HomeMy WebLinkAboutMinutes - Minutes - Risk Management and Worker's Compensation Trust Board - Meeting Date: 8/7/2013 Minutes
Workers' Compensation Trust Fund
Wednesday, August 7, 2013 - 7:00 PM
City Hall - Council Chambers
5850 W. Glendale Avenue
Glendale, AZ 85301
Members Present
Diane Goke
John Stern, President
Julie Stiak, Trustee
Sandra Oates, Trustee
Yvonne Knaack, Vice-Mayor and Trustee
Members Absent
None
Staff Present
Dianne Shoemake, Risk Manager
Lorena Sanchez, Risk & Safety Analyst
Nick DiPiazza, Acting City Attorney
1. Call to Order
John Stern called the meeting to order at 7:31 PM.
2. Minutes of April 1, 2013 Workers' Compensation Trust Fund Board
Dianne Shoemake presented the minutes to the Board. Yvonne Knaack made a motion
to accept the minutes and Julie Stiak, seconded. All voted "aye" and the minutes were
approved.
3. Discussion of Workers Compensation Trust Fund 2013/2014 Year End Revenue and
Expenses
Dianne Shoemake provided a spreadsheet listing the revenues and expenses for the
workers' compensation trust fund for the period 7/1/2012 through 6/30/2013. For this
period, the ending fund balance was $4,466,963. The actuary required the minimum
balance, 55% confidence level, at $4,217,568. The fund is above the minimum
requirement by $249,395.
4. Discussion of Fiscal Year 2013/2014 Workers Compensation Insurance Renewals
Dianne Shoemake presented a spreadsheet of the Workers' Compensation Trust Fund
2560 for fiscal year 7/1/2012 through 7/1/2013. For the period ending 6/30/2013 total
revenue is $2,340,275. Of that amount $14,341 is from interest income, $23,513 is
from stadium security fees, $902,421 from self-insurance premiums and $1,400,000
from a transfer made into the Fund from the General Fund.
The total expenses paid from the Fund are $1,311,924. Of that amount $955,071 is
from payment of claims and $316,210 for payment of professional and contractual fees
(third party TPA, taxes and insurance premiums). Claims were much less than were
expected.
When the actuary completed their analysis of revenue and expenses in April 2012, they
required a fund balance of$4,217,568 from data extrapolated to June 30, 2012. The
fund performed better than expected ending with a fund balance at $4,466,963 or
$249,395 above the minimum required. Actuarially the Fund is adequately funded at
the 55% level. Risk Management continues to monitor the balance on a monthly basis
to ensure that it does not drop below the Industrial Commission required minimum
(which is the actuary's 55% confidence level).
For the upcoming 2013/2014 fiscal year the amount of insurance premiums charged
will be $1,894,000 claims paid are estimated at $1,436,000 and professional and
contractual fees paid at $398,000.
Risk Management has submitted the required data to the actuary for completion of an
analysis for the period ending 6/30/2013. Their analysis should be completed within
the next 60 days.
5. Discussion of Request for Proposal for Third Party Administration - Workers
Compensation Claims Administrator - RFP 13-43
Lorena Sanchez provided the following information to the Trustees.
The City's five-year contract with the current Third Party Administrator for Workers
Compensation Claims, Matrix Absence Management, Inc. expired on June 30, 2013.
Risk Management prepared specifications to obtain request for solicitations for
Workers Compensation Claims Administrator. The specification for the scope of
services was previously provided on April 13, 2013 to this board for review.
The due date for the solicitation response was originally scheduled for May 17, 2013.
However, due to the number of requests received by the City from Proposers for RFP
clarification and additional information, as well as, requests to extend the response date
in order for them to prepare their bid, Risk Management extended the solicitation
response date to June 6, 2013. As a result, Risk Management recommended and
received approval to extend the current contract with Matrix Absence Management,
Inc., for six months. The new contract expires on December 31, 2013. Services and
fees remain the same.
The City received five bids from the following organizations:
• Matrix Absence Management, Inc.
• FFC Services
• CorVel
• YORK
• TRISTAR
Currently, Risk Management is in the process of evaluating and selecting the finalist.
After the finalists are identified, Risk Management will request a best and final. If time
permitted, Risk Management will communicate and review the finalist with this board
at the tentative August 2013 meeting. The finalist will be presented with a
recommendation to Mayor and Council for approval and contract award in September
2013.
Risk Management will work with the awarded Third Party Administrator to create a
seamless transition and data conversion process for a January 1, 2014 implementation.
6. Final Results Workers' Compensation Trust Fund Request for Quotations for Actuarial
Services, RFQ 13-001 RMD.
Dianne reported the following information to the Trustees. Risk Management prepared
specifications to obtain request for quotations for actuarial services. The specifications
asked for the following scope of services.
On an as-needed basis, the Consultant will provide an actuarial valuation of its
outstanding self-insured liabilities for two lines of insurance 1-liability and 2-workers'
compensation. Separate actuarial valuations will be done for each self-insured risk.
The Consultant will develop estimated outstanding liabilities and funding rates for
future fiscal years. The actuarial valuation must satisfy the requirements of its auditors
as well as the Governmental Accounting Standards Board (GASB) #10 requirements
and Industrial Commission of Arizona, Title 20, Chapter 5. At the conclusion of each
valuation, a written report will be provided that includes an executive summary and
technical section with sufficient information to support all conclusions and to facilitate
future analysis.
The proposers were also asked to provide optional services for evaluating the city's
self-insured retention at alternative levels, midyear actuarial reviews and cost allocation
plan critique.
The request for quotation was sent to seven companies as follows: AON Risk
Solutions, GPW and Associates, Wells Fargo Insurance Services, Madison Consulting
Group, Milliman, Inc., Tillinghast, Sandy Goldstein& Associates and Tom Garrity.
The RFQ was sent on March 28, 2013 and responses were due April 11, 2013. The
City received one response from the incumbent, AON Risk Solutions. AON's response
was evaluated and they met all the requirements of the RFQ.
Risk Management entered into a contract with AON Risk Consultants effective June
10, 2013. The term of the contract is for one year with the option to renew up to four
additional one year periods. The total compensation paid to AON Risk Consultants for
full completion of all work required by the Project (including any optional services)
during the entire term of the Project, which includes the Initial one (1) year term and
any subsequent renewals periods for the duration of the contract(five years) will not
exceed $49,750. AON Risk Solutions detailed Project compensation is as follows:
•
Consultant shall be paid on an annual basis for services completed in accordance with
the Request For Proposal RFQ 13-001 RMD, Section II. Pricing Page.
Actuarial Analysis and Report for both Liability and Workers' Compensation on an
annual basis, for each fiscal year
FY 2013/14 - $6,850
FY 2014/15 - $6,850
FY 2015/16 - $6,850
FY 2016/17 - $6,850
FY 2017/18 - $6,850
The City may request and the Consultant may provide the following optional or
additional professional services:
(1) - Midyear Actuarial Review at a cost of$3,250 for each fiscal year such work is
performed; and
(2) - Cost Allocation Plan Critique at a cost of$2,500 for a critique of the City's
Liability Allocation and $2,500 for a critique of the City's Workers' Compensation
Allocation.
City will not be charged any additional fees or costs for overhead charges such as
Consultant's telephone, postage and photocopying expenses. Such fees or costs have
already been included as components of the Consultant's fixed fee. Likewise, any use
tax, or federal or state income or sales tax shall not be separately passed on to the City.
A complete copy of the final contract, C8508, was provided to the Trustees.
7. Workers' Compensation Trust Fund Board Accomplishments 2012/2013
A draft Risk Management and Workers' Compensation Trust Fund Board year end
report for fiscal 7/1/2012 through 6/30/2013 was presented to the Trustees by Dianne
Shoemake. The report provided innovative and administrative changes made,
accomplishments and goals for the upcoming fiscal year. Under the Goals listed, the
board added "Evaluate the budget office cost allocations for insurance premiums
charged to city departments". Below is the report that was approved by the Trustees.
Innovation:
• The Trust Fund Board is meeting a minimum of twice per year or more often as needed
rather than annually.
• The meetings are now being digitally recorded instead of using a court reporter. This
change has significantly reduced the cost of the meetings with an estimated annual
savings of approximately $3,000.
• Trustees are provided in advance of the meeting, a board book that provides a
description of the topics to be discussed, the supporting documentation and staff
recommendations.
• The Trust Fund Board developed a Trustee reference handbook that contains a listing
of trustees with contact information, loyalty oath, trustees insurance bond, RM&WC
Trust Fund City Ordinance, CAFR, monthly revenue and expenses report, summary of
insurance policies, actuarial reports, prior audit report, minutes from the past two years.
Additional reference materials will be added as needed.
• Two risk management vehicles returned to equipment management reducing the cost to
maintain these vehicles with an estimated annual savings of approximately $3,000.
Risk Management staff will use motor pool vehicles as needed.
Administrative:
• Meetings are being held in city council chambers to allow easier access for public
attendance.
Accomplishments:
• Created policy on transferring funds into and/or out of the RM&WC Trust Funds.
• Process developed for periodic updates to Trustees on fund balances, claims payments
and settlements and any other material changes.
• Transfer of$1,400,000 to WC trust fund from general fund to bring fund balance above
the minimum required by the Industrial Commission of Arizona(ICA). The ICA
authorized continuation of the self-insurance program.
• Risk Manager's insurance consultant license verified and submitted to City Council as
required by city code.
• Executed new one-year contract for third-party property damage claims repair services
not to exceed $75,000. Developed procedure for completion of the repairs,
documentation, invoice review and payment in accordance with the contract
requirements.
• Purchased faithful performance bond covering the Trustees amounting to $10,000 as
required by city code.
• Developed Claims Settlement Procedure for Releases with the approval of the City
Attorney.
• Bid and procured Actuarial Services for analysis of the RM & WC Trust funds not to
exceed $49,500 for the five-year term of the contract.
• City attorney presents claims/lawsuits estimated to be above $50,000 at each meeting
which provides a greater understanding of the exposures facing the City.
Goals for FY 13-14:
• Provide transparent open communication both internally and externally. Trustees will
make recommendations to ensure that decisions made are for the benefit and wellbeing
of the trusts and City.
• Provide recommendations on development of policies and procedures.
• Monitor and review the financial stability of the funds and make recommendations to
ensure that the trusts are adequately funded.
• As directed by the Trustees, Risk Management will provide updates and advise the
Trustees of any signification changes in the operation of the trusts, settlements and
lawsuits above $50,000.
• Evaluate outsourcing of services for cost savings.
• Update Risk Management and Workers' Compensation City Code.
• Evaluate the budget office cost allocations for insurance premiums charged to city
departments.
8. Executive Session
Yvonne Knaack made a motion to enter into executive session which was seconded by
Sandra Oates. Lorena Sanchez provided an update of the claims/lawsuits greater than
$50,000. Yvonne Knaack made a motion to leave executive session and Sandra Oates
seconded.
9. Adjournment
Yvonne Knaack made a motion to adjourn the meeting and Julie Stiak seconded.
The meeting was adjourned at 8:15 PM.
Submitted by:
Dianne Shoemake
Risk Manager
l luman Resources & Risk Management