workers' compensation rate that you have in there as well. But really starting to, you know, track that over time, because you can do like a snapshot of it and say like, here's where we're at right now.

And that's fine, but like really we start to look at that over time and then understand like what's driving that, the levers behind it, so that the agencies can like make more informed decisions.

I can give a couple of examples that I think help bring that to life a little bit, just because it kind of, I think sometimes accounting sounds very theoretical, but then when you like bring it into practice or like how a business owner would use that information. So when I'm looking at a gross margin, I'm thinking, okay, in home care, really, there's a few drivers, which, and I don't want to oversimplify it, but you have your volume of hours, you have your price per hour on like your income side.

And that's typically what makes up your revenue fluctuation. And then on the cost side, you have your caregiver wage as the main driver, because everything else is really a function of that. So we oftentimes track like what's the average price per hour you're charging clients and what's the average pay rate per hour you're charging or you're paying your caregivers.

And I would say there's actually a lot of meaningful conversation around both. But what I find what we uncover more is like on the pay rate per hour is when we present an average pay rate and we don't layer on like, it's not just the total loaded cost with the employer tax and the workers comp. It's purely just like, here's on average what you pay a caregiver per hour in this time period that we're looking at. We get pushback a lot from owners. They're like, no, you're telling me my average is $22.50. Our starting point is $21 an hour. That's what we pay our caregivers. And it's like, well, let's take a look at the data.

Okay, well, we went into overtime. So, you know, overtime was 10% of total cost, and we can only pass on 5% of that.

Another big one is there'll be call-offs, especially with the caregiver shortage and like just, or if you're going up in hours, you don't have the caregiver bench to fill those. You're going into overtime or you're paying staff incentives. So you say, hey, there's a call-off, there's a last minute shift that came up because we onboarded a new client. We're going to pay 50 cents more an hour than our, you know, $21 standard.

All these things add up. And so when an owner steps back and they're like, oh my goodness, I thought we were paying $21, we're paying $21.50. It has this impact on my gross margin. And that's when you can start to have conversations with like your scheduling team and, hey, help me understand, like, what are we doing to fill these shifts? You know, how are we going about it? Maybe the scheduler has a favorite caregiver that they're going to, and that person's already in overtime. So then they're making incentive on top of that overtime.

So you're starting to understand like your employees' habits. How do you coach them? How do you improve what they're doing? Not like it's right or wrong because scheduling is a tough job in home care, but just guiding them and saying like, here, if we did this instead, you know, this would have this impact and here's how you're contributing to the company as well. Same thing on the recruiting side of like the caregiver bench isn't there. You can bring that recruiter into that and say like, here's the number of caregivers that we want to bring on in this period. So that's where I mean, like it starts to tell a story and it starts to help that business owner feel like confident in some of the conversations that they're having, because it's not just from like a theory that they have. So that's one example on like the price per or the pay rate per hour side. Price per hour, I would say is a little bit like.

I do think everyone's trying to improve that and push that up as much as possible, but the agencies that are more strategic about it will say like, okay, we know we have to bring our caregiver rates up by this much based on merit or based on the current labor market. What do we need to look at in terms of like incoming price per hour for clients? Or how do we bring up like our current client's price per hour to make sure we're protecting our margin? So that, yes, I will go on for a long time about gross margin, but those are just some like examples that are relatable around like how an agency owner, when they start to kind of understand and get comfortable with those numbers, can, you know, start to make informed decisions and have conversations with their staff.

RB: I want to go back to a concept and I appreciate you sharing that. And you had mentioned when it comes to caregiver rates and how it relates to that double amount. So I was hoping you can elaborate a little bit more on bill rate versus caregiver pay rate, and then and how those two relate.

DC: Yeah, that's a great question. So gross margin is typically like a percent, so it's 40 to 45 percent as a target. And then your gross profit is the difference between your price per hour that you're charging your client and the pay rate per hour that you're charging your, that you're paying your caregiver.

If you basically take that pay rate and double it, so you're saying like, well, I'm paying my caregiver, let's use a simple example, $20 an hour, and I'm going to bill then $40 an hour. When you load on the employer tax and the workers' comp, then you typically will hit that 40 to 45% of like that gross margin target on obviously, the higher that price per hour can be, the more like comfort you have with, you know, some of the pay rate. But I think sometimes we also run into you know, if there's a really good reimbursement rate with like the VA pays really well, sometimes people are like, well, we're paying our caregivers more because we're getting paid more. And I caregivers do very meaningful work and there's, you know, I definitely think that there's a conversation around that. But it's also the question is like, you don't want to pass all of that on to your labor cost. Do you want to, you know, see if you can use that to maybe offset like a 24-7 case that you might not be able to double that rate because sometimes the volume of hours makes up for that lower gross profit or gross margin that you might see.

RB: Okay, that's really helpful to consider that. And that percentage is also really, it's very tangible as well. And I think you're taking something from the theoretical, ethereal, accounting vault, intimidating to going, okay, let's shoot for 40 to 45 percent. And that's very,

It's very realistic. Not necessarily realistic, but being able to go, okay, I can see this now. This is a helpful target or goal for me to have. I want to move on to another topic that also seemed to, you really seemed, for lack of a better phrase, you seemed really stoked on this type of topic, which was, you know, I'd go, okay, so gross margin, that is, that's Dana soapbox, but then the other idea, and I suppose they connect, but it's this idea of automation and systems. And so I'm hoping because I think at times we use these buzzwords, right? Like a circle back kind of situation. You're going, all right, come on. Let's start making these things a little bit more, again, tangible, going from the ethereal theoretical to something very practical. But when we had spoken about this, preparing for this podcast, you said, okay, well, one of the topics that was really important to you was that automation and systems set in place. So can you explain that and how they correlate with gross margin or in general?

DC: Yeah, and I love that you're talking about this because there's such, like you're saying, buzzword right now is like AI, and so like AI and automation, like all these things happening, and like they're going to take over all these jobs, which maybe, I don't know, but so I, and I do think about them separately. So like, hey, there's AI and then there's automation, and we try to really, when we first start working with agencies, focus heavily on the automation between their client management system and their accounting software. We pretty much work exclusively in QuickBooks Online because everything talks to it. And then their payroll software and QuickBooks Online. And that sounds like so basic. And I would say maybe 60% of the time there is some connection already between the client management system and the accounting software, but it's not configured in a way that gives that agency like the data that it wants on the accounting side. And what I mean by that is they see like their revenue coming in, but they, if they're working with different payer sources, they might not know that, you know, 50% is private pay, 30% is VA and 20% is other. And so I'll get to why that's relevant when we talk more about like how that plays in with financial reporting. Payroll is like the bigger one and I just think that's because it can feel so...overwhelming. Like if you look at a payroll software configuration to the accounting software, it's called like general ledger interface, which like, I mean, that just sounds like confusing when you think about it, right?

RB: All right, sweet. Yeah, exactly.

DC: And so, and then they start asking you like for your chart of accounts and like, where do you want these things to go? And you know, it's like, I'm not an accountant, I'm a home care agency owner. So wherever you think they should go. And that's even if the payroll software hand holds their way through this. So oftentimes that's a very underutilized feature, but so critical. The reason that these are critical for us, like underlying sort of structures and foundations because that's how we get information to our clients very timely. So one of the kind of jumping back to the opening question or like the opening kind of conversation we were having around, you know, I don't look at my P&L. Well, oftentimes that's because people don't have it done for like 3 months after the month's done. So you're like, hey, I don't care what happened in January, I'm in April, I'm almost in May.

And so if we can click a button and get that information into the accounting software, like we're able to turn around financial statements in a time period that makes sense for that owner to like really look at and say like, okay, I know that this happened two, three weeks ago, I can still do something about it today. So that's why those like automation pieces are important. And then going back to like looping in, you know, why is that client management software information coming into the accounting vault software and like a structured way?

So we'll look a lot at, you know, like what is your payer source mix over time and what are the reimbursement rates or prices that you're charging. So like if you're working with the VA, typically the reimbursement rate is at the private pay level or higher. You have the private pay segment and then maybe you have some sort of Medicaid or another reimbursement source.

And so when we start to look at like the shift or the difference month on month of what revenue is coming from those payer sources, we can track like, okay, your price per hour is going in this direction because the revenue is coming from these different sources. And that's how we know like why gross margin is going one way or the other. So I think of it as this like layering of like foundational, just like getting the data into the accounting software. Okay, let's get it organized and in a timely manner and then the top is like, let's actually have, you know, numbers that an agency owner can look at that aren't just, you know, numbers on a profit and loss. It's like, hey, because you signed on this contract, it did this to your price per hour and therefore like your gross margin went up or down by this percent. You're making this much more money this month because of it. So sounds super simple to like connect the systems, but getting that done can like unlock this whole new level of like timely reporting.

RB: You're absolutely right. So you're right that it is simple, but at the same time, I want to go back even further and you were talking about stories, right? And this goes back to the story and appreciate professionals like you that are able to hold stories well in that way and just find ways to make those connections.

As we're sort of landing the plane here, one of the things I absolutely love to do is just, and it sounds like you and I both resonate with connection and human connection. And so a question I like to ask my guests to add a human element to it is, what is something hobby interests that your professional network would be surprised that you are interested in right now.

DC: Probably a surprise that I don't talk about often is I do, well, I'll say do because I'm getting back into it. I have a three-year-old, so I kind of got off this for a little while, but endurance road cycling. So I've done like very long endurance rd cycles, predominantly when I was living abroad. So I've done three major races a year, for like a series of a few years. So that was like, for me, a very like therapeutic being on that bike outside is just like an incredible experience. Cycling in a race with like a group is very cool just to see everyone like working together and just like the mental perseverance that you have to have when it's like wind in your face.

You're like, why is the wind coming at me right now? Who put this wind gust right here? Is this cycle over yet? But like you persevere through it and that feeling afterwards is just like so amazing. And just being on a bike is like so much fun. I always say that.

I couldn't, I jokingly say, because I swam and played water polo when I was younger, I can't do land sports, like I'm not good at running, but like being on a bike is just like such a fun activity for me, and I just find a lot of enjoyment from those long cycles.

RB: Love it. When you're saying long distance, in my mind, I'm like 20 miles is really long. So what, oh, you're laughing. Oh, okay. Sounds good. Like, okay, but what's the distance that you've gone that would be considered long?

DC: Yeah. So this, no, no, that's like a, that's probably for me right now that is a long ride, but we, so there it was in kilometers because it was overseas. So like the longest one was like 110 kilometers and I'm trying to think that's probably like 70 miles maybe if you divide I think yeah.

RB: Yeah, that's not, okay. Yeah, my legs would cramp and I would need a lot of those little Gatorade gels.

DC: Yeah, those help.

RB:  Gosh, well, thank you so much for, you know, it's so interesting. I was thinking, okay, accounting. I'm in the same boat. I'm going, oh my gosh, accounting. It's so theoretical. How can I even, make this practical or tangible, and then you said stories, and you really tied it all in together very well, and I feel like I could talk to you for much longer about many different things. My brain is making all sorts of connections and different ideas for another time. But gosh, I appreciate you taking the time, Dana.

If people want to connect with you or get a hold of you somehow, what's the best way for people to reach out?

DC: Yeah, so our website is thehomecarecpas.com. I'm dana@thehomecarecpas.com on email. But there's, we're on LinkedIn. We're very active and very visible. So really out there. Yeah, for sure. Happy to have chats. We love talking to new like owners and hearing what's going on in their agency and how we can help. So just really open to conversations.

And I will be at CAHSAH, so I'll be in the desert in Palm Springs, end of June.

RB: Perfect. Be sure to say hi to Dana at CAHSAH. Dana, thank you so much. I really appreciate it.

And thank you everyone for tuning in to our latest episode produced by StudioOne. If you enjoyed what you heard, please share this episode and subscribe. For more insights like this, visit us at ranchomesa.com and subscribe to our weekly newsletter.

Staying Safe in the Heat: Preventing Heat Illness for Employees

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

As we enter into the summer months, warm weather conditions create a new level of risk for employers.

High temperatures and greater sun exposure can pose a danger to employees working both outdoors and indoors. Proper heat protection and preparation are necessary to keep employees safe.

The Occupational Safety and Health Administration (OSHA) reports over 70% of fatalities from heat illness occur in the first week of work. OSHA attributes this statistic to a lack of acclimatization, or proper adjustment to the changing temperatures.

Training employees on how to build tolerance to and protect themselves from the heat, and what to do if a person is showing signs of heat illness is essential when temperatures are high.

Rancho Mesa has a number of training and reporting resources available for clients through the SafetyOne™ platform and the RM365 HRAdvantage portal. These resources include:

SafetyOne™

• Heat Stress Online Training Courses

• Toolbox Talks for weekly safety training

• Observation Reports for documentation and issue identification

• Mobile Forms to collect safety data

• Heat Advisories that can be sent through the Company News function

RM365 HRAdvantage™ Portal

• OSHA 300 logs for incident documentation

Register to attend Rancho Mesa’s Heat Illness Prevention workshop on June 12th, 2026 at 9:00 am.

Completing this training counts towards earning the RM365 Advantage Safety Star™ Program certificate.

Rising Impact of Cumulative Trauma Claims in California Workers’ Compensation System

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

Claims involving Cumulative Trauma (CT) injuries are growing significantly, across California.

Data collected by the Worker’s Compensation Insurance Rating Bureau (WCIRB) shows growth of these types of claims accelerated in 2022, 2023 and 2024. The WCIRB now estimates that more than 25% of indemnity claims involve CT.

The Los Angeles area continues to see the largest concentration of CT claims; however, the recent increases have been observed state-wide.

Most CT claims are filed after an employee is terminated. Based on WCIRB claim survey data, approximately 60% of recent CT claims were filed post-termination, that’s an increase from prior studies which indicated only 40% of CT claims were filed post-term.

The rise in claims involving CT is having real effects on costs to employers, and underwriting losses.

The WCIRB reports combined ratios have exceeded 100% for the last six years and have been above 125% for the last two years. In accident year 2025, higher claim frequency, rising average medical costs, and increasing average allocated loss adjustment expenses (ALAE), led to a combined ratio of 129%, marking the highest ratio in over 15 years.

Rancho Mesa is seeking to reform California’s CT claims situation by drafting and sending letters to legislators asking for reform. If you are interested in taking action, templates are available addressed to California Senator Lola Smallwood-Cuevas and California Assembly Member Lisa Calderon at both their regional and capitol offices.

A Strategic Approach for Insuring HVAC and Plumbing Contractors in California Requires an Industry Specialist

Author, Matt Gorham, Account Executive, Rancho Mesa Insurance Services, Inc.

The insurance landscape that California plumbers and HVAC contactors currently face looks noticeably different than that of recent years. A prolonged period of sharp economic and social inflation has driven up claim costs for carriers, forcing many to exit or reevaluate their positions in the market. As carrier appetite shifts and capacity is constrained, contractors are largely experiencing frustration arising from limited carrier options, reduced coverage, and rapidly rising insurance premiums.

In this challenging environment, renewal outcomes are heavily influenced by carriers’ understanding of the specific business’ risks, as well as the processes and procedures used to effectively control them.

Mechanical contractors rely on their insurance broker to represent them and their operations to carriers. Partnering with an insurance broker who specializes in these trades allows HVAC and plumbing contractors to highlight favorable characteristics of their risk profile and provide more detailed insights that address potential underwriting concerns.

Proactively addressing underwriter concerns also provides the opportunity for the contractor to learn how to build or enhance their risk management strategies for common claims within their industry, leading to more favorable pricing. A specialist broker can help their clients:

• Strengthen their fleet safety program to reduce accidents within their service fleet,

• Understand the importance of a thorough subcontractor agreement which can direct liability to the appropriate party, and

• Closeout procedures to mitigate the risk of damage from latent defects.

While the ability to favorably represent a mechanical contractor’s risk profile is beneficial, knowing which carriers to approach  is also critical. As carriers reevaluate their market positions, their willingness to entertain an HVAC contractor working on rooftops, a plumber serving HOAs, or a refrigeration contractor involved in the life sciences industry may be impacted.

A specialized broker regularly has conversations with carriers about their appetite and proactively recognizes subtle shifts in the market. Working with a broker who specializes in your industry enables them to develop an insurance program tailored to the specific needs of the individual business.

When using a broker who is a generalist, coverage gaps can arise in a variety of ways that jeopardize a contractor’s financials, like:

• A residential exclusion for a plumber performing work on custom homes,,

• Inadequate installation floater limits for an HVAC contractor installing custom designed chillers,,

• Water intrusion claims that lead to mold, and

• Coverage limitations like work performed by subcontractors or work at height.

Rather than relying on a generalist using a generic mass marketing strategy that leads to market fatigue and diminished leverage, aligning with a specialist broker allows mechanical contractors to approach renewals strategically and to consistently secure more favorable outcomes.

To learn more about the ways our specific focus on plumbing and HVAC contractors can benefit you, contact me at mgorham@ranchomesa.com or (619) 486-6554.

“All in Together”: Construction Safety Week 2026 Kicks Off May 4

Author, Jadyn Brandt, Client Communications Coordinator, Rancho Mesa Insurance Services, Inc.

May 4-8 is Construction Safety Week. The annual event is designed to improve industry safety culture through increased awareness and access to resources.

This year’s theme is “All in Together,” with a focus on three pillars: Recognize, Respond, and Respect all with the goal of preventing serious injuries and fatalities on high energy, high hazard job sites.

Recognize

The first step in addressing serious risks is identification. The Construction Safety Research Alliance finds construction workers identify only 45% of the hazards they face during typical planning briefings. Increasing recognition of high energy and high hazard activities can improve ability to respond quickly to a dangerous situation, and ultimately prevent serious injuries or death.

Respond

Once hazards have been identified, the next step is to respond. That means putting direct controls in place before any work begins. When planning turns into prevention, teams are able to eliminate, substitute, or engineer out serious risks.

Respect

Respecting job site hazards means taking seriously all potential risks to health and safety. Taking the time to plan and implement direct controls, and adapting to changes as they arise builds and strengthens a safety culture that lasts.

Digital safety resources are available for organizations participating in Construction Safety Week.

A Planning Playbook is available for download and includes information on how to organize events and communicate goals with leadership and employees. Sample agendas, social media resources, and daily toolbox talks are available throughout the week.

Toolbox talks and safety observations are also available through Rancho Mesa’s SafetyOne™ platform.

Building a Scalable Safety Program with SafetyOne™ for Landscape Professionals

Author, Drew Garcia, Vice President, Landscape Group, Rancho Mesa Insurance Services, Inc.

Rancho Mesa provides our clients the key components for building the infrastructure of a modern-day safety program through the SafetyOne™ Platform.  By fundamentally layering your safety program through SafetyOne™, you will build a system that can keep up with your growth, measure your goals, and keep your organization engaged.  

In a report from Travelers Insurance Company titled, “2025 Travelers Injury Impact Report,” they noted within the last 5 years, more than a third of all injuries stemmed from an employee’s first year on the job.

Establishing an effective safety program can help prevent new-hire injuries. Avid SafetyOne users saw a 27% decrease in claim frequency over a 3-year period by implementing effective onboarding of their safety program, performing ongoing safety activities and maintain compliance:

Onboarding

The ability of an organization to effectively hire and train new employees is critical to maintaining a safe workplace. Safety onboarding ensures that site, equipment, and tool hazards, along with policies, processes, and emergency response protocols, are clearly communicated and understood to meet core safety expectations.

Ongoing

Manage your safety program on a regular basis with near miss reporting, job hazard analysis, tailgate training and more. By accessing your mobile forms and observations within SafetyOne, you are able to manage your team’s ongoing efforts to stay engaged.

Compliance

Pulling reports can be critical to evaluating the program you established and an efficient way to gather critical information when you need it quickly. This allows you to monitor the standards that are in place to help prevent injuries, ensure expectations are clear and change behaviors which ultimately impacts risk predictability.     

Build a safety program that works for you today that has the ability to adapt, grow and change with you. Talk to your broker or client technology team to learn more about a SafetyOne-based safety program.