GOVERNING BOARD MEETING AGENDA El Segundo, CA 90241 - …€¦ · GOVERNING BOARD MEETING AGENDA Aloft El Segundo Wednesday-Thursday, October 11-12, 2017 475 North Sepulveda Boulevard

GOVERNING BOARD

MEETING AGENDA

Aloft El Segundo Wednesday-Thursday, October 11-12, 2017

475 North Sepulveda Boulevard 9:00 A.M.

El Segundo, CA 90241

(424) 290-5555

CALL TO ORDER

ESTABLISHMENT OF QUORUM/INTRODUCTIONS

PUBLIC COMMENTS

This time is reserved for members of the public to address the Board relative to matters of ICRMA

that are not on the agenda. Persons wishing to address items on the agenda will be permitted to do

so during the discussion of the item. No action may be taken on non-agenda items unless authorized

by law. Comments will be limited to five minutes per person, twenty minutes in total.

APPROVAL OF AGENDA AS POSTED OR AMENDED

As a matter of procedure, the Board should approve the agenda.

CONSENT CALENDAR

If the Board would like to discuss any item listed, it may be pulled from the Consent Calendar.

A. Minutes of the June 15, 2017 Governing Board Meeting ......................................................... 4

B. Minutes of the August 10, 2017 Governing Board Meeting ................................................... 12

C. Governing Board 2017/2018 Attendance Record .................................................................. 21

D. Check Register for July, August, and September 2017 ......................................................... 22

E. Training Opportunities ........................................................................................................... 26

F. Risk Management Fund Balances as of September 30, 2017 ................................................ 28

Action: Approve items A-B and direct staff to finalize; review and file items C-F

OPEN SESSION

As to each agenda item, the Board may take action and/or receive informational reports as

appropriate.

A. Investment Portfolio Presentation (PFM) ................................................................................ 30

Action: Review and file

B. Annual review of the Investment Policy (Beth/PFM) ............................................................. 54

Action: Review and adopt recommended revisions

C. James Marta & Company Termination Notice ......................................................................... 65

Action: Review and provide direction

GOVERNING BOARD

October 11-12, 2017

D. Financial Audit Update (Beth) .................................................................................................. 67


E. Treasurer’s Report and the Unaudited Quarterly Financials as of June 30, 2017 (Beth) ......... 68


F. Annual Review of the Assessment Financial Plan (Beth) ..................................................... 104

Action: Receive the annual update of the assessment financial status

G. Manhattan Beach’s Request to Waive Interest Payment (Beth) ............................................ 126


H. Auto Physical Damage Program Audits and Reconciliation (Beth) ....................................... 127

Action: Review the premium adjustments made to the Auto Physical Damage program and

direct the finance team to send invoices to the members.

I. Review Financial Policies (Beth) ........................................................................................... 131

Action: Review financial policies and provide feedback

J. Underwriting Mechanisms (John/Tyler/Beth) ....................................................................... 138

Action: Review and discuss

K. Presentation: Ricard Bacio’s Retirement (Tom) ..........................................................................

Action: Presentation

L. Workers’ Compensation Defense Panel Addition (Todd/Beth).............................................. 143

Action: Approve the recommendation of AdminSure to add Brian Riley of Brian Riley Law

Offices to the Workers’ Compensation Defense Panel.

M. Workers’ Compensation Program Update (Todd/Beth) ......................................................... 149


N. Update Regarding Workers’ Compensation Claim Issues with Genesis Re (Beth) ............... 163


O. Liability Defense Panel Addition (John B./Beth) ................................................................... 173

Action: Approve the recommendation of the City of El Monte to add Daniel Barer of Pollak

Vida and Barer, LLP to the Liability Defense Panel with a retroactive date of September 11,

2017.

P. Liability Program Update (John B./Beth) .............................................................................. 177

Action: Discuss the status of the liability program and provide feedback

Q. Carl Warren Contract Update (Beth) ..................................................................................... 183

Action: Review and provide feedback

CLOSED SESSION

The Board will hold a closed session to discuss any or all claims listed on the agenda. Members are

reminded to destroy closed session materials after the meeting.

Discussion of Open Claims and Conference with Legal Counsel pursuant to Government Code

Section 54956.95(a)

Alvarez v. Huntington Park

Botten v. Redondo Beach

Zambrano v. Redondo Beach

REPORT FROM CLOSED SESSION

Report from Closed Session: Pursuant to Government Code Section 54957.1, the Board must report

in open session any action taken in closed session.

GOVERNING BOARD

October 11-12, 2017

R. Performance Review Process Development (Sara/Beth) ....................................................... 184


S. Revised ICRMA Bylaws (Sara/Beth/Luther) ......................................................................... 187

Action: Review draft revised Bylaws, provide feedback, and approve the Bylaws as

proposed or as modified with an effective date no earlier than January 1, 2018 and subject

to additional approval of the Program Underwriting & Administration Manual to be

discussed and approved at the board’s December 2017 meeting.

T. CAJPA Accreditation Presentation (CAJPA Accreditation Chair) .............................................

Action: Presentation

U. State of ICRMA (RPA) .......................................................................................................... 249

Action: Presentation and discussion

V. Strategic Planning Discussion (Sara) ..................................................................................... 250

Action: Participate in strategic planning exercises and take action as appropriate

PRESIDENT’S REPORT

CLOSING COMMENTS

This time is reserved to identify matters for future Governing Board business.

ADJOURNMENT

FUTURE BOARD MEETINGS

December 14, 2017 at 10:00 AM

McCormick & Schmick’s

2101 Rosecrans Avenue

El Segundo, CA 90245

February 8, 2018 at 10:00 AM

Rio Hondo Event Center

10627 Old River School

Downey, CA 90241

In compliance with the Americans with Disabilities Act, if you need special assistance to

participate in this meeting, please contact ICRMA at (949)349-9877. Notification 48 hours before

the meeting will enable ICRMA to make reasonable arrangements to ensure accessibility (28 CFR

35.102.35.104 ADA Title II).

The Open Session portion of this meeting may be recorded. The recording may be destroyed after

30 days.

Page 1 of 8

MINUTES OF THE GOVERNING BOARD MEETING

Thursday, June 15, 2017 10:00 A.M.

A meeting of the Governing Board was held on Thursday, June 15, 2017, in Downey, California. MEMBERS PRESENT: Alhambra Richard Bacio Velia Rodriguez Bell Sergio Ibarra

Howard Brown (arrived 10:16) El Monte John Nguyen Alex Hamilton (arrived 10:15) El Segundo Mike Dugan Joe Lillio Fullerton Gretchen Beatty (arrived 10:25) Glendora Cecilia Todd Hawthorne Olivia Valentine Dennis Hernandez Hermosa Beach Vanessa Godinez (arrived 10:15) Huntington Park Martha Castillo (arrived 10:19) Inglewood Sara Nazir Ken Campos Lynwood Treasure Ortiz Manhattan Beach Greg Borboa Monterey Park Tom Cody Redondo Beach Diane Strickfaden San Fernando Nick Kimball MEMBERS WITHOUT BOARD REPRESENTATION: Baldwin Park Downey South Gate NON-BOARD MEMBERS PRESENT: Redondo Beach Cristine Shin South Gate Jackie Acosta RPA Tyler LaMantia

Beth Lyons Ashley O’Brian Christina Floe Bob May

Page 4 of 251

MINUTES ICRMA Governing Board

June 15, 2017

Page 2 of 8

Johnson Schachter & Lewis Luther Lewis Carl Warren & Company John Beringer (arrived 12:08)

Sean Rasmussen (arrived 10:48) Todd Johnson

James Marta & Co. Jim Marta Carpenter Rothans & Dumont Steve Rothans (arrived 11:03) 1. CALL TO ORDER

President Tom Cody called the meeting to order at 10:11 AM. 2. ESTABLISHMENT OF QUORUM/INTRODUCTIONS

Introductions took place and it was determined a quorum was present. 3. PUBLIC COMMENTS

None 4. APPROVAL OF AGENDA AS POSTED OR AMENDED

Motion was made by Richard Bacio, Alhambra, seconded by Greg Borboa, Manhattan Beach, and unanimously carried to approve the agenda as presented.

5. CONSENT CALENDAR

Jackie Acosta, South Gate noted that the motion should read “receive and file items F-K”. Motion was made by Greg Borboa, Manhattan Beach, seconded by Mike Dugan, El Segundo, and unanimously carried to approve the consent calendar as presented.

6. OPEN SESSION A. ELECTION OF ICRMA OFFICERS

The terms of all four officers expire on June 30. Section 7.3, Nominating Committee, of the ICRMA Bylaws requires that the President appoint a Nominating Committee to develop a slate of candidates. In February the President appointed, and the Board approved, Gretchen Beatty (Fullerton), Nellie Cobos (South Gate), Mike Dugan (El Segundo), and Anil Gandhy (Downey) to serve on the Nominating Committee.

Section 7.3.2 provides that, “The nomination of candidates for the Officers and Administrative Committee shall be made in writing to the Governing Board no later than 60 days prior to the last regular Governing Board meeting of the fiscal year.” The Nominating Committee met in March and presented the following candidates for Board consideration at its meeting in April:

President: Tom Cody (Monterey Park) Term expires 6/30/2019 Vice President: Nick Kimball (San Fernando) Term expires 6/30/2019 Secretary: Vanessa Godinez (Hermosa Beach) Term expires 6/30/2019 Treasurer: Joe Lillio (El Segundo) Term expires 6/30/2019

Page 5 of 251


June 15, 2017

Page 3 of 8

Motion was made by Dennis Hernandez, Hawthorne, seconded by Greg Borboa, Manhattan Beach, and carried unanimously to elect the following officers, recommended by the Nominating Committee, to terms expiring on June 30, 2019: President: Tom Cody (Monterey Park), Vice President: Nick Kimball (San Fernando), Treasurer: Joe Lillio (El Segundo), Secretary: Vanessa Godinez (Hermosa Beach).

B. ANNOUNCE AD HOC COMMITTEE MEMBERS APPOINTED TO REVIEW

ACTUARIAL, GENERAL/COVERAGE COUNSEL, AND PROPERTY APPRAISER RFPS

Every five years, ICRMA facilitates property appraisals for members that participate in the property program. Funds for the appraisals have been allocated in the 2017-18 budget and an appraiser needs to be selected to provide the appraisal services. At its February 9 meeting, the Board directed staff to prepare request for proposals (RFPs) for actuarial and general/coverage counsel services. In accordance with section 7.4.1 of the ICRMA Bylaws, the President may appoint an ad hoc committee at any time. President Tom Cody contacted individual Board members to determine availability and interest in serving on the various committees and appointed the following committee members: Property appraisal ad hoc committee members: Nellie Cobos (South Gate) Sergio Ibarra (Bell) Actuarial services ad hoc committee members: Anil Gandhy (Downey) Richard Bacio (Alhambra) Joe Lillio (El Segundo) General counsel/coverage counsel ad hoc committee members: Gretchen Beatty (Fullerton) Nick Kimball (San Fernando) Vicki Cross (Glendora) The Board reviewed and filed.

C. LIABILITY DEFENSE PANEL ADDITION According to ICRMA’s Litigation Management Policies and Procedures (LMPP), Approved Panel Counsel, Section 1.1, attorneys must be approved by the Board for inclusion on the liability defense panel. Attorneys must be nominated in writing, agree to the provisions of the LMPP, and have at least five years of civil litigation practice which includes substantial and significant defense experience in the area of public sector litigation in California. The City of Bell nominated Laura Walker to serve on the Liability Defense Panel. Enclosed in the packet were the city’s nomination letter, and Ms. Walker’s resume, signed LMPP agreement, and proof of insurance.

Page 6 of 251


June 15, 2017

Page 4 of 8

Motion was made by Olivia Valentine, Hawthorne, seconded by Alex Hamilton, El Monte, and carried unanimously to approve the City of Bell’s request to add Laura Walker of Aleshire & Wynder to the Liability Defense Panel.

D. ADOPTION OF THE OPERATING BUDGET

The Board reviewed the operating budget prepared by James Marta & Company for the 2017/18 program year, based on the program structure and renewals approved by the Governing Board at its prior meetings. Total budgeted contributions for all programs combined increased 4%. Following are key statistics for each program. Withdrawing members were removed for comparison purposes.

LIABILITY PROGRAM: 8% increase · Self-insured retention unchanged at $3 million · Eliminated the $1 million corridor · Funding from member retained limit (MRL) to $3 million at 70% confidence level,

2% discount · Program participant payroll increased by 3% over the prior year

PROPERTY, BOILER & MACHINERY, AND AUTO PHYSICAL DAMAGE PROGRAM: $63,000 savings · Self-insured: $250,000 pool deductible and fully-funded $500,000 aggregate stop loss · Total insured values in the property program increased 1%

EARTH MOVEMENT AND FLOOD PROGRAM: 16% decrease · Earth Movement and Flood has been separated from the Property Program into its

own program · Coverage limits decreased to $125 million from $135 million (lower limits needed

due to fewer members in the program) · Total insured values used in the earthquake/flood program increased 1%

CRIME PROGRAM: $10,237 increase · Employee count decreased 2% · Limit increased from $3 million to $5 million · Renewed with a 2% rate increase (20% limit increase) CYBER PROGRAM: $44,778 increase · Program participant payroll increased 6% over the prior year · Limit increased from $2 million per member/$5 million ICRMA aggregate to $3

million/$10 million · Renewed with a 10% rate increase (coverage limits increased 36%)

Page 7 of 251


June 15, 2017

Page 5 of 8

WORKERS’ COMPENSATION PROGRAM: 28% increase · Self-insured retention reduced from $3 million to $2 million; Statutory limits remain · Funding from MRL to $2 million increased from 57% to 60% confidence level, 2%

discount · 2017/18 projected payroll increased 10.4% over 2016/17 projections · The DIR Assessment item in the budget was based on 2015/16 indemnity payments

reported to the state in October 2016.

Motion was made by Greg Borboa, Manhattan Beach, seconded by Richard Bacio, Alhambra, and carried unanimously to adopt the operating budget for the 2017/18 program year.

E. PROPOSED RISK CONTROL PLAN

Marco Guardi is no longer serving as ICRMA’s Loss Control Director. The new service team includes Lead/Service Coordinator Robert “Bob” May and Service Consultants Mat Matsumune and Andrew Lloyd.

For 2017/18, RPA proposed a Risk Control Plan that takes into account the Board’s desire to combine a structured approach to address specific losses facing each member, with a comprehensive risk management and safety program evaluation of each member, and a pool wide bank of hours to be used to address specific member needs and issues as they arise.

May presented the 2017/18 Risk Control plan, stressing that it is heavily service oriented. He is working with staff to coordinate the use of loss control funds provided by the various carriers. Risk Control staff will be reviewing losses and creating customized trainings, recommendations, and services based on each city’s unique needs.

The 2017-18 Risk Control Plan features:

1. Loss analysis and focused risk control services to develop root cause and intervention strategies for the top loss producing members – 2 service days each

2. Risk management & safety program evaluation of each member:

Liability and Workers’ Compensation members – 2 service days Liability only members – 1 service day

3. A pool of 70 days dedicated to services to address member needs and issues, or based

on specific member requests. Motion was made by Alex Hamilton, El Monte, seconded by Richard Bacio, Alhambra, and carried unanimously to adopt the proposed 2017-18 Risk Control Plan.

F. PROPERTY/APD PROGRAM

ICRMA’s Property Program has been fully insured, with members having the option to participate in one of two programs: All Risk Only or All Risk with Earth Movement and Flood. At the April 13, 2017 meeting, RPA, broker Susan Blankenburg, and the actuary presented information regarding the creation of a self-insured property and auto physical

Page 8 of 251


June 15, 2017

Page 6 of 8

damage (APD) program. Several options were discussed and the Board directed the broker and RPA staff to develop a self-insured option and solicit quotes from carriers.

At the meeting on May 22, the Board reviewed the proposed program structure, which combines property and auto physical damage into a self-insured program. The Board approved a self-insured program with a $250,000 pool deductible and $500,000 aggregate stop loss. Deductibles are $10,000 for Property and $5,000 for Auto Physical Damage. General Counsel Luther Lewis and RPA staff drafted program bylaws for the Board’s review and adoption. The Board reviewed and discussed the proposed bylaws. Several changes were recommended by the Board: Page 5: Delete “in general” from the Assessment paragraph Page 7: Section 4.2.2.6: Replace the term penalty(ies) with “surcharge(s)” Page 8: Section 4.3.2.4: Revise language to define “frequent” by replacing “Frequent late” with “Late payment (more than once in a rolling five year period)”

Motion was made by Olivia Valentine, Hawthorne, seconded by Gretchen Beatty, Fullerton, and carried unanimously to approve the Property/APD Bylaws with the noted revisions. RPA staff contacted AdminSure and Carl Warren, the current liability TPAs, to solicit proposals for TPA services for the program. AdminSure responded and its proposal was included in the agenda packet. The proposal includes a $26,976 annual flat fee for claim handling services, and states the fee is negotiable in subsequent years based on volume.

Motion was made by Richard Bacio, Alhambra, seconded by Mike Dugan, El Segundo, and unanimously carried to authorize the Executive Director to complete negotiations with AdminSure for Property/APD program TPA services and execute a contract.

G. 2017-18 LIABILITY MEMORANDUM OF COVERAGE

The 2017-18 Liability Memorandum of Coverage (MOC) was reviewed in March by the Claims Committee and in April by the Governing Board. During the meeting in April, the Board provided additional direction regarding several items. · The Declarations page was updated to reflect the reinsurance structure approved by the

Board on May 22. · At the City of Alhambra’s request, and upon Board approval at its meeting on May 22, its

member retained limit (MRL) was increased from $250,000 to $750,000. Beatty confirmed that Fullerton’s MRL will be increasing from $6,000,000 to $8,000,000.

· Added language to page 14 that the Board discussed at its April meeting: “Unless ICRMA assumes control of the claim, ICRMA will not settle a claim without the MEMBER’s consent; however, the MEMBER may not unreasonably withhold such consent.”

· Added the word “paid” as follows on page 14: “When total DEFENSE…plus claim DEFENSE COSTS paid by ICRMA…”

· Added a new paragraph to add further definition regarding a CLAIM that “could have been settled.”

Page 9 of 251


June 15, 2017

Page 7 of 8

Borboa expressed concern that the language was unnecessary, since the pool already has the right to take control of a claim. Lewis explained that this clause caps the pool’s liability exposure at what the claim could have settled for, and offers members an additional option short of the pool “taking control” of the claim. Additional revisions discussed by the Board included the following: · Page 15: Added new paragraph to state recusal policy in the MOC. · Page 21: Revised exclusion 21 regarding marijuana as discussed at the May 22 meeting. · Page 28: Replaced “Arbitration” with “Dispute Resolution,” to accurately reflect what

this section is about and to make it consistent with language on p. 14, fourth full paragraph.

Motion was made by Dennis Hernandez, Hawthorne, seconded by Mike Dugan, El Segundo, and unanimously carried to adopt the 2017/18 Liability Memorandum of Coverage with the changes noted above, direct RPA to finalize the document, and distribute to the members and third party claims administrators.

H. LIABILITY PROGRAM ASSESSMENT DISCUSSION

Staff presented an overview of the process for determining, and reviewing, the liability program assessment in light of continued concerns expressed by Redondo Beach. RPA and financial staff reiterated that the assessments were levied to rectify deficits for years in which large claim payments have already been made, and a brief recap of the payments was provided. Actuarial studies are performed annually for ICRMA and form the basis for estimating claim liabilities. Last year Jack Joyce of Bay Actuarial used claim data from the TPAs valued as of August 31, 2015 to conduct the annual study and projected losses to June 30, 2016. This year, at the May 22, 2017 meeting, actuary Jack Joyce presented the annual actuarial study, which used data from the member TPAs valued as of December 31, 2016. The report indicated the estimated claim liabilities have been reduced slightly. Understanding that claim liabilities continue to change until all claims are closed, the Board directed the finance team to move forward with the 2017 assessment invoicing and affirmed the assessments will be reviewed annually in order to determine if adjustments are necessary.

While preparing the year-end financial statements, the finance team will compare the actuarial report projections to June 30, 2017 to the actual loss data. They will consult with the actuary if claim development has exceeded actuarial projections. After this analysis has been completed, an updated assessment calculation will be presented to the Board for review. This review will take place each fall, with presentations to the Board anticipated each October.

In conclusion: · the assessment amounts change regularly due to claim development · each annual actuarial report will bring new program year balances as the losses change

with each evaluation date until closed

Page 10 of 251


June 15, 2017

Page 8 of 8

· ICRMA’s high SIRs create large swings in program year balances, and cities generally desire financial predictability. Based upon these factors, the Board must carefully consider whether it is in the pool’s best interest to change the assessment plan annually.

Shin distributed a letter addressed to Redondo Beach’s city manager, written by Steve Glicksman, the actuary the city hired. Shin relayed verbally the key point, namely the city believes the actual assessment should be around $4.7 million because that was the cumulative financial position of all years on June 30, 2016. Shin further stated Redondo Beach respectfully disagrees with the pool’s position regarding the assessment amounts. Kimball asked how Glicksman conducted an actuarial study without the claims data, and Shin advised that he did not complete an actuarial study but instead reviewed existing documents. Kimball stated that the net position of $4.7 million reflects losses at expected, so there is no contingency. It also includes $12.5 million in assessments already declared in January 2016. If ICRMA doesn’t collect enough now, it may need to continue increasing the assessments.

Borboa affirmed Kimball’s statements, and stated Redondo Beach’s actuary did not look at each program year individually as required due to ICRMA’s program year accounting. Borboa reaffirmed that the Board has thoroughly vetted the assessment plan during the past two years with affirmative votes from all members, including Redondo Beach.

Bacio advised that Alhambra supports the suggestions made by Redondo Beach city manager Joe Hoefgen: to conduct a second study and delay the assessment. Lyons noted ICRMA is issuing an RFP for actuarial services, so it is possible that a new actuary will be selected as part of that process. Beatty reminded the Board that the withdrawn members asked for a separate actuarial study in December 2016, and the Board declined.

Shin noted that “dividend” isn’t defined in the Bylaws. LaMantia said he spoke with the Association of Governmental Risk Pools (AGRiP) and learned that the agency has not officially defined dividend, however, it is generally accepted to mean refunds, credits, applications of net assets to deficits or future premium, and so on.

With the lack of a motion, the President recognized the service of departing members, and expressed appreciation to Jill Buchholz (not present), Strickfaden, and Borboa.

The Board recessed for lunch at 12:44 PM and reconvened at 1:05. The Board entered closed session at 1:07 PM. At 1:37 PM, the Board entered open session. Lewis reported the Board discussed the following claims and took action as follows:

· Hernandez v. Lynwood - settlement authority was granted · Kitahara v. Monterey Park - authority was granted and direction given

There being no further items to discuss, the President thanked the Board for attending, and the meeting adjourned at 1:39 PM.

Page 11 of 251

MINUTES OF THE GOVERNING BOARD MEETING Thursday, August 10, 2017 10:00 A.M. A meeting of the Governing Board was held on Thursday, August 10, 2017, in Downey, California. MEMBERS PRESENT: Alhambra Richard Bacio Velia Rodriguez Bell Howard Brown (arrived 10:08)

Sergio Ibarra El Monte John Nguyen El Segundo Mike Dugan Joe Lillio Fullerton Gretchen Beatty Glendora Cecilia Todd Hawthorne Olivia Valentine Dennis Hernandez Hermosa Beach Vanessa Godinez Huntington Park Martha Castillo (left at 1:14) Donna Schwartz (left at 1:14) Inglewood Ken Campos (arrived 10:16) Lynwood Yolanda Delgadillo Monterey Park Tom Cody San Fernando Nick Kimball South Gate Nellie Cobos (left at 2:21) Denise Diaz (arrived 10:13, left at 11:20) MEMBERS WITHOUT BOARD REPRESENTATION: Baldwin Park Downey NON-BOARD MEMBERS PRESENT: El Monte Angela McCray Glendora Shama Curian RPA Tyler LaMantia

Beth Lyons Ashley O’Brian Christina Floe Bob May

Johnson Schachter & Lewis Luther Lewis

Page 12 of 251

MINUTES Governing Board August 10, 2017

Page 2 of 9

Facilitator Sara Peterson Arthur J. Gallagher & Co. Susan Blankenburg Kylie Bailey AdminSure Mike Reed Carl Warren & Company John Beringer Dwight Kunz

Todd Johnson Tom Boylan

James Marta & Co. Jim Marta Aleshire & Wynder Glen Tucker (arrived 10:13) Marsha Yasuda 1. CALL TO ORDER

President Tom Cody called the meeting to order at 10:06 AM. 2. ESTABLISHMENT OF QUORUM/INTRODUCTIONS

Introductions took place and it was determined a quorum was present. 3. PUBLIC COMMENTS

None

4. APPROVAL OF AGENDA AS POSTED OR AMENDED Motion was made by Dennis Hernandez, Hawthorne, seconded by Gretchen Beatty, Fullerton, and unanimously carried to approve the agenda as presented.

5. CONSENT CALENDAR

Motion was made by Richard Bacio, Alhambra, seconded by Gretchen Beatty, Fullerton, and unanimously carried to pull Item I, CAJPA Accreditation Approval, and approve the consent calendar as presented. Bacio pulled Item I., CAJPA Accreditation Approval, and asked Executive Director Beth Lyons to provide a verbal report. Ms. Lyons reported that CAJPA Accreditation Consultant Robin Johnson conducted an accreditation review for ICRMA over the summer. Mr. Johnson was very thorough in his analysis, having reviewed over 100 documents and procedures submitted by RPA. On July 14, he performed a site visit at RPA’s office in Irvine. Mr. Johnson reviewed additional documents, interviewed RPA staff, and ultimately asked that ICRMA’s executive director attend the CAJPA Accreditation Committee meeting on August 1 to discuss the pool’s financial status and assessment plan.

Page 13 of 251


Page 3 of 9

After discussion and multiple questions, the CAJPA Accreditation Committee found ICRMA was in substantial compliance with Accreditation standards and unconditionally granted ICRMA Accreditation with Excellence through April 1, 2020. Mr. Johnson subsequently issued a report with three suggestions, all related to governing documents and administrative contracts. These suggestions will be discussed by the Board under Item H., Review Governing Documents. A representative from CAJPA will be present at the Board’s meeting in October to officially recognize this accomplishment. Motion was made by Richard Bacio, Alhambra, seconded by Gretchen Beatty, Fullerton, and unanimously carried to receive and file the report.

6. OPEN SESSION A. Risk Control Updates

The Board adopted the 2017-18 Risk Control plan in June. The plan outlines risk control and service benchmarks. Prior to the adoption, staff worked with several members in the areas of training, loss analysis and identification of key loss exposures. Loss Control Director Bob May reported that Bell hosted two Driver Awareness Training sessions for members of the pool. Staff provided assistance in contractual indemnity and sidewalk inspection programs as well. A liability claim analysis was conducted for El Segundo. RPA staff also conducted member visits to the following agencies: Bell, El Segundo, Downey, Alhambra and El Monte. Future visits are scheduled for Huntington Park, Hawthorne, South Gate and Glendora. It is anticipated that all agencies will be visited before the end of the year. Several agencies have requested training in Contractual Risk Transfer, including the use of the ICRMA Contracts Manual. These trainings have been scheduled for October 23 in Huntington Park, and April 26 in Downey. Registration information is available in on the ICRMA website. The loss control team is also developing a risk management evaluation tool to help identify key loss areas both in liability and workers’ compensation. Member risk assessment will begin this fall. Nellie Cobos asked about online trainings. Assistant Executive Director Ashley O’Brian advised that BRIT’s TEAM platform is no longer available, due to the change in reinsurance liability carriers that took place at renewal, but Safety National’s suite of services is available for all ICRMA members. The Board reviewed and filed the loss control report.

B. University Training Opportunities

Page 14 of 251


Page 4 of 9

Bob May presented the schedule of ICRMA University session topics. Registration information for all sessions will be sent out approximately six weeks prior to each. The Board reviewed and filed the University training opportunities report.

C. Amend Contract with Origami Risk Software Company In 2014 ICRMA’s previous administrator implemented the Origami claim management software for its pool clients. When ICRMA transitioned to a new administrative vendor in 2016, the Origami contract was also transitioned. ICRMA entered into a direct contract with Origami for an annual fee of $39,950 and began the process of separating claim records to ensure its database was separate from the previous administrator’s structure. During the past year RPA staff has also been working with Origami to discuss its long-term vision regarding data and to scope the process and reports necessary to consolidate data from the multiple TPAs. Subsequent to ICRMA’s budget approval in June, RPA held a planning meeting with Origami. During this discussion, it became clear that the existing structure was not going to be sufficient for ICRMA needs. For example, the previous administrator was only maintaining reported claims, so there were less than 5,000 claims. To ensure accurate, consistent, and compiled data needed by the actuary and broker, however, all ground-up claims for both programs must be imported, thus the claim count is closer to 80,000. The additional hosting, network, and storage, as well as several other items, resulted in an increase in the contract for a total annual fee of $73,450. ICRMA budgeted $40,000 for 2016-17. The increase represents an unbudgeted amount of $33,500 which will be allocated to the liability program. Fortunately, due to a premium credit available in the liability program, funds were available to offset the entire unbudgeted amount. When the budget was approved, reinsurance carrier Safety National’s quote assumed Fullerton would attach at $6 million. Fullerton instead elected to attach at $8M, so Safety National provided a premium credit. The premium decreased by $35,544. ICRMA’s top priorities related to Origami include compiling the TPA data and providing fiscal year-end reports for the finance team. RPA staff is also validating the status of the TPA data cleanup and ensuring TPA data feeds are set-up to run monthly. In the coming months, RPA will work with Origami to determine the best methodology to merge the ICRMA reported data and claim files with the existing ground up data from the TPAs. Origami will help review workflow and processes, identify and create reports, and provide training to ensure ICRMA’s team operates effectively and supports ICRMA’s needs. Motion was made by Sergio Ibarra, Bell, seconded by Gretchen Beatty, Fullerton, and unanimously carried to approve a contract amendment with Origami Risk to reflect a total annual fee of $73,450 for 2017-18 and 2018-19 and authorize the Executive Director to execute the contract amendment.

Page 15 of 251


Page 5 of 9

D. Property Appraisal Ad Hoc Committee Recommendation It has been five years since ICRMA’s property program participants have funded a formal appraisal of covered locations. Standard practice is to perform appraisals at least once every five years. In 2007, AssetWorks conducted a full appraisal of 1,400 ICRMA member buildings for $146,900. In 2012, AssetWorks conducted a desk update appraisal of 1,400 buildings, plus onsite appraisal of 95 added buildings which had not been appraised in 2007, for a total cost of $25,625. RFPs were sent to six appraisal firms in June requesting cost indications for full on-site appraisal of roughly 800 buildings valued over $100,000. The cost indications received for a full appraisal were significantly higher than the $40,000 allocated in the program for appraisals, which was based off of the cost of the previous, primarily desk update, appraisal. A Property Appraisal Ad Hoc Committee was formed to review the responses received, and give direction. Their recommendation to the Board was to negotiate desk appraisals, and a specified number of onsite appraisals, with Duff and Phelps, for an amount not to exceed $40,000. This would avoid having to collect additional funds, while keeping valuations up-to-date and accurate. Upon review, the Board agreed that it did not want to collect more money, however, felt full onsite appraisals were due.

Motion was made by Richard Bacio, Alhambra, seconded by Nick Kimball, San Fernando, and unanimously carried to negotiate a full appraisal with Duff & Phelps, using the funds allocated for 2017/18, and budgeting the remainder in 2018/19. RPA staff was directed to work with Duff & Phelps to determine an appropriate appraisal inspection schedule.

E. Cyber Program Deductible In the broker’s renewal proposal presented to the Board on May 22, the Cyber program information depicted a deductible of $10,000 for $2M/$5M limits. The Board ultimately selected $3M/$10M limits and believed the deductible for the increased limits would remain at $10,000. The carrier was expecting a $15,000 deductible for the higher limits, but unfortunately that wasn’t clearly outlined in the presentation or the written proposal. RPA discovered the issue in late June during a review of the final insurance proposal. The broker requested the carrier provide the $3M/$10M limits with a $10,000 deductible at the premium approved in the ICRMA budget, but the carrier was unwilling to do so. The Board considered the following options: 1) Reduce the deductible to $10,000 and invoice the members the additional $17,740 premium, or 2) Make no changes and clearly note the $15,000 deductible for $3M/$10M limits in the budget and other program documents. Motion was made by Richard Bacio, Alhambra, seconded by Olivia Valentine, Hawthorne, and unanimously carried to recognize the corrected program deductible of $15,000 and maintain the invoiced premium.

Page 16 of 251


Page 6 of 9

F. Broker Contract with Arthur J. Gallagher ICRMA’s broker services agreement with Arthur J. Gallagher (AJG) expires on October 31, 2017. The Governing Board discussed the expiration of this contract at its February meeting, the service received from the brokerage team, and directed RPA to negotiate a contract with AJG.

The last RFP for broker services was issued in 2011. The Board elected not to issue a broker RFP earlier in 2017, due to the excellent service provided by broker Susan Blankenburg and her team. Blankenburg appreciated the Board’s sentiments and proposed fees she felt were reasonable and reflective of her understanding regarding the changes the pool is experiencing. The proposed contract terms included the following: · Three year term with two optional one year extensions

o Three (3) year Insurance Brokerage Agreement with Arthur J. Gallagher (AJG) o Two optional one (1) year extensions

· Base compensation fee of $200,000, with no commissions earned on ICRMA programs. o Programs include liability, workers’ compensation, property/APD/B&M,

earthquake & flood, crime, and cyber. · Base compensation fee to be increased annually, beginning in 2018, equal to the San

Francisco-Oakland-San Jose CPI-U (change measured August – August), or 3%, whichever is less.

o In effect, the total 2017-18 broker compensation will be reduced from $260,000 to $222,596 ($200,000 flat fee and retention of $22,596 in commissions already earned).

o In 2018-19, broker compensation is estimated at $206,000 ($200,000 flat fee x 3% increase)

· The broker may continue to earn commission for placement of ancillary lines placed by members directly through the broker as well as new programs created for ICRMA

Three issues were identified for Board discussion:

1. Confirm the Board believes the proposed compensation is appropriate 2. Affirm the Board wishes to eliminate commissions for placement of ICRMA

programs 3. Provide feedback regarding the “trigger” related to fee adjustments due to changes in

membership/exposures. Current contact language reads as follows: “In the event that the total exposure base for an ICRMA insurance line changes by 20% in either direction, the parties agree to re-open discussions with respect to the appropriate fee for services.”

Motion was made by Richard Bacio, Alhambra, and seconded by Sergio Ibarra, Bell to approve a five-year contract at the proposed terms. After discussion, Bacio amended his motion to approve a three-year contract with the option for two one-year extensions. Sergio Ibarra seconded. After additional discussion, Bacio made another amendment, to approve a three-year contract, basing compensation increases on the Los Angeles/Long Beach CPI-U, and issue an RFP after three years. Sergio Ibarra withdrew his second and the motion died.

Page 17 of 251


Page 7 of 9

Tom Cody, Monterey Park, made a motion to approve a two-year contract at the stated amounts using the Los Angeles CPI-U or 3%, whichever is less, as the basis of increase; include language to trigger a contract negotiation of ICRMA’s exposure base changes, and issue an RFP during the second year of the contract. Richard Bacio suggested an amended motion to approve a three-year contract with the same terms, and the amendment died. Nick Kimball, San Fernando, seconded the original motion made by Tom Cody. Motion carried, with Richard Bacio opposed. Gretchen Beatty, Fullerton, stated that the decision was based on fiscal prudence, and thanked Susan for her work over the past several decades.

G. Workers’ Compensation Staffing Update

Carl Warren & Company is in the process of exiting the workers’ compensation line of business as a primary workers’ compensation claim administrator. Carl Warren is still maintaining a resident staff of workers’ compensation claims professionals, however, and the necessary technical resources to manage the ICRMA workers’ compensation program and legacy claims for a variety of clients. As a company, Carl Warren’s strategic focus remains to be the premier General Liability TPA for public and private entities. With these strategic changes, there has been some impact to the workers’ compensation team. Specifically, Sean Rasmussen accepted a new opportunity in early July and Estelle Freeman accepted a new opportunity early August. Todd Johnson, Director of WC, remains with Carl Warren and has consistently provided oversight of the ICRMA program since the program moved to Carl Warren in July of 2016. The Carl Warren workers’ compensation team is continuing to manage responsibilities as outlined in the contract and communicate with the primary TPAs regarding the workers’ compensation claims that may present an exposure to the ICRMA. The Carl Warren contract will be presented to the Board in October for amendment approval, to reflect elimination of the structured return to work program & reassignment of staffing to the liability program, as well as the current key staff members assigned to the account on both programs. The Board received and filed the workers’ compensation staffing update.

The Board recessed for lunch at 11:54 AM and reconvened in open session at 12:45 PM.

H. Review Governing Documents

In December, the ICRMA Board of Directors approved staff’s recommendation that ICRMA continue its governing document revisions with another phase of consulting work. The purpose of this phase would be to bring ICRMA’s governing documents in line with proposed Bylaw changes.

Page 18 of 251


Page 8 of 9

The Board reviewed proposed revisions to the Bylaws draft with an emphasis on the Board Appointment Process, clarifications to Dividend/Assessment language, and Dispute Resolution Process, questions regarding financial penalty provisions; as well as outlines for other documents in process. They also discussed the JPA amendment/approval process to be placed in said draft. Board members were advised to send any feedback to Sara Peterson by August 31. The next revision will be provided to the Board by email by September 11, in order for final edits to be presented for approval and adoption at the October Board meeting. The Board reviewed and provided feedback.

I. Liability Program Assessment Update

In early April 2017, the finance team distributed assessment designation forms to all members and former members. All cities had the option of paying the assessment in a lump sum or requesting a 10 year payment plan. Cities that returned signed payment agreements to ICRMA by June 15th were allowed to fund the deficit over the next ten years. The complete assessment was due and payable by cities that did not sign and return the payment agreement by June 15th. Two members returned designation forms after the deadline: Baldwin Park (June 22) and Inglewood (June 28). Invoices sent on June 30 reflected the 10 year payment plan installment, rather than the lump sum, as requested by the cities. The following cities had not returned designation forms and were invoiced for the full assessment: Lynwood, Redondo Beach, and Whitter. Lynwood subsequently made payment in full. The Board was asked to ratify the Executive Director’s action to allow payment over 10 years for Baldwin Park and Inglewood, and provide the Executive Director with the authority to approve any additional 10 year payment plan requests received by August 30, 2017. Motion was made by Gretchen Beatty, Fullerton, seconded by Sergio Ibarra, Bell, and unanimously carried to ratify approval of 10 year payment plan requests for Baldwin Park and Inglewood and authorize the Executive Director to approve any additional requests received by August 30, 2017.

J. Accounts Receivable Status Report The Finance team provided an overview of accounts receivable as of August 3, 2017, including assessment invoices, deferral invoices, and interest invoices. The Board received the update on payments received for annual contributions and assessments, and provided direction to the finance team.

Page 19 of 251


Page 9 of 9

K. Approve Revised ICRMA 2017-18 Budget

Subsequent to the adoption of the 2017-18 ICRMA budget in June, several corrections and enhancements were noted. The budget was also presented with the option to keep the cyber premium status quo and reflect a $15,000 deductible, or to change the deductible to $10,000 and reflect additional premium due from the members. Multiple labeling revisions were also made. Motion was made by Olivia Valentine, Hawthorne, seconded by Gretchen Beatty, Fullerton, and unanimously carried to review and approve the proposed amendments and adopt the revised 2017-18 budget with the $15,000 cyber deductible noted.

The Board entered closed session at 1:49 PM. At 2:24 PM, the Board entered open session. Lewis reported the Board discussed the following claims and took action as follows:

· Ramos v. Bell – authority was granted up to $500,000 · Rosby v. Hawthorne - authority was granted up to $599,999.99 · Rodriguez v. Upland – authority was granted up to $700,000 with authorization to

negotiate liens · Kitahara v. Monterey Park – allocation of the Sprouts policy limit was approved as

follows: City - $100,000 and $900,000 – plaintiffs

There being no further items to discuss, the President thanked the Board for attending, and the meeting adjourned at 2:25 PM.

Page 20 of 251

October 11-12, 2017 Governing Board

Subject: 2017/18 Governing Board Attendance Record Action for consideration: Review and file Background: The Governing Board’s (Board) attendance record is presented for review. Attendance at Governing Board meetings during the 2017/18 fiscal year is noted below. Section 5.2.2 of the Bylaws states that every member is expected to have its delegate representative, alternate representative or substitute alternate representative attend Board meetings.

City 8/10/2017 10/11-12/2017 12/14/2017 2/8/2018 4/12/2018 6/14/2018 % of Attendance

Alhambra 1 100% Baldwin Park 0 0% Bell 1 100% Downey 0 0% El Monte 1 100% El Segundo 2 100% Fullerton 1 100% Glendora 1 100% Hawthorne 1 100% Hermosa Beach 1 100% Huntington Park 1 100% Inglewood 1 100% Lynwood 1 100% Monterey Park 1 100% San Fernando 1 100% South Gate 1 100% Total Cities: 16

Attachments: None Prepared by: Christina Floe, Administrative Assistant

Page 21 of 251

Governing Board October 11-12, 2017

CHECK REGISTER REPORT HIGHLIGHTS FOR JULY 1 THROUGH SEPTEMBER 30, 2017

Sizable General Administrative Payments: · Arthur J. Gallagher and Company $ 7,472,490.53

Coverage Renewals 2017-2018 · Risk Pool Administrators $ 478,400.00

Installments 1 & 2 of 2017-18 contract Sizable Liability Claims Payments:

· Geragos and Geragos, APC $ 599,999.99 Rosby vs Hawthorne

· Shegerian and Associates, Inc. $ 714,465.00

Lopez vs Lynwood

Attachments: Check registers for July, August, and September 2017

Prepared by: Nicole Rushing, Finance Manager

● General Administrative Payments 130,246.57$ ● Liability Claims Payments 17,123.15 ● Workers' Compensation Claims Payments -

147,369.72$

● General Administrative Payments 8,254,591.54$ ● Liability Claims Payments 604,588.14 ● Workers' Compensation Claims Payments -

8,859,179.68$

● General Administrative Payments 41,551.91$ ● Liability Claims Payments 768,737.79 ● Workers' Compensation Claims Payments -

810,289.70$

● General Administrative Payments 8,426,390.02$ ● Liability Claims Payments 1,390,449.08 ● Workers' Compensation Claims Payments -

9,816,839.10$ Total Payments Issued for July, August and September 2017

Summary of July 2017 Payment Activity

Total Payments Issued for July 2017

Summary of August 2017 Payment Activity

Total Payments Issued for August 2017

Summary of July, August and September 2017 Payment Activity

Summary of September 2017 Payment Activity

Total Payments Issued for September 2017

Page 22 of 251

General and Administrative PaymentsDate Vendor Check No * Amount memoAccount No: 1030068561

7/7/2017 VEN_1220--HR Dynamics Performance Management 11151 9,375.00 Tasks 1-9 City of Bell Contract - RM Fund Balance refund

7/7/2017 VEN_1107--Occu-Med 11149 4,250.00 July 2017 Services

7/7/2017 VEN_1077--Company Nurse 11147 5,037.50 August Monthly Fee

7/7/2017 VEN_1219--Casualty Actuarial Consultants, Inc. 11150 500.00 Actuary Work for Fire Truck Incident - Claims Apportionment

7/7/2017 VEN_1098--Johnson Schachter and Lewis 11148 38,505.15 Legal fees for general and various claims

7/7/2017 VEN_1069--Bay Actuarial Consultants 11146 44,030.00 Liability and WC member studies

7/14/2017 VEN_1097--James Marta and Company 11153 11,452.50 Accounting services for June

7/15/2017 VEN_1132--City of Alhambra 11154 16,080.00 Original check issued to ICRMA, this is reimbursement to member

7/31/2017 VEN_1160--BANKCARD CENTER-Beth Lyons EFT 1,016.42 Rio Hondo meetings 6.15-17.17

130,246.57

Liability Claims PaymentsDate Vendor Document No Amount7/14/2017 VEN_1014--Carpenter, Rothans and Dumont LLP 11152 16,154.12 Thai v Monterey Park 188485

7/14/2017 VEN_1167--Personal Court Reporters, Inc. 11155 969.03 Ruan v. Monterey Park 1882206

17,123.15

TOTAL 147,369.72

*Note: 4 digit check numbers are printed in accounting office, 5 digit check numbers are printed via check delivery.

ICRMA

Check Register

7/01/2017 - 7/31/2017

Page 23 of 251

General and Administrative PaymentsDate Vendor Check No * Amount MemoAccount No: 1030068561

8/2/2017 VEN_1109--Origami Risk LLC 11157 14,430.00 Collection/Data Cleanup

8/2/2017 VEN_1161--Carl Warren and Company 11158 28,333.33 June 2017 Monthly Flat Fee

8/2/2017 VEN_1221--Enquiron 11159 4,800.00 17-18 Service Fees

8/2/2017 VEN_1222--Beth Lyons 11160 450.00 2017 CAJPA

8/7/2017 VEN_1066--Alliant Insurance Services, Inc. 11161 10,320.00 Professional Liability Renewal

8/7/2017 VEN_1067--Arthur J. Gallagher and Co. 11161 7,472,490.53 Liability Reinsurance, WC Installment 1, DIC, Property, APD, Crime, Cyber Coverages 07/01/17-07/01/18

8/7/2017 VEN_1161--Carl Warren and Company 11162 27,500.00 July 2017 Monthly Flat Fee

8/7/2017 VEN_1107--Occu-Med 11163 4,250.00 August 2017 Services

8/7/2017 VEN_1097--James Marta and Company 11164 14,066.84 Accounting Services for July 2017 - Accting Services (new contract)

8/17/2017 VEN_1224--Simon Law Group, LLP 11166 185,000.00 Coughlin v. San Fernando (1895705)

8/31/2017 VEN_1156--Risk Pool Administrators 11168 478,400.00 Risk Management Fee - Installments 1 and 2 of 4

8/31/2017 VEN_1226--Glenn Scott Lipson 11169 2,750.00 Molestation Recognition & Prevention

8/31/2017 VEN_1097--James Marta and Company 11170 11,800.84 Accounting Services for Aug 2017 - Accting Services (new contract)

8,254,591.54

Liability Claims PaymentsDate Vendor Document No Amount Memo

8/2/2017 VEN_1039--Manning and Kass LLP 11156 550.72 Simental v. Azusa (AZU-2014-082-1)

8/17/2017 VEN_1138--City of Downey 11165 3,666.57 Downey Fireman's Assoc vs Downey (1876983)

8/31/2017 VEN_1014--Carpenter, Rothans and Dumont LLP 11167 371.16 Kitahara v. Monterey Park (1877213)

8/17/2017 VEN_1223--Geragos and Geragos, APC 1058 599,999.99 Rosby v. Hawthorne (ICRMA-HAW-2012-071)

604,588.44

TOTAL 8,859,179.98


ICRMA

Check Register

8/01/2017 - 8/31/2017

Page 24 of 251

General and Administrative PaymentsDate Vendor Check No * Amount MemoAccount No: 1030068561

9/5/2017 VEN_1077--Company Nurse 11171 5,037.50 September 2017 Monthly Fee

9/15/2017 VEN_1107--Occu-Med 11174 4,250.00 September 2017 Services

9/15/2017 VEN_1161--Carl Warren and Company 11175 27,500.00 August 2017 Monthly Flat Fee

9/15/2017 VEN_1228--AR Tech Forensic Experts 11178 3,375.35 Coughlin v. San Fernando (1895705)

9/29/2017 VEN_1160--BANKCARD CENTER-Beth Lyons EFT09302017 1,389.06 Rio Hondo 8.18.17 Meeting and El Segundo 12.14.17 Holiday Lunch Catering

41,551.91

Liability Claims PaymentsDate Vendor Document No Amount Memo9/15/2017 VEN_1013--Burke, Williams and Sorensen, LLP 11172 614.00 Schilling v. Manhattan Beach (13-116541 )

9/15/2017 VEN_1014--Carpenter, Rothans and Dumont LLP 11173 820.16 Kitahara v Monterey Park 1877213

9/15/2017 VEN_1205--The Gary Law Firm 11176 12,252.50 Kitahara v. Monterey Park (1877213)

9/15/2017 VEN_1227--Thornhill and Associates, Inc. 11177 740.00 Coughlin v. San Fernando (1895705)

9/5/2017 VEN_1225--Shegerian and Associates, Inc. 1059 714,465.00 Lopez v. Lynwood (ICRMA-LYN-2012-027)

9/15/2017 VEN_1225--Shegerian and Associates, Inc. 1060 39,846.13 Lopez v. Lynwood (ICRMA-LYN-2012-027)

768,737.79

TOTAL 810,289.70


ICRMA

Check Register

9/01/2017 - 9/30/2017

Page 25 of 251


Subject: Training Opportunities Action for consideration: Review and file Background: ICRMA Universities and training opportunities are held numerous times a year and focus on specific Workers’ Compensation and Liability loss drivers that may be affecting ICRMA members. University sessions are approximately three hours in length and are scheduled from 9 a.m. – noon on each date indicated with a networking lunch held after the session. All employees are welcome to attend, particularly since care is taken to ensure a diverse range of topics, ranging from Public Works to Employment Practices Liability. Below is a summary of the sessions that have been identified for 2017/18.

Contractual Risk Transfer October 23, 2017 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: Human Resources, Finance Managers, Risk Management, Parks & Recreation, Public Works, Individuals working with contracts

Fleet Safety October 26, 2017 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: Risk Management, Parks & Recreation, Public Works Employment Practice Lability-Hostile Work Environment/Discrimination/Retaliation, Lessons Learned November 16, 2017 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: Human Resources, Finance Managers, Risk Management, Parks & Recreation, Public Works Mandated Reporting, Employees v. Independent Contractors, Utilization of Volunteers January 25, 2018 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: Human Resources, Parks & Recreation, Supervisors, Finance, Public Works, and line-level staff

Workplace Violence/Active Shooter Training February 22, 2018 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: All staff

Page 26 of 251

Governing Board October 11-12, 2017

Successful Claims Handing (effective utilization of TPA adjusters and defense attorneys) March 22, 2018 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: Human Resources, Finance Managers, Risk Management

Contractual Risk Transfer April 26, 2018 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: All individuals working with contracts, Human Resources, Finance, Risk Management, Parks & Recreation, Public Works

Design Immunity May 24, 2018 8:30 A.M. – 12:00 P.M. Where: Rio Hondo Event Center Who: Public Works, City Attorneys, Risk Management

Recognizing Cultural Bias When: June 28, 2018 Where: Rio Hondo Event Center Who: Human Resources, Finance Managers, Risk Management, Parks & Recreation, Public

Works, Police, Council Members

Prepared by: Bob May, Risk Control Director Christina Floe, Administrative Assistant

Page 27 of 251

Subject: Risk Management Fund Usage Report and Fund Balances

as of September 30, 2017 Action for consideration: Review and file Background: The ICRMA Risk Management Fund was created in 2009 to replace the ICRMA Grant Program. The purpose of the Risk Management Fund Program is to provide a mechanism for ICRMA members to fund expenditures that support their safety and risk management programs. Each year members can elect to contribute up to $5,000 to their Risk Management Fund. The fund balance is capped at $25,000. Once the maximum allowable balance is reached, members may not contribute to fund until some of the funds are used, and the balance falls below the maximum allowed. Requests to use the funds for reimbursement or pre-payment are submitted to the ICRMA Risk Control Director for processing. The table below identifies the members who utilized their Risk Management Funds, the purpose for which they used their funds, and the amount expended from July 1, 2017 to September 30, 2017.

Attachments: Risk Management Fund Balances as of September 30, 2017

Prepared by: Bob May, Risk Control Director

ICRMA Member Requested Use Funds UsedBell HR Dynamics Contract - Tasks 1-9 $9,375.00 As of September 30, 2017 Total $9,375.00

2017/2018 - 1st Quarter ICRMA Risk Management Fund Use Summary


Page 28 of 251

ICRMA ~ Risk Management Fund ~

For the Quarter Ended September 30, 2017

Member

2017/2018

Contribution

6/30/2017 Balance at End of Qtr.

(Withdrawals)

9/30/2017 Balance at End of Qtr.

Alhambra $0 $25,000.37 $25,000.37 Baldwin Park $2,695 22,305.19 $25,000.19 Bell $5,000 13,490.00 (9,375.00) $9,115.00 Downey $1,376 0.00 $1,376.00 El Monte $0 25,000.00 $25,000.00 El Segundo $5,000 8,584.78 $13,584.78 Fullerton $5,000 551.21 $5,551.21 Glendora $1,173 23,827.04 $25,000.04 Hawthorne $5,000 13,331.59 $18,331.59 Hermosa Beach $0 26,053.00 $26,053.00 Huntington Park $0 25,586.45 $25,586.45 Inglewood $0 25,684.85 $25,684.85 Lynwood $0 25,000.49 $25,000.49 Monterey Park $0 29,000.00 $29,000.00 San Fernando $5,000 3,030.00 $8,030.00 South Gate $5,000 4,168.12 $9,168.12

Total $35,244 $270,613.09 ($9,375.00) $296,482.09

Notes: 1. Each member optionally contributes $5,000/annually. 2. Each member’s contribution is capped at $25,000 and no additional deposits may be made

until the Member’s account balance falls below $25,000.

U:\Client\Independent Cities Risk Management Authority\Accounting\Board Reports\2017-2018\October 11, 2017\Risk Mgmt Fund\RMFundUsage_Balances_20170930_attachment.xlsx\RM Fund 9.30.17

Page 29 of 251


Subject: ICRMA Investment Portfolio Review Action for consideration: Review and file Background: ICRMA’s investment advisors, Public Financial Management (PFM), have prepared the attached annual report on the investment portfolio. The report includes information on the state of the fixed income securities markets, economic conditions, portfolio performance, and compliance. Mr. Richard Babbe from PFM will be in attendance to present the report and answer Board questions.

Attachments: ICRMA Portfolio Review Prepared by: Beth Lyons, Executive Director

Page 30 of 251

© PFM 0

Independent Cities Risk Management AuthorityPortfolio Review

PFM AssetManagement LLC

601 South Figueroa StreetSuite 4500Los Angeles, CA 90017

949-230-6896pfm.com

Richard Babbe, Senior Managing ConsultantPresented By:

September 26, 2017

Page 31 of 251

© PFM 1

Key FY16-17Messages

ECONOMIC CONDIT IONS

PORTFOLIO REVIEW Increases in interest rates drove higher accrual earnings but lower

market value earnings

Improved liquidity position enabled a longer portfolio duration

Increased portfolio’s allocation to credit sector

Portfolio performed strong relative to the benchmark, but absolute returns were down due to higher interest rates

Moderate economic growth

Strength in the labor market

Inflation remains soft

Interest rates up sharply year-over-year, but ended the FY off earlier highs

Page 32 of 251

© PFM 2

Economic Conditions

Page 33 of 251

© PFM 3

Economic Growth Picked up in Second Quarter

Gross domestic product rebound to 3.0% in the second quarter of 2017, the fastest pace since 2015.

Growth has averaged 2.2% over the last four quarters.

Source: Bloomberg, as of August 2017. SAAR is seasonally adjusted annualized rate. Orange denotes rolling four-quarter averages.

1.2%

3.0%

-2%

0%

2%

4%

6%

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2013 2014 2015 2016 2017 2018

U.S. Real GDPQoQ, SAAR Bloomberg

Survey of Economists

2.7%2.0% 1.9%

2.7%

Page 34 of 251

© PFM 4

Labor Market Strength Continues The U.S. labor market remained strong, adding 581,000 jobs in the second quarter and an average of 187,000 jobs per

month over the past year.

The headline unemployment rate ended FY17 at 4.4%. The U-6 rate, which includes underemployed and discouraged workers, ended the quarter at 8.6 %—the lowest since 2007.

Average hourly earnings—an important gauge of wage growth—grew 2.5% over the past 12 months.

Source: Bloomberg, as of 6/30/17.

0k

100k

200k

300k

400k

Jun '12 Jun '13 Jun '14 Jun '15 Jun '16 Jun '17

Monthly Change in Nonfarm PayrollsNonfarm Payrolls 12-Month Moving Average

8.2%

7.5%

6.1% 5.3%

4.9%

4.4%

4%

5%

6%

7%

8%

9%


Unemployment Rate

Page 35 of 251

© PFM 5

Inflation Remains Soft

The core personal consumption expenditures (PCE) price index steadied at 1.5% year-over-year in June. While some Fed officials expect this weakness to be transitory, the prospect for another rate hike in 2017 may be diminished should this trend continue.

Following the U.S. election, inflation expectations jumped as President Trump’s proposed spending policies would likely increase price pressures. The inflation outlook has since softened, reflecting doubts in the new administration’s ability to implement its agenda.

Source: Bloomberg, as of 06/30/17. Inflation expectations based on yield difference between 5-year Treasury note and 5-year Treasury Inflation Protected Securities (TIPS).

0.5%

1.0%

1.5%

2.0%

2.5%


Expectations for Average InflationRate Over Next 5 Years

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%


Inflation Measures(YoY)

Core CPICore PCEFed's Long Term Inflation Target

Page 36 of 251

© PFM 6

Short-Term Yields Higher but Curve Flatter in Second Quarter

Treasury yields are substantially higher compared to a year ago; short-term yields rose as the Fed raised rates, while longer yields reflected higher inflation expectations following the U.S. Presidential Election.

The yield curve flattened in the second quarter as inflation expectations moderated.

Source: Bloomberg, as of 06/30/17.

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3m

1y

2y

3y

5y

7y

10y

U.S. Treasury Yield CurveJun 30, 2017 Jun 30, 2016

Maturity 06/30/16 06/30/17 Change1-Mo. 0.17 0.84 +0.67

3-Mo. 0.26 1.01 +0.75

6-Mo. 0.35 1.13 +0.78

1-Yr. 0.44 1.23 +0.79

2-Yr. 0.58 1.38 +0.80

3-Yr. 0.69 1.55 +0.86

5-Yr. 1.00 1.89 +0.89

7-Yr. 1.28 2.14 +0.86

10-Yr. 1.47 2.31 +0.84

30-Yr. 2.29 2.84 +0.55

Yield Curve History

Page 37 of 251

© PFM 7

Portfolio Review

Page 38 of 251

© PFM 8

Portfolio in Compliance

Security Type Market Value as of June 30, 2016

% of Portfolio

Market Value as of June 30, 2017

% of Portfolio

% Change vs. Prior

Year

Permitted by Policy

In Compliance

U.S. Treasury $16,958,187 32% $16,512,781 30% - 100%

Federal Agency/GSE $5,701,174 11% $3,593,784 7% -4% 100%

Federal Agency/CMO $2,852,691 5% $1,913,992 4% -2% 20%

Municipal Obligations $2,110,997 4% $924,368 2% -2% 100%

Supra-National Agency $948,584 2% $1,613,472 3% 1% 15%

Corporate Notes $6,079,238 11% $11,883,996 23% 12% 30%

Negotiable CDs $10,157,941 19% $5,768,227 11% -8% 30%

Asset-Backed Securities $1,362,317 3% $1,987,254 4% 1% 10%

Commercial Paper - - $1,093,250 2% 2% 25%

Security Sub-Total $46,171,129 87% $45,291,124 86%

Accrued Interest $175,483 $151,484

Securities Total $46,346,611 $45,442,608

LAIF $7,207,974 13% $7,264,755 14% - $65 million

CAMP $161,082 <1% $62,054 <1% - 100%

Total Investments $53,715,667 100% $52,769,417 100%

Page 39 of 251

© PFM 9

Trade Activity

Trade Date Trade Type Security Maturity Par Value Yield at Market

8/8/16 Buy Berkshire Hathaway 8/15/19 $195,000 1.33%

8/8/16 Sell U.S. Treasury Note 9/30/19 $125,000 0.90%

10/17/16 Buy Toyota Motor 10/18/16 $380,000 1.57%

10/13/16 Sell FNMA Note 8/28/19 $380,000 1.09%

1/4/17 Buy Citigroup Inc. 1/10/20 $485,000 2.46%

1/4/17 Sell FHLB Note 8/5/19 $485,000 1.45%

3/10/17 Buy John Deere 1/6/20 $335,000 2.75%

3/10/17 Sell FNMA Note 8/17/21 $335,000 2.10%

4/3/17 Buy BB&T 4/1/22 $730,000 2.59%

4/3/17 Sell FNMA Note 8/17/21 $440,000 1.89%

6/19/17 Buy Bank of America 1/24/22 $205,000 2.64%

6/19/17 Sell FNMA Note 8/17/21 $240,000 1.76%

+43bps

+48bps

+101bps

+65bps

+70bps

+88bps

Page 40 of 251

© PFM 10

Sector Allocation

1Sector allocation calculated using market values excluding accrued interest. Excludes CAMP and LAIF.

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2Q16 3Q16 4Q16 1Q17 2Q17

Mill

ions

Sector Allocation1

U.S. Treasury Federal Agency/GSE Federal Agency/CMOMunicipal Obligations Supra-National Agency Corporate NotesNegotiable Certificates of Deposit Asset-Backed Securities Commercial Paper

Page 41 of 251

© PFM 11

Maturity Distribution

13%

11%

20%

12%

27%

17%

0%

14%

4%

14%

21%

26%

20%

1%0%

10%

20%

30%

Under 6 Months 6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years 5 Years and Over

Perc

enta

ge o

f Tot

al P

ortfo

lio

Maturity Distribution1

June 30, 2016

June 30, 2017

Weighted Average Maturity June 30, 2016 June 30, 2017

Overall Portfolio2: 2.16 years 2.50 years

Individual Securities: 2.42 years 2.82 years

1Callable securities in the portfolio are included in the maturity distribution analysis to their stated maturity date, although they may be called prior to maturity.2Overall portfolio includes CAMP and LAIF.

Page 42 of 251

© PFM 12

Credit Quality

AAA5%

AA53%

A20%

A-1 (Short-term)2%

BBB+**3%

Not Rated*3%

LAIF (Not Rated)14%

AAAm (CAMP)<1%

Credit Quality DistributionJune 30, 2017

Standard and Poor’s ratings

*The “Not Rated” category comprises asset-backed securities rated Aaa by Moody’s and is in compliance with the Authority’s investment policy.**The “BBB+” category comprises securities rated A- or better by Moody’s and/or Fitch and is in compliance with the Authority’s investment policy.

Page 43 of 251

© PFM 13

Market values move inversely to interest rates.

Total Return = Income + Change in Market Value

Interest Rates

MarketValue

Interest Rates

MarketValue

Date Yield-to-Maturityat Market

Yield-to-Maturityat Cost Portfolio Value1

June 30, 2016 0.96% 1.38% $46,171,129

June 30, 2017 1.76% 1.74% $45,291,124

1Portfolio value of managed securities excludes LAIF and CAMP.

ICRMA Portfolio

Page 44 of 251

© PFM 14

0.50%

0.75%

1.00%

1.25%

1.50%

Jun-16 Sep-16 Dec-16 Mar-17 Jun-17

Impact of Changing Yields on Portfolio Earnings

Treasury Yield Source: Bloomberg, as of 6/30/17.

2-Year Treasury YieldsJune 30, 2016 – June 30, 2017

Higher interest rates drive higher earnings but result in temporarily lower market values.

3Q16 4Q16 1Q17 2Q17 FY16/17Accrual BasisInterest Earned 157,647 186,395 207,436 221,574 773,052Change in Value 120,618 (60,666) (72,872) (31,805) (44,825)Portfolio Earnings $278,265 $125,729 $134,564 $189,769 $728,227

Market Value Basis 0.19% 0.42% 0.07% 0.12% 0.80%Change in 2-Yr UST 0.19% 0.42% 0.07% 0.12% 0.80%Interest Earned 157,647 186,395 207,436 221,574 773,052Change in Value (167,132) (676,357) 51,878 63,584 (728,026)Portfolio Earnings ($9,485) ($489,962) $259,315 $285,158 $45,026

Page 45 of 251

© PFM 15

Portfolio Performance

Duration(years)

Past 12 Months

Past 3 Years

Past 5 Years

Since Inception

ICRMA 2.64 0.07% 1.37% 1.22% 3.41%

BofA/Merrill Lynch U.S. Treasury Index 2.63 -0.53% 1.08% 0.87% 3.31%

• Performance on trade date basis, gross (i.e., before fees), in accordance with the CFA Institute’s Global Investment Performance Standards (GIPS).

• Merrill Lynch Indices provided by Bloomberg Financial Markets.

• Quarterly returns are presented on an unannualized basis. Returns for periods greater than one year are presented on an annualized basis.

• Includes CAMP Cash Reserve Portfolio in performance and duration computations; excludes LAIF and the short-term portfolio.

• Performance and duration calculation exclude holdings from the short-term portfolio as those funds are not part of the 1-5 year strategy.

• The portfolio's benchmark was the Merrill Lynch 1-3 U.S. Treasury Index for the quarters beginning October 1, 2002 through September 30, 2007 and the Merrill Lynch 1-5 Year U.S. Treasury Benchmark beginning October 1, 2007.

• Inception date is April 1, 2000.

Total Returnsfor Periods Ending June 30, 2017

Page 46 of 251

© PFM 16

Investment Outlook

Page 47 of 251

© PFM 17

Fed’s Next Step for Monetary Policy

Recent market conditions have driven Fed expectations of an additional rate hike before the end of 2017

The Fed announced it’s plans to reduce its balance sheet and we will closely monitor its implementation

Source: Probability of rate hike from Bloomberg, as of 08/31/17. Timing of balance sheet announcement from WSJ Economic Forecasting Surveys, as of August 2017. PFM, Bloomberg, The Federal Reserve, FRB of St. Louis, as of 06/15/17. Projection is based on maturity schedule of Fed’s Treasury holdings and caps on reinvestments as described in FOMC’s June 2017 addendum to the Policy Normalization Principles and Plans, assuming normalizat ion begins in October 2017.

Meeting 06/30/17 07/31/17 08/31/17 09/18/17

09/20/17 16% 6% 2% 2%

11/01/17 17% 10% 3% 3%

12/13/17 52% 42% 34% 51%

01/31/18 53% 43% 34% 52%

Probability of Next Rate Hike

$0

$1

$2

$3

$4

$5

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

(in tr

illio

n)

Fed’s Total Balance Sheet AssetsTreasury Mortgage-Backed Federal Agency Other

Projection

QE3QE2

Page 48 of 251

© PFM 18

Current Short-Term Credit Environment

Yield spreads on short-term credit instruments widened sharply ahead of SEC-imposed reforms to the money market fund industry, which became effective in October 2016.

Spreads have since normalized, but commercial paper and negotiable bank CDs remain attractive alternatives to Treasury bills and short-term agencies.

Source: Bloomberg, PFMAM Trading Desk, as of 08/31/17. Not a specific recommendation. 6-mo CP yield spread based on A1/P1 rated CP index.

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

1 2 3 4 5 6 7 8 9 10 11 12Maturity in Months

Money Market Yield Curves

CD/CP Average

Agencies

Treasuries

+34bps

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

Aug '12 Aug '13 Aug '14 Aug '15 Aug '16 Aug '17

Yield Spread on 6-mo Commercial Paper Over 6-mo T-Bill

Now: 34bps

Page 49 of 251

© PFM 19

Source: Bloomberg, as of 09/25/17

2-Year Treasury Yield

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

Dec

'15

Jan'

16

Feb'

16

Mar

'16

Apr'1

6

May

'16

Jun'

16

Jul'1

6

Aug'

16

Sep'

16

Oct

'16

Nov

'16

Dec

'16

Jan'

17

Feb'

17

Mar

'17

Apr'1

7

May

'17

Jun'

17

Jul'1

7

Aug'

17

YTD Change: +25bps

Page 50 of 251

© PFM 20

Yield Environment as of August 31, 2017

Source: Bloomberg BVAL yield curves for Treasury and Corporate yields, TradeWeb for Federal Agency yields. Three- and six-month corporate yields from commercial paper: A-1+ for AA and A-1 for A. Yields are for indicative purposes only; actual yields may vary by issue.

Maturity Treasury FederalAgency AA Corporate A Corporate

3-Month 0.99% 1.04% 1.23% 1.30%

6-Month 1.08% 1.12% 1.34% 1.41%

1-Year 1.22% 1.26% 1.43% 1.59%

2-Year 1.33% 1.39% 1.64% 1.80%

3-Year 1.43% 1.50% 1.83% 2.00%

5-Year 1.70% 1.73% 2.18% 2.35%

Page 51 of 251

© PFM 21

Disclosures

This material is based on information obtained from sources generally believed to be reliable and available to the public,

however PFM Asset Management LLC cannot guarantee its accuracy, completeness or suitability. This material is for

general information purposes only and is not intended to provide specific advice or a specific recommendation. All

statements as to what will or may happen under certain circumstances are based on assumptions, some but not all of

which are noted in the presentation. Assumptions may or may not be proven correct as actual events occur, and results

may depend on events outside of your or our control. Changes in assumptions may have a material effect on results.

Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in this

presentation is not an offer to purchase or sell any securities.

Page 52 of 251

© PFM 22

Thank You

Page 53 of 251


Subject: Investment Policy Review Action for consideration: Review and adopt the revised ICRMA Investment Policy. Background: Staff and PFM Asset Management LLC (PFM) have performed the annual review of the attached Investment Policy (Policy) of the Authority, which was approved by the Board of Directors in October 2016. The Policy is in compliance with all applicable California Government Code (Code) statutes and no changes are required. However, per the attached Memorandum from PFM, they recommend updating the Policy to reflect how the rating requirements are now described in the Code. Attachments:

1. PFM Memorandum Regarding Annual Review of ICRMA Investment Policy

2. Draft Proposed Investment Policy

Prepared by: James Marta, Director of Finance

Page 54 of 251

October 2, 2017

Memorandum To: Nicole Rushing, Accounting Supervisor, James Marta & Co

Beth Lyons, Senior Pool Administrator, Risk Pool Administrators Independent Cities Risk Management Authority

From: Richard Babbe, Senior Managing Consultant PFM Asset Management LLC

Re: Investment Policy Review

We completed our annual review of the Independent Cities Risk Management Authority’s (“ICRMA”) Investment Policy (the “Policy”). As written, the Policy is in compliance with the sections of the California Government Code (the “Code”) that govern the investment of public funds. Although no changes are required, we did want to bring to ICRMA’s attention a recent update to the Code. Senate Bill 974, which took effect on January 1, 2017, modified Code Sections 53601 et seq. to clarify that the Code’s rating requirements specify the minimum credit rating category required at purchase, without regard to “+”, “-”, or 1, 2, 3 modifiers. This Code revision did not change the minimum ratings required by the Code nor change the ratings required by ICRMA’s Policy. The change simply codified the credit rating interpretation already used by most public agencies including ICRMA. As the Code revision is consistent with the Policy’s current language, no changes are required. However, we recommend ICRMA consider updating the Policy to reflect how the rating requirements are now described in the Code. We have attached a marked-up version of the Policy illustrating our recommendations. Please let me know if you have any questions or would like to discuss our recommendations in more detail.

Page 55 of 251

ICRMA

Investment Policy

Page 56 of 251

Investment Policy Change Record

Date Description of Change(s) October 9, 2014 Addition of Asset-backed securities (ABS) and Supranational Debt as

acceptable asset classes, limited to 10% and 15% respectively October 7, 2015 No changes. October 20, 2016 Increased asset-backed security percentage from 10% to 20%

Page 57 of 251

ICRMA – Investment Policy Page 1 of 7 October 20, 2016

Independent Cities Risk Management Authority Investment Policy

The purpose of this investment policy is to provide guidelines for the prudent investment of the Independent Cities Risk Management Authority’s (ICRMA) assets and to outline policies for maximizing the efficiency of ICRMA’s cash management system. A. Scope

This investment policy applies to all financial assets of ICRMA and investment activities under the direction of ICRMA.

B. Objective

The overall program shall be designed and managed with a degree of professionalism worthy of the public trust. ICRMA’s primary investment objectives, in priority order, shall be: 1) Safety. Safety of principal is the foremost objective of the investment program.

Investments shall be undertaken in a manner that seeks to ensure preservation of capital in the portfolio.

2) Liquidity. The investment portfolio will be structured to provide sufficient liquidity to enable ICRMA to meet its cash flow requirements.

3) Yield. The investment program shall be designed with the objective of attaining a market rate of return on its investments consistent with the constraints imposed by its safety objective and cash flow considerations.

In order to maximize return on its investments, ICRMA seeks an active rather than passive management of portfolio assets. ICRMA may, from time to time, sell securities that it owns in order to better reposition its portfolio assets in accordance with updated cash flow schedules, yield curve optimizations, yield opportunities existing between market sectors, or simply market timing. The ICRMA Governing Board (Board) recognizes that in a diversified portfolio occasional measured losses are inevitable and must be considered within the context of the portfolio’s overall investment return, provided adequate diversification has been implemented. Generally, losses are acceptable on a sale before maturity and should be taken if the reinvested proceeds will earn an income flow greater than what would have been earned by the old investment, considering any capital loss or foregone interest on the original investment.

C. Delegation of Authority

The Board’s management responsibility for the investment program is hereby delegated for a one-year period to the ICRMA Treasurer (Treasurer). Subject to review, the Board may renew the delegation of authority pursuant to this section each year. The Treasurer may delegate these duties to the ICRMA General Manager (General Manager). It is the policy of ICRMA to delegate the day-to-day investment operations to an Investment Manager. The Investment Manager advisor shall follow this Policy and such other written instructions that are provided. The Treasurer and General

Page 58 of 251


Manager shall establish written investment policy procedures for the operation of the investment program consistent with this policy and shall supervise the activities of the Investment Manager.

D. Prudence

All persons authorized to make investment decisions on behalf of ICRMA are subject to the prudent investor standard. Investments shall be made with care, skill, prudence, and diligence under circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of ICRMA that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of ICRMA. Authorized individuals acting in accordance with this Policy and written procedures and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion.

E. Ethics and Conflict of Interest

Officers and employees involved in the investment process shall refrain from personal business activities that could conflict with proper execution of the investment program, or which could impair their ability to make impartial decisions.

F. Permitted Investment Instruments

Sections 53600 et. seq. of the California Government Code provide basic investment limits and guidelines for government entities. Within the investments permitted by the Government Code, ICRMA seeks to further restrict eligible investment to the investments listed below. In the event an apparent discrepancy is found between this policy and the Government Code, the more restrictive parameters will take precedence. 1) U.S. Treasury Instruments. United States Treasury notes, bonds, bills or certificates of

indebtedness, or those for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no limitation as to the percentage of the portfolio invested in this category.

2) Federal Agency and Instrumentality Securities. Federal agency or United States government-sponsored enterprise obligations, participations, mortgage-backed securities or other instruments, including those issued by or fully guaranteed as to principal and interest by Federal agencies or United States government-sponsored enterprises. There is no limitation as to the percentage of the portfolio invested in this category.

3) Municipal Securities. Registered treasury notes or bonds issued by any of the 50 United States, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any state.

Bonds, notes, warrants, or other evidences of indebtedness of any local agency within the State of California, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency,

Page 59 of 251


or authority of the local agency.

A maximum of 30% of ICRMA’s portfolio may be invested in this category.

4) Supranationals. United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank. The maximum maturity for investments in this category is five years. Purchases are limited to issues that are eligible for purchase and sale within the United States and shall be rated in a rating category of at least “AA” or its the equivalent or better, by a Nationally Recognized Statistical Rating Organization (‘n NRSRO”). A maximum of 15% of ICRMA’s portfolio may be invested in this category.

5) U.S. Corporate Debt. Medium-term notes, defined as all corporate and depository institution securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or depository institutions licensed by the United States or any state and operating within the United States. Eligible investment shall be rated in a rating category of at least “A”, or its the equivalent or better, by an Nationally Recognized Statistical Rating Organization (“NRSRO”). A maximum of 30% of ICRMA’s portfolio may be invested in this category.

6) Negotiable Certificates of Deposit. Negotiable certificates of deposit issued by a national or State-chartered bank or a State or Federal association or by a federally licensed or State-licensed branch of a foreign bank. The maximum maturity for investments in this category is five years. Purchases are limited to issuers whose debt is rated in a rating category of at least “A-1”, short-term, or “A” long-term or its the equivalent or better, by an NRSRO. A maximum of 30% of ICRMA’s portfolio may be invested in this category.

7) Asset-Backed Securities. Mortgage passthrough security, collateralized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond of a maximum of five years’ maturity. Securities eligible for investment under this category shall be issued by an issuer rated in a rating category of having an “A” or higher ratingthe equivalent or better for the issuer’s debt as provided by an NRSRO and rated in a rating category of “AA” or its the equivalent or better by an NRSRO. A maximum of 20% of ICRMA’s portfolio may be invested in this category.

8) Commercial Paper. Commercial paper rated the highest ranking or of the highest letter and number rating as provided for by an NRSRO. The entity that issues the commercial paper shall meet all of the conditions in either paragraph (1) or paragraph (2): a. The corporation shall be organized and operating within the United States, shall have

total assets in excess of five hundred million dollars ($500,000,000), and shall issuehas debt, other than commercial paper, if any, that is rated in a rating category of at least “A”, or its the equivalent or higher, by an NRSRO.

Page 60 of 251


b. The corporation shall be organized within the United States as a special purpose corporation, trust, or limited liability company, have program wide credit enhancements, including, but not limited to, over collateralization, letters of credit, or surety bond; have commercial paper that is rated at least “A-1” or higher, or its the equivalent, by an NRSRO.

Eligible commercial paper may not exceed 270 days’ maturity. A maximum of 25% of ICRMA’s portfolio may be invested in this category.

9) Repurchase Agreements. Repurchase agreements are to be used solely as short-term

investments not to exceed 30 days. ICRMA may enter into repurchase agreements with primary government securities dealers rated in a rating category of “A” or better by two nationally recognized rating servicesNRSROs. Counterparties should also have (i) a short-term credit rating of at least “A-1”, or its the equivalent by an NRSRO; (ii) minimum assets and capital size of $25 billion in assets and $350 million in capital; (iii) five years of acceptable audited financial results; and (iv) a strong reputation among market participants.

The following collateral restrictions will be observed: Only U.S. Treasury securities or Federal Agency securities, as described in VII., Permitted Investments, A. and B., will be acceptable collateral. All securities underlying repurchase agreements must be delivered to ICRMA's custodian bank versus payment or be handled under a properly executed tri-party repurchase agreement. The total market value of all collateral for each repurchase agreement must equal or exceed 102 percent of the total dollar value of the money invested by ICRMA for the term of the investment. For any repurchase agreement with a term of more than one day, the value of the underlying securities must be reviewed on an on-going basis according to market conditions. Market value must be calculated each time there is a substitution of collateral.

ICRMA or its trustee shall have a perfected first security interest under the Uniform Commercial Code in all securities subject to repurchase agreement. ICRMA shall have a properly executed master repurchase agreement with each counterparty for which it enters into an agreement for repurchase agreements.

10) Bankers’ Acceptances. Bankers’ Acceptances are otherwise known as bills of exchange or time drafts that are drawn on and accepted by a domestic commercial bank. Bankers’ Acceptances must be rated at least “A-1” or higher, or theits equivalent, by an NRSRO. Bankers’ Acceptances cannot exceed a maturity of 180 days. A maximum of 40% of ICRMA’s portfolio may be invested in this category.

11) State of California Local Agency Investment Fund (LAIF). If ICRMA has funds invested in LAIF, it shall maintain LAIF’s current investment policy on file and its requirements for participation, including limitations on deposits or withdrawals. In addition, ICRMA’s investments in LAIF should be reviewed periodically.

12) California Asset Management Program (CAMP). Shares of beneficial interest issued by a joint powers authority organized pursuant to Government Code Section 6509.7 that invests in the securities and obligations authorized in Government Code Section 53601. If

Page 61 of 251


ICRMA has funds invested in CAMP, it shall maintain CAMP’s current information statement on file. In addition, ICRMA’s investments in CAMP should be reviewed periodically.

13) Money Market Funds. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 and following). The company shall have met either of the following criteria: (i) attained the highest ranking or the highest letter and numerical rating provided by not less than two NRSROs; or (ii) retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). A maximum of 20% of ICRMA’s portfolio may be invested in this category.

14) Bank Deposits. FDIC insured or fully collateralized demand deposit accounts, savings accounts, market rate accounts, time certificates of deposits, or other depository accounts in financial institutions located in California.

Any financial institution accepting ICRMA funds for deposit must comply with the requirements of Government Code Section 53630 et seq., including collateralization of deposits. ICRMA may waive the collateralization requirements for any portion of the deposit that is covered by Federal Deposit Insurance. Eligible deposits are restricted to those issuing institutions that have been in business at least five years and whose senior debt obligations are rated at leastin a rating category of “A” or higher, or the its equivalent by an NRSRO. The institution must place with ICRMA and maintain on file an audited financial statement not more than one year old. As provided by Government Code Section 53649, ICRMA shall have a signed contract with each financial institution that has ICRMA funds on deposit.

For time certificates of deposits, the maximum maturity is one year. A maximum of 20% of ICRMA’s portfolio may be invested in time certificates of deposit.

G. Prohibited Investments

ICRMA shall only invest in securities permitted by the California Government Code and this investment policy. ICRMA is prohibited from buying on margin or from speculative buying.

H. Term of Investment

Maturities of investments will be selected to provide necessary liquidity, minimize interest rate risk, and maximize earnings. Current and expected yield curve analysis will be monitored and the portfolio will be invested accordingly. Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds. Where this Policy does not specify a maximum remaining maturity at the time of the investment, no investment shall be made in any security authorized by this Policy, that at the time of the investment has a term remaining to maturity in excess of ten years, unless the Board has granted express

Page 62 of 251


authority to make that investment, either specifically or as a part of an investment program approved by the Board no less than three months prior to the investment. The Board authorizes investments in securities with maturities of up to ten years at its December 2007, meeting. The amount invested in securities with maturities between five and ten years should not exceed an amount equal to 30 percent of the workers’ compensation assets.

I. Diversification

The investment portfolio shall be diversified among security types, issuers, and maturities to prevent incurring unreasonable and avoidable risks regarding specific security types, individual financial institutions, or maturity segments. In addition to the percentage limitations specified in Section VII., Permitted Investments, the maximum amount of the portfolio ICRMA may invest with any one non-governmental issuer is 20%.

The percentage limitations listed on the amount of the ICRMA’s portfolio that may be invested in each investment category or issuer shall apply at the time of purchase.

J. Credit Rating Changes

Credit ratings, where shown, specify the minimum credit rating category required at purchased without regard to +/- or 1,2,3 modifiers, if any. In the event a security held by ICRMA is subject to a rating change that brings it below the minimum credit ratings specified in this Policy, the Treasurer should notify the Board of the change. The course of action to be followed will then be decided on a case-by-case basis, considering such factors as the reason for the rate drop, prognosis for recovery or further rate drops, and the market price of the security.

K. Investment Transactions

Whenever possible, investment transactions shall be made on a competitive basis to provide ICRMA with the best price and execution. It is ICRMA’s policy to purchase securities only from those brokers/dealers and financial institutions that ICRMA has reviewed and approved. For transactions initiated through the Investment Manager, they may use their own list of approved brokers/dealers and financial institutions.

L. Safekeeping

All cash and securities in ICRMA’s portfolio, including those that are being managed by the Investment Manager, shall be held in safekeeping in ICRMA’s name by a third party bank trust department, acting as agent for ICRMA under the terms of a custody agreement executed by the bank and ICRMA. All securities will be received and delivered using standard delivery versus payment (DVP) procedures. ICRMA’s safekeeping agent will only release payment for a security after the security has been properly delivered. The only exception to the foregoing shall be depository accounts and securities purchases made with: (i) local government investment pools; and, (ii) money market mutual funds, since the purchased securities are not deliverable.

M. Reports

The Treasurer, unless otherwise delegated to the General Manager in accordance with section IV of this Policy, shall provide quarterly reports to the Board. The quarterly reports shall encompass all

Page 63 of 251


investments and monies held by ICRMA, and/or under the management of any outside party and shall include a list of security transactions, the type of investment, issuer, date of maturity, par and dollar amount invested on all securities, current market value on all securities (including the source of this valuation), a statement that the portfolio is in compliance with this Policy or the manner in which it is not in compliance and a statement that ICRMA has the ability to meet its expenditure requirements for the next six months or an explanation as to why sufficient money may not be available. The Treasurer or General Manager shall report whatever additional information or data the Board may require.

N. Investment Policy Review

The Treasurer, unless otherwise delegated to the General Manager, shall annually render to the Board a statement of investment policy, which the Board shall consider at a public meeting. Any change in the policy shall also be considered by the Board at a public meeting.

Page 64 of 251


Subject: James Marta & Company Termination Notice Action for consideration: Review and provide direction. Background: James Marta & Company elected to exercise the 90-day termination provision in its contract with ICRMA. The letter was dated October 6, which means ICRMA has until January 6 to identify and integrate a new finance team. The finance function is critical to the pool and the members, so prompt action is necessary. Options for Board discussion include, but are not limited to, the following: 1. Ask James Marta to present a written proposal to the Board outlining contract amendments that

could be made that would enable his company to remain on the ICRMA team 2. Ask James Marta if his company would he be willing to continue providing services through

the end of the fiscal year so an RFP may be performed 3. Review the RFP responses received in 2015 and contact other bidders regarding their interest

in providing financial services to ICRMA Attachments: Letter dated October 6, 2017 from James Marta to ICRMA Prepared by: Beth Lyons, Executive Director

Page 65 of 251

James Marta & Company LLP Certified Public Accountants

Accounting, Auditing, Consulting, and Tax

701 Howe Avenue, Suite E3, Sacramento, California 95825 Phone: 916-993-9494 Fax: 916-993-9489

e-mail: [email protected] www.jpmcpa.com

October 6, 2017

To ICRMA

c/o Tom Cody, ICRMA Board President

Monterey Park City Hall

320 W. Newmark Avenue

Monterey Park, CA 91754

[email protected]

c/o Luther R. Lewis, ICRMA General

Counsel

Johnson Schachter & Lewis, A P.L.C.

2180 Harvard Street, Suite 560

Sacramento CA 95815

[email protected]

James Marta & Company LLP hereby gives notice of termination of the Financial

Management Services Agreement with Independent Cities Risk Management Authority

(ICRMA).

Pursuant to the agreement entered into April 1, 2016, Section II. Term & Termination, B.

Termination 1) Notice. Either Party may terminate the Agreement at any time upon no

less than ninety (90) days prior written notice.

This notice is effective today October 6th

, 2017 and we believe the 90 day period ends

January 4th

, 2018.

Sincerely,

James P. Marta CPA, CGMA, ARPM

James Marta & Company LLP

Certified Public Accountants

Page 66 of 251

mailto:[email protected]

http://www.jpmcpa.com/




Subject: Financial Audit Update Action for consideration: Review and file Background: Vavrinek, Trine, Day & Co., LLP (VTD) is in the process of conducting an audit of ICRMA’s financial statements as of and for the fiscal year ended June 30, 2017. The audit commenced in early August and staff provided the audit draft report on 9/11/2017 with the exception of a portion of the MD&A the Description of Facts or Conditions Expected to have a Significant Effect on Financial Position or Results of Operations Section, which was provided 9/12/17. Staff met with audit manager Jessica Anderson on October 3 and were advised the auditors need additional time to complete the financial audit and quality control procedures. Attachments: None Prepared by: James Marta, Finance Director

Page 67 of 251


Subject: Treasurer’s Report & Unaudited Financial Statements for June 30, 2017 Action for consideration: Receive and file the unaudited financial statements for June 30, 2017 Background: Statement of Net Position

• Total Assets at $95.4M; 61.6% of it is cash and investments o Receivables $1.9M a decrease of $171K or 8.1% due to member assessment

invoice/payment activity. o Investments $49M, an increase of $3.1M due to deposits and interest income. o Assessment Receivable $34.4M approved by the Board at the November 2016

meeting. • Total Liabilities at $54.2M

o Claims liabilities $54M, a decrease of $14.6M or 21.3% due to closure and settlement of claims, reduction in reserves and improved litigation management.

• Net Position at $41.2M, which is an increase of $42M from prior year end.

Budget to Actual Comparison Highlights • 4th Quarter completed. • Revenues at $50.3M; Member Contributions of $24.9M and Assessments of $25.3M.

Increase from budget due to the approved liability program assessment. • Claims Expense at <$3.9M>. $16.8M decrease from budget based on new actuarial report

for the workers’ compensation and liability programs. • Property Appraisal funds budgeted for $25K were not utilized. • DIR Assessment was $75.6K under budget. • General and Administrative Expenses at $749K; $67K more than approved budget

mostly due to risk management fund usage, legal services, claims audit and software licensing expenses being over budget and offset by ICRMA university, defense cost initiative, scholarship/conference, data collection solution and marketing expenses being under budget.

Attachments: Financial Report (unaudited) for June 30, 2017

Treasure’s Report Financial Report - Power Point Presentation

Prepared by: James Marta, Director of Finance

Page 68 of 251

gmail6

FINANCIAL REPORT

JUNE 30, 2017 AND 2016 AND FOR THE TWELVE MONTHS THEN ENDED

Page 69 of 251

Independent Cities Risk Management Authority

— Governmental Joint Powers Authority —

Executive Director

Beth Lyons

Chief Financial Officer James P. Marta, CPA, CGMA, ARPM

18201 Von Karman, Suite 200 Irvine, CA 92612

[email protected]

Page 70 of 251

Independent Cities Risk Management Authority Table of Contents

Accountant’s Report 1 BASIC FINANCIAL STATEMENTS Statement of Net Position 2 Statement of Revenues, Expenses and Changes in Net Position 3 Statement of Cash Flows 4 SUPPLEMENTARY INFORMATION Combining Statement of Net Position 5 Combining Statement of Revenues, Expenses and Changes in Net Position 6 Combining Statement of Cash Flows 7 Approved Budget to Actual Comparison - Combined 8 Approved Budget to Actual Comparison by Program Liability Program 10 Workers’ Compensation Program 11 Property Program 12 Auto Physical Damage Program 13 Crime Program 14 Cyber Program 15 Graphical Summary of Claims – Workers Compensation 16 Graphical Summary of Claims – Liability 17

Page 71 of 251

James Marta & Company LLP Certified Public Accountants

Accounting, Auditing, Tax, and Consulting

701 Howe Avenue Suite E3, Sacramento, California 95825 Phone: 916-993-9494 Fax: 916-993-9489 [email protected] www.jpmcpa.com

1

ACCOUNTANT’S REPORT

Board of Directors Independent Cities Risk Management Authority 18201 Von Karman, Suite 200 Irvine, CA 92612 Management is responsible for the accompanying financial statements of Independent Cities Risk Management Authority which comprise of statement of net position as of June 30, 2017 and 2016, and the related statement of revenues, expenses and changes net position, and statement of cash flows for the years then ended and the related notes to the financial statements in accordance with accounting principles generally accepted in the United States of America. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the AICPA. We did not audit or review the financial statements nor were we required to perform any procedures to verify the accuracy or the completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on these financial statements. Management has elected to omit substantially all of the disclosures required by accounting principles generally accepted in the United States of America. If the omitted disclosures were included in the financial statements, they might influence the user’s conclusions about the company’s financial position, results of operations, and cash flows. Accordingly, the financial statements are not designed for those who are not informed about such matters. The supplementary information on pages 5 through 17 (as listed in the table of contents) is presented for purposes of additional analysis and is not a required part of the basic financial statements. The information is the representation of management. The information was subject to our compilation engagement; however, we have not audited or reviewed the information and, accordingly, do not express an opinion, a conclusion, nor provide any assurance on such information.

We are not independent with respect to Independent Cities Risk Management Authority since we provide accounting, financial and management services

James Marta & Company LLP Certified Public Accountants September 11, 2017

Page 72 of 251


http://www.jpmcpa.com/

Independent Cities Risk Management Authority (Governmental Enterprise Fund)

Statement of Net Position June 30, 2017 and 2016

(Unaudited)

See Accompanying Accountant’s Report 2

2017 2016

Current AssetsCash & Cash Equivalents 9,471,282$ 8,493,650$ Investments 5,866,560 5,866,560 Accounts Receivable 150,686 322,011 Assessment Receivable 1,785,714 1,785,714 Interest Receivable 233,721 195,082 Prepaid Expenses 112,982 84,655 Total Current Assets 17,620,945 16,747,672

Noncurrent AssetsInvestments 43,425,760 40,465,650Assessment Receivable 34,386,724 10,714,286.00 Total Noncurrent Assets 77,812,484 51,179,936

Total Assets 95,433,429 67,927,608

Current LiabilitiesAccounts Payable 137,251 51,769 Claim Liabilities 10,000,000 20,000,000 Total Current Liabilities 10,137,251 20,051,769

Noncurrent LiabilitiesClaim Liabilities 44,047,135 48,697,565Total Noncurrent Liabilities 44,047,135 48,697,565

Total Liabilities 54,184,386 68,749,334

Net Position (Deficit), Unrestricted 41,249,042$ (821,726)$ NET POSITION

ASSETS

LIABILITIES

Page 73 of 251

Independent Cities Risk Management Authority Statement of Revenues, Expenses and Changes in Net Position

For the Twelve Months Ended June 30, 2017 and 2016 (Unaudited)


2017 2016

OPERATING REVENUESMember contribution 24,932,413$ 24,124,728$ Assessments 25,337,691 12,500,000

Total Operating Revenues 50,270,104 36,624,728

OPERATING EXPENSESClaims expense (3,922,691) 35,899,161Insurance expense 9,175,279 8,332,206Broker fees 200,000 287,334Claims administration 235,000 306,632CA division of workers comp. assesment 654,301 729,548Structured return to work program 187,620 250,272Program administration 963,711 679,183General & administrative expense 749,472 967,835

Total Operating Expenses 8,242,692 47,452,171

Operating Income (loss) 42,027,412 (10,827,443)

NONOPERATING INCOMEInvestment income 43,356 1,236,726

Change In Net Position 42,070,768 (9,590,717)

Net PositionBeginning Net Position (821,726) 8,768,991

Ending Net Position (Deficit) 41,249,042$ (821,726)$

Page 74 of 251


Statement Cash Flows For the Twelve Months Ended June 30, 2017 and 2016

(Unaudited)

See Accompanying Accountant’s Report

4

2017 2016Cash Flows from Operating Activities:

Cash Received from Members for Deposit Premiums 26,769,207$ 23,991,924$ Cash Payments to Suppliers for Services (15,108,444) (11,470,338) Cash Payments Relating to Claims and Claim Administration (10,727,739) (23,918,270)

Net Cash Used For Operating Activities 933,024 (11,396,684)

Cash Flows from Investing Activities:Purchases of Investments 95,234,798 (32,035,825) Proceeds from Investment Sales and Maturities (95,233,546) 38,321,762 Interest Income Received 43,356 770,764

Net Cash Provided By Investing Activities 44,608 7,056,701

Net Decrease in Cash and Cash Equivalents 977,632 (4,339,983)

Cash and Cash Equivalents, Beginning of Year 8,493,650 12,833,633 Cash and Cash Equivalents, End of Year 9,471,282$ 8,493,650$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities:

Operating loss 42,027,412$ (10,827,443)$ Adjustment to net cash used by operating activities:

(Increase) Decrease in:Accounts Receivable (23,501,113) (12,632,803) Prepaid Expenses (28,328) 81,584

(Decrease) Increase in:Accounts Payable 85,482 1,085 Claims Liabilities (17,650,430) 11,980,893

Net Cash Used For Operating Activities 933,024$ (11,396,684)$

Supplemental Disclosures:Noncash Investing and Financing Activities:

Unrealized gain (loss) in market values of investments 118,902$ (382,489)$

Page 75 of 251

SUPPLEMENTARY INFORMATION

Selected Information Substantially All Disclosures Required by Generally Accepted

Accounting Principles Are Not Included

Page 76 of 251


Combining Statement of Net Position June 30, 2017 (Unaudited)


Liability Workers

Compensation Property APD Crime Cyber TotalASSETS

Current AssetsCash & Cash Equivalents 5,285,522$ 4,298,988$ (89,300)$ (18,336)$ (629)$ (4,963)$ 9,471,282$ Investments 3,519,936 2,346,624 - - - - 5,866,560 Accounts Receivable 116,308 13,477 6,073 14,828 - - 150,686 Assessment Receivable 1,785,714 - - - - - 1,785,714 Interest Receivable 154,288 79,433 - - - - 233,721 Prepaid Expenses 53,972 30,343 28,667 - - - 112,982 Total Current Assets 10,915,741 6,768,864 (54,560) (3,508) (629) (4,963) 17,620,945

Noncurrent AssetsInvestments 22,740,958 20,684,802 - - - - 43,425,760 Assessment Receivable 34,386,724 - - - - - 34,386,724 Total Noncurrent Assets 57,127,682 20,684,802 - - - - 77,812,484

Total Assets 68,043,423 27,453,666 (54,560) (3,508) (629) (4,963) 95,433,429

LIABILITIESCurrent Liabilities

Accounts Payable 94,223 41,883 1,145 - - - 137,251 Claim Liabilities 9,000,000 1,000,000 - - - - 10,000,000 Total Current Liabilities 9,094,223 1,041,883 1,145 - - - 10,137,251

Noncurrent LiabilitiesClaim Liabilities 28,546,255 15,500,880 - - - - 44,047,135

Total Liabilities 37,640,478 16,542,762 1,145 - - - 54,184,386

Net Position, Unrestricted 30,402,945$ 10,910,903$ (55,706)$ (3,508)$ (629)$ (4,963)$ 41,249,042$ NET POSITION

Page 77 of 251


Combining Statement of Revenues, Expenses and Changes in Net Position For the Twelve Months Ended June 30, 2017

(Unaudited)


Liability Workers'

Compensation Property APD Crime Cyber Total

REVENUESMember contribution 16,218,704$ 4,090,086$ 4,231,696$ 259,312$ 39,616$ 92,999$ 24,932,413$ Assessment 25,337,691 - - - - - 25,337,691

Total Revenues 41,556,395 4,090,086 4,231,696 259,312 39,616 92,999 50,270,104

EXPENSESClaims expense (7,282,410) 3,359,719 - - - - (3,922,691) Insurance expense 4,413,689 429,945 3,974,033 239,177 32,526 85,908 9,175,279 Broker fees 100,000 14,000 86,000 - - - 200,000 Claims administration 162,228 72,772 - - - - 235,000 CA division of workers comp. assessment - 654,301 - - - - 654,301 Structured return to work program - 187,620 - - - - 187,620 Program administration 691,276 110,139 133,952 14,162 7,090 7,091 963,711 General & administrative expense 431,911 307,909 9,653 - - - 749,472 Dividends expense - - - - - - -

Total Expenses (1,483,306) 5,136,404 4,203,638 253,339 39,616 92,999 8,242,692

Operating Income (Loss) 43,039,701 (1,046,318) 28,058 5,973 (0) (0) 42,027,412

NONOPERATING INCOME (LOSS)Investment income 41,073 2,284 - - - - 43,356

Change In Net Position 43,080,774 (1,044,035) 28,058 5,973 (0) (0) 42,070,768

Net PostionBeginning Net Position (12,677,829) 11,954,938 (83,763) (9,481) (629) (4,963) (821,726) Ending Net Position 30,402,945$ 10,910,903$ (55,706)$ (3,508)$ (629)$ (4,963)$ 41,249,042$

Page 78 of 251


Combining Statement of Cash Flows For the Twelve Months Ended June 30, 2017

(Unaudited)


Liability Workers

Compensation Property APD Crime Cyber TotalCash Flows from Operating Activities:

Cash Received from Members for Deposit Premiums 18,055,498$ 4,090,086$ 4,231,696$ 259,313$ 39,616$ 92,999$ 26,769,207$ Cash Payments to Suppliers for Services (4,070,592) (6,434,388) (4,203,684) (267,164) (39,616) (92,999) (15,108,444) Cash Payments Relating to Claims and Claim Administration (9,524,259) (1,203,480) - - - - (10,727,739)

Net Cash Provided By (Used For) Operating Activities 4,460,647 (3,547,782) 28,012 (7,851) - - 933,024

Cash Flows from Investing Activities:Purchases of Investments 51,533,675 43,701,124 - - - - 95,234,799 Proceeds from Investment Sales and Maturities (51,530,140) (43,703,407) - - - - (95,233,547) Interest Income Received 41,073 2,283 - - - - 43,356

Net Cash Provided By (Used For) Investing Activities 44,608 - - - - - 44,608

Net Increase (Decrease) in Cash and Cash Equivalents 4,505,255 (3,547,782) 28,012 (7,851) - - 977,632

Cash and Cash Equivalents, Beginning of Year 780,268 7,846,769 (117,311) (10,484) (629) (4,963) 8,493,650 Cash and Cash Equivalents, End of Year 5,285,523$ 4,298,987$ (89,299)$ (18,336)$ (629)$ (4,963)$ 9,471,282$

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities:

Operating loss 43,039,701$ (1,046,318)$ 28,058$ 5,973$ (0)$ (0)$ 42,027,413$ Adjustment to net cash used by operating activities:

(Increase) Decrease in:Accounts Receivable (23,501,113) - - - - - (23,501,113) Prepaid Expenses (9,225) (19,103) - - - - (28,328)

(Decrease) Increase in:Accounts Payable 65,523 33,830 (46) (13,824) - - 85,483 Claims Liabilities (15,134,239) (2,516,191) - - - - (17,650,430)

Net Cash Provided By (Used For) Operating Activities 4,460,647$ (3,547,782)$ 28,012$ (7,851)$ (0)$ (0)$ 933,024$

Supplemental Disclosures:Noncash Investing and Financing Activities:Unrealized loss in market values of investments 64,341$ 54,561$ -$ -$ -$ -$ 118,902$

Page 79 of 251


Approved Budget to Actual Comparison As of June 30, 2017


Approved Budget Budget As of Actual As of

06/30/2017 06/30/2017 06/30/2017

Budget Diff Budget % Var

Revenues

Member Premiums $ 26,718,342 $ 26,718,342 $ 24,932,413 $ (1,785,929) (6.68) %

Assessments 0 0 25,337,691 25,337,691 0.00 % A

Investment Income 0 0 43,356 43,356 0.00 %

Revenues 26,718,342 26,718,342 50,313,460 23,595,118 88.31 %

Expenses

Direct Operating Expense

Claims Expense 12,923,618 12,923,618 (3,922,691) (16,846,309) 130.35 % B

Property Appraisals 25,000 25,000 0 (25,000) 100.00 % C

Claims Administration 229,260 229,260 229,260 0 0.00 %

Brokerage Services 200,000 200,000 200,000 0 0.00 %

DIR Assessment 730,000 730,000 654,301 (75,699) 10.36 %

Excess Insurance 9,175,280 9,175,280 9,175,279 (2) 0.00 %

Structured Return To Work Program 193,360 193,360 193,360 0 0.00 %

Program Administration 963,046 963,046 963,711 665 (0.06) %

Total Direct Operating Expenses 24,439,564 24,439,564 7,493,220 (16,946,346) 69.33 %

General and Administrative Expenses

Loss Control Services 134,800 134,800 134,800 0 0.00 %

Risk Management Certificate 1,600 1,600 651 (949) 59.32 %

Risk Management Fund Program 57,842 57,842 134,036 76,195 (131.72) % D

ICRMA University 35,020 35,020 18,451 (16,570) 47.31 %

Legal Services 100,000 100,000 119,905 19,906 (19.90) %

Defense Cost Initiative 20,000 20,000 0 (20,000) 100.00 % E

Actuarial 77,478 77,478 76,340 (1,139) 1.46 %

Financial Audit 19,500 19,500 20,450 950 (4.87) %

Claims Audit 23,125 23,125 51,800 28,675 (124.00) % F

Insurance 11,000 11,000 10,320 (680) 6.18 %

Meetings 32,600 32,600 23,711 (8,889) 27.26 %

Scholarship/Conference 14,000 14,000 1,863 (12,137) 86.69 % G

Dues & Subscriptions 4,670 4,670 8,537 3,867 (82.79) % H

Special Financial Consulting 5,000 5,000 5,000 0 0.00 %

Transition Support 5,000 5,000 11,210 6,210 (124.19) % I

Data Collection Solution 25,000 25,000 0 (25,000) 100.00 % J

Occu-Med 60,000 60,000 60,000 0 0.00 %

Website Hosting 600 600 8,950 8,350 (1,391.66) % K

Marketing 20,000 20,000 0 (20,000) 100.00 % L

Miscellaneous Expense 0 0 188 188 0.00 %

Software Licensing 35,000 35,000 63,260 28,260 (80.74) % M

General and Administrative Expenses 682,235 682,235 749,472 67,238 (9.85) %

Total Expenses 25,121,799 25,121,799 8,242,692 (16,879,108) 67.18 %

Change in Net Position $ 1,596,543 $ 1,596,543 $ 42,070,768 $ 40,474,226 2,535.11 %

Year To Date

06/30/2017

Page 80 of 251


Approved Budget to Actual Comparison As of June 30, 2017


A Assessment was approved at the November 17, 2017 Board meeting and has been adjusted for 10% Lump Sum Payment Discounts.

B Claims expense has been adjusted to reflect the actuary's most recent projections of ultimate losses which include write down of previous

claim years.

C Property appraisal funds were not utilized this year.

D The risk management fund program budgeted amount is the amount we collect to get each member to $25,000 (or a max collection of $5,000).

It has no relationship to the amount of money that can be withdrawn.

E Defense Cost Initiative funds were not utilized this year.

F Claims audit expense was higher than anticipated due to the change in claims administrators which increased the scope of work for the

auditors.

G Scholarship/Conference funds were budgeted but not utilized this year with the exception of $1,863.

H Dues & subscriptions are over budget this year due to CAJPA Accreditation expense incurred every three years.

I Transition Support is over budget due to the expenses incurred for Sara Peterson Consulting for review and revision of bylaws and JPA.

J Data collection solution funds were not utilized this year.

K Website hosting is over budget due to AJG and Zadro Web expenses.

L Marketing funds were not utilized this year.

M Software licensing is over budget due to additional one time costs incurred during implementation.

Page 81 of 251


Approved Budget to Actual Comparison - Liability As of June 30, 2017


Approved Budget Budget As of Actual As of Year To Date

06/30/2017 06/30/2017 06/30/2017 06/30/2017

Budget % Var

Revenues

Member Premiums $ 18,004,632 $ 18,004,632 $ 41,556,395 130.80 %

Investment Income 0 0 41,072 0.00 %

Revenues 18,004,632 18,004,632 41,597,467 131.03 %

Expenses


Claims Expense 10,505,218 10,505,218 (7,282,411) 169.32 %

Claims Administration 156,488 156,488 163,024 (4.17) %

Brokerage Services 100,000 100,000 100,000 0.00 %

Excess Insurance 4,413,689 4,413,689 4,413,689 0.00 %

Structured Return To Work Program 0 0 (796) 0.00 %

Program Administration 690,596 690,596 691,276 (0.09) %

Total Direct Operating Expenses 15,865,991 15,865,991 (1,915,218) 112.07 %


Loss Control Services 17,332 17,332 17,332 0.00 %

Risk Management Certificate 800 800 326 59.32 %

Risk Management Fund Program 57,842 57,842 128,731 (122.55) %

ICRMA University 17,510 17,510 10,632 39.27 %

Legal Services 70,000 70,000 82,860 (18.37) %

Defense Cost Initiative 20,000 20,000 0 100.00 %

Actuarial 42,761 42,761 43,632 (2.03) %

Financial Audit 11,700 11,700 10,225 12.60 %

Insurance 5,500 5,500 10,320 (87.63) %

Meetings 19,560 19,560 12,322 37.00 %

Scholarship/Conference 7,000 7,000 376 94.63 %

Dues & Subscriptions 2,335 2,335 4,493 (92.43) %

Special Financial Consulting 2,500 2,500 2,500 0.00 %

Transition Support 2,500 2,500 5,605 (124.19) %

Data Collection Solution 10,000 10,000 0 100.00 %

Occu-Med 60,000 60,000 60,000 0.00 %

Data Management & Storage 300 300 4,475 (1,391.66) %

Marketing 10,000 10,000 0 100.00 %

Miscellaneous Expense 0 0 174 0.00 %

Software Licensing 22,000 22,000 37,908 (72.30) %

General and Administrative Expenses 379,640 379,640 431,911 (13.76) %

Total Expenses 16,245,631 16,245,631 (1,483,307) 109.13 %

Change in Net Position $ 1,759,001 $ 1,759,001 $ 43,080,774 2,349.16 %

Page 82 of 251


Approved Budget to Actual Comparison – Workers’ Compensation As of June 30, 2017


11


06/30/2017 06/30/2017 06/30/2017 06/30/2017

Budget % Var

Revenues

Member Premiums $ 4,090,086 $ 4,090,086 $ 4,090,086 0.00 %

Investment Income 0 0 2,284 0.00 %

Revenues 4,090,086 4,090,086 4,092,370 0.05 %

Expenses


Claims Expense 2,418,400 2,418,400 3,359,719 (38.92) %

Claims Administration 72,772 72,772 72,772 0.00 %


DIR Assessment 730,000 730,000 654,301 10.36 %

Excess Insurance 429,945 429,945 429,945 0.00 %

Structured Return To Work Program 193,360 193,360 187,620 2.96 %

Program Administration 110,139 110,139 110,139 0.00 %

Total Direct Operating Expenses 3,968,616 3,968,616 4,828,496 (21.66) %


Loss Control Services 117,468 117,468 117,468 0.00 %

Risk Management Certificate 800 800 326 59.32 %

Risk Management Fund Program 0 0 5,305 0.00 %

ICRMA University 17,510 17,510 7,416 57.64 %

Legal Services 22,500 22,500 29,106 (29.36) %

Actuarial 34,717 34,717 32,708 5.78 %

Financial Audit 5,850 5,850 10,225 (74.78) %

Claims Audit 23,125 23,125 51,800 (124.00) %

Insurance 5,500 5,500 0 100.00 %

Meetings 9,780 9,780 10,077 (3.03) %

Scholarship/Conference 7,000 7,000 1,487 78.74 %

Dues & Subscriptions 2,335 2,335 4,044 (73.16) %

Special Financial Consulting 2,500 2,500 2,500 0.00 %

Transition Support 2,500 2,500 5,605 (124.19) %

Data Collection Solution 15,000 15,000 0 100.00 %

Data Management & Storage 300 300 4,475 (1,391.66) %

Marketing 10,000 10,000 0 100.00 %

Miscellaneous Expense 0 0 15 0.00 %

Software Licensing 13,000 13,000 25,352 (95.01) %

General and Administrative Expenses 289,885 289,885 307,909 (6.21) %

Total Expenses 4,258,501 4,258,501 5,136,405 (20.61) %

Change in Net Position $ (168,415) $ (168,415) $ (1,044,035) (519.91) %

Page 83 of 251


Approved Budget to Actual Comparison – Property As of June 30, 2017


12


06/30/2017 06/30/2017 06/30/2017 06/30/2017

Budget % Var

Revenues

Member Premiums $ 4,231,696 $ 4,231,696 $ 4,231,696 0.00 %

Revenues 4,231,696 4,231,696 4,231,696 0.00 %

Expenses


Property Appraisals 25,000 25,000 0 100.00 %


Excess Insurance 3,974,034 3,974,034 3,974,033 0.00 %


Total Direct Operating Expenses 4,218,986 4,218,986 4,193,985 0.59 %


ICRMA University 0 0 402 0.00 %

Legal Services 7,500 7,500 7,940 (5.86) %

Financial Audit 1,950 1,950 0 100.00 %

Meetings 3,260 3,260 1,311 59.77 %

General and Administrative Expenses 12,710 12,710 9,653 24.05 %

Total Expenses 4,231,696 4,231,696 4,203,638 0.66 %

Change in Net Position $ 0 $ 0 $ 28,058 0.00 %

Page 84 of 251


Approved Budget to Actual Comparison – Auto Physical Damage As of June 30, 2017



06/30/2017 06/30/2017 06/30/2017 06/30/2017

Budget % Var

Revenues

Member Premiums $ 259,313 $ 259,313 $ 259,312 0.00 %

Revenues 259,313 259,313 259,312 0.00 %

Expenses




Total Direct Operating Expenses 253,356 253,356 253,339 0.00 %

Total Expenses 253,356 253,356 253,339 0.00 %

Change in Net Position $ 5,957 $ 5,957 $ 5,973 0.26 %

Page 85 of 251


Approved Budget to Actual Comparison – Crime As of June 30, 2017



06/30/2017 06/30/2017 06/30/2017 06/30/2017

Budget % Var

Revenues

Member Premiums $ 39,616 $ 39,616 $ 39,616 0.00 %

Revenues 39,616 39,616 39,616 0.00 %

Expenses





Total Expenses 39,616 39,616 39,616 0.00 %

Change in Net Position $ 0 $ 0 $ 0 0.00 %

Page 86 of 251


Approved Budget to Actual Comparison – Cyber As of June 30, 2017



06/30/2017 06/30/2017 06/30/2017 06/30/2017

Budget % Var

Revenues

Member Premiums $ 92,999 $ 92,999 $ 92,999 0.00 %

Revenues 92,999 92,999 92,999 0.00 %

Expenses



Program Administration 7,090 7,090 7,091 (0.01) %


Total Expenses 92,999 92,999 92,999 0.00 %

Change in Net Position $ 0 $ 0 $ 0 0.00 %

Page 87 of 251


Graphical Summary of Claims – Workers’ Compensation As of June 30, 2017


Page 88 of 251


Graphical Summary of Claims – Liability As of June 30, 2017


Page 89 of 251

Page 90 of 251

Presented By: James Marta, CPA, CGMA, ARPM

James Marta & Company LLP Certified Public Accountants Accounting, Auditing, Consulting, and Tax Page 91 of 251

Statement of Net Position June 30, 2017 and 2016 (Unaudited)

2017 2016

Current AssetsCash & Cash Equivalents 9,471,282$ 8,493,650$ Investments 5,866,560 5,866,560 Accounts Receivable 150,686 322,011 Assessment Receivable 1,785,714 1,785,714 Interest Receivable 233,721 195,082 Prepaid Expenses 112,982 84,655 Total Current Assets 17,620,945 16,747,672

Noncurrent AssetsInvestments 43,425,760 40,465,650Assessment Receivable 34,386,724 10,714,286.00 Total Noncurrent Assets 77,812,484 51,179,936

Total Assets 95,433,429 67,927,608

Current LiabilitiesAccounts Payable 137,251 51,769 Claim Liabilities 10,000,000 20,000,000 Total Current Liabilities 10,137,251 20,051,769

Noncurrent LiabilitiesClaim Liabilities 44,047,135 48,697,565Total Noncurrent Liabilities 44,047,135 48,697,565

Total Liabilities 54,184,386 68,749,334

Net Position (Deficit), Unrestricted 41,249,042$ (821,726)$ NET POSITION

ASSETS

LIABILITIES

Page 92 of 251

Statement of Revenues, Expenses and Net Position For the Twelve Months Ended June 30, 2017 and 2016 (Unaudited)

Page 93 of 251

Page 94 of 251

Statement of Net Position by Fund June 30, 2017 and 2016 (Unaudited)

Page 95 of 251

Statement of Revenues, Expenses and Net Position by Fund For the Twelve Months Ended June 30, 2017 and 2016 (Unaudited)

Page 96 of 251

Page 97 of 251

Page 98 of 251

} Summary

Page 99 of 251

2017 2016 2017 2016 2017 2016Unpaid loss and loss adjustment expenses at beginning of year 54,352,924$ 44,445,440$ 14,344,641$ 12,271,232$ 68,697,565$ 56,716,672$

beginning of the year

Incurred losses and loss adjustment expenses:Provision for insured events of current year 11,071,574 10,715,593 2,270,446 2,408,517 13,342,020 13,124,110 Provision for insured events of prior years (18,353,984) 22,380,137 1,089,273 394,914 (17,264,711) 22,775,051

Total incurred loss and loss adjustment expenses (7,282,410) 33,095,730 3,359,719 2,803,431 (3,922,691) 35,899,161

Payments:Loss and loss adjustments expenses for insured events of the

current year - - - - - - Loss and loss adjustments expenses for insured events of the

prior year 9,524,259 23,188,246 1,203,480 730,022 10,727,739 23,918,268 Total payments of loss and loss adjustment expenses 9,524,259 23,188,246 1,203,480 730,022 10,727,739 23,918,268

Unpaid loss and loss adjustment expenses at end of year 37,546,255$ 54,352,924$ 16,500,880$ 14,344,641$ 54,047,135$ 68,697,565$

Reserve for known claims 13,642,456$ 25,328,560$ 3,390,204$ 2,906,276$ 17,032,660$ 28,234,836$ Reserve for incurred but not reported (IBNR) 22,976,799 28,177,719 13,032,676 11,387,174 36,009,475 39,564,893 Reserve for unallocated loss adjustment expenses (ULAE) 927,000 846,645 78,000 51,191 1,005,000 897,836

Total claims payable as of end of year 37,546,255$ 54,352,924$ 16,500,880$ 14,344,641$ 54,047,135$ 68,697,565$

General Liability Workers' Compensation Total

Page 100 of 251

Page 101 of 251

Page 102 of 251

} ICRMA’s claims have improved based on ◦ Closure and settlement of claims ◦ Reduction in reserves ◦ Improved litigation management

} The financial position has been stabilized with a plan to fund deficit years.

} Volatility will be reduced with a lower SIR going forward.

James Marta CPA, CGMA, ARPM

Page 103 of 251


Subject: Annual Review of the Assessment Financial Plan Action for consideration: Receive the annual update of the assessment financial status Background: During the past five years, the Governing Board has evaluated various aspects of the Liability Program and has taken numerous proactive steps to ensure the financial integrity of the program due to multiple catastrophic losses. After several open discussions, in January 2016 the Board approved a comprehensive financial plan based on the June 30, 2015 financial statements. In June 2016, after learning additional claim development had exceeded actuarial estimates, the Board held additional deliberations in open meetings and in November 2016 adopted a revised plan of assessments in an exercise of fiscal prudence. Total assessments declared were approximately $38 million. Multiple independent parties reviewed the assessments, and recognizing that the claim liabilities will continue to change until all claims are closed, the Board established an annual review process to evaluate if assessment adjustments are necessary. The review process is anticipated to take place each autumn, after the year-end financial statements have been prepared. As noted in the presentation materials attached to this agenda item, a reduction of approximately $5.6 million, or 14.7%, has occurred in the assessed deficit years. In other words, based upon the actuary’s estimate of ultimate losses, the deficit in the five years assessed has dropped from $38 million to $32.6 million. Due to the volatility of the losses and the $5 million pool retention in the most recent years assessed, the administrative and financial teams recommend no change be made to the assessment at this time. The original plan adopted by the Board anticipated consistent payments for the members. If the deficit continues to improve, it is recommended the same calculated payments remain in place, but for fewer years. For example, based upon the recent reduction to the estimate of ultimate losses, the 10 year payment period would be reduced by 1.47 years. Below is a summary of accounts receivable payment activity and unpaid invoices as of October 3, 2017.

· Redondo Beach’s assessment invoice has not been paid. · All 2017/18 renewal invoices have been paid. · Manhattan Beach owes $735.52 in interest for their deferral invoice (addressed in

another agenda item in this meeting).

Page 104 of 251


Receivable Details Assessment invoices were emailed on June 30, 2017 and due July 31, 2017. Lump sum invoices included a 10% discount if paid by July 31, 2017. In accordance with Section 13.3.1 of the ICRMA Bylaws, past due invoices will be revised to reflect a late fee penalty of 10% per annum from the due date.

Section 13.3 – Late Fees 13.3.1 Unless other arrangements for payment have been approved by the Governing Board, Members with delinquent amounts due shall be assessed a penalty which shall be one percent of the unpaid amount due and payable to the Authority 30 days after the initial invoice due date. A penalty of another one percent shall accrue after an additional 45 days. Interest shall accrue on all delinquent amounts due and payable to the Authority at the applicable rate of 10% per annum from the due date of the billing until the date finally posted by the designated financial institution.

Only the City of Redondo Beach’s payment remains outstanding. On September 6, 2017, the City of Redondo Beach filed a complaint against ICRMA in Los Angeles Superior Court for declaratory relief, injunctive relief, and accounting related to the liability program assessments.

Attachments: Letter from Bay Actuarial Presentation Regarding the Assessment Status Prepared by: Jim Marta, Finance Director

Beth Lyons, Executive Director

Invoice Type Total Billed Total ReceivedTotal Due as of

9/29/20172017/18 Renewal Invoices 22,423,507.00 22,423,507.00 - Assessment Invoices Year 1 of 10 3,045,223.20 3,045,223.20 - Assessment Invoices - Lump Sum 5,806,649.29 3,761,979.35 2,044,669.94 Deferral Invoices (Outstanding at 7/1/2016) 192,323.00 192,323.00 - Interest on Unpaid Deferral Invoices 3,393.21 2,657.89 735.32

Total 31,471,095.70 29,425,690.44 2,045,405.26

Member AmountCity of Redondo Beach 2,044,669.94

Total 2,044,669.94

There is 1 Unpaid Assessment InvoicePayment ElectionLump Sum

Page 105 of 251

Page 106 of 251

Page 107 of 251

Page 108 of 251

Exhibit 1

Independent Cities Risk Management AuthorityLiability Program

REPRINT OF PAGE 25 OF BAY ACTUARIAL 5/16/17 ACTUARIAL REPORTEstimated Unpaid Losses as of December 31, 2016

Estimated EstimatedEstimated Losses Case Losses IBNR Unpaid

Program Ultimate Paid Reserves Reported Liability LossesYear Losses @ 12/31/16 @ 12/31/16 @ 12/31/16 @ 12/31/16 @ 12/31/16

(1) (2) (3) (4) (5) (6)

1998-99 $2,871,796 2,855,410 $16,386 2,871,796 $0 $16,386 1999-00 1,677,868 1,677,868 0 1,677,868 0 0 2000-01 3,304,733 3,304,733 0 3,304,733 0 0 2001-02 2,677,792 2,677,792 0 2,677,792 0 0 2002-03 4,164,509 4,164,509 0 4,164,509 0 0 2003-04 9,873,715 9,873,715 0 9,873,715 0 0 2004-05 6,744,535 6,744,535 0 6,744,535 0 0 2005-06 1,946,448 1,946,448 0 1,946,448 0 0 2006-07 5,174,937 5,174,937 0 5,174,937 0 0 2007-08 6,270,000 5,331,594 922,189 6,253,783 16,217 938,406 2008-09 5,120,000 4,940,446 151,088 5,091,534 28,466 179,554 2009-10 1,810,000 1,333,787 436,552 1,770,339 39,661 476,213 2010-11 4,480,000 4,323,628 71,285 4,394,913 85,087 156,372 2011-12 9,260,000 8,803,742 73,734 8,877,476 382,524 456,258 2012-13 20,980,000 14,210,155 6,395,774 20,605,929 374,071 6,769,845 2013-14 22,510,000 17,599,074 3,220,490 20,819,564 1,690,436 4,910,926 2014-15 7,190,000 0 1,795,623 1,795,623 5,394,377 7,190,000 2015-16 9,840,000 0 395,002 395,002 9,444,998 9,840,000 2016-17 5,750,000 0 629,344 629,344 5,120,656 5,750,000

Total $131,646,333 $94,962,373 $14,107,467 $109,069,840 $22,576,494 $36,683,960

Notes:(1) Page 25 of May 16, 2017 actuarial report.(2) Page 25 of May 16, 2017 actuarial report.(3) Page 25 of May 16, 2017 actuarial report.(4) Page 25 of May 16, 2017 actuarial report.(5) Page 25 of May 16, 2017 actuarial report.(6) Page 25 of May 16, 2017 actuarial report.

Page 4Bay Actuarial Consultants

Page 109 of 251

Exhibit 2


REPRINT OF PAGE 23 OF BAY ACTUARIAL 5/16/17 ACTUARIAL REPORTProjected Unpaid Losses as of June 30, 2017

Projected Projected Projected Projected ProjectedEstimated Paid Case Reported IBNR Unpaid

Program Ultimate Losses Reserves Losses Liability LossesYear Losses @ 6/30/17 @ 6/30/17 @ 6/30/17 @ 6/30/17 @ 6/30/17

(1) (2) (3) (4) (5) (6)

1998-99 $2,871,796 $2,855,410 $16,386 $2,871,796 $0 $16,386 1999-00 1,677,868 1,677,868 0 1,677,868 0 0 2000-01 3,304,733 3,304,733 0 3,304,733 0 0 2001-02 2,677,792 2,677,792 0 2,677,792 0 0 2002-03 4,164,509 4,164,509 0 4,164,509 0 0 2003-04 9,873,715 9,873,715 0 9,873,715 0 0 2004-05 6,744,535 6,744,535 0 6,744,535 0 0 2005-06 1,946,448 1,946,448 0 1,946,448 0 0 2006-07 5,174,937 5,174,937 0 5,174,937 0 0 2007-08 6,270,000 5,630,912 628,267 6,259,179 10,821 639,088 2008-09 5,120,000 4,974,775 127,244 5,102,019 17,981 145,225 2009-10 1,810,000 1,483,680 299,184 1,782,863 27,137 326,320 2010-11 4,480,000 4,350,667 47,293 4,397,960 82,040 129,333 2011-12 9,260,000 8,901,264 253,036 9,154,300 105,700 358,736 2012-13 20,980,000 16,472,495 4,169,263 20,641,759 338,241 4,507,505 2013-14 22,510,000 19,701,715 1,943,676 21,645,391 864,609 2,808,285 2014-15 7,190,000 349,034 3,186,676 3,535,710 3,654,290 6,840,966 2015-16 9,840,000 6,162 763,263 769,425 9,070,575 9,833,838 2016-17 11,500,000 9,578 913,881 923,459 10,576,541 11,490,422

Total $137,396,333 $100,300,230 $12,348,169 $112,648,399 $24,747,934 $37,096,104

Notes:(1) Page 23 of May 16, 2017 actuarial report,(2) Page 23 of May 16, 2017 actuarial report,(3) Page 23 of May 16, 2017 actuarial report,(4) Page 23 of May 16, 2017 actuarial report,(5) Page 23 of May 16, 2017 actuarial report,(6) Page 23 of May 16, 2017 actuarial report,


Page 110 of 251

Exhibit 3


UPDATED PAGE 25 OF ACTUARIAL REPORT BASED ON CORRECTED 12/31/16 DATAEstimated Unpaid Losses as of December 31, 2016

Estimated EstimatedEstimated Losses Case Losses IBNR Unpaid

Program Ultimate Paid Reserves Reported Liability LossesYear Losses @ 12/31/16 @ 12/31/16 @ 12/31/16 @ 12/31/16 @ 12/31/16

(1) (2) (3) (4) (5) (6)

1998-99 $2,871,796 2,855,410 $16,386 2,871,796 $0 $16,386 1999-00 1,677,868 1,677,868 0 1,677,868 0 0 2000-01 3,304,733 3,304,733 0 3,304,733 0 0 2001-02 2,677,792 2,677,792 0 2,677,792 0 0 2002-03 4,164,509 4,164,509 0 4,164,509 0 0 2003-04 9,873,715 9,873,715 0 9,873,715 0 0 2004-05 6,744,535 6,744,535 0 6,744,535 0 0 2005-06 1,946,448 1,946,448 0 1,946,448 0 0 2006-07 5,174,937 5,174,937 0 5,174,937 0 0 2007-08 6,270,000 5,331,594 922,189 6,253,783 16,217 938,406 2008-09 5,120,000 4,940,446 151,088 5,091,534 28,466 179,554 2009-10 1,810,000 1,333,787 436,552 1,770,339 39,661 476,213 2010-11 5,750,000 5,573,628 71,285 5,644,913 105,087 176,372 2011-12 10,180,000 8,803,742 958,734 9,762,476 417,524 1,376,258 2012-13 20,980,000 14,210,155 6,395,774 20,605,929 374,071 6,769,845 2013-14 22,510,000 17,599,074 3,220,490 20,819,564 1,690,436 4,910,926 2014-15 7,190,000 0 1,795,623 1,795,623 5,394,377 7,190,000 2015-16 9,840,000 0 395,002 395,002 9,444,998 9,840,000 2016-17 5,750,000 0 629,344 629,344 5,120,656 5,750,000

Total $133,836,333 $96,212,373 $14,992,467 $111,204,840 $22,631,493 $37,623,960

Notes:(1) Revised actuarial estimates reflecting corrected data in Columns (2) and (3).

2016-17 value reflects 1/2 year exposure through 12/31/16(2) New Data supplied by James Marta, 10/3/17.(3) New Data supplied by James Marta, 10/3/17.(4) (2) + (3).(5) (1) - (4).(6) (1) - (2).


Page 111 of 251

Exhibit 4


UPDATED PAGE 23 OF ACTUARIAL REPORT BASED ON CORRECTED 12/31/16 DATAProjected Unpaid Losses as of June 30, 2017

Projected Projected Projected Projected ProjectedEstimated Paid Case Reported IBNR Unpaid

Program Ultimate Losses Reserves Losses Liability LossesYear Losses @ 6/30/17 @ 6/30/17 @ 6/30/17 @ 6/30/17 @ 6/30/17

(1) (2) (3) (4) (5) (6)

1998-99 $2,871,796 $2,855,410 $16,386 $2,871,796 $0 $16,386 1999-00 1,677,868 1,677,868 0 1,677,868 0 0 2000-01 3,304,733 3,304,733 0 3,304,733 0 0 2001-02 2,677,792 2,677,792 0 2,677,792 0 0 2002-03 4,164,509 4,164,509 0 4,164,509 0 0 2003-04 9,873,715 9,873,715 0 9,873,715 0 0 2004-05 6,744,535 6,744,535 0 6,744,535 0 0 2005-06 1,946,448 1,946,448 0 1,946,448 0 0 2006-07 5,174,937 5,174,937 0 5,174,937 0 0 2007-08 6,270,000 5,630,912 628,267 6,259,180 10,820 639,088 2008-09 5,120,000 4,974,775 127,244 5,102,019 17,981 145,225 2009-10 1,810,000 1,483,680 299,184 1,782,863 27,137 326,320 2010-11 5,750,000 5,604,125 44,550 5,648,676 101,324 145,875 2011-12 10,180,000 9,097,909 966,720 10,064,629 115,371 1,082,091 2012-13 20,980,000 16,472,495 4,169,263 20,641,759 338,241 4,507,505 2013-14 22,510,000 19,701,715 1,943,676 21,645,391 864,609 2,808,285 2014-15 7,190,000 349,034 3,186,676 3,535,710 3,654,290 6,840,966 2015-16 9,840,000 6,162 763,263 769,425 9,070,575 9,833,838 2016-17 11,500,000 9,578 913,881 923,459 10,576,541 11,490,422

Total $139,586,333 $101,750,332 $13,059,111 $114,809,444 $24,776,889 $37,836,001

Notes:(1) Page 6, Column (1).

2016-17 value doubled to reflect full program year exposure.(2) Projected by BAC.(3) (4) - (2).(4) Projected by BAC.(5) (1) - (4).(6) (1) - (2).


Page 112 of 251

Independent Cities Risk Management Authority

Status of Financial Plan October 11, 2017

Page 113 of 251

Long Term Financial Plan

• Board approved unanimously the revised financial plan on November 17, 2016 which assessed as follows: – 2003/04 $ 2,308,572

– 2011/12 $ 4,149,603

– 2012/13 $13,619,158

– 2013/14 $16,940,004

– 2014/15 $ 1,238,351

– Total $38,255,688 2 Page 114 of 251

Validation of Financial Information

• Ultimate loss estimates (provided by the actuary) used for the assessment calculation were also used for the year end closing.

• This included the 5-16-17 actuary estimates based on the 12-31-16 claims data. – We adjusted the ultimate losses

• 2007-08 down $909,386 since the last claim was closed.

• 2010-11 up $1,250,000 for a claim payment correction

• 2011-12 up $885,000 for a claim reporting change

3 Page 115 of 251

Comparison to the Actuary Ultimate Loss

Deficit years are highlighted.

4

Required

Per Actuary Ultimate Discounting Adjusted12/31/2016 Adjustment Other Adjustment Ultimate

2000-01 3,304,733$ 40$ 3,304,773$ 2001-02 2,677,792 - 2,677,792 2002-03 4,164,509 - 4,164,509 2003-04 9,873,715 - 9,873,715 2004-05 6,744,535 - 6,744,535 2005-06 1,946,448 - 1,946,448 2006-07 5,174,937 - 5,174,937 2007-08 6,270,000 (909,386) - 5,360,614 Adjust for closed claim2008-09 5,120,000 (620) 5,119,380 2009-10 1,810,000 (5,548) 1,804,452 2010-11 4,480,000 1,250,000 (824) 5,729,176 Paid reclass 88/892011-12 9,260,000 885,000 (20,758) 10,124,242 Reserve adjustment2012-13 20,980,000 (75,907) 20,904,093 2013-14 22,510,000 (40,169) 22,469,831 2014-15 7,190,000 (16,625) 7,173,375 2015-16 9,840,000 (175,100) 9,664,900 2016-17 11,500,000 (428,426) 11,071,574 Total w/o prior 132,846,669$ 1,225,614$ 40$ (763,977)$ 133,308,346$ Net difference of reported by actuary to adjusted ultimate 461,677

Page 116 of 251

Change in Discounted Ultimate Loss

Deficit years are highlighted.

5

ICRMAAnalysis of Liability Program changes in ultimate losses

Adjusted Ultimate Adjusted Ultimate2016 assmt 2017 final change

Prior 42,918,929$ 42,429,694$ (489,235)$ 2000-01 3,300,000 3,304,773 4,773$ 2001-02 2,677,792 2,677,792 -$ 2002-03 4,066,042 4,164,509 98,467$ 2003-04 9,879,527 9,873,715 (5,812) 2004-05 6,744,535 6,744,535 -$ 2005-06 1,946,448 1,946,448 -$ 2006-07 5,272,377 5,174,937 (97,440)$ 2007-08 5,376,254 5,360,614 (15,640)$ 2008-09 5,105,064 5,119,380 14,316$ 2009-10 4,985,022 1,804,452 (3,180,570)$ 2010-11 5,061,964 5,729,176 667,212$ 2011-12 11,418,586 10,124,242 (1,294,344) 2012-13 21,612,479 20,904,093 (708,386) 2013-14 25,707,342 22,469,831 (3,237,511) 2014-15 10,866,781 7,173,375 (3,693,406) 2015-16 8,067,263 9,664,900 1,597,637$ 2016-17 11,071,574 11,071,574$

Total Ultimate 175,006,405$ 175,738,040$ 731,635$

Page 117 of 251

Claim Liabilities by Policy Year

6 Page 118 of 251

June 30, 2017

Equity per financial Statements (proof of total equity balance)

7 Page 119 of 251

Calculated Policy year Equity

Equity per financial Statements (Proof of policy year equity balance) 8

Equity RevisedCalculated Equity

2016 June 2017 AuditW/O assessments W/O assessments Change

2016 assmt 2017 finalPrior 3,006,192$ 2,181,217$ (824,975)$ 2000-01 991,450 1,008,110 16,660$ 2001-02 1,877,956 1,918,752 40,796$ 2002-03 1,404,242 1,334,141 (70,101)$ 2003-04 (2,308,572) (2,151,024) 157,548 2004-05 680,052 694,826 14,774$ 2005-06 6,490,937 6,631,944 141,007$ 2006-07 1,668,102 1,802,941 134,839$ 2007-08 1,041,464 1,080,067 38,603$ 2008-09 872,016 878,606 6,590$ 2009-10 118 3,233,532 3,233,414$ 2010-11 785,859 142,721 (643,138)$ 2011-12 (4,149,603) (2,974,941) 1,174,662 2012-13 (13,619,158) (13,314,783) 304,375 2013-14 (16,940,004) (14,190,344) 2,749,660 2014-15 (1,238,351) 2,197,793 3,436,144 2015-16 1,000,358 1,892,775 892,417$ 2016-17 - 198,920 198,920$

Policy year equity (18,436,942) (7,434,747) Unallocated 2015-16 Assessment 12,500,000 12,500,000 Unallocated 2016-17 Assessment 25,337,692

Equity with Assessment (5,936,942)$ 30,402,945$

Page 120 of 251

Analysis of Defict Years

Current deficit years improved. The improvement was 14.70%.

9

Change favorable by a bit over one SIR. Still have exposure.

Original Current deficits Reduction in Policy Year 2016 assmt W/C Assmt Alloc. Deficits2003-04 (2,308,572)$ (2,151,024)$ 157,548$ 2011-12 (4,149,603) (2,974,941) 1,174,662 2012-13 (13,619,158) (13,314,783) 304,375 2013-14 (16,940,004) (14,190,344) 2,749,660 2014-15 (1,238,351) - 1,238,351 Totals (38,255,688)$ (32,631,092)$ 5,624,596$

Change -14.70%

Page 121 of 251

Policy year equity before application of assessments

Green lines show improvement

10 Page 122 of 251


• Seven cities elected to pay the lump-sum balance with the 10% discount

• Of the remaining cities all but Redondo Beach have paid the assessment in accordance with the payment plan.

• Redondo Beach owes $2,141,303 (including interest and penalties).

Member Assessment Status

11 Page 123 of 251


• Claims have continued to develop, but mostly favorably. Current estimates show a 14.7% reduction in the calculated deficit.

• The 2003-04 year deficit reduced by $157,548.

Review of Plan

12 Page 124 of 251


Maintain the current plan and review annually.

• The original plan anticipated level payments for members. If the deficit improves, it is recommended the same payment continue, but for less time. If the current valuations continue, the payments on the newer years would be shortened by nearly 1.5 years.

Recommendation

13 Page 125 of 251


Subject: Request from Manhattan Beach to waive interest payment Action for consideration: Consider Manhattan Beach’s request for a waiver of its $735.32 interest payment on the deferred contribution loan. Background: During the 2004/05 and 2006/07 budget cycles, the Governing Board allowed members to defer a portion of their liability and workers’ compensation contributions. Members could elect to pay contributions at a lower confidence level than was approved by the Board during those program years, and the difference would be loaned by either the Liability or Workers’ Compensation Programs. Four members elected this option for a total of $176,287. There was not a specific plan outlined for repayment, but the expectation was that the loan repayment would be made from future dividends. Because the net position of the liability program decreased significantly over the past several years, and the net position in the workers’ compensation program has not reached the levels for consideration of dividends, in June 2015 the Governing Board required repayment of these loans. Invoices were issued in 2015 and again in early 2017. The cities of Azusa and Redondo Beach paid the invoices, and the finance team worked diligently to collect the two unpaid invoices. In July 2017, the cities of Lynwood and Manhattan Beach were invoiced for the deferred contribution loan amount as well as interest due. In August Lynwood paid the deferred contribution loan amount and interest. Manhattan Beach paid the deferred contribution loan amount of $29,173 on September 29, 2017, and made a verbal request that the unpaid interest fees be waived. The City requested the waiver because it felt ICRMA was not proactive in developing a payment plan and providing the balance due. Prepared by: Jim Marta, Finance Director Ashley O’Brian, Assistant Executive Director

Page 126 of 251


Subject: Auto Physical Damage Program Audits and Reconciliation Action for consideration: Review the premium adjustments made to the Auto Physical Damage program and direct the finance team to send invoices to the members. Background: During the year members make changes to their auto schedules as vehicles are acquired or eliminated from the fleet. When schedule changes are made, premium adjustments are triggered by the carrier and invoiced or refunded to ICRMA. In the past, ICRMA has accounted for those changes and invoiced members for the difference at year end, rather than billing upon receipt. When ICRMA’s finance team switched from Bickmore to James Marta and Company in 2016, however, the premium changes were made by ICRMA, but were not invoiced or refunded to the members. As a result, premium adjustments of $13,825 are due for the 2015-16 coverage period. During the 2016-17 coverage period, members again made adjustments to vehicle schedules which resulted in an additional premium payment of $8,039 from ICRMA to the carrier. These amounts also need to be invoiced or refunded to the members, and below is a summary of the amounts due:

While members must report all vehicles for which they want coverage, the broker reports additional premium for the 2017-18 coverage period will only be charged for vehicles added during the year

Page 127 of 251


with values of over $1 million. Members will receive regular reminders to update their schedules in RiskPartner. On July 1, 2017, ICRMA created a self-insured property and auto property damage program. The quote provided to the Board, and approved as part of the budget process, was based upon the total insured values (TIV) provided with the renewal data in February 2017. The actual invoice sent by the carrier, however, was based upon the updated TIV information provided in June. The increase in TIV between February and June was $3.7 million, or 4%, which resulted in additional premium due of $2,207. The broker was successful in securing a waiver of additional premium from the excess carriers, but the primary carrier would not waive the additional premium. This resulted in an unbudgeted expense of $774 that also needs to be collected from the members. RPA will work with the finance team to include a contingency fund in the 2018-19 budget to ensure enough money is collected to pay for premium adjustments due to revised TIV calculations.

RPA and the finance team recommends the Board authorize invoices be sent as outlined in the summary chart above. Attachments: Premium Audit Adjustments for 2015-16

Premium Audit Adjustments for 2016-17 Prepared by: Nicole Rushing, Finance Manager

Beth Lyons, Executive Director

Page 128 of 251

Independent Cities Risk Management Association (ICRMA)Auto Physical Damage2015-2016 Year-End Audit

Average 2015No. Member Values Deductible Rate Premium Values Deductible Rate Premium Premium Audit Premium1 Alhambra $ 14,179,664 $ 10,000 0.23 32,613$ $ 15,966,725 $ 10,000 0.23 36,723$ 34,668$ 2,055$ 2 Azusa $ 8,094,098 $ 5,000 0.28 22,663$ $ 8,094,098 $ 5,000 0.28 22,663$ 22,663$ -$ 3 Baldwin Park $ 5,268,847 $ 5,000 0.28 14,753$ $ 5,268,847 $ 5,000 0.28 14,753$ 14,753$ -$ 4 Culver City $ 20,660,084 $ 10,000 0.23 47,518$ $ 20,660,084 $ 10,000 0.23 47,518$ 47,518$ -$ 5 Downey $ 8,726,237 $ 10,000 0.23 20,070$ $ 11,891,655 $ 10,000 0.23 27,351$ 23,711$ 3,641$ 6 Fullerton $ 19,554,608 $ 10,000 0.23 44,976$ $ 19,236,314 $ 10,000 0.23 44,244$ 44,610$ (366)$ 7 Glendora $ 2,178,000 $ 10,000 0.23 5,009$ $ 2,128,000 $ 10,000 0.23 4,894$ 4,952$ (58)$ 8 Hermosa Beach $ 4,281,455 $ 5,000 0.28 11,988$ $ 5,155,164 $ 5,000 0.28 14,434$ 13,211$ 1,223$ 9 Huntington Park $ 3,808,056 $ 5,000 0.28 10,663$ $ 3,598,661 $ 5,000 0.28 10,076$ 10,370$ (294)$

10 Lynwood $ 1,773,468 $ 5,000 0.28 4,966$ $ 2,146,134 $ 5,000 0.28 6,009$ 5,488$ 522$ 11 Monterey Park $ 9,950,911 $ 5,000 0.28 27,863$ $ 10,364,430 $ 5,000 0.28 29,020$ 28,442$ 579$ 12 Redondo Beach $ 5,902,694 $ 5,000 0.28 16,528$ $ 9,836,363 $ 5,000 0.28 27,542$ 22,035$ 5,507$ 13 San Fernando $ 3,067,000 $ 5,000 0.28 8,587$ $ 3,197,000 $ 5,000 0.28 8,952$ 8,770$ 183$ 14 South Gate $ 5,874,500 $ 10,000 0.23 13,511$ $ 6,599,360 $ 10,000 0.23 15,179$ 14,345$ 834$

$ 113,319,622 281,708$ 124,142,835$ 309,358$ 295,533$ 13,825$

2015-2016 2015-2016

Page 129 of 251

Independent Cities Risk Management Association (ICRMA)Auto Physical Damage2016-17 Year-End Audit

No. Member Deductible Values Rate Premium Values Variance Rate Premium1 Alhambra $10,000 $15,966,725 0.230 $36,723 $17,563,426 $1,596,701 0.115 $1,8363 Baldwin Park $5,000 $5,268,847 0.280 $14,753 $5,268,847 $0 0.140 $05 Downey $10,000 $11,891,655 0.230 $27,351 $12,634,391 $742,736 0.115 $8546 Fullerton $10,000 $19,236,314 0.230 $44,244 $19,483,314 $247,000 0.115 $2847 Glendora $10,000 $2,128,000 0.230 $4,894 $3,095,000 $967,000 0.115 $1,1128 Hermosa Beach $5,000 $5,155,164 0.280 $14,434 $4,638,214 ($516,950) 0.140 ($724)9 Huntington Park $5,000 $3,598,661 0.280 $10,076 $3,694,831 $96,170 0.140 $135

10 Lynwood $5,000 $2,146,134 0.280 $6,009 $2,314,134 $168,000 0.140 $23511 Monterey Park $5,000 $10,364,430 0.280 $29,020 $13,912,907 $3,548,477 0.140 $4,96812 Redondo Beach $5,000 $9,836,363 0.280 $27,542 $9,836,363 $0 0.140 $013 San Fernando $5,000 $3,197,000 0.280 $8,952 $3,317,000 $120,000 0.140 $16814 South Gate $10,000 $6,599,360 0.230 $15,179 $5,878,360 ($721,000) 0.115 ($829)

$95,388,653 $239,177 $101,636,787 $6,248,134 $8,039

2016-2017 Expiration2016-2017 Inception

Page 130 of 251


Subject: Review Financial Policies Action for consideration: Review financial policies and provide feedback Background: Multiple financial policies were reviewed and considered during the Governing Document review process. RPA staff and consultant Sara Peterson will facilitate a Board discussion of the attached policy outline as well as existing or proposed language. Attachments: Draft Financial Policies Prepared by: Beth Lyons, Executive Director Sara Peterson, Consultant

Page 131 of 251

WORKING DRAFT – As of 10/2017 edits

*** ICRMA General Counsel must review and approve all documents prior to any vote by the Board of Directors. Page 1 of 6

POLICIES & PROCEDURES FOR FINANCIAL MANAGEMENT

Draft Text Notes Contents

A. General B. Definitions C. Net Asset Policy D. Internal Controls & Accounting E. Investment Policy F. Calculating Dividends and Assessments G. Member Contribution Procedures H. Annual Budget Procedures I. Purchasing Procedures J. Service Provider Agreement Renewal K. Amendment

A. General This policy and procedure document shall be treated as one of ICRMA's Governing Documents and, as such, shall have the same effect as the Joint Exercise of Powers Agreement for Insurance and Risk Management Purposes (Agreement), the ICRMA Bylaws and Memorandum of Coverage (MOC). If any provision of this document conflicts with the Joint Exercise of Powers Agreement for Insurance and Risk Management Purposes (Agreement), the ICRMA Bylaws and Memorandum of Coverage (MOC), the then current version of those documents govern whenever approved.

B. Definitions 1. “Claims Paid to Date” is the amount actually paid on reported claims at the date of valuation.

“Claims Paid to Date” includes those amounts paid for both defense and indemnity of claims.

2. “Confidence Level” is a statistical term used to express the degree to which an actuarial projection (usually “Ultimate Net Loss” or “IBNR”) will be an accurate prediction of the dollar losses ultimately paid for a given program year or combination of years. The higher a “Confidence Level” the greater certainty the actuary has that losses will not exceed the dollar value used to attain that “Confidence Level”.

3. “Equity” or “Net Assets” is the amount of assets remaining, after deducting all liabilities, including liabilities of unpaid losses discounted for investment income and estimated at the actuarially determined “Expected” or “Central Estimate” “Confidence Level”.

4. “Expected” by industry standard translates roughly to the 50% to 56% “Confidence Level” as determined by the independent actuary.

5. “Expected Liabilities” is the total of all “Outstanding Reserves”, “IBNR”, discounted, at the “Expected” “Confidence Level” and “ULAE”.

6. “Incurred But Not Reported (IBNR)” is the estimate of the funds needed to pay for covered losses that have occurred but have not yet been reported to the member and/or ICRMA. “IBNR” includes (a) known and unknown loss events that are expected to be claims; and (b) expected future development on claims already reported.

7. “Net Contribution” includes the total contributions from members less the excess insurance cost.

8. “Net Present Value” is the discounting of future cash flows to current values by taking into account the time-value of money.

9. “Self Insured Retention” is the maximum amount of exposure to a single loss retained by ICRMA.

10. “Outstanding Reserves” are the sum total of unpaid case reserves in the “Self Insured Retention” as determined by the ICRMA Claims Manager.

11. “Ultimate Net Loss” is the sum of “Claims Paid to Date”, “Outstanding Reserves”, and “IBNR”, all within ICRMA’s “Self Insured Retention”. It is the estimate of the total value of all claims that will ultimately be made against members for which ICRMA is responsible.

Edits to original text in this document in bold green Definitions taken verbatim from current Net Assets policy document

Page 132 of 251



Draft Text Notes 12. “Unallocated Loss Adjustment Expenses (ULAE)” are settlement expenses that cannot be directly

attributed to individual claims.

C. Net Asset Policy 1. Purpose

The purpose of this policy statement is to give guidance to the Board in making annual funding, dividend and assessment decisions for the ICRMA pooled liability and workers compensation programs. By adoption of this policy statement, the Board acknowledges the long-term financial strength of the ICRMA pooled program is of utmost importance.

The Board relies heavily on actuarial estimates when making financial decisions. Such estimates, though professionally developed, contain uncertainty due to the random nature of liability claims, the ICRMA’s significant self-insured retention level, possible data errors, inaccurate case reserving and other unknowns. Accordingly, the Board desires to fund the ICRMA pooled programs in a cautious and prudent manner and return equity to its members in an equally cautious and prudent manner. ICRMA seeks to conservatively fund the outstanding liabilities of its pooled programs and to maintain net assets sufficient to absorb substantial fluctuations from estimates.

To fund program years in a fiscally prudent manner, ICRMA collects contributions at an actuarially determined confidence level as determined by the Board annually. The ICRMA Board strives to annually collect at the 70% confidence level or higher for the liability program and the 80% confidence level or higher for the workers compensation program as determined by the actuary.

In addition, as provided in the ICRMA governing documents, dividends may be declared and paid solely at the discretion of the Board provided that the net assets of the program plus the reserves for unpaid losses, after dividend, equals or exceeds a 90% confidence level (discounted for the liability program and undiscounted for the workers compensation program).

2. IMPORTANT NET ASSET RATIOS

The ICRMA GB will only consider returning “Equity” to the members after evaluating and concluding the following ratios remain appropriate for the group prior to and following any potential return of “Equity”:

“Net Contributions” to “Net Assets” ratio: Target ≤ 2:1. This ratio is a measure of how “Net Assets” compare to the rate at which the pool is taking on risk (or growing), measured by the current annual volume of contributions, less contributions passed through to reinsurers or insurers. A low ratio is desirable. “Outstanding Reserves” to “Net Assets” ratio: Target ≤ 3:1. This ratio is a measure of how “Net Assets” are leveraged against possible reserve inadequacies. A low ratio is desirable. “Net Assets” to “Self Insured Retention” ratio: Target ≥ 5:1. This ratio measures how conservative the “Net Asset” position is by virtue of how many retained occurrences the “Net Asset” amount could absorb. A high ratio is desirable. Reserve Development: Target ≤ 20%. This is a measure of the change in aggregate ultimate losses from one valuation period to the prior valuation(s). Generally, the one-year and two-year reserve development to “Equity” threshold should be less than 20%. A low ratio is desirable. Change in “Net Assets”: Target ≥ -10%. This ratio measures the stability “Net Assets,” from recent events. A decline in excess of 10% may signal a new adverse trend and warrant consideration of more conservative financial decisions in the near term. A positive or low-negative ratio is desirable.

3. ANNUAL ACTUARIAL STUDY

ICRMA will engage credentialed actuaries with appropriate experience to perform annual actuarial studies to assist the Board in making funding decisions.

Minor edits made to the net asset policy as highlighted in bold green Section on Dividend and Assessment Criteria moved to new section for calculating same Section on review / amendment of the policy moved to the end of the document to refer to the whole rather than this section in isolation

D. Internal Controls & Accounting

Page 133 of 251



Draft Text Notes ICRMA maintains a manual of internal controls and accounting procedures to ensure consistency of practice over time relative to its needs and industry standards

E. Investment Policy – Placeholder to insert CURRENT POLICY WITHOUT EDIT.

F. Calculating Dividends & Assessments 1. Criteria

After annual review of the “Net Asset” position of the pooled programs, the program years to be adjusted and the important ratios, the Board will determine whether it is desirable to increase, decrease, or stabilize “Net Assets”. If the Board desires to decrease “Net Assets”, by returning “Equity” to the members, it will not return funds from any given program year that will cause the funding of the program as a whole to fall below the 90% “Confidence Level”.

2. Dividends

i. The first dividend calculation shall be performed five (5) years after the end of the program year. Additional calculations shall be made each year thereafter until such time as the program year is closed.

ii. Dividends are available to be declared ONLY at such time as the program has equity, with liabilities actuarially stated undiscounted at a 90% confidence level.

iii. The calculated amount shall represent the maximum dividend available to be declared.

iv. This amount shall be reduced if the two (2) succeeding years (after the fifth program year reaches eligibility) have negative equity, with liabilities actuarially stated at an expected confidence level.

v. Each Member’s share of any dividends shall be allocated based upon the method by which the deposit premiums were collected, beginning with the oldest program year. However, until the last claim of a program year has been paid and the program year has been closed, the program year must maintain sufficient funds to satisfy the 90% confidence level discounted requirement.

vi. Because funds received for each program are accounted for separately on a full-accrual basis,

and further because each program year shall be accounted for separately, any transfer of surplus funds among program years treated as a dividend and must be expressly approved by the Board of Directors.

2. Assessments

i. Each Member’s share of the assessment shall be allocated based upon the method by which the annual contributions were collected for the risk-sharing layer of each program year being assessed. There is no requirement that the program year be closed prior to making such an assessment

ii. If such assessment is not sufficient to relieve the pool of its actuarially determined deficit in the year of the assessment, such assessment shall be levied each subsequent year until the actuarial deficit is relieved.

Opening paragraph of Section C taken verbatim from Net assets policy document The remainder comes from draft bylaws Article IX – Financial Matters of the new ICRMA Bylaws will leave the following unchanged A. Fiscal year B. Budget C. Audit D. General Admin of Funds E. Program Accounting G. Deposit and Investment

of Funds As well as F1a, F2a-b. F2d, and F3 However, if approved, the calculations portions of bylaws Article IX - F should move to this document

G. Member Contribution Procedures Under ICRMA’s Joint Power Agreement, member cities must make a three-year commitment to participate in ICRMA. Mid-term cancellation or withdrawal is not permitted and members’ annual contributions are at the beginning of the fiscal year. As such, all contributions are earned evenly over the applicable coverage period. Operating revenue and expenses include all activities necessary to achieve the objectives of ICRMA. Non-operating revenues and expenses include investment activities and other non-essential activity. Each member’s contribution is based on its underwriting factors including payroll, total insured values, employees, loss history and experience modification factor and the Authority’s estimated annual administrative and cost of risk transfer expense. Contributions are recognized as revenues when earned based on the coverage period. Member experience modification factors are calculated annually by the actuary.

This is a new procedure written by James Marta and Co.

Page 134 of 251



Draft Text Notes Board Responsibility The Board shall approve contribution rates annually. Staff Responsibility The Finance Manager shall be responsible for ensuring the annual billing of member contributions agrees with the Board approved contributions as presented in the Budget document. Member contribution invoices are emailed to member finance contacts before the start of the fiscal year and payment is due by July 31. The Finance Director is responsible for presenting a report of accounts receivable activity to the Board.

H. Annual Budget Procedures Finance Committee/Board Responsibility The budget shall be designed to meet the Board of Directors’ annual objectives for Independent Cities Risk Management Authority (ICRMA). The budget must be carefully organized and planned to insure adequate understanding of the financial needs of ICRMA. The preliminary budget is due for Board approval at the spring meeting. The final budget will be adopted by the Board no later than June 30. Adjustments necessary to the approved Budget will be presented to the Finance Committee in a timely manner. Finance Committee/Board Responsibility Adjustments to the budget shall be approved by the Finance Committee. Included with the adjustments will be a description of the reason for the adjustment and the resulting balance in the account adjusted. Actions approved by the Finance Committee resulting in increases or decreases to revenue or expenses will be automatically adjusted in the budget the following month. Staff Responsibility The Finance Manager is responsible for maintaining the budget documents. The Finance Manager with assistance from the Finance Director and Executive Director will draft the annual budget report. The Finance Committee will advise and review the annual budget report. Budget strategies may be addressed by the Finance Committee, Finance Manager and Executive Director during this process. Such approaches shall include comparison to prior year(s) and consideration of known factors affecting the annual budget lines. Necessary Information for Budget Preparation · Actuarial funding rates and member experience modification factors · Reinsurance rates and member exposure data · Contracts with dollars updated for new fiscal year · Allocation percentages by fund (coverage) for operating expenses · Estimated non contractual operating expenses · Audit adjustment expenses by coverage and member for addition to member renewal invoice

This is a new procedure written by James Marta and Co.

I. Purchasing Procedures 1. INTRODUCTION

The purpose of this policy is to establish efficient procedures for the purchase of supplies, equipment, services, and public projects; to secure for ICRMA supplies, equipment, and services at the lowest possible cost commensurate with quality needed; to exercise necessary financial control over purchases; to clearly define authority for the purchasing function; and to assure the quality of purchases; purchasing procedures have been adopted. The Executive Director shall serve as the Purchasing Officer (PO), unless the Executive Director appoints an ICRMA contractor to serve in that capacity. These policies shall be regularly reviewed and revised as needed and approved by the Board of Directors.

2. PURCHASES OF SUPPLIES AND EQUIPMENT

i. Purchases up to $50,000 Purchases may be made by the PO in the open market. Requests for purchases shall be made

This is a new procedure proposal.

Page 135 of 251



Draft Text Notes on forms prescribed and provided by the PO.

ii. Purchases Over $50,000

1. The PO shall solicit proposals by telephone or written request from prospective vendors. 2. Purchases shall be based on at least three (3) proposals unless the product or service is

proprietary. The order shall be awarded to the lowest responsible proposer, consistent with quality and delivery requirements.

3. The PO, without noticing and after approval by the Board of Directors, may purchase

supplies or equipment in an amount greater than fifty thousand dollars ($50,000) that can be obtained from only one source.

4. The PO is authorized to award contracts and orders set forth herein. 5. Bids shall be submitted to the PO who shall keep a record of all orders and bids in

compliance with ICRMA’s record retention policy.

3. EXCEPTIONS A. The bid procedures set forth above need not be followed in situations determined by the

PO to constitute an emergency or when the commodity or service is proprietary or for the contracting of professional services (e.g., attorneys) or for other similar services as determined by the Executive Director.

B. The Board of Directors may authorize purchase of supplies and/or equipment without

complying with the above procedures when in the opinion of the Board of Directors, compliance with the procedures is not in the best interest of ICRMA.

4. LOWEST RESPONSIBLE BIDDER

In addition to price in determining the lowest responsible bidder, consideration will be given to quality and performance of the supplies to be purchased or services provided by the bidder. Criteria for determining low bids shall include but not be limited to the following:

i. The ability, capacity and skill of the bidder to perform the contract or provide the supplies or services required;

ii. The ability of the bidder to provide the supplies or services promptly or within the time specified, without delay or interference;

iii. The character, integrity, reputation, judgment, experience, and efficiency of the bidder; iv. The quality of bidder’s performance on previous purchases or contracts with the Authority or

other public agencies; v. The ability of the bidder to provide future maintenance, repair, parts, and services for the use

of the supplies or equipment purchased; vi. Current compliance by the bidder with Federal acts, executive orders, and State statutes

governing the subject of nondiscrimination in employment, provided that the Purchasing Officer shall recognize as proof of noncompliance only the final decisions and orders of those Federal and State agencies empowered under the law to make such findings.

5. PROFESSIONAL SERVICES

ICRMA shall not be restricted to engage in a competitive bidding procedure when seeking to retain specially trained persons or firms providing services in connection with financial, actuarial, economic, accounting, engineering, administrative, or other matters involving specialized expertise or unique skills. In securing professional services, ICRMA may utilize a request for qualifications procedure or a request for proposals procedure, the method and details of which shall be determined by the Purchasing Officer. The PO may award any contract for professional services when the cost of such contract is equal to or less than one hundred thousand dollars ($100,000). The Board shall award any contract for professional services that exceeds the cost of one hundred thousand dollars ($100,000).

Page 136 of 251



Draft Text Notes 6. SURPLUS SUPPLIES AND EQUIPMENT

The PO shall have authority to exchange or trade in all supplies and equipment which cannot be used by any department, or which have become unsuitable for ICRMA use.

7. EMERGENCIES In cases of emergency when repair or replacements are necessary, ICRMA shall follow the provisions of Section 22050 of the Public Contracts Code. For purposes of applying Section 22050 to ICRMA, City Council shall mean Board and City Manager shall mean Executive Director.

J. Service Provider Agreement Renewal

ICRMA may evaluate all service provider agreements prior to the end of an agreement period. The evaluation will compare the required services under the agreement to those provided during its term. After the evaluation, the Board will determine, by a majority vote, if the service provider's agreement shall be renewed or if a Request for Proposal (RFP) or Request for Qualification (RFQ) should be developed.

Inserted verbatim from current then edited as visible

K. Amendment Unless otherwise specified all financial policies approved by the Board may be reviewed and reaffirmed or modified at least once every three (3) years.

Page 137 of 251


Subject: Underwriting Mechanisms in the New Age of Claims Action for consideration: Review and discuss Background: Over the past five years, ICRMA has lost several members for a variety of reasons, including fiscal/economic advantages, senior management relationship with and affinity for other pools, and aggressive broker marketing. It is critical the ICRMA Board evaluate the pool fundamentals that may be contributing to member departures. The pool must also consider the tools available to promote the retention of members, including the voluntary (or mandatory) adjustment of member retained limits and sensible modifications to the cost allocation formula.

Program Structures The liability and workers’ compensation programs are structured similarly, in that members can select an individual member retained limit (MRL) and enjoy discrete control over the firms and specific claims professionals and attorneys that will adjust claims and defend lawsuits. Members share losses from the MRL to the pooled self-insured retention (SIR), and ICRMA purchases reinsurance (or excess insurance), collectively – on behalf of all members. Workers’ Compensation Program Structure Liability Program Structure

Changes in California Public Entity Claims Environment While there has been relative stability in California’s workers’ compensation environment, the liability claims environment in which ICRMA operates has markedly changed in recent years. A surge in both the frequency and severity of liability claims against California public entities is driving up insurance costs. Some insurers have withdrawn from the market, while others are limiting their lines of coverage, adding exclusions, or requiring higher self-insured retentions. This is particularly impactful in California, where there is limited immunity for public entities, no caps on tort claims, and joint & several liability for all parties involved. As “Deep Pockets” this leaves

Page 138 of 251


ICRMA member cities particularly vulnerable to being drawn into litigation and funding subsequent settlements and judgements. The contrast in the severity and frequency of ICRMA claims is reflected in the following “Large Loss Exhibits” which summarize losses exceeding the member retained limit (“MRL Breaches”) for ICRMA’s Workers’ Compensation and Liability Programs, respectively:

Workers’ Compensation Program - Large Loss Exhibit

Liability Program - Large Loss Exhibit

Page 139 of 251


Frequency of MRL Breaches As an “excess pool” ICRMA’s main purpose is to protect members against relatively rare, but truly catastrophic losses. Members are expected to manage claims within their MRL’s – the “primary layer” – with minimal oversight from ICRMA. When a claim is determined to have an incurred value of the lesser of 50% of the member’s retained limit or $250,000 in the liability program, a reporting obligation to ICRMA is triggered. Several other classes of claims (e.g. fatalities, employment practices, civil rights violations) also require reporting. Upon reporting a potential excess loss to ICRMA, members have a contractual obligation to fully cooperate with the excess pool to resolve these high dollar losses in ways consistent with protecting the collective (i.e., “risk-sharing”) interests of the group. ICRMA’s workers’ compensation program is exemplary of how an excess program is intended to work. During the twelve-year period captured by the top chart, above (for claims incurred between 2005/06 and 2016/17) nine ICRMA members experienced 18 breaches of their respective MRL’s for an average of 2.0 breaches per member. The highest breach rate for any single workers’ compensation program participant was one breach every two years by El Segundo, followed closely by Baldwin Park with just slightly less than that amount (5 breaches in 12 years). In contrast, ICRMA’s liability program – over a slightly truncated eleven-year period (2006/07 through 2016/17) – incurred 85 breaches among its 16 members. This works out to an average of more than 5.3 breaches per member over 11 years, a breach-rate more than 160% greater than the workers’ compensation program. Notably, three current members (Hawthorne, Alhambra and Lynwood) have averaged an excess liability loss (or more) per year over the analysis period. Four more (Monterey Park, El Monte, Inglewood and South Gate) have averaged more than one liability breach every two years. The high level of activity in ICRMA’s liability program excess layer is of relatively recent vintage. Historically, breach rates in the liability program were much closer to those reflected in the workers’ compensation program. Effectively, ICRMA has gone from the occasional claim in the pool’s retained layer to regular claims in the ICRMA layer. This is not how excess pools are generally expected to function nor how ICRMA operated in the past. Like reinsurers, excess pools generally do not want to be in a position of “trading dollars” with their members. Not only do members’ premiums go up dramatically in this circumstance, it is inefficient for the pool to be disproportionately involved in what should really be primary/working layer claims that the member can and should be managing. To the extent members are repeatedly piercing their retention, they should be encouraged (and in some cases, perhaps, required) to increase their MRL. In fact, Alhambra recently voluntarily increased its liability MRL from $250,000/occurrence to $750,000/occurrence to avoid substantial premium increases that would have otherwise resulted. Higher member retentions also send an appropriate message to members that it is in their interest to focus greater organizational time, attention and resources to risk reduction, loss control and claims mitigation efforts. A loss controlled or even better, avoided, is in the members’ direct interest (as well as ICRMA’s). Normally, when members are hit with losses we would expect that they would

Page 140 of 251


feel pressure themselves to begin loss control efforts. If they have a low MRL, they have less incentive to manage these losses and reduce/avoid claims. Inappropriately setting member retentions too low may also have the unintended consequence of encouraging members to look outside ICRMA for quotes from competitors when their ICRMA premiums inevitably increase under the premium allocation formula. It is in the interests of both ICRMA and its members to set MRL’s at a point higher than the “working layer” where claims occur relatively frequently. Data and TPA Issues In developing the breach charts, we planned to include loss ratios in the Large Loss Exhibits, but multiple data issues prevented the inclusion of this information. For example, in examining the underlying data supporting the liability program large loss exhibit @ 12-31-16, it became quickly apparent in one case the member adjuster established multiple occurrences for two large claims that fall within the same occurrence, distorting the claims’ ICRMA SIR/excess insurance obligations. In another, double payments were recorded in the primary claim file, so the claim value was higher than it should have been, again distorting the payment history so that accurate loss ratio comparisons remain problematic until the data is corrected. As reported to the Board on multiple occasions previously, primary TPA data issues have been identified and presented to the TPAs for correction. The TPAs were instructed to complete all data updates by September 30, and data checks will be performed in October and November to validate the updates. We also wish to express concern that we have observed situations where members appeared to be directing their independent third-party claims adjusters how to set reserves on certain potentially large loss claims. This is antithetical to the spirit of ICRMA’s purpose, core mission and governing documents. Such practices will potentially result in the understatement of member claims reserves, and in turn, ICRMA’s excess reserves and actuarially determined IBNR reserves and reserves for loss development. It may also impact the equitable allocation of costs within the group. By following this practice, members may put themselves in a position of violating the ICRMA membership agreement and compromising coverage. We strongly encourage you to avoid going down this road. Annual Cost Allocation Another tool the board may consider in making an effort to optimally retain members is in the application of its annual cost allocation formula. One of the main goals articulated by the board in the latest iteration of ICRMA’s cost allocation formula was “stability.” Various strategies can be employed to generate greater stability in terms of member costs, the membership retention strategies ICRMA employs and the membership decisions that follow, including:

· Losses could be evaluated over a longer time horizon to better smooth-out changes · Losses could be capped for rating purposes to soften the blow of a single bad loss · Alternative weighting of loss experience v. exposure rating can be employed to balance

equity concerns and stability concerns

While premium allocation formulas are more an “art form” than a “science,” it is not in ICRMA’s interest to drive members out of the pool as the result of a single loss (or a small number of losses

Page 141 of 251


over an extended period) due to the cost increases tied to such a loss. While we cannot state categorically that the cost allocation formula, as presently constituted, was the proximate cause of a membership loss, we were sufficiently concerned about this dynamic that RPA engaged Milliman to take a preliminary look at how changes in ICRMA’s cost allocation formula might better position the organization to retain members, rather than lose them unintentionally/arbitrarily. In the upcoming weeks, RPA will schedule an Ad Hoc Committee meeting to review the cost allocation formula and how it might be better aligned to encourage membership retention. Ideally, a meeting could be held in late October or in November with results and recommendations reported to the board at its December meeting. Objective Membership Standards ICRMA’s Underwriting Policy establishes the standards under which it intends to operate and maintain a cooperative program of self-insurance for the collective benefit of its members. The relevant sections of the Underwriting Policy are shown below:

Underwriting Policy The Independent Cities Risk Management Authority (ICRMA) Annual Review of Existing Members provides a framework for a holistic review of ICRMA’s membership that supports the JPA’s stated purpose of operating and maintaining a cooperative program of self-insurance, jointly purchased insurance and risk management and to provide a forum for the discussion, study, development, and implementation of procedures of mutual benefit in risk sharing and risk management programs (JPABylaws Preamble). ICRMA’s Bylaws identify six conditions under which a member would be found in default of the JPA agreement and Bylaws. Four of these six conditions can be tested with objective measures. The conditions and measures that will be used to test them are: Condition of Membership Underwriting Test(s)

Attend meetings, submit requested documents and cooperate in the fulfillment of the program objectives

· Attendance at Committee and Board meetings over the past 12 months.

· Timeliness of responses to requests for information

Pay amounts due to ICRMA in a timely fashion · Timeliness of payments including contributions and tendering of retention

Losses shall not be unreasonable · Average number of losses over member’s retention

· Average loss ratio The filing of a petition applicable to the member in any proceedings instituted under the provisions of the Federal Bankruptcy Code or under any similar act which may hereafter be enacted

· Bankruptcy filing

RPA will lead the board through a discussion of the elements included in this agenda item. Prepared by: RPA Team

Page 142 of 251


Subject: Workers’ Compensation Defense Panel Addition Action for consideration: Consider the request from AdminSure to add Brian Riley, of the Law Offices of Brian T. Riley, to the Workers’ Compensation Defense Panel. Background: According to ICRMA’s Workers’ Compensation Litigation Management Policies and Procedures, Approved Panel Counsel, Section 1.1, attorney firms requesting to be added to the panel of approved attorney firms must be nominated in writing, and meet and/or agree to the following provisions before the Governing Board will consider their inclusion on the panel: 1.1.1 The attorney must be nominated, in writing, by one of the current ICRMA Members, their

Third Party Administrator (TPA), or by ICRMA. The Governing Board shall have the authority to add or delete individual attorneys.

1.1.2 Regardless of the selection process, the Member shall bear the financial responsibility of the

defense expenses, including fees, until its retained limit is exhausted. 1.1.3 The attorney shall provide a resume setting forth his/her experience and areas of expertise.

The attorney shall have a minimum of five (5) years experience in handling workers’ compensation defense for public entities.

1.1.4 The attorney must agree that the hourly rate charged by the firm shall not exceed the current

approved rates for partners and associates, unless the Member agrees to pay any difference between the maximum allowed rate and the actual rate charged. ICRMA must be notified in writing if the Member agrees to exceed the maximum allowed rate.

1.1.5 The firm must annually submit proof of professional liability insurance appropriate to the

legal profession, and in an amount not less than $1,000,000 per claim.

AdminSure recommends Brian Riley from the Law Offices of Brian T. Riley, be added to the panel to help resolve workers’ compensation claims.

The application package, which includes the nomination letter, attorney resume, signed agreement to comply with ICRMA’s Litigation Management Policies and Procedures, and proof of insurance, is attached. Attachments: Application Package Prepared by: Christina Floe, Administrative Assistant

Page 143 of 251

September 12, 2017 Todd Johnson Director of Workers’ Compensation Carl Warren & Company P.O. Box 2422 Tustin, CA 92781 Re: ICRMA Workers’ Compensation Program Dear Todd: As outlined in the Litigation Management Policies and Procedure for the ICRMA Workers’ Compensation Program, I would like to nominate Workers’ Compensation Defense Attorney Brian Riley as he would be an excellent addition to the litigation panel. He has the extensive experience and background to successfully defend ICRMA’s workers’ compensation claims. Attached, please find information regarding defense attorney Brian Riley including his current resume, professional liability insurance policy, and agreement to comply with the ICRMA’s litigation management policies and procedures. Please let me know if you have any further questions or concerns and feel free to reach out to him directly. Thank you for your consideration. Sincerely,

Nerissa Burnside Workers’ Compensation Manager /nb

Page 144 of 251

Law Offices of Brian T. Riley 27201 Puerta Real, Ste 300, Mission Viejo, CA 92691 • (949)-800-7700 • [email protected]

Summary of Relevant Experience

26 years of workers' compensation industry experience. Certified Specialist by the CA State Bar in workers' compensation,

practice exclusively in workers' compensation defense. Former senior partner at large workers' compensation defense firm. Prior experience as claims examiner/hearing representative for 2 major carriers. Successfully litigated thousands of cases with many "take nothings" as a result. Excellent litigation, research and negotiation skills. Selected by the CA State Bar to administer and grade key test question for the Certified Specialist

Examination.

Education

CA State Bar Admission, January, 2001. Juris Doctorate, Whittier Law School, May, 2000. Bachelor of Science, Business Administration, University of Delaware, December, 1989.

Experience

5/08 - 11/16 Senior Partner - Tobin Lucks LLP

Involved with all aspects of workers' compensation defense insurance litigation with a full active caseload including management of high exposure cases, SIU cases, self-insured employers, as well as defense of serious and willful claims and discriminatory conduct pursuant to CA LC §132a.

Trained multiple newly admitted attorneys regarding best practices in workers' compensation defense.

Successfully interfaced with claims examiners, management, subrogation counsel, and employers, while consistently achieving excellent case litigation outcomes.

Participated in training seminars for multiple clients regarding overviews of changes in the law pursuant to SB899, SB227/SB228.

Instrumental as a law firm liaison with major clients. 1/01-5/08 Associate Attorney -Tobin Lucks LLP

Management of active caseload including extensive client contact and consistently achieved excellent litigation results.

Received multiple "take nothings" as well as many defense verdicts following trial. Instrumental in the ultimate prosecution and conviction of two applicants for violations of Insurance Code §1871 et seq, (Insurance Fraud), including procurement of restitution orders.

5/92 - 1/01 Senior Hearing Representative -Safeco Insurance Company

Management of a wide variety of workers' compensation claims and hearings at the WCAB including interfacing with employers and management in the furtherance of claim defense.

6/90 -5/92 Claims Examiner-Allstate Insurance Company

Involved with all aspects of workers’ compensation claim administration and defense including but not limited to management of benefits to be provided, identification of appropriate defenses, and investigation of questionable claims.

Extensive employer contact in the furtherance of claim administration and management.

Page 145 of 251


Page 146 of 251

Page 147 of 251

Page 148 of 251


Subject: Workers’ Compensation Program Update Action for consideration: Discuss the status of the workers’ compensation program and provide feedback Background: Carl Warren & Company continues to provide oversight of the Workers’ Compensation program for the ICRMA member cities that utilize the WC coverage. The primary responsibilities for the Carl Warren team are to ensure that the underlying TPA is managing the primary exposure and protecting the interests of the ICRMA. This is accomplished by obtaining Interim Status Reports every 90 days on all claims reported to the ICRMA and maintaining a collaborative working relationship with the Member Cities and their TPAs. These claims are documented in the ICRMA Origami Risk system. Following are the key statistics of the workers’ compensation claims in the ICRMA system:

ICRMA Origami Risk WC Claim Data Total open claims being monitored 194 Total ICRMA members/former members with reported WC claims 22 Total ICRMA WC claims reported 7/1/2016 – 9/30/2016 16

ICRMA Member Detail in Origami Risk

Member Name Current Status

Start Date End Date

2017-2018 Retention Limit Open Claims

City of Alhambra Current 4/1/2003 $500,000 6 City of Arcadia Former 7/1/2003 6/30/2006 Not in Program 3 City of Azusa Current 7/1/2003 6/30/2016 Not in Program 5 City of Baldwin Park Current 2/1/2003 $500,000 18 City of Bell Former 2/1/2003 6/30/2006 Not in Program 1 City of Buena Park Former 7/1/2003 6/30/2006 Not in Program 2 City of Culver City Former 2/1/2003 6/30/2016 Not in Program 8 City of Downey Former 7/1/2003 6/30/2006 Not in Program 0 City of El Monte Former 7/1/2003 6/30/2006 Not in Program 2 City of El Segundo Current 2/1/2003 $350,000 27 City of Glendora Current 7/1/2003 $500,000 5 City of Hermosa Beach Current 7/1/2003 $500,000 18 City of Huntington Park Current 7/1/2003 $500,000 5 City of Inglewood Current 2/1/2003 $1,000,000 7 City of La Habra Former 10/1/2003 6/30/2006 Not in Program 3 City of Lynwood Current 7/1/2003 $500,000 4 City of Manhattan Beach Former 7/1/2003 6/30/2017 Not in Program 22 City of Monrovia Former 7/1/2003 6/30/2015 Not in Program 2 City of Monterey Park Current 2/1/2003 $500,000 14 City of Redondo Beach Former 7/1/2003 6/30/2017 Not in Program 25 City of San Fernando Current 7/1/2003 $500,000 3 City of Upland Current 7/1/2003 6/30/2013 Not in Program 10 City of Vernon Former 7/1/2003 6/30/2006 Not in Program 1

Page 149 of 251


Safety National The ICRMA Self-Insured Retention Per Occurrence decreased from $3 million to $2 million effective 7/1/2017. As of 9/30/2017, 16 workers’ compensation claims were reported to Safety National. However, all 16 claims were closed by Safety National with no payments as they believe there is no exposure in their layer. Carl Warren will continue to monitor the open claims for potential reporting to the ICRMA excess carrier. Company Nurse The 6/30/2016 – 7/30/2017 Company Nurse Stewardship report is attached. A few statistics worth underscoring include: Ø 593 incidents reported to Company Nurse (this does not mean a claim is reported to ICRMA) Ø Of 593 incidents reported; 370 (62%) treated and 223 (38%) did not treat. Ø Only 83% of the incidents were reported to Company Nurse within 3 days, ideally we should see claims reported within 2 days. Ø When timely reports to Company Nurse occurred, only 7% needed Emergency Room referral, with the remainder being referred to less expense medical treatment options such as occupational medicine clinics or self-care.

Action Items for Company Nurse include: 1) reminders to the TPAs and Member Cities participating in the program to report incidents timely, 2) Increase triage participation of employees. MOC Revisions and Settlement Activity The Board approved two changes to the Workers’ Compensation MOC in May 2017. As a result of these two changes, there have not been any notable changes to the ICRMA involvement in the member’s workers compensation claims. The first change clarified that the members’ TPA must report claims within 5 days after the reporting criteria are met. The second MOC change clarified that members are required to obtain ICRMA approval for any settlement where the total incurred is greater than the member retained limit, regardless of the amount of the settlement. Carl Warren has not seen an increase the frequency of new claims reported to the ICRMA and no members have requested settlement authority since the MOC settlement authority change was implemented. Genesis Reinsurance A February 2017 Board memo by RPA provided the background and proposed action plan to provide assistance to member cites in obtaining WC reinsurance recoveries. In brief, Genesis Re is asserting that ICRMA member cities are combining multiple occurrences of one injured employee and aggregating the payments in order to reach the applicable retention limit. As the coverage is provided on a per-occurrence basis, Genesis Re is asserting the settlements resolving several exposures are not covered. At this time, RPA and Carl Warren continue to work with the TPAs and member cities. Each WC claim with payments in excess of the applicable retention limit needs to be evaluated and dissected individually due to the unique nature of each claim. This matter is discussed at greater length in a separate memo. Single TPA RPA and Carl Warren & Company continue to explore the benefits of the ICRMA WC program utilizing a single third party administrator (TPA) to manage the WC claims for participating cities.

Page 150 of 251


It is our collective industry experience that a single TPA offers a risk sharing pool more effective and efficient claims management services. Following are the key advantages: · Economies of scale (TPA pricing, group purchase programs: legal, managed care services) · More consistent and efficient claims handling · Better data and benchmarking · More reliable data and higher carrier confidence · Less expensive program administration (claim audits, data feeds, etc.) · More bargaining power because we have a much larger contract · More efficient management of MOC, LMPP, TPA Standards and contracts

And key disadvantages: · Not as much independence to “select” a TPA · possible loss of existing relationships · don’t like them don’t have options (identify why: if services-change adjuster, if overall claims

handling, have “bigger stick” to resolve things)

What available data is telling us: · Most members are buying services on a monthly fee basis. · Rough numbers show a monthly fee variance between $33 and $106/open claim as of 6/30/17. · Monthly claim management fees are important. However, the managed care fees and legal fees

are also impactful. For example, data for one member shows the total of medical benefits paid at $6.4 million, and the managed care fees to limit these medical expenses equal $1.1 million. In addition, $750K was paid in legal fees, while ‘administration fees’ total < $10,000 / month.

· It appears cost savings can be generated for participants when all factors are considered

Page 151 of 251


Considerations: · Current members consolidate to a selected TPA · New members required to utilize selected TPA · Member WC claims required to stay with selected TPA if member leaves ICRMA

RPA and Carl Warren will facilitate a conversation of the workers’ compensation program to solicit Board feedback. Attachments: None

Prepared by: Todd Johnson, Workers’ Compensation Program Manager

Page 152 of 251

2016 – 2017

STEWARDSHIP REPORT Annual Stewardship report for ICRMA for Company Nurse Workplace Injury Reporting and Triage Service

Page 153 of 251

Triaged to ER 24 33%

To ER w/out Triage 49 67%

Treated to ER 73 20%

Treated to Non-ER 297 80%

Total to ER 73

206 60%Lag Days 30+ Days 31 5.2% Triaged to Self Care 115 33%

Total Treated 370

Triaged to ER 24 7%Lag Days 3<29 Days 68 11.5% Treated w/out Triage 140 38% Triaged to Non-ERLag Days < 3 Days 494 83.3% Triaged to Treatment 230 62%

248 42%

Average Reporting Lag in Days 17.2

Total Treated 370 Total Triaged 345

Average Calls per Incidents 1.2 Total Not Treated 223 38% Total Not Triaged

593Totals Calls 710 Total Treated 370 62% Total Triaged 345 58%

Total Incidents 593 Total Incidents 593 Total Incidents

Injury Summary ReportDate Comparison: 7/1/2016 - 6/30/2017

Totals for Independent Cities Risk Mgmt Authority

CURRENT 12 MONTH RESULTS – 7/1/2016 TO 6/30/2017

When triage occurs, results are strong. CN referred only 7% of incidents to the ER, with the remainder going to less expensive clinics or self-care.

We want the lag days to be as close to same day reporting as possible. When 20 outliers with lag days over 100 are removed, the average adjusts to 2.9 days. 2 days is generally a good goal.

This number is on the low side. We see the best effects on reduction of claims and costs when the level of triage to treatment is 80% or more.

67% of the ER visits were without triage. Some of these may have been referred to a more cost-effective level of care.

Page 154 of 251

Average Reporting Lag Days

The chart above shows that 83% of incidents were reported to Company Nurse in less than 3 days from the date of injury. Only 11% were reported 3 days or later, with a slight 5% reporting more than 30 days from the date of injury. The goal is to get same day reporting whenever possible, and to definitely keep the lag day average under 2 days.

Page 155 of 251

593

Total Treated 370

Total Not Treated 223

370

230

140 38%

"Triaged" means employee reported the injury and spoke to a nurse about their injury. "Treated without Triage" means the

employee sought treatment on their own and later reported the incident to Company Nurse.

"Not Treated" means the employee reported an incident to Company Nurse, but was not referred to a medical provider or

chose not to seek treatment.

Triaged to Treatment vs. Treated W/O Triageof 370 Total Treated7/1/2016 - 6/30/2017

Total Treated

Triaged to Treatment 62%

Treated w/out Triage

Breakdown of Incidents Reported to Company Nurse

Total Treated vs. Total Not Treatedof 593 Total Incidents7/1/2016 - 6/30/2017

Total Incidents

62%

38%

Page 156 of 251

370

73 20%

297 80%

73

24

49

"To ER without Triage" means the employee sought treatment at the ER on their own and later reported the incident to Company Nurse.

"Total to ER includes employees who were triaged there by Company Nurse as well as those who went on their own without

triage.

Triaged to ER vs. to ER W/O Triageof 73 Total to ER

7/1/2016 - 6/30/2017

Total to ER

Triaged to ER 33%

To ER w/out Triage 67%

Breakdown of Incidents to ER

Total to ER vs. to Non-ER Facilityof 370 Total Treated7/1/2016 - 6/30/2017

Total Treated

Treated to ER

Treated to Non-ER

Page 157 of 251

Total Triaged 58%

Total Not Triaged 42%

345

24 7%

206 60%

115 33%

Based on the type of injury and employee responses to medical protocol, the Nurse will triage to an ER, Clinic or Urgent Care, or

give Self-Care advice with no medical referral.

"Triaged" means employee reported the injury and spoke to a nurse about their injury. "Not Triaged" means the employee

reported an incident to Company Nurse but chose not to speak to

Disposition of Total Triagedof 345 Total Transactions

7/1/2016 - 6/30/2017

Total Triaged

Triaged to ER

Triaged to Non-ER

Triaged to Self Care

Breakdown of Triaged IncidentsTotal Triaged vs. Total Not Triaged

of 593 Total Treated7/1/2016 - 6/30/2017

Total Incidents 593

345

248

Page 158 of 251

CategoryTreated w/o Triage

Treated to Non-ER w/o TriageTreated to ER w/o Triage

$16,560$34,500$51,060

49

Savings example – If we were able to triage even 50% of these calls

- 1/2 of 91 to Non-ER (46) triaged to Self Care- 1/2 of 49 to ER (25) to a Clinic or Urgent Care

Total Sample Savings

NOTE : Example based on an average of $360 for a Clinic Visit and $1,740 for an ER Visit.

INCREASED TRIAGE PARTICIPATION – SAVINGS EXAMPLE

The 140 incidents that were “Treated without Triage” represent an area of opportunity to maximize the savings benefits to be realized from the Company Nurse program.

Total14091

Page 159 of 251

Location IncidentCount

Triaged to ER

Triaged to Non-ER

Triaged to Self-Care

ER Without Triage

Non-ER Without Triage

Treated

Alhambra (City), CA- Community Svcs 1 0 1 0 0 0 1Alhambra (City), CA- Emery Park 1 0 0 0 0 0 0Alhambra (City), CA- Fire Dept 2 1 0 0 0 0 1Alhambra (City), CA- Fire Station #71 9 2 0 2 0 1 3Alhambra (City), CA- Fire Station #73 8 2 0 2 0 1 3Alhambra (City), CA- Fire Station #74 7 0 1 5 0 1 2Alhambra (City), CA- Police Dept 19 3 9 4 0 1 13Alhambra (City), CA- Public Wx, City Yard 6 0 4 1 0 1 5Alhambra (City), CA- Utilities 4 0 2 1 0 0 2City of Alhambra - IC004 57 8 17 15 0 5 30Azusa (City), CA- Police Department 1 0 0 0 0 1 1City of Azusa - IC015 1 0 0 0 0 1 1Baldwin Park (City), CA- UNKNOWN 2 0 1 0 0 1 2Baldwin Park (City), CA- City Hall Offices 3 0 0 0 1 2 3Baldwin Park (City), CA- City Yard Mx Warehouse 2 0 2 0 0 0 2Baldw in Park (City), CA- City Yard(general mx/streets/landscape/graff iti) 8 0 7 1 0 0 7

Baldwin Park (City), CA- Comm Ctr 5 0 2 3 0 0 2Baldwin Park (City), CA- Police Dept. 21 1 10 1 2 6 19City of Baldwin Park - IC009 41 1 22 5 3 9 35El Segundo (City), CA- Finance 3 0 2 0 0 1 3El Segundo (City), CA- Fire 26 0 8 7 2 2 12El Segundo (City), CA- Human Resources 1 0 1 0 0 0 1El Segundo (City), CA- Library Svcs 2 0 0 0 0 0 0El Segundo (City), CA- Parks & Rec 8 1 2 3 0 2 5El Segundo (City), CA- Planning & Bldg Safety 1 0 0 0 0 0 0El Segundo (City), CA- Police 35 1 17 1 3 3 24El Segundo (City), CA- Public Wx Admin 1 0 1 0 0 0 1El Segundo (City), CA- Public Wx Water/Wastewater 3 0 1 2 0 0 1City of El Segundo - IC012 80 2 32 13 5 8 47Hermosa Beach (City), CA- Fire Dept 4 0 3 0 0 1 4Hermosa Beach (City), CA- Police Dept 13 3 6 0 2 2 13Hermosa Beach (City), CA- Public Wx Yard 2 0 1 0 0 1 2City of Hermosa Beach - IC014 19 3 10 0 2 4 19Huntington Park (City), CA- Field Svcs Dept 2 0 1 0 1 0 2Huntington Park (City), CA- Police Dept 10 1 6 1 1 1 9City of Huntington Park - IC005 12 1 7 1 2 1 11Inglewood (City), CA- UNKNOWN (Misc/All Other) 2 0 1 0 0 1 2Inglewood (City), CA- Administration 1 0 0 1 0 0 0Inglewood (City), CA- Community Dev 4 0 2 1 0 0 2Inglewood (City), CA- Finance 2 0 2 0 0 0 2Inglewood (City), CA- Info, Tech & Communications 1 0 0 1 0 0 0Inglewood (City), CA- Library 5 0 4 0 0 1 5Inglewood (City), CA- Parks-Rec 5 0 1 1 0 3 4Inglewood (City), CA- Police-Other Civilian 17 0 5 3 1 4 10

Utilization Report - ICRMA7/1/2016 - 6/30/2017

Page 160 of 251

Location IncidentCount

Triaged to ER

Triaged to Non-ER

Triaged to Self-Care

ER Without Triage

Non-ER Without Triage

Treated

Inglewood (City), CA- Police-Safety 67 0 22 10 2 12 36Inglewood (City), CA- Police-Special Enforcemt Ofcr 15 1 6 2 1 4 12Inglewood (City), CA- Public Wx-Engr 1 0 1 0 0 0 1Inglewood (City), CA- Public Wx-Fleet Mx 1 0 1 0 0 0 1Inglewood (City), CA- Public Wx-Meter Readers 1 0 1 0 0 0 1Inglewood (City), CA- Public Wx-Sewer 1 0 1 0 0 0 1Inglewood (City), CA- Public Wx-Street Mx 1 0 0 0 1 0 1Inglewood (City), CA- Public Wx-Weed Abatement 2 0 1 0 0 1 2City of Inglewood - IC002 126 1 48 19 5 26 80Lynwood (City), CA- Bldg Mx 1 0 1 0 0 0 1Lynwood (City), CA- City Clerk 1 0 0 0 0 1 1Lynwood (City), CA- Code Enforcement 2 0 0 0 0 0 0Lynwood (City), CA- Dev Svcs 1 0 1 0 0 0 1Lynwood (City), CA- Finance Admin 2 0 1 1 0 0 1Lynwood (City), CA- Grounds 4 0 1 1 0 2 3Lynwood (City), CA- Human Resources 2 1 1 0 0 0 2Lynwood (City), CA- Parking Enforcement 4 0 1 2 0 1 2Lynwood (City), CA- PW Adminstrative 1 0 1 0 0 0 1Lynwood (City), CA- Rec & Comm Svcs 5 0 1 1 1 2 4Lynwood (City), CA- Right of Way (Qual of Life) 3 0 0 1 0 2 2Lynwood (City), CA- Streets Dept 1 0 1 0 0 0 1Lynwood (City), CA- Water Dept 1 0 0 0 0 1 1City of Lynwood - IC008 28 1 9 6 1 9 20Manhattan Beach (City), CA- Animal Control 1 0 1 0 0 0 1Manhattan Beach (City), CA- Fire 10 0 2 3 0 2 4Manhattan Beach (City), CA- Parks & Rec 7 1 3 2 0 0 4Manhattan Beach (City), CA- Police 28 3 8 7 6 3 20Manhattan Beach (City), CA- Public Wx 2 0 2 0 0 0 2City of Manhattan Beach - IC007 48 4 16 12 6 5 31Monterey Park (City), CA- City Clerk's Offc 1 1 0 0 0 0 1Monterey Park (City), CA- Community Dev 1 0 0 0 0 1 1Monterey Park (City), CA- Fire Station #1 12 0 2 2 1 3 6Monterey Park (City), CA- Fire Station #2 6 0 1 1 1 0 2Monterey Park (City), CA- Fire Station #3 3 0 1 0 1 0 2Monterey Park (City), CA- Library 1 0 0 1 0 0 0Monterey Park (City), CA- Parks 2 0 2 0 0 0 2Monterey Park (City), CA- Parks & Rec 2 0 1 0 0 1 2Monterey Park (City), CA- Police Dept 22 1 7 7 1 2 11Monterey Park (City), CA- Public Wx Mx 8 0 3 1 1 2 6Monterey Park (City), CA- Water 4 0 2 0 0 1 3City of Monterey Park - IC003 62 2 19 12 5 10 36Redondo Beach (City), CA- Fire Station #1 9 0 4 3 1 0 5Redondo Beach (City), CA- Fire Station #2 18 1 3 7 1 0 5Redondo Beach (City), CA- Main Library 3 0 0 3 0 0 0Redondo Beach (City), CA- Police Dept: Nonsworn 15 0 1 4 2 3 6Redondo Beach (City), CA- Police Dept: Sworn 51 0 7 10 13 6 26Redondo Beach (City), CA- Public Wx: Streets&Sewers 2 0 1 0 1 0 2Redondo Beach (City), CA- Rec Dept 3 0 3 0 0 0 3City of Redondo Beach - IC001 101 1 19 27 18 9 47San Fernando (City), CA- City Hall 2 0 0 0 0 2 2San Fernando (City), CA- Police Dept 10 0 4 3 1 2 7San Fernando (City), CA- Public Wx 6 0 3 2 1 0 4City of San Fernando - IC011 18 0 7 5 2 4 13

Page 161 of 251

• Identify lag time and non-triage offending locations to target forcommunications.

• Ensure placement and usage of collateral materials.

• Email blast reminders to administrators.

• Provide education and training review materials: Client Portal access

56

RECOMMENDATIONS FOR TRAINING

Page 162 of 251


Subject: Update Regarding Workers’ Compensation Claim Issues with Genesis Re Action for consideration: Review and provide direction Background: From 1990 to 2003, prior to implementing a self-insured workers’ compensation program, ICRMA members purchased workers’ compensation policies as a group to receive reduced premiums. The policies were commercially insured and did not include any risk-sharing. Each member was a named insured on the policy and Genesis Re was a carrier during that time. In February 2017 the following information was reported to the Board: Genesis Re contacted RPA staff several months ago to describe issues they were experiencing with the TPA’s on multiple older workers’ compensation claims. According to Genesis Re the issues revolved around the TPA adjusters improperly grouping multiple claims from the same employee onto one claim file, thus increasing the claim value and triggering the excess reimbursement. Genesis Re has asked to discuss these coverage issues with the TPAs, but in nearly every case has not received a response. As a result, Genesis has stopped paying the claims and they are stagnant. Genesis Re has asked that ICRMA make the members aware of this issue.

Genesis Re’s description of the issue: · Twenty-four (24) cities have reported claims to the excess carrier for claims that occurred

during the 1990’s through early 2000’s, with a range of 1 – 19 claims per city. · There are 119 open reported claims · The common issue is the problem described above (grouping multiple claims onto one file as

one “occurrence”). For example, one TPA took an individual that had ten different accidents/injuries, lumped them into one claim, settled under one stipulation, left the claim open for future medical, and then reported the one claim to Genesis Re for payment using the last date of injury. Genesis Re stated it was clear the claims were not “re-aggravations” or cumulative trauma injuries, but instead all separate occurrences.

· Genesis understands the reasons for having a master file, but the policy has a per accident retention, not a per employee retention.

· Six TPAs are involved in this issue (York, AdminSure, CCMS, Keenan, Athens, Corvel). · As of December, Genesis Re had sent 19 letters regarding this issue. They were still going

through the files and expected the number to grow · Letters were sent to ask the TPAs, as the cities’ representatives, to engage in discussion about

contract matters regarding indemnification. Genesis Re stated they are not responding to the letters, however, and instead continue to invoice Genesis Re.

Page 163 of 251

Update Regarding Workers’ Compensation Claim Issues with Genesis Re Page 2 of 6

October 11-12, 2017

· Genesis Re stated they would like to indemnify for the losses, but are unable to do so because they are not receiving responses and the requested information. o In some cases the TPAs are not providing a contact person at the city, so Genesis Re is

unable to reach the appropriate party to discuss the issues relative to the contract and the related coverage issues.

o In other cases, the TPAs are assigning workers’ compensation defense attorneys to respond to Genesis Re. This isn’t the best strategy because the issues are contract/coverage related, thus often fall outside of the expertise of workers’ compensation defense attorneys.

Update: Since the report to the Board, RPA staff performed additional research regarding this issue. After multiple attempts to receive updated information from Genesis Re went unanswered, staff learned several lawsuits have been filed against Genesis Re regarding non-payment of claims. Staff discussed one of the lawsuits with defense attorneys S. Henslee Smith and Richard Stoll of S. Henslee Smith Law Offices, and the TPA adjusters at AdminSure. Last week we received confirmation that at least three of the claims noted as disputed are currently in litigation, while a fourth has been resolved through litigation because Genesis Re concluded its denial was wrong and has again initiated payments. In several of the cases, Mr. Stoll found Genesis Re is asserting that multiple injuries or claims are being combined into one claim in order to reach the excess coverage. According to the Stoll, the carrier is relying on a California Appellate Court case, Supervalu vs. Wexford (2009) 175 Cal.App.4th 64. In turning to the facts of Supervalu, the employer resolved multiple claims filed by one employee, for example one specific injury and two CT claims, into one C&R with a PD rating that reached excess. The Court in Supervalu, however, agreed with the excess insurance company that multiple claims could not be combined and settled via one C&R to reach excess. Coverage only applied to one claim, either a specific injury claim or CT claim, that separately had to reach excess coverage before the excess insurance company would pay. In several cases Stoll has evaluated, the excess carriers are disputing coverage where there are multiple injuries arising out of one claim or they are pointing to other causes of the injuries other than the CT claim or specific injury claim filed by the employee. Stoll and Smith believe each claim must be carefully evaluated to determine if there are facts distinguishable from the Supervalu case. The original thought was that an attorney or consultant could be selected to handle all claims for ICRMA members and former members at a set cost. After review and discussion with Smith and Stoll, however, it appears the issue is more complicated as each individual file will need to be reviewed in depth. Following are additional sentiments shared by Smith:

· We discussed the thought coverage counsel might need to be involved and believe that would unnecessarily duplicate your initial costs without bringing resolution to the disputes. [Note: RPA staff spoke with two firms willing to offer coverage counsel services at $450/hour].

o The biggest issue in these cases is unraveling the medical evidence to determine where the deductibles should apply. The medical files are generally voluminous and

Page 164 of 251


October 11-12, 2017

really do not change the applicability of the policy language. Neither Richard nor I feel a coverage lawyer is necessary to add to that inquiry.

· The most difficult problem posed by a list of over 100 files is the variability in the claims. Without reviewing an entire file, we feel that a fair understanding can be gained from AME or QME reports which include a rather comprehensive medical history. That information, taken in conjunction with the rest of the claim correspondence, will give us a fair understanding of the dispute and enable us to estimate the time it is likely to take to resolve.

o We feel we can provide a review of each file and provide that estimate in 5 hours or less. This is based on our best guess as to what each file may contain. If we find a given file will require significantly more time than that to provide a cost estimate, we would bring that to the client's attention early on and make certain the additional time is acceptable.

· These are far more complex and difficult cases than typical workers’ compensation or personal injury cases. We are willing to offer an hourly rate of $300 per hour, plus costs, net/30.

The Board is encouraged to discuss options and provide feedback to staff.

Attachments: Claim Count and Dates of Loss Resumes of attorneys Henslee Smith and Richard Stoll

Prepared by: Beth Lyons, Executive Director

Page 165 of 251


October 11-12, 2017

Member City Reported Date of Injury

City of Alhambra 12/1/2000 City of Alhambra 11/14/1993 City of Alhambra 12/31/1995 City of Alhambra 1/4/1995 Claims reported 4 City of Arcadia 11/3/2000 Claims reported 1 City of Azusa 11/16/1994 City of Azusa 3/28/2001 City of Azusa 3/29/1993 Claims reported 3 City of Baldwin Park 4/8/1997 City of Baldwin Park 5/1/2001 City of Baldwin Park 12/29/1997 City of Baldwin Park 1/14/1998 Claims reported 4 City of Colton 10/11/1995 City of Colton 6/15/1994 Claims reported 2 City of Culver City 8/2/2000 City of Culver City 9/17/1996 City of Culver City 5/3/2001 City of Culver City 7/6/1991 City of Culver City 12/20/1995 City of Culver City 11/10/1992 City of Culver City 9/29/1997 City of Culver City 1/24/1997 City of Culver City 10/22/1996 City of Culver City 9/27/1994 City of Culver City 2/14/1998 City of Culver City 3/8/2001 Claims reported 12 City of Downey 11/16/1999 City of Downey 4/28/1999 City of Downey 4/1/1995 City of Downey 10/16/1990 City of Downey 9/25/1997 City of Downey 2/3/1997 Claims reported 6

Page 166 of 251


October 11-12, 2017


City of El Monte 5/27/1995 City of El Monte 9/6/1998 City of El Monte 3/24/1999 City of El Monte 8/8/1996 City of El Monte 12/6/2000 City of El Monte 5/22/1995 Claims reported 6 City of El Segundo 10/12/1999 City of El Segundo 9/13/2000 City of El Segundo 5/10/2000 City of El Segundo 2/24/1998 City of El Segundo 2/20/2001 Claims reported 5 City of Fullerton 1/24/1994 City of Fullerton 6/19/1995 City of Fullerton 1/30/1997 Claims reported 3 City of Gardena 10/30/1990 City of Gardena 11/17/1998 City of Gardena 4/1/1991 City of Gardena 10/1/1996 Claims reported 4 City of Hawthorne 5/16/1997 Claims reported 1 City of Hermosa Beach 5/10/2001 City of Hermosa Beach 11/13/1991 City of Hermosa Beach 1/27/2001 Claims reported 3 City of Inglewood 8/21/1999 City of Inglewood 9/21/1998 City of Inglewood 4/12/2000 City of Inglewood 6/21/2001 City of Inglewood 9/18/2000 City of Inglewood 2/8/1991 City of Inglewood 12/11/1998 City of Inglewood 10/1/1997 City of Inglewood 2/24/1993 City of Inglewood 10/11/1995 City of Inglewood 11/27/2000 City of Inglewood 12/17/1998

Page 167 of 251


October 11-12, 2017


continued… City of Inglewood 7/21/1998 City of Inglewood 10/15/1998 City of Inglewood 1/1/1998 Claims reported 15 City of Lynwood 3/29/2001 Claims reported 1 City of Manhattan Beach 9/15/1999 City of Manhattan Beach 2/16/1994 City of Manhattan Beach 2/6/1998 City of Manhattan Beach 6/8/2001 Claims reported 4 City of Monterey Park 1/24/1996 City of Monterey Park 7/18/1991 City of Monterey Park 6/19/1997 City of Monterey Park 12/24/1999 Claims reported 4 City of Redondo Beach 1/3/2000 City of Redondo Beach 11/17/1999 City of Redondo Beach 1/2/1997 Claims reported 3 City of San Fernando 9/5/1996 City of San Fernando 4/5/1997 Claims reported 2 City of Vernon 2/15/2000 City of Vernon 5/9/2000 City of Vernon 2/15/1999 City of Vernon 4/14/1997 City of Vernon 6/12/1998 City of Vernon 6/21/2001 Claims reported 6


City of West Covina 6/15/1998 City of West Covina 2/24/1992 City of West Covina 8/19/1998 Claims reported 3 City of Whittier 9/6/2000 City of Whittier 9/21/2000 City of Whittier 5/13/1996 City of Whittier 5/2/2000 Claims reported 4

Page 168 of 251

Page 169 of 251

Page 170 of 251

Page 171 of 251

Page 172 of 251


Subject: Liability Defense Panel Addition Action for consideration: Approve the City of El Monte’s Request to add Daniel Barer of Pollak Vida and Barer to the Liability Defense Panel with a retroactive date of September 11, 2017.

Background: According to ICRMA’s Litigation Management Policies and Procedures (LMPP), Approved Panel Counsel, Section 1.1, attorneys must be approved for inclusion on the liability defense panel by the Board. Attorneys must be nominated in writing, agree to the provisions of the LMPP, and have at least five years of civil litigation practice which includes substantial and significant defense experience in the area of public sector litigation in California.

Through attorney Allen Christiansen, the City of El Monte has nominated Daniel Barer of Pollak Vida and Barer to serve on the approved Liability Defense Panel.

The application package, which includes the nomination letter, attorney resume, signed agreement to comply with ICRMA’s LMPP, and insurance information is partially attached. There was a delay receiving the firm’s insurance information and the signed LMPP due to Barer’s travel and trial schedule, but we expect to receive them prior to the Governing Board’s meeting. Based upon the city’s request, Litigation Manager John Beringer recommends Mr. Barer be added to the panel with a retroactive date of September 11, 2017.

Attachments: Nomination letter Resume of Daniel Barer Prepared by: Christina Floe, Administrative Assistant

Page 173 of 251

DANIEL P. BARER

Born Walla Walla, Washington, 1965.

Admitted to bar, 1990, California; all California U.S. District Courts, U.S. Court of Appeals, NinthDistrict, and U.S. Supreme Court.

Education: University of California, Los Angeles (B.A., 1987); University of California, HastingsCollege of the Law (J.D., cum laude, 1990).

Member: State Bar of California; Los Angeles County Bar Association, Appellate Courts Section;Scribes, The American Society of Legal Writers.

The California Board of Specialization of the State Bar of California has certified him as a Specialistin Appellate Law. Fewer than 300 attorneys in the State of California currently are certified by thebar as specialists in appellate work. Since 2005, Mr. Barer has been listed as a “Super Lawyer” inappellate law by Southern California Super Lawyers Magazine.

Trials: Mr. Barer has trial experience.

Published Appeals: Mr. Barer’s primary practice is appellate law in the defense of public entities.Published decisions in appellate cases he has handled include:

Grace v. Mansourian (2015) 240 Cal.App.4th 523

Horath v. Hess (2014) 225 Cal.App.4th 456

Sanchez v. Brooke (2012) 204 Cal.App.4th 126

Silverbrand v. County of Los Angeles (2009) 46 Cal.4th 106

Roberts v. County of Los Angeles (2009) Cal.App.4th, 96 Cal.Rptr.3d 60

Sprint PCS Assets, L.L.C. v. City of Palos Verdes Estates (9th Cir. 2009) 583 F.3d 716

Ovando v. County of Los Angeles (2008) 159 Cal.App.4th 42

Olsen v. Reid (2008) 164 Cal.App.4th 200

Luna v. Vela (2008) 169 Cal.App.4th 102

Gillan v. City of San Marino (2007) 147 Cal.App. 4th 1033

Paniagua v. Orange County Fire Authority (2007) 149 Cal.App. 4th 83

Sprint v. City of Palos Verdes Estates (9th Cir. 2007) 487 F.3d 694

Lockhart v. County of Los Angeles (2007) 155 Cal.App.4th 289

Authority for Calif. Cities Excess Liability v. City of Los Altos (2006) 136 Cal.App.4th 1207

Morgan v. City of Chino (2004) 115 Cal.App.4th 1152

Mercado v. Allstate Ins. Co. (2003) 340 F.3d 824

7

Page 174 of 251

Quintana v. Gibson (2003) 113 Cal.App.4th 89

Eastburn v. Regional Fire Protection Authority (2003) 31 Cal.4th 1175 (amici curae)

Truck Ins. Exchange v. County of Los Angeles (2002) 95 Cal.App.4th 13

Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112 (amici curae)

Degrassi v. Cook (2002) 29 Cal.4th 333

LeVine v. Weis (Levine II) (2001) 90 Cal.App.4th 201

Galland v. City of Clovis (2001) 24 Cal.4th 1003 (amicus curiae)

DeGrassi v. City of Glendora (9th Cir. 2000) 207 F.3d 636

Kobzoff v. Harbor/UCLA Medical Center (1998) 19 Cal.4th 851

Garcia v. Superior Court (County of Los Angeles) (1996) 42 Cal.App. 4th 177

Martin v. County of Los Angeles (1996) 52 Cal.App.4th 274

Publications: Mr. Barer is co-author of California Government Tort Liability Practice (C.E.B.2015). His published articles include:

“Leading the Dance: Drafting the Appellee’s Brief” Certworthy, Vol. 13, Issue 2, October 20, 2011

“Appellate Tips for Trial Lawyers: Summary of Facts” Los Angeles County Bar Association E-Publication, November 2010

“Consequences of Wireless Case Are Not So Dire” (letter to the editor)Los Angeles Daily Journal, November 17, 2009

“The Collateral Conundrum: Olsen v. Reid Frames the Hanif/Nishihama Controversy – and Suggests How It Will Turn Out”

California Litigation, Vol. 21, No. 3 (2008)

“California Courts Differ on Liability for Negligent Handling of Emergency Calls” Los Angeles Daily Journal, September 11, 2002

“Say it With Feeling: Aim for the Heart, or Go for the Gut” Certworthy, Winter 2006

“Handle With Care: Preserving the Public Entity’s Right to Challenge a Late Claim” Claims People, Vol. 8, No. 2 (1998)

“Contractual Indemnification Claims Against Public Entities: When Are They Time-Barred?”Public Law Journal, Vol. 21, No. 5 (Winter 1998)

8

Page 175 of 251

Page 176 of 251


Subject: Liability Program Update Action for consideration: Discuss the status of the liability program and provide feedback Background: Following is a Liability Program overview, including oversight of the TPAs and panel counsel, from July 1, 2016 to present. The membership in the Liability Program is diverse and typically characterized by internal tensions between city administrations, city councils, TPAs, defense attorneys, and ICRMA. These tensions have increased the claims and litigation management costs tied to defending ICRMA claims and have led to conflict between the various parties. On occasion, these tensions have also had larger political and legal consequences. Examples of specific situations will be presented during the meeting. In offering liability reinsurance protection to its members, ICRMA’s membership agreement and coverage documents intended to infuse a spirit of cooperation between the parties. On page 14 of the 2017-18 Memorandum of Coverage (Section III – Defense and Settlement) ICRMA and its members have agreed that:

“The COVERED PARTY shall fully cooperate in all matters pertaining to such investigation, defense, negotiation, or settlement of a CLAIM. The duty to fully cooperate requires, at a minimum and without limitation, compliance by the COVERED PARTY and its defense counsel with the Litigation Management Policies and Procedures (LMPP). If the Governing Board determines that a COVERED PARTY is refusing to fully cooperate in all matters pertaining to the CLAIM, said CLAIM shall not be covered under this MEMORANDUM.”

Members tend to exercise varying degrees of cooperation and control over the claims and litigation management process. Some members offer full cooperation, while others seem overly protective of what they perceive to be their prerogatives in this regard. This dynamic can lead to conflicts with the LMPP and MOC and, in some instances, the potential compromise of coverage. In consequence, claims are often more expensive to adjust/litigate than would otherwise be the case. There have been circumstances where a member’s protective nature over the claims adjustment/litigation process has resulted in ICRMA being left uninformed and subsequently exposed to financial risk, without adequate time to respond or execute a tactical plan to reduce its exposure to loss/damages. Accepting appropriate risk is part of a self-insurance group, however, the information upon which the analysis is based must be timely and active to ensure educated risk taking. Some members appear to be unfamiliar with the principals of risk sharing as a risk and financial management tool, causing an adversarial relationship with the Liability Program. The adversarial relationship is reflected not only in additional costs in attorney fees and settlements, but influences the projection of loss (reserves) which could result in inaccurate actuarial projections of ultimate loss. When

Page 177 of 251


reinsurance carriers are not secure in these projections, the cost of the reinsurance also increases to account for the additional risk to the carrier. Further, there are situations in which the members and TPA adjusters lack sufficient expertise to recognize the difference between attorney product and litigation management product. This also results in additional costs related to attorney fees and settlements. Without that expertise, or focused attention regarding the provided expertise of others, the cost of resolving cases can escalate. Several members have limited experience in analysis of risk and/or case evaluation, which makes it incumbent on the TPA adjuster to be experienced and actively engaged in working with ICRMA and the defense attorney to strategize and analyze litigation exposures. The Board has adopted several documents which serve as the operational foundation for the Liability Program. The Litigation Management Policies and Procedures (LMPP), Memorandum of Coverage (MOC) and the Third-Party Administrator Performance Standards (Standards) provide the framework for a viable risk and litigation management program. Consistently utilizing the framework is one means to control the cost of claims, including litigation expenses. Integrating the above, with emphasis on the LMPP and Standards, into the normal handling process of claims/litigation is imperative for risk cost control. For example, municipalities enjoy tactical and strategic advantages not enjoyed by private-sector businesses or insurance companies. For example:

1. The Government Code proscribes early reporting of a claim; 2. The Government Code allows for free discovery in a non-litigated environment; 3. The Government Code allows for process in the resolution of claims; 4. The Government Code shortens the statutes of limitation for bodily injury and property

damage claims; 5. Governmental immunities may apply, if raised promptly; 6. There are limitations on execution of judgments and limitations as to certain damages; 7. The Fair Claims Standards Act does not apply; there are no punitive damages and, for the

most part, there are limitations on the nature of claims that can be presented. The Standards are designed to utilize the Government Code as the primary means to investigate and resolve cases without litigation and/or development of adverse political consequences. Effectively, the Standards focus on prompt claimant contact and the timely investigation and acquisition of information to facilitate the evaluation of each claim. Without implementation of the Standards, the advantages are lost. This influences the cost to both the member and ICRMA. Utilization of the Standards, hand-in-hand with active ICRMA involvement, recently reduced the cost of an alleged excessive force claim from $1.8 million to approximately $518,000 for all costs (including defense and plaintiff attorney costs). The City and ICRMA, in effect, used the Government Code and Standards to direct a case from a posture of expensive, protracted litigation to one of resolution and cost control. A review of the claim files tendered to ICRMA reveal that, except in a few circumstances, the Standards are not being utilized by the TPA adjusters nor enforced by the members consistently.

Page 178 of 251


This means opportunities are being lost that would otherwise reduce the financial consequences of claims and provide city councils with information to make informed settlement decisions earlier in the process. A conservative estimate of $2.0 and $3.0 million in savings annually could be realized by more consistently following the Standards already adopted by ICRMA. The board adopted the LMPP to provide an environment in which ICRMA has the ability to control its costs as an organization. Unfortunately, the LMPP is often ignored by both the members and defense counsel, setting the tone for an adversarial relationship with ICRMA when the litigation manager reminds both of board policy. Consistent adherence to the LMPP would be expected to reduce the total cost per claim, not only in settlement costs but defense attorney fees. Since a substantial part of some claims is derived from plaintiff attorney fees and the LMPP cannot directly reduce this exposure, the LMPP needs to be used as a tool to control the overall litigation which in turn impacts all aspects of the case expenses.

Liability Program Manager Comments: My role as Liability Program Manager is to assist ICRMA’s members in securing the best financial result possible. My awareness begins when claims are reported to ICRMA, and my involvement begins when a claim has reached the lesser of 50% of the member retained limit or $250,000. When it appears the value of the claim/occurrence will be greater than the member’s retention, my obligation is to reduce the exposure and consequence to ICRMA. This includes reporting the claim to the reinsurance carriers and the Claims Committee and/or Board. By way of background, I have been involved in approximately ten thousand individual cases (see attached resume). The breadth of cases have included municipal work, directing the work of defense counsel in a variety of scenarios, serving as an expert, and reviewing insurer programs. ICRMA’s liability program consists of multiple TPAs and adjusters, about 120 defense attorneys, and over 300 reported claims. Currently the program receives approximately 75-85 hours a week through the efforts of two staff members: myself and a second person that works 25 hours a week on non-litigation management tasks. In my opinion, to be adequately managed, ICRMA’s program as currently structured requires 165 to 200 hours per week. Attachments: Resume of John Beringer

Prepared by: John Beringer, Liability Program Manager RPA Team

Page 179 of 251

Page 1 of 3: CV

Curriculum Vitae John M. Beringer, LPCS, RPA Beringer & Associates E-mail: [email protected]

Professional History

Mr. Beringer is Principal of Beringer & Associates (B&A), A Business Risk Management Firm. This Firm provides business and risk management (including Labor Code, Safety and ADA compliance); litigation management; and Workers Compensation analysis/consultant services for the construction industry. We also form/operate alternative risk transfer mechanisms for domestic and non-domestic captive programs. B&A has provided risk analysis and risk management services to the construction industry since January of 2000. Previous to the formation of B&A, Mr. Beringer worked in the insurance industry for 30 plus years as a Litigation Manager for various insurance carriers, including Specialty Risk Services (Hartford), Industrial Indemnity, Great American and Western International. Since B&A’s formation he has assisted major insurance carriers and served as a consultant to various reinsurance and captive insurance carriers. He has also been engaged to provide analysis of construction defect exposures, including analysis of risk exposure coverage; Labor Code exposures, including assisting with administration of prevailing wage in California; to assist with operational concerns, logistics, risk management, Workers Compensation underwriting and executive management. As a Claim and Litigation Manager his responsibilities included significant case handling for exposures in excess of client’s self-insured retention through various levels of the reinsurance in the United States and offshore venues. Mr. Beringer is also CEO and Operating Manager of JPJ, a Joint Venture (New Zealand) for the design/implementation of sureties for international commodity transactions from July of 2014 to present; CEO/President of Strategic Captive Services, Inc., a provider of ancillary captive services from 2000 to 2008; Senior Director of Creative Solutions, SPC, licensed by CIMA in the Cayman Islands, from 2002 to 2006; Senior Director of JPJ Reinsurance Company (Cayman) from 2006 to 2009 (Carve Out W/comp); and CEO/President of Plexi, Inc. from 2006 to 2012 (Long Beach, California) Mr. Beringer was also a consultant for claim/litigation management/design of client service systems to Caledonia Bank & Trust in the Cayman Islands. B&A has been engaged by American Insurance Group, Swiss RE and Sterling Insurance Company for carrier review preceding the attachment of E&O and/or reinsurance attachment; by Atlantic Surety & Indemnity for reinsurance/policy construction and analysis; A.B. Lexman SPC for formation of reinsurance and program presentation to Regulators; and JPJ Reinsurance SPC for a commodity transfer reinsurance program. In 2000 B&A was requested to assist with the Reliance Insurance Company’s run off for their self-insured and large deductible programs, including trucking airlines and other various risks. Mr. Beringer was also engaged by Plexi

Page 180 of 251

Page 2 of 3: CV

Insurance Services, an insurance brokerage, for support of underwriting submissions for Workers Compensation and other risks. Mr. Beringer (as is Beringer & Associates) was listed for five years as an approved consultant by A.M. Best (http://www.ambest.com); the Round Table Group (http://www.roundtablegroup.com) and the Gerson Lehrman Consulting Group. He is also a founding Fellow of the Council on Litigation Management (Previously the Counsel on Ethical Billing); served on the Board of Directors of the National Association of Litigation; a member of the National Association of Subrogation Professional and is a member of the Forensic Expert Witness Association. Mr Beringer’s firm, Beringer & Associates, has been acknowledge for the three successive years as the Best of Newport Beach by the Newport Beach Chamber of Commerce. In business since 2000, his organization has been acknowledged consistently for its expertise, quality of services and professionalism. He was issued a personal commendation by Ramani Ayer, Chairman/Chief Executive Officer of The Hartford; a personal commendation by the City of Tustin; commendation by the Korean Insurance Agents & Brokers Association of America; the California CPA Society and the Minister for Inland Marine Insurance for the Peoples Republic of China. Mr. Beringer started in the insurance industry in 1969, completing his formal career with Specialty Risk Services directing litigation on the behalf of Twin City Fire Insurance Company/Hartford Fire Insurance Company. His responsibilities include case management of significant pending including class action lawsuits, developer/subcontractor construction defect cases, trade dress and various employment torts; Workers Compensation, supervision of policy administration and Coverage B litigation; negotiation and analysis of coverage for Hartford Insurance Company. He was also charged during his time in the insurance industry with coverage analysis and case handling for Industrial Indemnity, Great American, the Automobile Club of Southern California and Western International Insurance Company for coverage derived from primary, reinsurance and excess policies, Errors and Omissions, Workers Compensation, General Liability, Tax Practitioners and professional services contracts. While the specific list of clients’ assigned is confidential, his clientele has included Fortune 500 companies, various municipalities in California, Nevada, Oregon, Washington, Texas, Florida, and Arizona, and individually owned companies. Well over 25,000 litigated cases were resolved by the efforts of Mr. Beringer during his employment in the insurance industry and as a private practitioner in his over 42 years in the claims and risk management industry. Professional credentials include an LPCS from the American Institute of Insurance Studies, and an RPA from the Registered Professionals Adjuster Association. He is a member of The Society of Claim Law Professionals (SCLA), a founding member of the National Association of Insurance Litigation Managers (NAILM) and a published author in Litigation Matters, the Property and Casualty Newsletter and the IMMS publication Close Up. He has been interviewed for internet publications for the Insurance Journal as well as other online insurance

Page 181 of 251

Page 3 of 3: CV

publications. He is also qualified under the DFEH Regulations as a qualified instructor for Sexual Harassment, Gender Disparity and Discrimination training. Mr. Beringer is also a graduate of The Mediation Center and qualified as a mediator under the Alternative Dispute Resolution Program Act of 1993 and Business & Profession Code 465; a past mediation provider for the Victim-Offender Reconciliation Program (VORP), sponsored by the Orange County District Attorney's office; and host mediator for the Day of Dialog in Los Angeles in 1996, sponsored by the Los Angeles City Attorney’s Office. Mr. Beringer holds appointment as Special Arbitrator, since December of 1989, with Arbitration Forums Inc. In 2005, Mr. Beringer was a Featured Guest Speaker for the California CPA Educational Foundation’s Accounting Conference in Fresno regarding alternative risk and the Professional Employment/Temporary Staffing marketplace. In 2003, Mr. Beringer was a Featured Guest Speaker at the Cayman Island Insurance Managers Conference on the topic of Loss Control, Risk and Claim/Litigation Management. In 1996 he was a participant in a panel discussion on The Claims Business for the 21st Century for the CPCU convention in Costa Mesa on Litigation Management and the application of technology to the claims process. He is also a speaker on the topic of Captive Insurance as an alternative to traditional insurance and has testified as an expert witness on the behalf of various insurance companies, including Lumberman’s Underwriters Insurance Company and testified on the behalf of the Hartford Insurance Company regarding insurance coverage issues, as well as other insurance carrier clients.

Page 182 of 251


Subject: Carl Warren Staffing and Contract Update Action for consideration: Review and provide feedback Background: At its February meeting, the Board eliminated the structured return to work (SRTW) program effective June 30, 2017. This eliminated a large portion of the workers’ compensation program manager’s responsibilities, and associated contract revenue. The anticipated time allocation for the workers’ compensation manager, included:

· SRTW: 80% of time was to be dedicated to the STRW program responsibilities · Claim Management and Administration: 20% of time was to be spent on claim reporting

to excess, reviewing primary TPA loss runs & adjuster files, and performing administrative responsibilities

The overall contract with Carl Warren & Company for liability and workers’ compensation program management services totals $340,000 annually. At its April strategic planning session, rather than requesting a fee reduction, the Board agreed to a reallocation of Carl Warren employee time, eliminating SRTW and instead allocating it to the liability program. It was anticipated the funding would pay for another full-time person to assist with claims. The Board believed this was important because claim patterns are changing and ICRMA increasingly requires proactive claims management. In May, RPA staff communicated with Carl Warren, both verbally and through email, requesting a new staffing plan and revised contract to reflect the Board’s direction. Staff followed up several times during the summer, and in mid-August again asked that a redline contract and staffing plan be provided by September 18 so it could be reviewed and included in the Board’s October agenda packet. As of this writing, Carl Warren’s response is still pending. RPA staff will continue to follow-up to ensure the information is presented at the December meeting.

Attachments: None Prepared by: Beth Lyons, Executive Director

Page 183 of 251


Subject: Performance Review Process Development Action for consideration Review and provide direction Background: At the ICRMA Board’s April 2017 meeting, it briefly discussed the question of how to proceed with evaluating vendors and vendor contract performance. At that meeting, the board agreed that in the current three-year cycle for key management contracts, the first year should be one of self-reporting to the board, learning and contract revision. Then a more formal process might follow in the second or third year of the cycle. Rather than taking time in a board meeting to create this structure, staff suggested they create an outline of possible process elements for the board to discuss at a future meeting. What follows here is that outline. We ask that the board provide feedback on this outline so that a full process and implementation schedule may be developed.

Attachments: Discussion Outline Prepared by: Sara A. Peterson, Consultant Beth Lyons, Executive Director

Page 184 of 251

Performance Review Process Development Page 2 of 3

October 11-12, 2017

Vendor Performance Review Outline for Discussion

Purpose The purpose for creating a vendor performance review process is to:

· Provide contract oversight ensuring vendors are meeting contract expectations within industry standards

· Provide proper oversight of contract performance for ongoing improvement and inform the renewal process

The process is not intended to mimic a comprehensive review process in the vein of annual staff performance supervision. Applicability The process being contemplated is intended to supplement existing financial and function audits. It contemplates oversight of the following contracted functions:

· Pool administration · Financial management · Program and litigation management · Risk control · General/coverage counsel · Broker services

Process We recommend that the process take advantage of and be informed by the following existing processes.

· Annual : Financial audit, which naturally looks at adequacy of financial management and accounting function

· Bi-Annual: Liability and Workers Compensation claims audits taking place in alternating

years, which naturally look at adequacy of program and litigation management functions

· Tri-Annual: CAJAPA accreditation process, which naturally looks at how these functions compare with industry standards

With this as a starting point, we recommend that performance review include three elements:

Industry Standards This element will draw upon the findings of the external audit processes described above. We recognize that not all functions being considered for review are covered by that list. When that is the case, the process will need to rely more heavily on the latter two elements. ICRMA Standards Vendors make promises to ICRMA in the form of the contract they sign and as they implement that contract (e.g., various work plans, agenda follow up, etc.). This element contemplates an internal review of those promises in three ways: · A checklist review of major duties defined under the contract as amended · A sample review of specific work plans and assignments across a given year · Assessment of performance related to a common list of service expectations

Page 185 of 251

Performance Review Process Development Page 3 of 3

October 11-12, 2017

Assessment of each of these items would rely on the expertise of other members of the ICRMA “team” – those who interact with the vendor most on a daily basis. For example: · Administration – The lead member of each of the other teams · Risk Control – The administrative team with LP & WC program managers · Financial - admin team + annual outside audit · Program and Litigation – The administrative team with additional TPA feedback · Broker – The administrative team with the finance team · Counsel – The administrative team with program managers The list of common service expectations needs further development, but we would anticipate it including items such as: · Responsiveness and timely performance · Quality of communication · Understandability and usability of advice given · Proactive ethics and conflict of interest management · Sufficient data security and confidentiality · State and federal accountability (e.g., licensing and required filings) · Maintenance of required liability coverage Member Feedback This element ensures that both board and members have regular input into the process and that their satisfaction is appropriately valued. In the past, Bickmore asked members to complete a survey every two years so that it could gather feedback and track changes in member satisfaction. Currently, ICRMA’s broker periodically scans members as well. We recommend a comprehensive annual survey that focuses on satisfaction with and improvement of performance across functions. The resulting information would be used on an ongoing basis by vendors, would inform the larger process, and would serve as an early alert system so that items can be addressed before they become problems.

Schedule Given the number of contracts involved and work entailed, we suggest performance be reviewed on a rolling

basis

Year 1 Year 2 Year 3 Notes RPA

· Administration · Risk control

x We recognize that this schedule does not align with current or even expected contract terms. However, with 1 and 3-year contracts, each with extension options, there is no practical way to align the two that does not result in annual review. This would be too heavy a burden for all.

James Marta & Company · Financial management

x

Carl Warren · Program and litigation management

x

Counsel x Broker x

Page 186 of 251


Subject: Restatement of Bylaws – Governing Document Project Action for consideration Review draft revised Bylaws, provide feedback, and approve the Bylaws as proposed or as modified with an effective date no earlier than January 1, 2018 and subject to additional approval of the Program Underwriting & Administration Manual to be discussed and approved at the board’s December 2017 meeting. Background: As previously reported, RPA staff and consultants have worked to modernize, reorganize and collapse ICRMA various bylaw documents and in doing so:

· Update language and eliminate redundancies · Bring provisions in line with both current and preferred practice · Improving the overall efficacy of the document · Ensure the resulting document contains customary sections We did so with the advice of an ad hoc committee of the ICRMA Board. In December, the Board approved staff’s recommendation that ICRMA continue its governing document revisions with another phase of consulting work. The purpose of this phase would be to bring ICRMA’s governing documents in line with proposed bylaw changes. This item fits within the larger governing documents project as follows.

October Retreat

December Meeting

Effective Date

1. Policies & Procedures for Financial Management Discuss & Advise

Unless individual items specified otherwise 1/1/2018

2. Litigation Management Policies & Procedures 3. ICRMA Consolidated Bylaws 4. Program Underwriting & Administration Manual

Discuss & Advise

5. Board of Directors Manual 6. Joint Powers Agreement After Member

approvals 7/1/2018

*** ICRMA General Counsel must review and approve all documents prior to any vote by the Board of Directors.

Attachments: Governing Document Project – Bylaws Revision, Notice Copy Prepared by: Sara A. Peterson, Consultant

Page 187 of 251

NOTICE COPY – As of 9/8/2017 edits


Governing Document Revision Project BYLAWS REVISION NOTICE COPY Revised through September 8, 2017

Page 188 of 251



Table of Contents Overview of Change Process _______________________________________________ 3

ICRMA BYLAWS – Proposed Consolidation & Restatement _______________________ 4

THE ITEMS THAT FOLLOW ARE PROVIDED AS REFERENCE ONLY

Original Documents & Policies _____________________________________________ 29 A. Joint Powers Agreement ......................................................................................................................................29 B. Bylaws

1. JPA Bylaws .............................................................................................................................................34 2. Liability Program Bylaws ........................................................................................................................43 3. Property Program Bylaws ......................................................................................................................50 4. Workers Compensation Bylaws .............................................................................................................54

These proposed bylaws are being provided to the ICRMA Board of Directors on September 8, 2017 with the intent that they be discussed for adoption at the Board’s October 11-12, 2017 meeting and thus meeting the ICRMA 30-day notice requirement for changes to its bylaws.

A revised version of other documents included in the governing document project will be provided as preparation for the October and December meetings of the ICRMA Board of Directors.

Page 189 of 251



Overview of Change Process Process for Approving New Documents

October Retreat

December Meeting

Effective Date

1. Policies & Procedures for Financial Management Discussion & Vote Unless individual items

specified otherwise

1/1/2018

2. Litigation Management Policies & Procedures 3. ICRMA Consolidated Bylaws 4. Program Underwriting & Administration Manual

Discussion & Vote 5. Board of Directors Manual 6. Joint Powers Agreement After Member approvals

7/1/2018

*** ICRMA General Counsel must review and approve all documents prior to any vote by the Board of Directors.

Summary Disposition of Current Documents & Policies

· Joint Powers Agreement To be revised and replaced once Members approve

· Bylaws o JPA Bylaws To be revised, consolidated and restated o Liability Program Bylaws To be replaced in consolidation of bylaws and original rescinded o Property Program Bylaws To be replaced in consolidation of bylaws and original rescinded o Workers Compensation Bylaws To be replaced in consolidation of bylaws and original rescinded

· Investment Policy To be inserted into the financial policy document without edit

· Liability and WC Program Net Asset Policy Statement To be revised, inserted into financial policies and original rescinded

· Underwriting Manual To be revised / consolidated with various program bylaw provisions · Litigation Management Policies & Procedures To be revised (limited) and otherwise remain intact

· Various Standalone Policies o Administrative Committee Roles & Responsibilities To be rescinded as no longer necessary o Dispute Resolution Policy To be revised, inserted into new bylaws and original rescinded o Governing Board Roles & Responsibilities To be revised, inserted into board manual and original rescinded o Mission & Vision Statements To be revised, inserted into board manual and original rescinded o Policy Regarding Recusal of Member City To be revised, inserted into board manual and original rescinded o Service Provider Agreement Renewal Policy To be revised, inserted into financial policies and original rescinded o WC Program Code – Conflict of Interest Policy To be revised, inserted into program manual and original rescinded

Governing Documents NOT Affected by this Process

· Liability Program Memorandum of Coverage

· Property Program Memorandum of Coverage

· Workers Compensation Memorandum of Coverage

· TPA Performance Standards

· Third Party Claims Administration Data Request Standards

· Any other policy or governing document not listed here

Page 190 of 251



ICRMA BYLAWS – Proposed Consolidation & Restatement Contents ARTICLE 1. ARTICLE I – PURPOSE ARTICLE II – DEFINITIONS &

INTERPRETATION ARTICLE III – NOTICE ARTICLE IV – MEMBERS A. Membership B. Application & Approval C. Withdrawal & Renewal D. Obligations of Membership E. Default & Remedies ARTICLE V – BOARD OF DIRECTORS A. Authority of the Board of Directors B. Eligibility & Appointment C. Resignation, Removal & Vacancy D. Meetings E. Authority of Individual Directors F. Conflicts of Interest ARTICLE VI – OFFICERS A. Number B. Duties C. Eligibility & Terms of Office D. Elections

ARTICLE VII – COMMITTEES A. Formation B. Standing Claims Committee C. Other Committees ARTICLE VIII – ADMINISTRATION A. Executive Director B. Responsibilities ARTICLE IX – FINANCIAL MATTERS A. Fiscal year B. Budget C. Audit D. General Administration of Funds E. Program Accounting F. Annual Member Contribution G. Dividends, Assessments & Reserve

Fund H. Deposit & Investment of Funds ARTICLE X – COVERAGE PROGRAMS A. Purpose B. Authorization C. Participation & Coverage D. Program Management

ARTICLE XI – DISPUTE RESOLUTION A. Scope B. Procedure ARTICLE XII – MISCELLANEOUS A. Conflicting Representation B. Member Indemnification C. Counsel Authorized D. Board Authorization E. Reimbursed Expenses F. Representative & Officers Insurance G. Claims Against ICRMA ARTICLE XIII – TERMINATION &

DISTRIBUTION ARTICLE XIV – EFFECTIVE DATE ARTICLE XV – AMENDMENTS

Overview of Changes ARTICLE 2. The following is a broad overview of changes in the document that follows. It is not an exhaustive list. · Collapsing the Bylaws from 4 + to 1

o Simplify the Document’s Number Convention o Eliminate definitions to the degree already defined in JPA or MOC and refer back to them o Collapse all financial matters into a single article o Collapse core formation, definition, management provisions into an article related to programs o Specifically articulate in the bylaws that the article related to programs meets the JPA requirement for program bylaws as

operationalized and changed from time to time via other governing documents (e.g., MOC, etc.)

· Simplifying & Updating Language o Member – will be used only to refer to the municipal entity (not an individual) and only in reference to the JPA (not an ICRMA

program) o Participant – will be used only to refer to the municipal entity and only in reference to a specific ICRMA program o Governing Board – will be replaced with Board of Directors. There is no other board for “governing” to contrast with, and Board

of Directors is widely accepted in the field o The Authority – will be replaced with ICRMA. It eliminates confusion with use of authority as a verb and personalizes the text. o General Manager – will be replaced with Executive Director. This aligns with the field and current usage by ICRMA. It also better

describes the role, relationship with the board, and expectations for performance. o Delegate & Representative – will be largely eliminated throughout the documents. To the degree representative is used it will

refer to the individual speaking for the member at any given time and dissociated from anything to do with governance of ICRMA. There will be no reason to continue use of Delegate as a noun.

o Director – will be used only to refer to the individual appointed by the Member to serve on the Board of Directors. It is this

Page 191 of 251



person who has been granted voting authority. o Alternate or sub-alternate – will only be used in lower case to refer to individuals appointed by the Member to serve in the

Director’s absence. They are not members of the Board of Directors per se but are authorized to act in the Director’s absence o Members acting through their governing body – will be clarified to ensure there is no confusion with the ICRMA Board o Deposit Premium or Premium – replace with annual contribution o Insurance – replace with self-insured or pooled risk as appropriate to the context o Risk Management Program – replace with more generic ICRMA program with global definition that includes the various possible

components

· Substantive Changes o Unified amendment, voting and notice provisions o Elimination of Administrative Committee and changes to settlement authority levels o Director appointments and attendance

§ Ensure consistent, informed and thoughtful participation on the Board consistent with each individuals legal obligations § Ensure Member engagement in governance in a way that maximizes their commitment to and understanding of the pool § Create incentives for “good” behavior and enforceable consequences that allows the Board to self-monitor § ICRMA already has attendance expectations in its bylaws. As such, the change here is more about beefing up the

expectation and its enforcement § Changes that allow for board approval of Member appointments, Members to appoint ex officio

o Clarification of alternate role o Clarification of Member obligations post withdrawal o Addition of Mission statement, member recusal and dispute resolution language (with narrowed definition of dispute) o Changes to dates for MLR change o Clarification of dividend and assessment language

· CAVEAT – We cannot make a completely clean break with some of these terms until other governing documents are changed as well. As a result, there will be parentheticals included that link the terms – e.g., Executive Director (referred to in some governing documents as General Manager, these terms are intended to be synonyms)

Formatting Key ARTICLE 3. In order to facilitate reading and ease of use, we have employed the following formatting conventions.

· Bold Blue Text – Highlights references to specific laws or provisions in other ICRMA governing documents · Underlined Text – Highlights dates, deadlines, notice periods, terms, and the like · In the annotations, grey text is language quoted from another text, and red text is for notes and/or comments · Also in the annotations, larger text identify items for in-depth board discussion in December · Bold green text identifies edits made since the August meeting

Restated Bylaws

Draft Provisions JPA Language & Annotations

ARTICLE I – PURPOSE The Independent Cities Risk Management Authority (ICRMA) is established for the purpose of operating and maintaining a cooperative program of self-insurance, jointly purchased insurance coverage, and risk management; and to provide a forum for the discussion, study, development, and implementation of procedures of mutual benefit in risk sharing and risk management programs. Therefore its mission is to be the premier member-focused association of California public entities, joined together to protect member resources by managing the cost of risk, by providing its members with comprehensive risk management services and broad coverage, resulting in cost stabilization and effective risk solutions. Further objectives and authority may be provided for in the ICRMA Joint Powers Agreement (the Agreement) as amended from time to time.

JPA: “Pursuant to Article I (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, the Members hereby create a public entity, separate and apart from the Members, to be known as the Independent Cities Risk Management Authority, hereinafter referred to as “ICRMA” or the "Authority". Pursuant to Government Code Section 6508.1, the debts, liabilities, and obligations of the Authority shall not constitute debts, liabilities, or obligations of any Member. The purpose of creating this Authority is to exercise the powers of the Members to jointly accomplish the following:

Page 192 of 251




2.1.1 Develop effective Risk Management Programs to reduce the amount and frequency of their losses. 2.1.2 Develop Risk Management Programs of insurance to protect Members from the effects of catastrophic or unexpected losses. Such programs shall include, but not be limited to, coverages for losses arising out of Tort Liability, Workers' Compensation, Health Benefits, and the ownership or use of real or personal property. 2.1.3 Design Risk Management Programs of the Authority on a pooled or self-funded basis whereby the Members share some portion, or all, of the costs of the program losses. 2.1.4 Jointly purchase insurance, excess insurance, or reinsurance and/or develop alternative financial arrangements for the purpose of transferring risk of loss to commercial insurers. 2.1.5 Assist Members to the maximum extent authorized by law to secure long term solutions enabling the Authority to provide adequate protection to Members against catastrophic, or greater than expected, claims and to attract major reinsurers for the purpose of transferring risk. 2.1.6 Jointly secure administrative and other services including, but not limited to, general administration, underwriting, risk management, loss prevention, claims adjusting, data processing, brokerage, accounting, and legal services when related to any of the other purposes. The Authority shall have the powers common to its Members and is authorized, in its own name, to do all acts necessary and to exercise such common powers to fulfill the purposes of this Agreement referred to in Article 2 including, but not limited to, each of the following: 8.1.1 Finance through the issuance of Bonds or other financial instruments of indebtedness, self-insurance reserve funds necessary or convenient for the implementation of this Agreement. 8.1.2 Incur debts, liabilities, and obligations. 8.1.3 Acquire, hold, or dispose of real and personal property. 8.1.4 Receive contributions and donations of property, funds, services, and other forms of assistance from any source. 8.1.5 Sue and be sued in its own name. 8.1.6 Employ agents and employees. 8.1.7 Acquire, construct, manage, maintain, or operate buildings, works, or improvements. 8.1.8 Lease real or personal property, including that of a Member. 8.1.9 Receive, collect, and disburse monies. 8.1.10 Invest money in the treasury of the Authority in the same manner and on the same conditions as local agencies pursuant to Government Code Section 53601. 8.1.11 Exercise all other powers necessary and proper to carry out the provisions of this Agreement.

a. 8.1.12 Develop and implement Risk Management Programs.

8.1.13 Jointly purchase for the benefit of Members, insurance, excess insurance, reinsurance, and enter into agreements for the benefit of Members, for the purpose

Page 193 of 251



Draft Provisions JPA Language & Annotations of transferring risk of loss to commercial insurers or reinsurers or other insurance pools. “

ARTICLE II – DEFINITIONS & INTERPRETATION Unless expressly provided otherwise, terms used in these Bylaws are as defined in the Agreement and/or Memorandums of Coverage. If any provision of these Bylaws conflicts with the Agreement, the Agreement governs.

JPA: “The following definitions shall apply to the provisions of this Agreement and the By-Laws of the Authority and Risk Management Programs: 3.1.1 "Agreement" … 3.1.2 "Board" or "Governing Board" … 3.1.3 "By-Laws" … 3.1.4 "Claim(s)" …. 3.1.5 "Fiscal Year" … 3.1.6 “Governing Documents” …. 3.1.7 "Insurance" ... 3.1.8 "Member”... 3.1.9 "Memorandum of Coverage" … 3.1.10 "Program Year" … 3.1.11 "Participation" or "Participating" … 3.1.12 "Risk Management" … 3.1.13 "Risk Management Program" …”

ARTICLE III – NOTICE Unless otherwise specified, any notice to be given or to be served in connection with these Bylaws must be in writing (i.e., mail, email, or other means of written communication) and will be deemed to have been given and received when delivered personally, by mail, email, or other approved method of delivery using the contact information (physical or electronic) as shown on ICRMA’s records. Any Member may change its address with five- (5) day written notice to ICRMA. Whenever applicable, notice shall be given in accordance with the Ralph M. Brown Act (Government Code §54950 et seq.), hereafter the “Brown Act.”

JPA: “Notices to each Member under this Agreement shall be sufficient if mailed to its respective address on file with the Authority. Any Member may designate any other address in substitution of the foregoing address to which such notice will be given at any time by giving five days written notice to the Authority and all other Members.”

ARTICLE IV – MEMBERS A. Membership

The Agreement defines Member eligibility under California law, and each party to the Agreement is a Member.

JPA: “Any governmental agency, organized and operating under the laws of the State of California which is authorized to participate in a joint powers authority under the Government Code may become a member of the Authority by complying with the requirements of the Authority By-Laws”

B. Application & Approval In order to become a Member, a governmental agency must agree to be bound by ICRMA’s Governing Documents, 1 to participate in ICRMA’s liability program (minimum participation required), and to comply with all requirements set forth in the ICRMA underwriting policies then in effect and as subsequently modified including an initial participation commitment of three (3) years. The Board of Directors shall either approve or disapprove the application consistent with the ICRMA underwriting policies and relevant Board policy then in effect and as subsequently modified.

C. Withdrawal & Reapplication 1. Ability to Withdraw

a. Withdrawal by a Member from any or all programs must be in accord with the provisions of ICRMA’s Governing Documents.

JPA: “Any Member which enters a Risk Management Program may withdraw from that Risk Management Program and may at a later time seek to renew participation in said Program subject to the terms and conditions as set forth in the By-Laws of that particular Risk Management Program.

1 As defined in the Agreement, ICRMA’s Governing documents include the Agreement, ICRMA’s Bylaws, the Memoranda of Coverage and any other

document stipulated as a Governing Document in the Bylaws or by action of the Board of Directors.

Page 194 of 251



Draft Provisions JPA Language & Annotations b. A Member may NOT withdraw prior to the end of its initial three (3)

year commitment period and shall be obligated for payment of its ENTIRE annual contribution for those three (3) years.

c. If a Member withdraws from all programs or fallen below the minimum

requirement of participation in the liability program, it will be deemed to have withdrawn from ICRMA. Likewise, if a Member withdraws from ICRMA it will be deemed to have withdrawn from all programs.

d. No withdrawal may become effective EXCEPT at the close of a program year in accordance with the notice provisions of Article IV, Section C.2 of these Bylaws. As such, annual contributions will NOT be pro rated.

A Member is no longer a party to the Authority or this Agreement upon its withdrawal from all of the Authority’s Risk Management Programs.” Current Bylaw language: “13.5.3 Any member seeking to withdraw without proper and effective notice shall be responsible for the full cost of the subsequent year’s premium, and the notice will be deemed effective for the following year.”

2. Notice of Intent to Withdraw a. Notice of intent to withdraw from ICRMA or to terminate participation

in a specific program must be from the City Manager or other duly authorized official of the Member AND include the Council resolution or meeting minutes of the Member authorizing such action.

b. Notice of intent to withdraw from ICRMA’s liability program will be treated the equivalent of withdrawal from ICRMA as a whole.

c. For notice to be timely for a given program year beginning July 1, it must be received by ICRMA no later than December 1 of the preceding year. The Member may revoke such notice by providing subsequent notice to ICRMA by January 15.

d. Notice received after December 1 shall be considered UNTIMELY.

3. Ability to Reapply Any Member, which has voluntarily withdrawn from ICRMA or a specific program, may renew its participation by reapplying for membership and complying with all ICRMA Governing Documents.

D. Obligations of Membership The obligations of a Member include but are not limited to the following:

1. General

a. ALL current AND past members shall be responsible for their respective share of the expenses, as determined by the Executive Director, until all claims, or other unpaid liabilities, covering the period of the Member’s participation in the program have been finally resolved and the Board has determined the final amount of payments due by, or credited to, the Member for the period of its participation.

b. ALL current AND past members shall be responsible for providing accurate and factual data required by ICRMA on a timely basis to determine appropriate cost of coverage. The Member shall disclose activities not usual and customary in their operation. The Member shall at all times cooperate with ICRMA, including its Executive Director, program managers, Claims Committee, claims adjusting company, and loss control personnel, in regards to ICRMA’s underwriting activities, which shall include the collection of loss data in accordance with the ICRMA Third Party Claims Administration Data Request Standards.

JPA: “Each Member represents and warrants that it intends to, and does hereby, contract with all other Members listed in Appendix "A", and any new members admitted to the Authority pursuant to Article 16. Each Member also represents and warrants that the withdrawal or expulsion of any Member, pursuant to Article 14 or 15, shall not relieve any Member of its rights, obligations, liabilities or duties under this Agreement or the individual Risk Management Programs in which the Member participates. Each Member agrees to be bound by and to comply with all of the terms and conditions of the Governing Documents and any Resolution or other action adopted by the Governing Board as they now exist or may hereinafter be adopted or amended. Each Member assumes the obligations and responsibilities set forth in the Governing Documents. “

Page 195 of 251



Draft Provisions JPA Language & Annotations Failure to comply may subject the Member to sanctions, up to and including termination from the affected program.

c. NEITHER WITHDRAWAL NOR EXPULSION FROM ICRMA OR ANY OF ITS PROGRAMS RELIEVES MEMBERS OF ANY BENEFITS OR OBLIGATIONS OF THOSE PROGRAM YEARS IN WHICH THE ENTITY PARTICIPATED. These obligations include payment of assessments, retrospective adjustments, or any other amounts due and payable. In addition, the obligation to provide timely claims data for evaluation of claims exposure does not cease with termination from the program.

d. The withdrawal of any Member from any program shall not require the repayment or return to that Member of all or any part of any contributions, payments, advances, or distributions except in conformance with the provisions set forth herein and in ICRMA’s Governing Documents.

e. All past members shall receive any distribution of dividends based on the same methodology as applied to the current members.

f. All Members shall be held accountable for understanding and abiding

by ICRMA’s Governing Documents, as well as any changes thereto.

2. Annual Contribution The Board shall approve the annual contribution amount for each Member entity as part of the approved annual budget. The Executive Director shall recommend rates for each program in conjunction with ICRMA’s actuary or other financial advisors, if deemed necessary. The contribution amount shall be calculated according to an approved allocation formula or other guidelines approved by the Board. Billing will occur annually with due dates specified and failure to pay consequences as provided in the Bylaws or other ICRMA Governing Documents. Any Member seeking to withdraw without timely notice 2 shall be responsible for the full cost of the subsequent year’s contribution, and the notice will be deemed effective for the following year. After that year, the administrative fee shall apply as provided here.

3. Administrative Fees a. Applicability

Any withdrawing or expelled Member shall be subject to an administrative fee equal to its pro rata share of ongoing expenses for the three (3) program years following withdrawal. Ongoing expenses include but are not limited to staff payroll and benefits, vendor contracts, actuarial services, investment services, financial audits, and claims audits and administration.

b. Calculation The administrative fee shall be calculated based on the member’s actual payroll and self-insured retention level in the last year in which the Member participated. It shall be charged to the Member as follows: · In year one (1), 100% of the administrative fee will be charged to

the member;

Current Bylaw language: “13.5.2 The withdrawal or expulsion of any member of any risk management program after the effective date of such pooling program shall not terminate its responsibility to contribute its share of premiums or funds to any fund or insurance program created by the Authority. All current and past members shall be responsible for their respective share of the expenses, as determined by the General Manager, until all claims, or other unpaid liabilities, covering the period of the member’s participation in the risk management program have been finally resolved and a determination of the final amount of payments due by, or credit to, the member for the period of its participation has been made by the Governing Board. All past members shall receive any distribution of dividends based on the same methodology of the current members. The withdrawal or expulsion of any member from any program shall not

2 See Section C.2 of this Article for definition of timely notice.

Page 196 of 251



Draft Provisions JPA Language & Annotations · In year two (2), 50% of the administrative fee will be charged to

the member; and · In year three (3), 25% of the administrative fee will be charged to

the member.

require the repayment or return to that member of all or any part of any contributions, payments, advances, or distributions except in conformance with the provisions set forth herein and in the risk management program’s Bylaws.”

E. Default & Remedies The Agreement allows for expulsion of Members following material breach of the Agreement per provisions to be included in these Bylaws. As such, this section defines both expulsion and other remedies for Member default.

1. Definition of Default The following shall be "defaults" under the Agreement and these Bylaws: a. Failure by a Member to observe and/or perform any covenant,

condition, or agreement under ICRMA’s Governing Documents;

b. Consistent failure by a Member to attend meetings, respect Board of Directors decision-making authority, or otherwise circumvent ICRMA’s integrity as a point powers agency;

c. Consistent failure to cooperate fully in the fulfillment of the ICRMA objectives, including but not limited to: i. Submission of requested documents and information; ii. Cooperation with any insurer, claims adjuster, legal counsel or

other service provider engaged or retained by ICRMA in all matters relating to ICRMA

d. Failure to pay ANY amounts, including penalties and interest, due to

ICRMA for more than 30 days;

e. Excessive losses as determined by the Board of Directors;

f. The filing of a petition applicable to the Member in any proceedings instituted under the provisions of the Federal Bankruptcy Code or under any similar act which may hereafter be enacted; or

g. Any condition of the Member that the Board of Directors believes is unduly detrimental to ICRMA.

Current Bylaw language: 14.1.1.1 Failure by a member; 14.1.1.2 Consistent failure to: attend meetings, submit requested documents and cooperate in the fulfillment of the program objectives; 14.1.1.3 Failure to pay; 14.1.1.4 Excessive losses. 14.1.1.5 The filing of a petition; or 14.1.1.6 Any condition. Additional PROGRAM bylaw language: The Board may initiate termination of future participation for the following reasons: · Termination as a Member of ICRMA; · Declination to cover the participant by the entity

providing excess coverage; · Nonpayment of premiums, assessments, or other

charges; · Frequent late payment of premiums, assessments,

and/or other charges: subject to interest and penalty charges;

· Failure to timely provide requested underwriting information;

· Consistent poor loss history relative to the pool; · Substantial change in exposures which are not

acceptable in the program; and/or · Financial impairment that is likely to jeopardize

the program’s ability to collect amounts due in the future

The Board shall have ICRMA, as provided in Section 5.1.3.14 of ICRMA Bylaws to send termination notice to a participant. Such notice shall be sent at least 60 days prior to termination.

2. Remedies Upon Default a. Scope of Remedy

No remedy contained in these Bylaws is intended to be exclusive. Whenever a default as defined in this Article occurs, ICRMA may exercise any and all remedies available pursuant to law or granted pursuant to the Agreement and these Bylaws, including, but not limited to increasing a Member’s retention, imposing a penalty or assessment, canceling Member’s coverage, expulsion from any risk management program, and/or expulsion of the Member from ICRMA.

Current Bylaw language: “Whenever any event of default referred to in Section 14.1 of this article shall have occurred, it shall be lawful for the Authority to exercise any and all remedies available pursuant to law or granted pursuant to the Agreement and these Bylaws, including, but not limited to increasing a member’s retention, penalty or assessments, canceling member’s coverage, or expulsion of the member. However, no remedy shall be sought for defaults, until the member has been given 30 days written notice of default from the Governing Board, except defaults under Sections 14.1.1.4, 14.1.1.5, and 14.1.1.6 in Section 14.1.1.” b. Notice

No such remedy shall be sought until the Member has been given 30 days’ notice of default from the Board, except defaults under Sections E.1.e through g of this Article.

Page 197 of 251



Draft Provisions JPA Language & Annotations c. Late Fees, Penalties & Interest

i. Unless other arrangements for payment have been approved by the Board of Directors, Members with delinquent amounts due to ICRMA shall be assessed a penalty of: · One percent (1%) of the unpaid amount due to ICRMA 30 days

after the initial invoice due date. · A penalty of another one percent (1%) shall accrue after an

additional 45 days.

ii. Interest shall accrue on all delinquent amounts due and payable to ICRMA at the applicable rate of 10% per annum from the due date of the billing until the date finally posted by the designated financial institution.

iii. For the purpose of assessing penalties and interest, the fee calculation shall be based on each calendar day the delinquent amount is late, notwithstanding the foregoing. No late fee or other charge shall exceed the maximum authorized by law.

iv. Each Member shall indemnify ICRMA from any expense resulting from its failure to pay the sum due on or before the due date.

v. Any late fee assessed in accordance with the provisions of this Section may be appealed. Such appeal shall be in accordance with ICRMA’s Dispute Resolution Policy as contained in Article XI of these bylaws.

d. Cancellation of Coverage under a Program Upon any default, the Board of Directors may: i. Temporarily cancel any or all rights of the defaulting Member in

any program in which such Member is in default until such time as the condition causing default is corrected and/or other conditions are met (e.g., the Board of Directors may elect to temporarily suspend coverage if a Member fails to pay its contribution); OR

ii. Permanently cancel any or all rights of the defaulting Member in any program in which such Member is in default.

e. Involuntary Termination or Expulsion The Board may expel any Member that is in default as defined in Section E of this Article. i. Such expulsion shall be effective on the date prescribed by the

Board, but not earlier than 30 days after notice of expulsion has been personally served on or sent via certified mail to the Member.

ii. As stated in Article IV.D of these Bylaws, neither withdrawal nor expulsion from ICRMA or any of its programs relieves members of any benefits or obligations of those program years in which the entity participated.

iii. The Board in its discretion may impose conditions for curing any grounds for expulsion, and for reinstating the member to its rights.

JPA: “The Governing Board may expel any Member from the Authority and/or from a Risk Management Program at any time for material breaches of the Governing Documents. Such expulsion shall be as provided in the By-Laws of the Authority or each Individual Risk Management Program.” Program Bylaws: “The Governing Board shall have the authority, as provided in Section 5.1.3.14 of the Authority Bylaws to send termination notice to a participant. Such notice shall be sent at least 60 days prior to termination.”

3. Agreement to Pay Attorney's Fees and Expenses In the event either ICRMA or a Member is in default and the other party employs attorneys or incurs other expenses for the collection of moneys or

Page 198 of 251



Draft Provisions JPA Language & Annotations the enforcement of performance or observance of any obligation under the Agreement on the part of the defaulting party, the losing party shall pay to the other party the reasonable fees of such attorneys and such other expenses so incurred by the other party.

4. No Additional Waiver Implied No delay or omission to exercise any right or power accruing upon any default shall impair any such right or shall be construed to be a waiver thereof. In the event any condition contained in ICRMA’s Governing Documents is breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived, and shall not be deemed to waive any other breach hereunder.

ARTICLE V – BOARD OF DIRECTORS A. Authority of the Board of Directors

1. General a. ICRMA is governed by its Board of Directors (the Board).

b. The Board shall have the responsibility and authority to carry out and

perform all relevant functions, and make all decisions affecting ICRMA’s programs, consistent with the powers of ICRMA and not in conflict with the Agreement, these Bylaws, or other Governing Documents.

c. The Board shall provide policy direction for the Executive Director and ICRMA committees.

JPA: “The Authority shall be governed by a Governing Board the composition of which shall be set forth in the Authority’s By-Laws. Immediately upon admission of a new Member pursuant to Article 16, the Member shall be entitled to appoint a Representative to the Governing Board and an alternate Representative and, if desired, a substitute alternate Representative, each of whom shall meet the parameters set forth in the Authority’s By-Laws. Decisions of the Member representative, or the Governing Board in his/her absence, shall be binding on the Member. The Representatives to the Governing Board and to each of the Risk Management Programs and any officer, employee, contractor, or agent of the Authority shall use ordinary care and reasonable diligence in the exercise of their power and in the performance of their duties under this Agreement.”

1. Delegation The Board may delegate ANY of its responsibilities EXCEPT: a. Those requiring a vote by the Board as specified in the Agreement,

ICRMA’s Governing Documents, OR

b. Those listed here: i. Accept a new Member into ICRMA or alter a Member’s retained

limit ii. Adopt a budget

iii. Amend any of its Governing Documents, including these Bylaws iv. Approve contracts for ICRMA administrative services and legal

counsel v. Approve dividends and/or assessments to Members

vi. Establish, amend, or terminate a program vii. Settle matters in excess of the Claims Committee authority viii. Approve indebtedness

ix. Expel, terminate or suspend the rights of a Member x. Approve dissolution of ICRMA

2. Voting Authority All matters within the purview of the Board may be decided by a simple majority (over 50%) vote of the Board, EXCEPT for the following matters specified as requiring a two-thirds majority vote of the Board:

Page 199 of 251




a. Approve indebtedness b. Expel, terminate or suspend the rights of a Member c. Approve dissolution of ICRMA

F. Eligibility & Appointment 1. Voting Director

The ICRMA Board shall be comprised of one (1) Voting Director appointed from each Member agency.

JPA: “The Authority shall be governed by a Governing Board the composition of which shall be set forth in the Authority’s By-Laws. Immediately upon admission of a new Member pursuant to Article 16, the Member shall be entitled to appoint a Representative to the Governing Board and an alternate Representative and, if desired, a substitute alternate Representative, each of whom shall meet the parameters set forth in the Authority’s By-Laws. Decisions of the Member representative, or the Governing Board in his/her absence, shall be binding on the Member.”

2. Alternates Each Member may appoint up to two (2) alternates to the Voting Director, who may vote only in the absence of the Voting Director. Other than this use of alternates, no proxies are allowed for Board business. The purpose of appointing alternates is to ensure near-perfect Member attendance at Board meetings. The purpose is NOT to facilitate the absences of the Voting Director. Unless specified otherwise, all provisions of the Bylaws that apply to the Voting Director (“Director”) shall apply equally to any appointed alternates.

3. Eligibility a. All Directors must EITHER be an elected official OR hold a position with

the equivalent authority of a Department Director within the Member hierarchy.

b. Appointments must be of a specifically named individual or specific position (e.g., City Manager) named ex officio in order to be approved by the ICRMA Board. If the latter appointment is used, the Member must provide specific contact information with the initial resolution and notify ICRMA of any changes to that information within 48 hours of the change.

4. Form of Appointment a. All Director appointments shall be made via Member Council resolution

or other appointment process recognized as official by the Member.

b. ICRMA shall be promptly notified in writing of any new or changed appointments.

c. The ICRMA Board has the right to approve or reject any appointments. As such it may, at its discretion, reject a specific appointment and request that the Member select another to appointment.

G. Resignation, Removal & Vacancy 1. Resignation

a. Any Director may resign at any time by giving notice of resignation to the ICRMA Executive Director.

b. Such resignation shall be effective immediately unless another time is specified.

c. Acceptance of such resignation is not necessary to make it effective.

2. Removal a. The Board may request removal of any Director for cause at which point

the Member shall make a new appointment. Cause for removal of the

JPA: “… shall be removed from the Governing Board upon the occurrence of any one of the following events: (1) the expulsion or withdrawal of the Member from the

Page 200 of 251



Draft Provisions JPA Language & Annotations Voting Director includes, but is not limited to, absence from two (2) or more consecutive meetings 3, failure to adhere to approved code of conduct, repeated failure to fulfill the duties set forth these bylaws or other board-approved policy statements, repeated failure to address conflicts of interest, or other actions that jeopardize IRCMA or the Board’s governance function.

b. The appointing Member may remove its Director with or without cause.

c. Termination of office or employment with the appointing Member shall automatically terminate a Director’s appointment to the Board.

Authority; (2) the death or resignation of the Member Representative; (3) the Authority receives the written notice from the Member that the Member Representative is no longer a member of the governing body of the Member or as otherwise provided in the Authority’s By-Laws.”

3. Vacancy The respective Member shall promptly fill any Board vacancy regardless of the cause of the vacancy.

H. Meetings 1. Chair

The President chairs the Board.

2. Regular Meetings a. The Board shall hold regular meetings each year at the time and place

of its choosing.

b. Discussion of developments and performance of any program may occur as part of any scheduled meeting.

JPA: “The Governing Board and all standing committees shall hold meetings at the location and time set forth in the By-Laws of the Authority and each individual Risk Management Program.” FOR BOARD DISCUSSION: Do we want to consider moving to monthly meetings with WebX (or similar) options and virtual voting?

3. Special Meetings a. EITHER the President OR 20% of voting Directors may call a special

meeting by notifying the Executive Director of the purpose of the meeting.

b. The Executive Director shall provide 24-hour notice to each Voting Director of a special meeting in compliance with the Brown Act.

4. Quorum Quorum for the transaction of business shall be as defined in the Agreement.

JPA: “A majority of the members of the Governing Board is a quorum for the transaction of business. However, less than a quorum may adjourn from time to time. A vote of the majority of a quorum at a meeting is sufficient to take action”

5. Participation by Conference Telephone Directors or any committee members may participate in a meeting by teleconference in compliance with the Brown Act.

6. Brown Act Requirements All meetings of the Board shall be conducted in accordance with the Brown Act.

JPA: “All meetings of the Governing Board, and appointed committees, including without limitation, regular, adjourned regular, and special meetings, shall be called, noticed, held, and conducted in accordance with the Ralph M. Brown Act (Section 54950 et. seq. of the Government Code).“

I. Authority of Individual Directors 1. General

Each Director is individually expected to: · Meet all legal obligations of Board service, · Perform all duties set forth in ICRMA’s Governing Documents, and

3 See Section C.2 of this Article for authority to remove a Director based on meeting attendance.

See also Article III, Section E.1 in which consistent failure by a Member to attend meetings is default under the Agreement.

Page 201 of 251



Draft Provisions JPA Language & Annotations · Serve with keen attention to ICRMA’s purpose and high professional

standards

2. Voting Authority a. ICRMA allows no proxies. Thus, Voting Directors and alternates shall

exercise independent judgment in all ICRMA matters including but not limited to voting, making motions, or otherwise acting in a governance capacity at a Board meeting.

b. ONLY the Voting Director in attendance may vote, make motions, or otherwise act in a governance capacity at a Board meeting.

c. An alternate may vote, make motions, or otherwise act in a governance capacity ONLY in the Voting Director’s absence.

d. In no instance may a Member have more than one vote on any item before the Board or have more than one appointee vote, make motions, or otherwise act in a governance capacity during a single meeting.

e. A Member shall notify ICRMA of an anticipated Voting Director absence as soon as practicable, at which point the Member will declare which alternate will exercise its voting authority for a given meeting. Only upon such declaration may an alternate vote.

3. Binding on Members Actions properly approved or taken by the Board shall be binding on all Members regardless of the individual vote of any Director.

J. Conflicts of Interest ICRMA’s Conflict of Interest Policy incorporates by reference California Code of Regulations, §18730, and any amendments thereto. Whenever a member city is involved in litigation with the Independent Cities Risk Management Authority ("ICRMA"), the representative of that member city shall not participate in, nor be present during, any discussion between ICRMA counsel and the ICRMA Governing Board or any of its committees, nor shall any legally privileged communication between ICRMA's counsel and the Governing Board or the Committee be distributed to the representative of the member city.

ARTICLE VI – OFFICERS A. Number

ICRMA has four (4) Officers – President, Vice President, Treasurer, and Secretary – each of which is elected by the Board as set forth in these Bylaws.

JPA: “The Governing Board shall elect a president, vice-president, Treasurer and Secretary from among its members. The manner of election and term of office of elected officers and their authority and responsibilities shall be as set forth in the Authority By-Laws. If any of the officers cease to be a Member’s representative, the resulting vacancy shall be filled as provided in the Authority By-Laws. The Governing Board may appoint such other officers as it considers necessary”

B. Duties All Officers are expected to maintain regular meeting attendance and to ensure that ICRMA affairs are carried out consistent with its mission, Bylaws, and Governing Documents. In addition, individual offices have specific duties as follow:

1. President

Page 202 of 251



Draft Provisions JPA Language & Annotations The President shall: a. Chair all Board meetings of ICRMA; b. Appoint the members of all ICRMA ad hoc committees; c. Execute documents on behalf of ICRMA as authorized by the Board, or

delegate to the Executive Director; d. Serve as the primary liaison between ICRMA and any other

organization; e. Serve ex officio on all committees; and f. Have such other powers and duties as the Board may designate from

time to time.

2. Vice President The Vice President serves as may be required in the President’s absence with all the attendant powers and duties. The Vice President shall also serve ex officio on all committees. The Vice President shall have such other powers and perform such other duties as may be designated from time to time by the Board.

3. Secretary The Secretary is responsible for all ICRMA minutes, notices and records as well as such other duties as may be assigned by the Board.

JPA: “Minutes of regular, adjourned regular, and special meetings of the Authority shall be kept under direction of the Secretary. As soon as possible after each meeting, the Secretary shall forward copies of the minutes to each Governing Board member.”

4. Treasurer The Treasurer: a. Ensures the custody and management of ICRMA funds, accounts, and

property, in accordance with the California Government Code; b. Supervises the maintenance of such records to assure that financial

accounts, records, funds, and property are maintained in accordance with accepted accounting practices and procedures prescribed by the Government Accounting Standards Board;

c. Provides for inspection of all financial records; d. Oversees, monitors and reports on investment action; and e. Oversees and monitors the financial audit.

JPA: “Pursuant to Government Code Section 6505.6, the Governing Board shall designate an officer or employee, or officers and employees, to receive, deposit, invest, and disburse the property of the Authority pursuant to Government Code Sections 6505 and 6505.5. The Governing Board shall fix the amount of the fidelity bond to be filed by such public officer(s) and/or employee(s).”

C. Eligibility & Terms of Office 1. Any Director is eligible for election and continuation in office as President,

Vice President, Treasurer or Secretary, provided no Member is allowed more than one representative appointee in office at any time.

2. Officers serve two- (2)-year terms commencing with the start of the fiscal year unless otherwise specified. Officers serve for their elected terms with ICRMA, until termination of office or employment with their Member OR until removal from office by a majority vote of the Board, whichever is earliest.

3. The President of the Board shall appoint the Treasurer every year as the investment delegate in accordance with Government Code §53607 and ICRMA Investment Policy.

D. Elections 1. Frequency

The Board holds annual elections in order to stagger terms appropriately. The Board will from time to time approve a procedure for this.

Page 203 of 251



Draft Provisions JPA Language & Annotations 2. Nominations

a. The Nominating Committee shall receive nominations and present candidates for office to the Board prior to the last regular Board meeting of the fiscal year.

b. Nominations may also be made at the time of the meeting, provided the candidate(s) meet the requirements set forth in these Bylaws or other Governing Documents.

3. Voting a. Elections generally occur at the last regular Board meeting of the fiscal

year.

b. Those candidates receiving a majority of votes in each office will succeed to those offices.

c. If no nominee receives a majority vote, the nominee with the least votes shall be deleted as a nominee and a new vote taken. This elimination process will continue until one nominee receives a majority vote. If two or more nominees are tied with the least votes, then another vote shall be taken immediately. If that does not eliminate a nominee, then the outgoing President will eliminate one of the nominees with the least number of votes by way of a random process of his/her choosing (e.g., a coin flip).

4. Vacancy a. Vacancies in any office may be filled by Presidential appointment, with

the approval of the Board at its next regularly scheduled meeting held after the vacancy occurs.

b. A vacancy in the position of President shall be filled by election at the next regularly scheduled Board meeting held after the vacancy occurs.

ARTICLE VII – COMMITTEES A. Standing Claims Committee

1. Authority The Claims Committee has the responsibility and authority to perform all functions delegated to it by the Board and make all decisions affecting ICRMA Programs, provided that such functions and decisions are consistent with the powers of ICRMA and are not in conflict with ICRMA Governing Documents. Specifically, the Committee is responsible for reviewing all aspects of each program, including, but not limited to:

a. Claims handling, review and settlement as provided herein b. Memorandum of Coverage c. Litigation Management Procedures d. Proposals for Claims Adjusters, Claims Auditors, and Legal Defense

Services e. Negotiating and approving contracts within its scope of responsibilities,

$50,000 or less, and within the approved budget appropriations f. Items referred by the Board

2. Limitations a. The Committee forwards recommendations to the Board for approval. b. Any claim above the Committee’s authority must be brought to the

Page 204 of 251



Draft Provisions JPA Language & Annotations Board for approval.

3. Disputes Regarding Management of a Claim Any claims settlement or arbitration decision made by the Claims Committee may be appealed. Such appeal shall be in accordance with the Memorandum of Coverage.

4. Eligibility & Appointment a. The Claims Committee consists of no fewer than five (5) and no more

than nine (9) Directors serving three- (3) year terms. On average, ICRMA will endeavor to maintain seven (7) on the Committee.

b. No proxies are allowed for Claims Committee business. c. The Claims Committee recommends Directors to its available seats,

making efforts to include: i. A balanced mix of Participants from in each program ii. At least one (1) individual working in each of the following

disciplines: Risk Management, Finance, Legal, Human Resources, and Administration.

d. The Board approves Committee appointments ensuring that no Member holds more than one representative appointee to the Committee at any given time.

e. Any Claims Committee Director appointed by a Member that has announced its intent to withdraw from ICRMA loses her/his eligibility to serve on the committee following the January 15 deadline to rescind said notice.

5. Vacancies The President may fill Committee vacancies by appointment, with the approval of the Board, at the next regularly scheduled Board meeting held after the vacancy occurs.

6. Meetings a. Chair

The Claims Committee elects a Chair and Vice Chair from among its number. In the absence of or inability of the Chair to act, the Vice Chair shall act as Chair. If either the Chair or Vice Chair ceases to be eligible to serve on the Committee, the resulting vacancy will be filled at the next meeting of the Claims Committee.

b. Attendance Attendance at Claims Committee meetings is essential to conducting ICRMA business. A Claims Committee member missing a maximum of two (2) in a fiscal year shall be subject to review by the Board concerning forfeiture of his/her seat on the Committee. 4

c. Frequency The Claims Committee meets as required but not less than four (4) times a year. Such meetings will be duly noticed, and an agenda will be distributed to all Claims Committee members.

d. Quorum A majority of the appointees to the Claims Committee shall be quorum

4 See Section D.2.1 of this Article for authority to remove a Director based on meeting attendance.

Page 205 of 251



Draft Provisions JPA Language & Annotations for the transaction of business

7. Brown Act Requirements All meetings of the Claims Committee shall be conducted in accordance with the Brown Act.

B. Other Committees 1. Nominating Committee

a. The President shall periodically appoint a nominating committee for the purpose of officer elections.

b. The Nominating Committee shall consist of a minimum of three (3) and a maximum of five (5) Directors.

2. Ad Hoc The President may appoint an ad hoc committee at any time.

ARTICLE VIII – ADMINISTRATION A. Executive Director

1. The Board shall appoint ICRMA’s Executive Director (referred to as “General Manager” in some ICRMA Governing Documents).

2. The Executive Director may, but need not be, an employee of ICRMA, a consultant, or a corporation.

B. Responsibilities The Executive Director shall be responsible for the daily administration, management, and operation of ICRMA and its programs subject to the direction and control of the Board of Directors and as clarified in ICRMA Governing Documents, relevant job descriptions and/or contracts.

ARTICLE IX – FINANCIAL MATTERS A. Fiscal year

ICRMA’s fiscal year shall be the period from July 1 of each year through June 30 of the subsequent year.

B. Budget The Board shall adopt an annual budget by July 1 of each year, with receipt of a draft budget forty-five (45) days prior thereto. The Board has the authority to extend the deadline if it is unable to adopt a budget by July 1.

JPA: “The Governing Board shall adopt an annual budget not later than 30 days prior to the beginning of each Fiscal Year”

C. Audit 1. Required

The Board shall cause an annual audit of the financial accounts and records of ICRMA to be made by a qualified, independent individual or firm. The minimum requirements of the audit are those prescribed by California law.

2. Filing

The financial audit report shall be filed with: a. The State Controller's Office within 6 months of the end of the fiscal

year under examination; and b. As a public record with each Member.

3. Costs

ICRMA shall bear all costs of the audit, charged against its operating funds.

JPA: “The Governing Board shall cause an annual financial audit of the accounts and records to be made and filed as provided in the Authority’s By-Laws and the laws of the State.”

Page 206 of 251



Draft Provisions JPA Language & Annotations D. General Administration of Funds

1. ICRMA is responsible for the strict accountability of all funds and reports of all receipts and disbursements.

2. ICRMA shall comply with all relevant law, including California Government Code §6505.

3. ICRMA offers participation in a risk sharing pool, covering losses of participants in accordance with the Agreement and the applicable Memorandum of Coverage. The assets of the pooled program shall be maintained at all times as the assets of the participants collectively. The assets may be disbursed only pursuant to the provisions of these Bylaws, and no participant shall have an individual right to exercise control over said assets except as provided in the Agreement.

JPA: “Funds of the Authority may be used to defend, indemnify, and hold harmless the Authority and any member of the Governing Board, any member of a Risk Management Program, and any employee of the Authority for their actions taken within the scope of their duties while acting on behalf of the Authority. Nothing herein shall limit the right of the Authority to purchase insurance to provide such coverage as is hereinabove set forth.”

E. Program Accounting 1. The accounting method for each risk management program will be in

accordance with the provisions of the Bylaws governing that program and Government Accounting Standards Board principles.

2. Funds received for each program shall be accounted for separately on a full-accrual basis.

3. Each program year shall be accounted for separately, unless the Board approves a multi-year program funding option. Specifically, the income and expenses of each program year shall be accounted for separately from any other program year's income or expenses.

4. A program year shall not be closed until such time that the Board authorizes closure, being convinced that known claims for the year are all closed and the probability of further claims being discovered is minimal. Any closed years MAY be reopened at any time if deemed necessary and approved by the Board.

5. An independent actuary shall test the condition of each self-insured risk management programs of ICRMA on an annual basis. The condition of each open program year within each such program shall be tested to determine its actuarial soundness. If it is determined by the actuary that any year is no longer actuarially sound; an accountant, auditor and/or other financial services provider advises that the assets of a program, as a whole, do not meet the expected discounted losses; or other facts or circumstances appear such that the Board concludes, in its discretion, that levying an assessment would be fiscally prudent and appropriate actions may be taken. In addition, , the Board reserves the right to assess the members of any program an amount determined by the Board to be necessary for the soundness of the program and to allocate such assessment to the members in a fair and equitable manner.

JPA: “Funds of the Authority may be commingled for investment and administration purposes. However, each Risk Management Program shall be accounted for separately on a full accrual basis. The Governing Board shall establish the policy for warrants drawn to pay demands against the Authority. The coverage for each Program Year of each Risk Management Program shall be as specified in the Memorandum of Coverage or policies of insurance for that Program Year of the Risk Management Program.”

F. Annual Member Contribution b. The Executive Director, in conjunction with an actuary, shall establish rates and

annual Member contributions for each program, subject to Board approval with the adoption of the budget. Each Member shall be evaluated annually for an experience modification adjustment that shall be applied to its annual contribution. The calculation of the adjustment shall include the actual loss experience of the individual Member. Any Member benefiting from the indirect expenses from a program, to which the

Page 207 of 251



Draft Provisions JPA Language & Annotations Member does not belong, will be charged its allocable share of the expenses.

G. Dividends, Assessments & Reserve Fund 1. Dividends

a. The Board may declare dividends only when funds available exceed those available to pay for losses exceed known claims, an actuarially sound provision for case development, an actuarially sound provision for IBNR, provision for unexpected management expenses, and a provision for unrestricted surplus. Such dividend will be distributed in an equitable manner. When declared by the Board, the dividend must be explicitly named a dividend. As such no other transfer of funds, allocation of credits, creation of incentives or other financial benefits to members may be considered to be “dividends” unless expressly declared as such. Dividends are never required, and any dividends available to be declared and returned to the Members will be at the discretion of the Board.

b. The first dividend calculation shall be performed five (5) years after the end of the program year. Additional calculations shall be made each year thereafter until such time as the program year is closed.

c. Because funds received for each program are accounted for separately

on a full-accrual basis, and further because each program year shall be accounted for separately, any transfer of surplus funds among program years treated as a dividend and must be expressly approved by the Board of Directors.

d. Calculation i. Dividends are available to be declared ONLY at such time as the

program has equity, with liabilities actuarially stated undiscounted at a 90% confidence level.

ii. The calculated amount shall represent the maximum dividend available to be declared.

iii. This amount shall be reduced if the two (2) succeeding years (after the fifth program year reaches eligibility) have negative equity, with liabilities actuarially stated at an expected confidence level.

iv. Each Member’s share of any dividends shall be allocated based upon the method by which the deposit premiums were collected, beginning with the oldest program year. However, until the last claim of a program year has been paid and the program year has been closed, the program year must maintain sufficient funds to satisfy the 90% confidence level discounted requirement.

NOTE: The details re calculation will be moved to the comprehensive financial policy document once approved.

2. Assessments a. If the Board determines that a program lacks sufficient funds as

described under Article IX, Section E.5 of these Bylaws for a given program year or for the program as a whole, the Board may at its discretion assess the participating Members an amount sufficient to correct the insufficiency. There is no requirement that the program year be closed prior to making such an assessment.

b. The Board shall determine the timing of the payment at the time the assessment is levied as well as any potential interest to be assessed on

NOTE: The details re calculation will be moved to the comprehensive financial policy document once approved.

Page 208 of 251



Draft Provisions JPA Language & Annotations late payments.

c. Calculation

i. Each Member’s share of the assessment shall be allocated based upon the method by which the annual contributions were collected for the risk-sharing layer of each program year being assessed.

ii. If such assessment is not sufficient to relieve the pool of its actuarially determined deficit in the year of the assessment, such assessment shall be levied each subsequent year until the actuarial deficit is relieved.

d. Equity, from the risk-sharing layer, may be exchanged between eligible program years IF sufficient funds are available as defined in ICRMA Governing Documents then in effect and as subsequently modified. The transfer of equity will be performed such that the each Member’s share of equity is separately applied so as to maintain the integrity of the Member’s balance.

3. Reserve Fund

a. Declared dividends, portions thereof, other surplus or discretionary funds, may be directed and deposited into the Reserve Fund as approved by the Board.

b. The Reserve Fund shall be invested in accordance with the ICRMA Investment Policy and shall earn interest at the prevailing rates. Such interest earnings will be allocated quarterly with the preparation of the financial statements. The total interest earned by ICRMA in any quarter shall be allocated proportionately between the average cash balance in the ICRMA program and the average Reserve Fund. An accounting will be maintained of the individual Member’s portion of the Reserve Fund.

c. The Reserve Fund shall be accounted for as a component of the

Program’s equity. The Reserve Fund will be used through Board action for: 1) maintaining funds for disbursement of the dividend over an extended distribution period (over one year); 2) rate stabilization for future renewal increases; 3) enhancement or expansion of current programs; 4) development of new programs, or 5) other Board approved terms.

NOTE: Some of the detail here will be moved to the comprehensive financial policy document once approved.

H. Deposit and Investment of Funds The Treasurer may deposit and invest ICRMA funds, subject to the same requirements and restrictions that apply to the deposit and investment of the general funds of a City incorporated in the State of California and in accordance with ICRMA’s Investment Policy adopted by the Board annually.

ARTICLE X – COVERAGE PROGRAMS A. Purpose

The Agreement obligates ICRMA to establish programs of risk sharing, insurance, and risk management services in such areas as the Board may determine including, but not limited to, the areas of property, workers' compensation, liability and benefits. The primary purpose in establishing each ICRMA Program is to create a method for providing coverage for legal exposures incurred by the Member and ICRMA, as

There are a number of items in the various program bylaws providing specific participant duties, application approval, fees for late information, claims procedures and audits, etc. That we have not so far included here but will be placed in a single Master Underwriting and Program Administration Document.

Page 209 of 251



Draft Provisions JPA Language & Annotations provided in the related Memorandum of Coverage.

B. Authorization The Agreement further requires Board approval of Bylaws in order for such programs to become operational with the full authority of the Agreement and the powers specifically delegated to them by the Governing Board. The specific requirement of program Bylaws is met for each new program with passage of its authorizing ICRMA Resolution and approval of its Memorandum of Coverage or other policy documents as relevant. ICRMA’s Programs have been organized under authority granted by, and shall be conducted in accordance with the laws of, the State of California and the standards set forth by the California Association of Joint Powers Authorities (CAJPA) in its accreditation standards. Further, the provisions of these Bylaws are generally applicable to all ICRMA programs and are operationalized through ICRMA’s Governing Documents.

JPA: “The Governing Board shall establish Risk Management Programs as provided in the Authority’s By-Laws.

No Risk Management Program shall become operational, or possess any authority, until the proposed Risk Management Program By-Laws have been approved by the Governing Board. The voting on the approval of By-Laws shall be restricted to Governing Board Member representatives of the particular Risk Management Program. Approval of the By-Laws and any amendments thereto shall be as provided in the By-Laws of the individual Risk Management Programs. On approval of the By-Laws, the various Risk Management Programs shall become operational and will have all of the powers specifically delegated to them by the Governing Board.”

C. Participation & Coverage 1. Eligibility

a. Any Member may apply to participate in an ICRMA program by complying with all requirements set forth in the ICRMA Governing Documents then in effect and as subsequently modified.

b. The Board of Directors shall either approve or disapprove the application consistent with relevant Board policy then in effect and as subsequently modified.

2. Commitment Period If accepted, the Member shall commit to three (3) full years of participation in the program. Subsequently, the Member shall commit to at least one (1) full year of participation per renewal.

3. Coverage Terms Each ICRMA coverage program provides coverage under the terms and conditions set forth in its Memorandum of Coverage and/or related policy documents. Although Programs are provided to the Members under those terms and conditions which prevail when the Member joins, ICRMA’s Board shall have the right to alter the terms and conditions of the program in response to the needs and abilities of program participants, as well as in response to availability of coverage from outside sources. The amount of coverage to be pooled and/or purchased is at the discretion of the Board.

D. Program Management A. Retained Limits

a. Each coverage program shall annually establish the limit of coverage for the pool. The underlying coverage of the program shall provide Members retained limits per occurrence, or other limits modified by resolution.

b. If as Member wants to change its retained limit for the beginning of

the following program year, it must request the change in writing no later than January 15 of the prior program year.

c. The Board may require a Member to have a retained limit different from the expiring program year, at the inception of a program year and upon written notice sent no later than January 15 of the prior

Page 210 of 251



Draft Provisions JPA Language & Annotations program year.

d. The Member shall pay the amount of each loss, including expenses, which is less than the retained limit chosen by the applicable Member.

B. Excess Coverage

a. The Board shall ensure that each program year is provided with excess coverage for the participants of each program.

b. It is the intent and purpose of ICRMA to continue to provide such coverage to the participants, provided that such coverage can be obtained, and the coverage is not unreasonably priced. This coverage may be obtained from an insurance company, by participating in another pool established under the Government Code as a joint powers authority, or offered through another program pooling procedure. If the coverage is purchased from an insurance company, such insurance company shall have an A.M. Best Rating Classification of A- or better and an A.M. Best Financial Rating of VII or better or their equivalents.

c. ICRMA shall pay the premiums for such coverage from the proceeds received as annual contributions from its Participants.

d. The Board may, from time to time, alter excess coverage based on insurance market conditions, available alternatives, costs, and other factors.

e. The Board shall place excess coverage with the two competing objectives of security and minimizing costs to each program as a whole.

NOTE: Some of the detail here may be moved to another policy document in the next phase of this project.

C. Claims Procedures a. Claims policies and procedures including reporting procedures, forms,

and other vital information shall be adopted by the Board and provided to all participants.

b. All Participants shall be held accountable for understanding and abiding

ICRMA Governing Documents then in effect and as subsequently modified.

D. Settlement Authority a. Each Member shall have settlement authority for any claim, as defined

in the Memorandum of Coverage, including attorney fees and other costs, which does not exceed 100% of the amount remaining of the Member’s Retained Limit. The Claims Committee will review these claims from time to time and may offer its recommendation to the participant’s Third Party Administrator (TPA) and the participant regarding settlement.

b. The Executive Director shall have authority to settle any claim, as

defined in the Memorandum of Coverage, up to $50,000 in excess of the Retained Limit of the Member involved.

c. The Claims Committee shall have authority to settle any claim, as

defined in the Memorandum of Coverage, up to $750,000 in excess of the Retained Limit of the Member involved.

d. The Board, unless otherwise delegated, retains unto itself the authority

to approve settlement of any other claim.

BOARD DISCUSSION ITEM: the Bylaws outline authority for claims, not occurrences. Is this the Board’s intent? Claim #1:

· City has an MRL of $100,000 · 1 occurrence has 5 claimants · City spends $100K in legal, agrees to settle the 5 for $30K ea. · Based on the current Bylaws, ED has settlement authority

for each of the 5 claims, even though the total incurred for the occurrence would be $250K ($150K over the MRL).

Claim #2:

· 2 members involved, 1 with $300K MRL, 1 with $250K MRL · 1 occurrence has 17 claimants, Cities splitting costs 50/50 · 1 claim settled for over $15M, Board provided authority · Months later 7 claims settled at amounts from $2.5K - $50K · Based on the current Bylaws, ED has settlement authority

for each of the claims, even though the total incurred for the occurrence well exceeds stated authority

Total incurred: We also need to clarify “settlement” v. “total incurred value”. Based on the amount the members are

Page 211 of 251



Draft Provisions JPA Language & Annotations spending in legal defense, a member with a $300K SIR could

spend $700K in legal, settle the claim for $25K, and it would technically not appear on any committee’s radar for authority.

E. Claims Audit

a. The adequacy of claims adjusting for both ICRMA and Members shall be examined at least once every two years.

b. The examination shall be by an independent auditor who specializes in claims auditing. c.

c. The costs of such claims audit shall be paid by ICRMA. d.

d. The claims audit report shall address the issues of both adequacy of claims procedures and accuracy of claims data. The report shall be filed with ICRMA and sent to each Member.

ARTICLE XI – DISPUTE RESOLUTION A. Scope

The purpose of this Article is to provide Members with a process to address conflicts or disagreements pertaining to membership issues, other than claim handling issues and coverage issues, in a neutral and expeditious manner by establishing standard procedures for their resolution. All claims and coverage related disputes shall be addressed per the relevant Memorandum of Coverage. A “dispute” means complaint or disagreement relating to implementation of ICRMA Governing Documents, policies and procedures that cannot be resolved in the usual course of business despite the best efforts of both parties. This may include but is not limited to, the terms and conditions of membership, obligations of Members and ICRMA, interpretation or application of policies and procedures, and the performance of staff and ICRMA consultants.

NOTE: This narrows the definition of “dispute” from ”any complaint or disagreement relating to membership issues, including, but not limited to, the terms and conditions of membership, obligations of Members and ICRMA, interpretation or application of policies and procedures, and the performance of staff and ICRMA consultants” to the language in green

B. Procedure 1. Formal Request for Resolution

a. Members shall submit disputes to the ICRMA Executive Director in writing, clearly describing the dispute and related facts as well as efforts made to resolve the issue before going to the Board.

b. The Executive Director shall acknowledge receipt and refer the matter to the Board for consideration within ten (10) days of receipt of the written dispute.

c. The Executive Director shall place the matter on the agenda for discussion at the next regularly scheduled meeting of the Board. If said meeting is more than sixty (60) days from the date the dispute was raised, a special meeting of the Board will be scheduled to discuss the dispute.

d. Within ten (10) days of the meeting, the Board shall render a written

decision to the Member.

e. A dispute may be resolved at any state of the proceedings, and that resolution shall be final and binding. Likewise, the Member may withdraw a dispute at any stage in the procedure.

NOTE: Edited to be a single layer process now going directly to Board since there is no longer an AC. However, the complaints themselves go to the Executive Director to start the process rather than the President. BOARD DISCUSSION ITEM: Can the Board decide NOT to hear the issue?

Page 212 of 251



Draft Provisions JPA Language & Annotations f. Relevant penalties and interest will not accrue during a dispute.

2. Presidential Request for Resolution

At the President’s discretion, if the President perceives or has information that indicates a dispute pertaining to a membership issue exists, the President may initiate a dispute resolution procedure without written notice as required in a Formal Request for Resolution.

3. Time Limits Time limits shall be strictly enforced. However, any time limits established in this policy, may be waived or extended by mutual agreement of both the Member and ICRMA, and confirmed in writing.

ARTICLE XII – MISCELLANEOUS A. Conflicting Representation

After being notified in writing that one Member of ICRMA has filed a formal claim, which could be reasonably construed to seek damages covered by a Memorandum of Coverage, against another Member, in accordance with provisions of the California Government Code, ICRMA will no longer act, on behalf of either Member with respect to such claim, without written consent from ALL members involved, insofar as the case giving rise to the claim is concerned. Any action that ICRMA may choose to take is without waiver of any provision or exclusion of any Memorandum of Coverage.

B. Member Indemnification California Government Code §895.2 imposes certain tort liability jointly upon entities solely by reason of such entities being parties to an agreement as defined in §895 of said Code. Therefore, the members hereto, as between themselves, pursuant to the authorization contained in California Government Code §895.4 and 895.6, each assumes the full liability imposed upon it for any of its officers, agents, or employees by law for injuries caused by a negligent or wrongful act or omission occurring in the performance of this agreement, to the same extent that such liability would be imposed in the absence of §895.2 of said Code. To achieve this purpose, each Member indemnifies and holds all other members harmless for any loss, cost, or expense that may be imposed upon such other Member solely by virtue of California Government Code §895.2.

JPA: “Each Member agrees to indemnify, save and defend the Authority and all other Members harmless from and against all claims, losses, and damages, including legal fees and expenses, arising out of any breach or default on the part of such Member in performance of any of its obligations under this Agreement, or any act or negligence of such Member or any of its agents, contractors, servants, employees or licensees with respect to this Agreement. No indemnification is made under this Section for claims, losses or damages, including legal fees and expenses, arising out of the willful misconduct, negligence or breach of duty under this Agreement by the Authority or a Member or their officers, employees, agents or contractors”

C. Counsel Authorized 1. Legal counsel, to advise on matters relating to the operation of ICRMA, may

be recommended by the Executive Director and approved by the Board.

2. ICRMA shall have the right to pay such legal counsel reasonable compensation for said services.

D. Board Authorization The Board may authorize the Executive Director, any officer, and/or agent, to enter into any contract or execute any instrument in the name and on behalf of ICRMA. Such authorization may be general or confined to specific instances. Unless so authorized by the Board, no officer, agent, or employee shall have any power or authority to bind ICRMA by any contract or to pledge its credit or to render it liable for any purpose or to any amount.

E. Reimbursed Expenses Directors shall receive no compensation for their services. However, ICRMA shall reimburse any Director or Officer, who does not otherwise receive compensation, for actual expenses incurred, and reasonable out of pocket expenses of the

Page 213 of 251



Draft Provisions JPA Language & Annotations Director or Officer in the performance of his/her duty on behalf of ICRMA.

F. Director & Officers Insurance ICRMA may purchase insurance indemnifying the Directors, Officers, and Administrative staff for personal liabilities arising out of wrongful acts in the discharge of their duties to ICRMA or may elect to self-insure such risk.

G. Claims Against ICRMA Claims against ICRMA shall be presented to the mailing address of ICRMA.

ARTICLE XIII – TERMINATION & DISTRIBUTION A. Termination of a Program

1. A program may be terminated and dissolved any time during its first three (3) years by the written consent of all participants, and thereafter by the written consent of two-thirds of the participants. However, such a program shall continue to exist for the purpose of disposing of all claims, distributing assets and liabilities, and all other functions necessary to conclude its affairs.

2. Upon termination of a program, all program assets and liabilities shall be distributed only among the participants, including any which previously withdrew pursuant to these Bylaws, in accordance with and proportionate to their deposit premiums and assessments paid during the term of participation. The Board shall determine such distribution within six (6) months after the last pending claim or loss, covered by the program has been finally resolved and there is a reasonable expectation that no new claims will be filed.

B. Termination of the Authority 1. Upon termination of ICRMA, the assets of ICRMA shall be distributed and

apportioned among the Members that have been members in its programs, including those Members that previously withdrew or were expelled pursuant to these Bylaws, their predecessors or any other ICRMA Governing Documents. Any additional funds received after the above distributions are made shall be returned in proportion to the contributions made.

JPA: “This Agreement shall continue until terminated by vote or written consent of two-thirds of the Members provided, however, that this Agreement and the Authority shall continue to exist for the purposes of disposing of all claims, the distribution of assets, and any other functions necessary to conclude the affairs of the Authority. Upon termination of this Agreement, all assets of the Authority shall be distributed only among the Members that have been participants in its Risk Management Programs, including any of those Members which previously withdrew or were expelled pursuant to Articles 13 and 14 of this Agreement, in accordance with and proportionate to their net premium payments made during the term of this Agreement. The Governing Board shall determine such distribution within six months after the last claim covered by this Agreement has been finalized. The Governing Board is vested with all powers of the Authority for the purpose of concluding and dissolving the business affairs of the Authority. These include the power to require those Members which were Risk Management Program participants at the time of any particular occurrence which was covered or alleged to be covered under the Memorandum(s) of Coverage or policies of insurance to pay their share of any additional amount of premium deemed necessary by the Governing Board for the final disposition of all claims and expenses associated with such loss.”

2. The Agreement, these Bylaws, and ICRMA continue to exist after termination for the purpose of disposing of all claims, distribution of assets,

Page 214 of 251



Draft Provisions JPA Language & Annotations and all other functions necessary to conclude the obligations and affairs of ICRMA.

ARTICLE XIV – EFFECTIVE DATE Unless specified otherwise by Board resolution at the time approved for the purpose of avoiding conflicts among documents, these Bylaws shall be effective immediately upon the date of approval and upon adoption shall supersede and cancel any prior Bylaws and/or amendments thereto. However, the adoption of these Bylaws shall not affect the Agreement or any amendments to it. Any clauses in these Bylaws that are inconsistent with the Agreement shall be superseded by those clauses in the Agreement but only to the extent and duration of the inconsistency.

NOTE: Effective date will depend on how the Board decides to move forward with other documents and strategic decisions. We may want to “grandfather” some items in to ensure a smooth transition.

ARTICLE XV – AMENDMENTS The Board of Directors may amend or repeal these Bylaws as provided in Article IV Section A of these Bylaws. Notice of intended amendment or repeal shall be given to each voting Director at least 30 days prior to the taking of such action.

JPA: “This Agreement may be amended at any time by vote of two-thirds of the Members acting through their governing body. Amendments to the individual Risk Management Program By-Laws require the two-third vote of the Governing Board members representing Members of that Risk Management Program.” NOTE: By collapsing the program bylaws into this document we intend to have all changes approved by a majority of the full board. This will require a revision of the JPA. NOTE: The document can be edited further but only in conjunction with a rewrite of the JPA, net asset policy, and underwriting policy (at minimum).

Page 215 of 251



Original Documents & Policies – for reference only A. JOINT POWERS AGREEMENT

The current version was adopted October 13, 2004. Prior changes were not listed in document. FIFTH AMENDMENT TO JOINT EXERCISE OF POWERS AGREEMENT FOR INSURANCE AND RISK MANAGEMENT PURPOSES This Fifth Amendment To Joint Exercise Of Powers Agreement For Insurance and Risk Management Purposes (“Agreement”) is executed by and among the public entities, hereafter referred to as Member or Members, each of which is organized and existing under the laws of the State of California and is a signatory to this Agreement and listed in Appendix "A", which is attached hereto and made a part hereof. This Agreement, dated October 13, 2004, for identification purposes, amends the Joint Exercise of Powers Agreement For Insurance and Risk Management Purposes dated August 12, 1998. RECITALS This Agreement is predicated upon the following facts: The following State laws, among others, authorize the Members to enter into this Agreement:

1. Labor Code Section 3700, permitting a Member to fund its own Workers' Compensation claims; 2. Government Code Section 990, permitting a Member to insure itself against tort or inverse condemnation liability; 3. Government Code Section 990.4, permitting a Member to provide insurance and self-insurance in any desired combination; 4. Government Code Section 990.6, permitting the proper costs for self-insurance to be charged against each Member and

authorizing the Governing Board to make premium payments for such coverage in an amount such Governing Board determines to be necessary to provide such coverage;

5. Government Code Section 990.8, permitting two or more Members to enter into an agreement to jointly fund such expenditures under the authority of Government Code Sections 6500 et seq.;

6. Government Code Section 6500 et seq., permitting two or more Members to jointly exercise, under an agreement, any power which is common to each of them.

NOW, THEREFORE, for and in consideration of the mutual benefits, covenants, and agreements set forth in this Agreement, the Members agree as follows: ARTICLE 1. CREATION OF THE INDEPENDENT CITIES RISK MANAGEMENT AUTHORITY.. Pursuant to Article I (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, the Members hereby create a public entity, separate and apart from the Members, to be known as the Independent Cities Risk Management Authority, hereinafter referred to as “ICRMA” or the "Authority". Pursuant to Government Code Section 6508.1, the debts, liabilities, and obligations of the Authority shall not constitute debts, liabilities, or obligations of any Member. ARTICLE 2. PURPOSE. The purpose of creating this Authority is to exercise the powers of the Members to jointly accomplish the following:

2.1.1 Develop effective Risk Management Programs to reduce the amount and frequency of their losses. 2.1.2 Develop Risk Management Programs of insurance to protect Members from the effects of catastrophic or unexpected

losses. Such programs shall include, but not be limited to, coverages for losses arising out of Tort Liability, Workers' Compensation, Health Benefits, and the ownership or use of real or personal property.

2.1.3 Design Risk Management Programs of the Authority on a pooled or self-funded basis whereby the Members share some portion, or all, of the costs of the program losses.

2.1.4 Jointly purchase insurance, excess insurance, or reinsurance and/or develop alternative financial arrangements for the purpose of transferring risk of loss to commercial insurers.

2.1.5 Assist Members to the maximum extent authorized by law to secure long term solutions enabling the Authority to provide adequate protection to Members against catastrophic, or greater than expected, claims and to attract major reinsurers for the purpose of transferring risk.

2.1.6 Jointly secure administrative and other services including, but not limited to, general administration, underwriting, risk management, loss prevention, claims adjusting, data processing, brokerage, accounting, and legal services when related to any of the other purposes.

ARTICLE 3. DEFINITIONS The following definitions shall apply to the provisions of this Agreement and the By-Laws of the Authority and Risk Management Programs:

3.1.1 "Agreement" shall mean this Agreement, as it may be amended from time to time, creating the Independent Cities Risk Management Authority.

Page 216 of 251



3.1.2 "Board" or "Governing Board" shall mean the governing body of the Authority. 3.1.3 "By-Laws" shall mean the rules governing the management of the Authority and each individual Risk Management

Program. 3.1.4 "Claim(s)" shall mean demand(s) complying with the requirements of California Government Code Section 910 and

made against the Member arising out of occurrences which are covered or alleged to be covered by the Authority's Memorandums of Coverage, or policies of insurance.

3.1.5 "Fiscal Year" shall mean the period of time commencing on July 1 of each year, and thereafter ending on June 30 each following year.

3.1.6 “Governing Documents” shall mean this Agreement, the By-Laws of the Authority and each Risk Management Program, the Memorandum of Coverage and any other document stipulated as a Governing Document in the By-Laws or by action of the Governing Board.

3.1.7 "Insurance" shall mean insurance or reinsurance purchased by the Authority to cover losses for its Members. 3.1.8 "Member" shall mean any Municipal Corporation or public entity authorized to be a member of a Joint Powers

Authority, which is a party to this Agreement and is participating in one or more Risk Management Programs. 3.1.9 "Memorandum of Coverage" shall mean the document or documents issued by the Authority specifying the types of

coverages and limits provided to the Members. 3.1.10 "Program Year" shall mean a period of time in which each program shall be segregated for ease in determining

coverage premiums. 3.1.11 "Participation" or "Participating" shall mean a Member has elected to jointly participate in the management of a

specific risk and is a member of that Risk Management Program. 3.1.12 "Risk Management" shall mean the process of identifying, evaluating, reducing, transferring, and eliminating risks. Risk

Management includes, but is not limited to, various methods of funding claims payments, purchasing insurance, legal defense of claims, controlling losses, and determining self-insured retention levels and the amount of reserves for potential claims.

3.1.13 "Risk Management Program" shall mean those coverage programs of risk sharing, insurance, and risk management services created by the Authority to manage specific Risk Management Programs, i.e. "Liability Risk Management Program".

ARTICLE 4. PARTIES TO THE AGREEMENT AND RESPONSIBILITIES OF MEMBERS. 4.1 Each Member represents and warrants that it intends to, and does hereby, contract with all other Members listed in

Appendix "A", and any new members admitted to the Authority pursuant to Article 16. Each Member also represents and warrants that the withdrawal or expulsion of any Member, pursuant to Article 14 or 15, shall not relieve any Member of its rights, obligations, liabilities or duties under this Agreement or the individual Risk Management Programs in which the Member participates.

4.2 Each Member agrees to be bound by and to comply with all of the terms and conditions of the Governing Documents and any Resolution or other action adopted by the Governing Board as they now exist or may hereinafter be adopted or amended. Each Member assumes the obligations and responsibilities set forth in the Governing Documents.

ARTICLE 5. GOVERNING BOARD. 5.1 The Authority shall be governed by a Governing Board the composition of which shall be set forth in the Authority’s By-Laws.

Immediately upon admission of a new Member pursuant to Article 16, the Member shall be entitled to appoint a Representative to the Governing Board and an alternate Representative and, if desired, a substitute alternate Representative, each of whom shall meet the parameters set forth in the Authority’s By-Laws. Decisions of the Member representative, or the Governing Board in his/her absence, shall be binding on the Member.

5.2 The Member Representative and/or alternate Representative or substitute alternate Representative shall be removed from the Governing Board upon the occurrence of any one of the following events: (1) the expulsion or withdrawal of the Member from the Authority; (2) the death or resignation of the Member Representative; (3) the Authority receives the written notice from the Member that the Member Representative is no longer a member of the governing body of the Member or as otherwise provided in the Authority’s By-Laws.

5.3 Pursuant to Government Code Section 6505.6, the Governing Board shall designate an officer or employee, or officers and employees, to receive, deposit, invest, and disburse the property of the Authority pursuant to Government Code Sections 6505 and 6505.5. The Governing Board shall fix the amount of the fidelity bond to be filed by such public officer(s) and/or employee(s).

ARTICLE 6. BOARD MEETINGS AND RECORDS 6.1 Regular Meetings. The Governing Board and all standing committees shall hold meetings at the location and time set forth in the

By-Laws of the Authority and each individual Risk Management Program. 6.2 Ralph M. Brown Act. All meetings of the Governing Board, and appointed committees, including without limitation, regular,

adjourned regular, and special meetings, shall be called, noticed, held, and conducted in accordance with the Ralph M. Brown Act (Section 54950 et. seq. of the Government Code).

6.3 Minutes. Minutes of regular, adjourned regular, and special meetings of the Authority shall be kept under direction of the

Page 217 of 251



Secretary. As soon as possible after each meeting, the Secretary shall forward copies of the minutes to each Governing Board member.

6.4 Quorum. A majority of the members of the Governing Board is a quorum for the transaction of business. However, less than a quorum may adjourn from time to time. A vote of the majority of a quorum at a meeting is sufficient to take action.

ARTICLE 7. OFFICERS. 7.1 The Governing Board shall elect a president, vice-president, Treasurer and Secretary from among its members. The manner of

election and term of office of elected officers and their authority and responsibilities shall be as set forth in the Authority By-Laws. If any of the officers cease to be a Member’s representative, the resulting vacancy shall be filled as provided in the Authority By-Laws. The Governing Board may appoint such other officers as it considers necessary.

ARTICLE 8. POWERS. 8.1 The Authority shall have the powers common to its Members and is authorized, in its own name, to do all acts necessary and to

exercise such common powers to fulfill the purposes of this Agreement referred to in Article 2 including, but not limited to, each of the following: 8.1.1 Finance through the issuance of Bonds or other financial instruments of indebtedness, self-insurance reserve funds

necessary or convenient for the implementation of this Agreement. 8.1.2 Incur debts, liabilities, and obligations. 8.1.3 Acquire, hold, or dispose of real and personal property. 8.1.4 Receive contributions and donations of property, funds, services, and other forms of assistance from any source. 8.1.5 Sue and be sued in its own name. 8.1.6 Employ agents and employees. 8.1.7 Acquire, construct, manage, maintain, or operate buildings, works, or improvements. 8.1.8 Lease real or personal property, including that of a Member. 8.1.9 Receive, collect, and disburse monies. 8.1.10 Invest money in the treasury of the Authority in the same manner and on the same conditions as local agencies

pursuant to Government Code Section 53601. 8.1.11 Exercise all other powers necessary and proper to carry out the provisions of this Agreement. 8.1.12 Develop and implement Risk Management Programs. 8.1.13 Jointly purchase for the benefit of Members, insurance, excess insurance, reinsurance, and enter into agreements for

the benefit of Members, for the purpose of transferring risk of loss to commercial insurers or reinsurers or other insurance pools.

ARTICLE 9. RISK MANAGEMENT PROGRAMS. 9.1 The Governing Board shall establish Risk Management Programs as provided in the Authority’s By-Laws. 9.2 No Risk Management Program shall become operational, or possess any authority, until the proposed Risk Management Program

By-Laws have been approved by the Governing Board. The voting on the approval of By-Laws shall be restricted to Governing Board Member representatives of the particular Risk Management Program. Approval of the By-Laws and any amendments thereto shall be as provided in the By-Laws of the individual Risk Management Programs. On approval of the By-Laws, the various Risk Management Programs shall become operational and will have all of the powers specifically delegated to them by the Governing Board.

ARTICLE 10. BUDGET 10.1 The Governing Board shall adopt an annual budget not later than 30 days prior to the beginning of each Fiscal Year. ARTICLE 11. ANNUAL AUDIT AND REVIEW. 11.1 The Governing Board shall cause an annual financial audit of the accounts and records to be made and filed as provided in the

Authority’s By-Laws and the laws of the State. ARTICLE 12. ESTABLISHMENT AND ADMINISTRATION OF FUNDS. 12.1 Funds of the Authority may be commingled for investment and administration purposes. However, each Risk Management

Program shall be accounted for separately on a full accrual basis. 12.2 The Governing Board shall establish the policy for warrants drawn to pay demands against the Authority. 12.3 The coverage for each Program Year of each Risk Management Program shall be as specified in the Memorandum of Coverage or

policies of insurance for that Program Year of the Risk Management Program. ARTICLE 13. WITHDRAWAL. 13.1 Any Member which enters a Risk Management Program may withdraw from that Risk Management Program and may at a later

time seek to renew participation in said Program subject to the terms and conditions as set forth in the By-Laws of that particular Risk Management Program.

Page 218 of 251



13.2 A Member is no longer a party to the Authority or this Agreement upon its withdrawal from all of the Authority’s Risk Management Programs.

ARTICLE 14. EXPULSION. 14.1 The Governing Board may expel any Member from the Authority and/or from a Risk Management Program at any time for

material breaches of the Governing Documents. Such expulsion shall be as provided in the By-Laws of the Authority or each Individual Risk Management Program.

ARTICLE 15. TERMINATION. 15.1 This Agreement shall continue until terminated by vote or written consent of two-thirds of the Members provided, however, that

this Agreement and the Authority shall continue to exist for the purposes of disposing of all claims, the distribution of assets, and any other functions necessary to conclude the affairs of the Authority.

15.2 Upon termination of this Agreement, all assets of the Authority shall be distributed only among the Members that have been participants in its Risk Management Programs, including any of those Members which previously withdrew or were expelled pursuant to Articles 13 and 14 of this Agreement, in accordance with and proportionate to their net premium payments made during the term of this Agreement. The Governing Board shall determine such distribution within six months after the last claim covered by this Agreement has been finalized.

15.3 The Governing Board is vested with all powers of the Authority for the purpose of concluding and dissolving the business affairs of the Authority. These include the power to require those Members which were Risk Management Program participants at the time of any particular occurrence which was covered or alleged to be covered under the Memorandum(s) of Coverage or policies of insurance to pay their share of any additional amount of premium deemed necessary by the Governing Board for the final disposition of all claims and expenses associated with such loss.

ARTICLE 16. NEW MEMBERS. 16.1 Any governmental agency, organized and operating under the laws of the State of California which is authorized to participate in

a joint powers authority under the Government Code may become a member of the Authority by complying with the requirements of the Authority By-Laws.

ARTICLE 17. LIABILITY OF THE AUTHORITY. 17.1 Each Member agrees to indemnify, save and defend the Authority and all other Members harmless from and against all claims,

losses, and damages, including legal fees and expenses, arising out of any breach or default on the part of such Member in performance of any of its obligations under this Agreement, or any act or negligence of such Member or any of its agents, contractors, servants, employees or licensees with respect to this Agreement. No indemnification is made under this Section for claims, losses or damages, including legal fees and expenses, arising out of the willful misconduct, negligence or breach of duty under this Agreement by the Authority or a Member or their officers, employees, agents or contractors.

17.2 The Representatives to the Governing Board and to each of the Risk Management Programs and any officer, employee, contractor, or agent of the Authority shall use ordinary care and reasonable diligence in the exercise of their power and in the performance of their duties under this Agreement.

17.3 Funds of the Authority may be used to defend, indemnify, and hold harmless the Authority and any member of the Governing Board, any member of a Risk Management Program, and any employee of the Authority for their actions taken within the scope of their duties while acting on behalf of the Authority. Nothing herein shall limit the right of the Authority to purchase insurance to provide such coverage as is hereinabove set forth.

ARTICLE 18. NOTICES. 18.1 Notices to each Member under this Agreement shall be sufficient if mailed to its respective address on file with the Authority.

Any Member may designate any other address in substitution of the foregoing address to which such notice will be given at any time by giving five days written notice to the Authority and all other Members.

ARTICLE 19. AMENDMENTS TO THIS AGREEMENT AND PROGRAM BY-LAWS. 19.1 This Agreement may be amended at any time by vote of two-thirds of the Members acting through their governing body.

Amendments to the individual Risk Management Program By-Laws require the two-third vote of the Governing Board members representing Members of that Risk Management Program.

ARTICLE 20. SEVERABILITY. 20.1 Should any portion, term, condition, or provision of this Agreement be decided by a court of competent jurisdiction to be illegal

or in conflict with any law of the State of California, or be otherwise rendered unenforceable or ineffectual, the validity of the remaining portions, terms, conditions, and provisions shall not be affected thereby.

ARTICLE 21. AGREEMENT COMPLETE. 21.1 The foregoing constitutes the full and complete Agreement of the parties. There are no oral understandings or agreements not

Page 219 of 251



set forth in writing herein. ARTICLE 22. TERM OF AGREEMENT. 22.1 This fifth amended Agreement shall become effective upon the Authority receiving notice of the approval by the governing body

of two-thirds of the Members. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date indicated below. City of __________________________ By _____________________________ Title ___________________________ Executed before me this ______ day of __________________, 200____ (City Seal) ______________________________________ City Clerk City of ________________________________ APPENDIX “A” INDEPENDENT CITIES RISK MANAGEMENT AUTHORITY MEMBER CITIES 1. Alhambra 16. Hermosa Beach 2. Arcadia 17. Huntington Park 3. Azusa 18. Inglewood 4. Baldwin Park 19. La Habra 5. Bell 20. Lynwood 6. Buena Park 21. Manhattan Beach 7. Chino 22. Monrovia 8. Colton 23. Monterey Park 9. Culver City 24. Redondo Beach 10. Downey 25. San Fernando 11. El Monte 26. South Gate 12. El Segundo 27. Upland 13. Fullerton 28. Vernon 14. Glendora 29. Whittier 15. Hawthorne

Page 220 of 251



B.1. JPA BYLAWS The current version was approved by the Board 06-15-11. Prior changes were not listed in document.

ARTICLE 1 - PREAMBLE The Independent Cities Risk Management Authority (Authority) is established for the purpose of operating and maintaining a cooperative program of self-insurance, jointly purchased insurance and risk management and to provide a forum for the discussion, study, development, and implementation of procedures of mutual benefit in risk sharing and risk management programs. ARTICLE 2 - PURPOSES Section 2.1 – Purposes The Authority is created to jointly achieve the following objectives for the benefit of the Authority's members in all types of risks handled by the Authority: 2.1.1 Reduce costs of commercial or reinsurance insurance coverage through effective loss control practices and combined purchasing

power; Provide stability of commercial insurance markets through size of combined membership, longer duration of commercial

insurance agreements and effective loss control practices; 2.1.3 Reduce severity and frequency of member losses; and 2.1.4 Reduce the cost of all administrative services through central management, volume, and combined purchasing power. 2.1.5 Provide for payment of claims and benefits as authorized by the Authority's members; 2.1.6 Administer a cooperative self-insurance program wherein members self-insure by pooling funds as reserves against losses; 2.1.7 Purchase administrative services and other services including risk management, consulting, brokerage, claims administration,

claims adjusting, safety and loss prevention, data processing, legal, and related services; 2.1.8 Acquire, hold, and dispose of property, real and personal, necessary or desirable, for the purpose of providing the members of

the Authority with a complete self-insurance and risk management program, including, but not limited to, the acquisition of necessary facilities and equipment, the employment of personnel, and the operation and maintenance of a system of risk management; and

2.1.9 Sell, issue, hold, and dispose of bonds or other financial instruments, necessary or desirable, for the purpose of providing funding for risk management programs of the Authority.

ARTICLE 3 - GOVERNING DOCUMENTS 22.2 Section 3.1 - Governing Documents The governing documents of the Authority shall be the Joint Powers Agreement of the Authority (Agreement), these Bylaws, the Bylaws for each program, and the Memorandum of Coverage (MOC) for each program. ARTICLE 4 - MEMBER ENTITIES 22.3 Section 4.1 - Membership Each party to the Agreement is a member. Any governmental agency, organized and operating under the laws of the state of California which is authorized to participate in a joint powers agreement under the Government Code may become a member of the Authority by agreeing to be bound by the governing documents and by complying with all of the following requirements: 4.1.1 Submit a completed application for membership 60 days before the start of the policy year. The application must be accompanied

by the Governing Board approved fee, which shall be returned if membership is approved and the applicant becomes a member; 4.1.2 Submit applicant’s signed resolution acknowledging intent to become a member under the terms and conditions then prevailing; 4.1.3 Execute the Agreement then in effect and agree to be bound by any subsequent amendments to the Agreement; 4.1.4 Agree to be a member for at least three consecutive fiscal years after commencement of membership; 4.1.5 Be accepted for membership as provided in Section 4.2; 4.1.6 Appoint, by resolution, a representative and one alternate to the Governing Board as provided in Article 5. A member may also

appoint a substitute alternate; and 4.1.7 Ensure all representatives (delegate, alternate, and substitute alternate [if applicable]) file with the General Manager the

required Fair Political Practices Commission ("FPPC") forms upon assuming office, during office, and upon termination of office. 22.4 Section 4.2 - Approval of Membership The General Manager shall review each applicant’s submittal and may schedule and coordinate a safety inspection of the applicant’s facilities. The General Manager shall report the results of the review of the submittal and the inspection which shall be the basis for the recommendation to the Governing Board. The Governing Board shall either approve, as provided in Section 5.1.3.1, or disapprove the application based upon the General Manager’s recommendation, the application, and any inspections, reports, or other material which would be pertinent to the decision. ARTICLE 5 - GOVERNING BOARD

Page 221 of 251



22.5 Section 5.1 - Governing Board 5.1.1 The Governing Board of the Authority shall be comprised of one representative from each member. In

addition to the delegate representative, who may be a legislative member, an alternate and substitute alternate may be appointed either of whom may vote in the absence of the delegate representative. If the member chooses to designate an alternate or substitute alternate, other than a legislative member, the person(s) designated shall have one of the following positions, or their equivalent, City Attorney, Assistant City Attorney, Financial Officer, City Administrator/Manager, Assistant/Deputy City Administrator/Manager, Assistant to City Manager, Risk Manager, Human Resources Director/Manager, or Administrative Services Director.

5.1.1.1 Each representative, when voting on Authority business, shall have the authority to bind his or her member to the

action taken by the Governing Board. 5.1.1.2 The member may change any of its representatives (delegate, alternate, or substitute alternate) to the Governing

Board by filing a resolution with the Authority. 5.1.1.3 At a Governing Board meeting only one representative, if more than one representative is present, may vote.

5.1.2 The Governing Board shall provide policy direction for the Administrative Committee, and the General Manager, and other

appointed committees. The Governing Board may delegate any of its responsibilities except those requiring a vote by the Governing Board as specified in the Agreement or the Governing Documents.

5.1.3 The Governing Board reserves unto itself the authority to do the following (except where specifically otherwise noted, the

majority of the Governing Board members present at a meeting may take action):

5.1.3.1 Accept a new member into the Authority; 5.1.3.2 Approve indebtedness (two-thirds vote of the entire Governing Board); 5.1.3.3 Adopt a budget; 5.1.3.4 Amend these Bylaws; 5.1.3.5 Alter a member’s retained limit; 5.1.3.6 Approve contracts for Authority administrative services and legal counsel; 5.1.3.7 Approve Program Bylaws (Participants in Program only); 5.1.3.8 Approve Memoranda of Coverage; 5.1.3.9 Approve dividends and assessments to members of a program year; 5.1.3.10 Establish, amend, or terminate a program (Participants in Program only); 5.1.3.11 Elect the Members of the Administrative Committee; 5.1.3.12 Expel a member from the Authority (two-thirds vote of the entire Governing Board); 5.1.3.13 Settle claims in excess of the Claims Committee and Administrative Committee’s authority; 5.1.3.14 Terminate or suspend the rights of a member in default (two-thirds vote of the entire Governing Board); and 5.1.3.15 Approve dissolution of Authority (two-thirds vote of entire Governing Board.)

22.6 Section 5.2 - Meetings of the Governing Board 5.2.1 The Governing Board shall hold at least three regular meetings each year to review all operations of the Authority. The Governing

Board will establish a time and place to hold such regular meetings and notice shall be sent to each delegate representative, alternate representative, and substitute alternate representative (if applicable). The Authority Secretary shall be responsible for minutes of the meetings, and submission of copies of such minutes to the delegate representatives, alternate representatives, and substitute alternate representatives (if applicable).

5.2.2 Every member is expected to have its delegate representative, alternate representative, or substitute alternate representative

attend Governing Board meetings. 5.2.3 All meetings of the Governing Board shall be conducted in accordance with the Ralph M. Brown Act (Government Code §54950 et

seq.) 5.2.4 A special meeting may be called by the President, Vice President in the absence of the President or 20% of the Governing Board

members by notifying the General Manager of the purpose of the meeting. The General Manager shall provide 24 hours written notice to each delegate representative, alternate representative, and substitute alternate representative (if applicable) stating the purpose, date, time, and place of the meeting.

Section 5.3 - Voting All matters within the purview of the Governing Board may be decided by a majority vote of the Governing Board, except for as those matters which are specified as requiring a super majority vote of the Governing Board, which then must be decided by the vote specifically

Page 222 of 251



prescribed in Section 5.1.3. ARTICLE 6 – OFFICERS OF THE GOVERNING BOARD 22.7 Section 6.1 - Officers The Officers of the Authority shall consist of President, Vice President, Treasurer, and a Secretary to the Governing Board. 22.8 Section 6.2 - Eligibility for President, Vice President, Treasurer and Secretary Eligibility for election and continuation in office as President, Vice President, Treasurer and Secretary shall be limited to one representative, of a member entity, to the Governing Board. 22.9 22.10 Section 6.3 - Terms of Office 6.3.1 The terms of office for the President, Vice President, Treasurer, and Secretary shall be for two years, commencing with the start

of the fiscal years in each of the odd calendar years or until their successors are elected. 6.3.2 In accordance with Government Code § 53607 and ICRMA Investment Policy, the Treasurer (an elected position) shall be

appointed every year as the investment delegate by the President of the Governing Board. Section 6.4 - Elections 6.4.1 Election of officers shall be performed biennially. 6.4.2 As referenced in Section 7.3, after receiving nominations from members of the Governing Board the Nominating Committee shall

be responsible for developing a slate of nominees for regular elections. 6.4.3 Elections shall occur at the last regular Governing Board meeting of the fiscal year in which the applicable officer term concludes.

Those candidates receiving a majority of votes in each office will succeed to those offices. If no nominee receives a majority vote, the nominee with the least votes shall be deleted as a nominee and a new vote taken. This elimination process will continue until one nominee receives a majority vote. Each delegate representative to the Governing Board or in the absence of any member, his/her alternate or substitute alternate shall be eligible to vote.

6.4.4 The officers will serve for their elected terms with the Authority or until termination of office or employment with their member,

or until removal from office by a majority vote of the Governing Board, whichever is earliest. 6.4.5 Vacancies in any office shall be appointed by the President, with the approval of the Governing Board, at the next regularly

scheduled Governing Board meeting held after the vacancy occurs. A vacancy in the position of President shall be filled by election at the next regularly scheduled Governing Board meeting held after the vacancy occurs.

22.11 Section 6.5 - Duties 6.5.1 President - The President shall preside at all meetings of the Authority. Except for the Administrative Committee and Claims

Committee, the President shall appoint the members of all committees, which may be formed as necessary or appropriate for carrying on the activities of the Authority. The President shall execute documents, or delegate to the General Manager on behalf of the Authority as authorized by the Governing Board, and shall serve as the primary liaison between this and any other organization. The President shall serve as ex-officio member of all committees.

6.5.2 Vice President - The Vice President shall also serve as ex-officio member of all committees, when the President is unable to

attend. In the absence of or temporary incapacity of the President, the Vice President shall exercise the functions covered in Section 6.5.1 above.

6.5.3 Secretary - The Secretary will be responsible for the oversight of staff’s preparation of all minutes and agendas of the Governing

Board, the Administrative Committee, and any other committee meetings, preparing necessary correspondence, and maintaining files and records.

6.5.4 Treasurer - The Treasurer shall be responsible for: 1) ensuring the custody of and disbursement of Authority funds, accounts, and

property, in accordance with the California Government Code; 2) supervising the maintenance of such records to assure that financial accounts, records, funds, and property are maintained in accordance with accepted accounting practices and procedures prescribed by the Government Accounting Standards Board; 3) providing for inspection of all financial records; 4) overseeing, monitoring, and reporting on investment action; 5) overseeing and monitoring the financial audit; and, 6) overseeing and directing the Assistant Treasurer.

ARTICLE 7 - COMMITTEES 22.12 Section 7.1 – Administrative Committee

Page 223 of 251



7.1.1 Members - To facilitate the expeditious handling of transactions relating to the Authority’s operations, an Administrative Committee is established. The members shall be: 1) the offices of President, Vice President, Treasurer, Secretary and one representative and one alternate; and 2) four other representatives and one additional alternate and two substitute alternates. An alternate may participate in meetings but shall only be entitled to vote if an officer or representative is not present or is disqualified from participating. If only one officer or representative is not present or is disqualified, then the alternate that shares the same term period with the absent or disqualified member shall have the right to vote during the meeting. On July 1 of each even numbered year, four of the representatives and one of the alternates shall be elected for a two-year term to commence on July 1 of each even numbered year. On July 1 of each odd numbered year, one of the representatives and one of the alternates shall be elected for a two-year term to commence July 1 of each odd numbered year to serve on the Administrative Committee along with the President, Vice President, Treasurer and Secretary. The Administrative Committee shall include, as feasible, members representing the disciplines of risk management, finance, and claims/legal. A representative from the Claims Committee shall serve as a member. Additionally, the Administrative Committee composition shall attempt to be a balanced mix of members who participate in each program. Appointees to the Administrative Committee shall be limited to one representative per member without delegation. A majority of the members of the Administrative Committee is a quorum for the transaction of business.

7.1.2 Meetings - The Administrative Committee will meet as required by business, but not less than four times a year. Such meetings

will be duly noticed to all Governing Board delegate representatives, alternate representatives, and substitute alternate representatives (if applicable). The Authority Secretary shall be responsible for minutes of the meetings and shall send copies of such minutes to all Governing Board delegate representatives, alternate representatives, and substitute alternate representatives.

All meetings of the Administrative Committee shall be conducted in accordance with the Ralph M. Brown Act (Government Code § 54950, et seq.).

22.13 7.1.3 Duties - The Administrative Committee shall have the same authority as that of the Governing Board except for those

authorities specifically reserved unto the Governing Board in Article 5.1.3. 22.14 7.1.4 Attendance - Attendance of Administrative Committee members is essential to conducting the business of the

Authority. An Administrative Committee member missing a maximum of two meetings in a fiscal year, shall be subject to review by the Governing Board or Administrative Committee concerning forfeiture of his/her membership on the Administrative Committee.

22.15 7.1.5 Vacancies - The remaining term of the vacant representative position shall be filled by the alternate that has the same

term of office as the vacant position. Vacancies in the alternate positions shall be appointed by the President, with the approval of the Governing Board, at the next regularly scheduled Governing Board meeting held after the vacancy occurs.

22.16 7.1.6 Appeal Process - Any action taken by the Administrative Committee may be appealed by a minimum of 20% of the

members of the Authority to the Governing Board by filing a written appeal with the General Manager within 14 days following the date the minutes are mailed as provided in Section 7.1.2. Upon receipt of such appeal, the General Manager shall stay the action, and place the appeal on the agenda of the next regularly scheduled Governing Board meeting. The decision of the Governing Board shall be final.

Section 7.2 - Claims Committee 7.2.1 The Claims Committee (CC) shall have the responsibility and authority to carry out and perform all functions delegated to it, as

specified in the Liability and Workers’ Compensation Program Bylaws. These functions shall be consistent with the powers of the Authority and not in conflict with the Agreement, these bylaws or the (MOC).

Section 7.3 - Nominating Committee 7.3.1. A nominating committee shall be appointed by the President with the consent of the Governing Board for the purpose of annual

elections of Administrative Committee members and the biennial elections of officers. The Nominating Committee shall consist of a minimum of three and a maximum of five members.

7.3.2. The nomination of candidates for the officers and Administrative Committee shall be made in writing to the Governing Board no later than 60 days prior to the last regular Governing Board meeting of the fiscal year. The slate of nominees will be mailed to each member at least seven days before the last regular Governing Board meeting of the fiscal year. Additional candidate(s) may be nominated at the time of the meeting, provided the candidate(s) meet the requirements set forth in Sections 6.4 and 7.1.

Section 7.4 - Other Committees 7.4.1. At any time the President may appoint an ad hoc committee.

Page 224 of 251



7.4.2 The Administrative Committee has the authority to add additional committee(s) as deemed necessary. ARTICLE 8 – FINANCIAL AUDIT 22.17 Section 8.1 - Audit Required The Governing Board shall cause to be made, by a qualified, independent individual or firm, an annual audit of the financial accounts and records of the Authority. The minimum requirements of the audit shall be those prescribed by State law. 22.18 Section 8.2 - Filing an Audit The financial audit report shall be filed with the State Controller's Office within 6 months of the end of the fiscal year under examination. The Authority shall have a copy of the audit report filed as a public record with each member. 22.19 Section 8.3 - Costs of Audit The Authority shall bear all costs of the audit. Such costs shall be charged against the operating funds of the Authority. ARTICLE 9 - FISCAL YEAR 22.20 Section 9.1 - Fiscal Year The fiscal year of the Authority shall be the period from July 1st of each year through June 30th of the subsequent year. ARTICLE 10 - BUDGET 22.21 Section 10.1 - Budget The Governing Board shall adopt an annual budget by July 1 of each year, with receipt of a draft budget forty-five days prior thereto. ARTICLE 11 - ESTABLISHMENT AND ADMINISTRATION OF FUNDS 22.22 Section 11.1 - Administration of Funds The Authority is responsible for the strict accountability of all funds and reports of all receipts and disbursements. It shall comply with every provision of law relating to the subject, particularly Section 6505 of the California Government Code. The funds received for each program shall be accounted for separately on a full-accrual basis. The portion of each program premium allocated for payment of claims and losses, if any, shall be held by the Authority for the program participants in separate accounts for each program, and accounted for as prescribed by program bylaws. ARTICLE 12 - ADMINISTRATION 22.23 Section 12.1 - General Manager The Governing Board shall appoint the Authority’s General Manager. The General Manager shall be responsible for the daily administration, management, and operation of the Authority's programs and shall be subject to the direction and control of the Governing Board and the Administrative Committee. The General Manager may, but need not be, an employee of the Authority, a consultant, or a corporation. 22.24 Section 12.2 - Responsibilities The responsibilities of the General Manager or a designated representative are, among other matters, to: 12.2.1 Monitor the status of the Authority's programs and operations, member losses, programs’ administrative and operational

costs, and service companies’ performance; 12.2.2 Provide appropriate risk management consulting and information to members and the Governing Board, which may include

implementing, coordinating, and supervising the Authority’s programs of safety and risk control; and 12.2.3 Prepare periodic Risk Management Advisories to all members reporting new trends in the insurance field, matters of interest

regarding new legislation, and other information pertinent to risk management programs being handled by the Authority; 12.2.4 Prepare an annual budget; 12.2.5 Advise state legislators on Authority needs and advise members on legislative developments and need for any action; 12.2.6 Advise members of the risk impact of any proposed new programs or changes to existing programs; 12.2.7 Assist the Governing Board and/or any committees in selecting brokers, auditors, insurance companies, claims administration

services, and any other service providers; 12.2.8 Perform or contract for financial and claims audits and actuarial studies to determine cost allocations; 12.2.9 Design and implement new Authority programs of risk management and self-insurance as directed by the Governing Board.

Page 225 of 251



12.2.10 Prepare the Authority’s financial statements, receive budgeted revenues and pay budgeted expenses. The General Manager's responsibility to perform any or all of the above services with respect to any member is limited to those programs in which the member is participating. 22.25 Section 12.3 - Compensation and Employment The Authority shall compensate the General Manager for services rendered to the Authority in such amount and manner as may be approved by the Governing Board. Details respecting compensation, termination, and other employment related matters pertaining to the General Manager shall be governed by such terms and conditions as the Governing Board shall establish. ARTICLE 13 - RISK MANAGEMENT PROGRAMS 22.26 Section 13.1 - Formation of Risk Management Programs 13.1.1 The Authority will establish, as provided in Section 5.1.3.10, risk management programs in such areas as the Governing Board

may determine including, but not be limited to, the areas of property, workers' compensation, liability coverage, and benefits. 13.1.2 The Authority may authorize and use administrative funds to study the development/feasibility of new risk management

programs. In the event of such development, the estimated premium contributions shall be developed by the General Manager and presented in writing to each member. Each member shall have 60 days from the date of such notice to state in writing its intent to join or refrain from joining the new program. Unless written notice of acceptance into a program is provided to the General Manager by the member, it shall be presumed that the member declines to participate in the program. Upon conclusion of the notice period, premium contributions will be determined and billed to the members committed to join. Each member that elects to participate will be bound to the new program for the period of time so required by the Bylaws of that program.

13.1.3 The Governing Board shall adopt and maintain Program Bylaws to establish the operating guidelines of the program.

22.27 Section 13.2 - Administration 13.2.1 Each risk management program will be self-contained and individually evaluated for administrative and equity allocation

purposes. Each program year within each program shall be separately accounted and maintained, unless a multi-year program funding option is approved by the Governing Board. Any member benefiting from the indirect expenses from a program, to which the member does not belong, will be charged its allocable share of the expenses.

13.2.2 Each member shall provide the Authority with requested information within the time stated for successful operation of each

program. As such, each member of the Authority shall submit payroll information to the Authority at the same time it is required to submit such information to the State.

13.2.3 Each member shall cooperate fully with the General Manager or designated agent to provide underwriting and safety and loss

control information. Additionally, each member shall comply with the provisions of the annual Safety and Risk Plan as approved by the Administrative Committee and Governing Board.

22.28 Section 13.3 – Late Fees

28.22.1 Unless other arrangements for payment have been approved by the Governing Board, Members with ent amounts due shall be assessed a penalty which shall be one percent of the unpaid amount due and payable to the Authority 30 days after

al invoice due date. A penalty of another one percent shall accrue after an additional 45 days. Interest shall accrue on all delinquent amounts payable to the Authority at the applicable rate of 10% per annum from the due date of the billing until the date finally posted by the

ed financial institution. Each member shall indemnify the Authority from any expense resulting from its failure to pay the sum due on or he due date. The Governing Board may elect to temporarily suspend coverage if a member fails to pay its contribution. For the purpose of

g penalties and interest, the fee calculation shall be based on each calendar day the delinquent amount is late not withstanding the foregoing ee or other charge shall exceed the maximum authorized by law.

28.22.2 Any late fee assessed in accordance with the provisions of this Section may be appealed. Such appeal shall be dance with the Authority’s Dispute Resolution Policy.

22.29 Section 13.4 - Actuarial Soundness of Programs All self-insured risk management programs of the Authority shall be based on actuarial soundness at all times. The condition of each such program shall be tested by an independent actuary on an annual basis. The condition of each open program year within each such program shall be tested to determine its actuarial soundness. If it is determined by the actuary that any year is no longer actuarially sound, the appropriate actions as described in the Bylaws of each program shall be taken. In addition, upon approval of a majority of members in the program, the Governing Board reserves the right to assess the members of any program an amount determined by the Governing Board to be necessary for the soundness of the program and to allocate such assessment to the members in a fair and equitable manner.

Page 226 of 251



22.30 Section 13.5 – Program Withdrawal or Expulsion 13.5.1 Withdrawal or expulsion by a member from any risk management program shall be in accordance with the provisions of the

Bylaws governing that program. 13.5.2 The withdrawal or expulsion of any member of any risk management program after the effective date of such pooling program

shall not terminate its responsibility to contribute its share of premiums or funds to any fund or insurance program created by the Authority. All current and past members shall be responsible for their respective share of the expenses, as determined by the General Manager, until all claims, or other unpaid liabilities, covering the period of the member’s participation in the risk management program have been finally resolved and a determination of the final amount of payments due by, or credit to, the member for the period of its participation has been made by the Governing Board. All past members shall receive any distribution of dividends based on the same methodology of the current members. The withdrawal or expulsion of any member from any program shall not require the repayment or return to that member of all or any part of any contributions, payments, advances, or distributions except in conformance with the provisions set forth herein and in the risk management program’s Bylaws.

13.5.3 Any member seeking to withdraw without proper and effective notice shall be responsible for the full cost of the subsequent

year’s premium, and the notice will be deemed effective for the following year. 13.5.4 A member which voluntarily withdraws from any program shall not be permitted to renew participation in the program until

the expiration of three years from the effective date of the withdrawal. 13.5.5 No member can be expelled from a program except as provided by Article 14 of these Bylaws. 22.31 Section 13.6 - Deposit and Investment of Authority Funds The Treasurer may deposit and invest Authority funds, subject to the same requirements and restrictions that apply to the deposit and investment of the general funds of a city incorporated in the State of California and in accordance with the Investment Policy adopted by the Governing Board annually. 22.32 Section 13.7 - Accounting Method for Pooled Programs The accounting method for each risk management program will be in accordance with the provisions of the Bylaws governing that program and the principles established by the Government Accounting Standards Board. ARTICLE 14 - DEFAULTS AND EXPULSION FROM THE AUTHORITY 22.33 Section 14.1 - Events or Conditions of Default Defined 14.1.1 The following shall be "defaults" under the Agreement and these Bylaws:

14.1.1.1 Failure by a member to observe and/or perform any covenant, condition, or agreement under the Governing Documents including, but not limited to, risk management or loss reporting procedures;

14.1.1.2 Consistent failure to: attend meetings, submit requested documents and cooperate in the fulfillment of the program objectives;

14.1.1.3 Failure to pay any amounts, including penalties and interest, due to the Authority for more than 30 days; 14.1.1.4 Excessive losses as determined by the Governing Board; 14.1.1.5 The filing of a petition applicable to the member in any proceedings instituted under the provisions of the

Federal Bankruptcy Code or under any similar act which may hereafter be enacted; or 14.1.1.6 Any condition of the member which the Governing Board believes jeopardizes the financial viability of the

Authority. 22.34 Section 14.2 - Remedies on Default 14.2.1 Whenever any event of default referred to in Section 14.1 of this article shall have occurred, it shall be lawful for the Authority to

exercise any and all remedies available pursuant to law or granted pursuant to the Agreement and these Bylaws, including, but not limited to increasing a member’s retention, penalty or assessments, canceling member’s coverage, or expulsion of the member. However, no remedy shall be sought for defaults, until the member has been given 30 days written notice of default from the Governing Board, except defaults under Sections 14.1.1.4, 14.1.1.5, and 14.1.1.6 in Section 14.1.1.

14.2.2 Expulsion of a Member Entity from the Authority:

14.2.2.1 The Governing Board, as provided in Section 5.1.3.1, may expel any member (from the Authority) that is in default, as defined in Section 14.1.1 of this Article.

14.2.2.2 Such expulsion shall be effective on the date prescribed by the Governing Board, but not earlier than 30 days after written notice of expulsion has been personally served on or sent certified mail to the member.

14.2.2.3 The expulsion of any member from any risk management program shall not terminate the member’s responsibility to contribute its share of premiums or funds to any fund or insurance program created by the

Page 227 of 251



Authority, nor its responsibility to provide requested data. All current and past participants shall be responsible for their respective share of the expenses, as determined by the General Manager, until all claims, or other unpaid liabilities, covering the period of the participant's participation in the risk management program have been finally resolved and a determination of the final amount of payments due by, or credit to, the participant for the period of its participation has been made by the Board.

14.2.3 Cancellation of Coverage under a Program:

14.2.3.1 Upon the occurrence of any default, the Governing Board may temporarily cancel all rights of the defaulting member in any program in which such member is in default until such time as the condition causing default is corrected.

14.2.3.2 Upon the occurrence of any default, the Governing Board, as provided in Section 5.1.3.14, may cancel permanently all rights of the defaulting member in any program in which such member is in default.

14.2.4 No remedy contained herein is intended to be exclusive. No delay or omission to exercise any right or power accruing upon any

default shall impair any such right or shall be construed to be a waiver thereof. 22.35 Section 14.3 - Agreement to Pay Attorney's Fees and Expenses In the event either the Authority or a member entity is in breach of the Agreement and the other party employs attorneys or incurs other expenses for the collection of moneys or the enforcement of performance or observance of any obligation under the Agreement on the part of the defaulting party, the defaulting party shall pay to the other party the reasonable fees of such attorneys and such other expenses so incurred by the other party. 22.36 Section 14.4 - No Additional Waiver Implied by One Waiver In the event any condition contained in the governing documents is breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. ARTICLE 15 - DISPUTES OR CLAIMS BETWEEN MEMBERS 22.37 Section 15.1 - Authority Representation After being notified in writing that one member of the Authority has filed a formal claim, which is potentially covered by a program of the Authority, against another member, in accordance with provisions of the California Government Code, the Authority will no longer act, on behalf of either member with respect to such claim, without written consent from all members involved, insofar as the case giving rise to the claim is concerned. ARTICLE 16 - TORT LIABILITY 22.38 Section 16.1 - Member Entity's Indemnification Section 895.2 of the California Government Code imposes certain tort liability jointly upon entities solely by reason of such entities being parties to an agreement as defined in Section 895 of said Code. Therefore, the members hereto, as between themselves, pursuant to the authorization contained in Sections 895.4 and 895.6 of the California Government Code, each assumes the full liability imposed upon it for any of its officers, agents, or employees by law for injuries caused by a negligent or wrongful act or omission occurring in the performance of this agreement to the same extent that such liability would be imposed in the absence of Section 895.2 of said Code. To achieve this purpose, each member indemnifies and holds all other members harmless for any loss, cost, or expense that may be imposed upon such other member solely by virtue of Section 895.2 of the California Government Code. ARTICLE 17 - LEGAL REPRESENTATION 22.39 Section 17.1 - Counsel Authorized Legal counsel, to advise on matters relating to the operation of the Authority, may be recommended by the General Manager and approved by the Governing Board. The Authority shall have the right to pay such legal counsel reasonable compensation for said services. ARTICLE 18 - EXECUTION OF CONTRACTS 22.40 Section 18.1 - Authorization by Governing Board The Governing Board or Administrative Committee may authorize the General Manager, any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name and on behalf of the Authority and such authorization may be general or confined to specific instances. Unless so authorized by the Governing Board, no officer, agent, or employee shall have any power or authority to bind the Authority by any contract or to pledge its credit or to render it liable for any purpose or to any amount. ARTICLE 19 - COMPENSATION FOR REPRESENTATIVES AND OFFICERS 22.41 Section 19.1 - Reimbursed Expenses The Authority shall reimburse any representative or Officer, who does not otherwise receive compensation, for actual expenses incurred, and reasonable out of pocket expenses of the representative or Officer in the performance of his/her duty on behalf of the Authority. 22.42 Section 19.2 – Representative and Officers Insurance

Page 228 of 251



The Authority may purchase insurance indemnifying the Directors, Officers, and Administrative staff for personal liabilities arising out of wrongful acts in the discharge of their duties to the Authority or may elect to self-insure such risk. ARTICLE 20 – TERMINATION AND DISTRIBUTION The Agreement, these Bylaws, and the Authority continue to exist after termination for the purpose of disposing of all claims, distribution of assets, and all other functions necessary to conclude the obligations and affairs of the Authority. Upon termination of the Authority, the assets of the Authority shall be distributed and apportioned among the member entities that have been members in its programs, including those member entities which previously withdrew or were expelled pursuant to ARTICLES 13 and 14 of these Bylaws, as provided by the Program Bylaws. Any additional funds received after the above distributions are made shall be returned in proportion to the contributions made. ARTICLE 21 - NOTICES 22.43 Section 21.1 - Notices Any notice to be given or to be served upon any party hereto in connection with these Bylaws must be in writing (which may include facsimile) and will be deemed to have been given and received when delivered to the address specified by the party to receive the notice. Any party may, at any time by giving five days prior written notice to the other parties, designate any other address in substitution of the foregoing address to which such notice will be given. 22.44 Section 21.2 - Claims Against the Authority Claims against the Authority shall be presented to the mailing address of the Authority.

ARTICLE 22 - EFFECTIVE DATE 22.45 Section 22.1 - Effective Date and Supremacy These Bylaws shall be effective immediately upon the date of approval and upon adoption shall supersede and cancel any prior Bylaws and/or amendments thereto. However, the adoption of these Bylaws shall not affect the Agreement or any amendments to it. Any clauses in these Bylaws that are inconsistent with the Agreement shall be superseded by those clauses in the Agreement but only to the extent of the inconsistency. ARTICLE 23 - AMENDMENTS 22.46 Section 23.1 – Procure to Amend These Bylaws may be amended or repealed from time to time as provided in Section 5.1.3.4 provided, however, that at least 30 days prior to the taking of such action, written notice has been given to each delegate representative, alternate representative, substitute alternate representative (if applicable).

Page 229 of 251



B.2. LIABILITY PROGRAM BYLAWS The current version was approved by the Board 10/09/2014. Prior changes listed in document include:

o 10/09/2014 – Amended S5.3 to change withdrawal notice date and add revocation of withdrawal notice date o 6/13/13 - Amended to include a $750,000 SIR o Prior changes are available in minutes.

ARTICLE 1 - GENERAL Section 1.1 Authority

1.1.1 The Liability Program (LP) Bylaws of the Independent Cities Risk Management Authority (Authority) shall be treated as one of the Authority's governing documents and, as such, shall have the same effect as the Joint Exercise of Powers Agreement for Insurance and Risk Management Purposes (Agreement), Authority Bylaws and Memorandum of Coverage (MOC).

1.1.2 These LP Bylaws are intended to be the primary source of information, contain the rules and regulations, and serve as the

operational guide for the conduct of the LP. 1.1.3 In accordance with Authority Resolution 80-1, the LP was established, effective January 14, 1981. It was one of the risk

management programs provided to member entities pursuant to the Agreement. 1.1.4 The LP has been organized under authority granted by, and shall be conducted in accordance with the laws of the State of

California and the standards set forth by the California Association of Joint Powers Authorities (CAJPA) in its accreditation standards.

Section 1.2 Purpose

The primary purpose in establishing the LP is to create a method for providing coverage for legal exposures incurred by the member entities and the Authority, as provided in the MOC. Each member entity is herein referred to as member entity or participant.

Section 1.3 Participation Each member entity of the Authority may become a participant in the LP; however, the terms and conditions which may be imposed on a member entity that desires to join the LP may be different, depending upon payroll, number of employees, its size, its loss record, and other pertinent information.

Section 1.4 Governance Each member entity’s appointed delegate representative, alternate representative, and substitute alternate representative to the Governing Board of the Authority shall be the representatives for the LP. The member entity will be entitled to one vote on all issues or decisions that involve the LP. It is expected, but not mandatory, that the delegate representative from each member entity will be the primary appointee to the Governing Board. Section 1.5 Goals and Objectives

1.5.1 The LP shall provide liability coverage for the participants utilizing an optimum mix of risk retention and risk transfer. The LP shall provide various levels of retained limits for the participants, provide a risk sharing pool for losses above individual retained limits to the Authority’s self-insured retention (SIR), and obtain excess coverage for the amount of the loss which exceeds the Authority’s SIR. Additionally, the LP shall provide for the sharing of operating costs, administrative costs and payment of the excess coverage by charging all participants their share of such costs.

1.5.2 Although the LP is provided to the participants under those terms and conditions which prevail when the participant joins

the LP, the Authority’s Governing Board shall have the right to alter, from time to time, the terms and conditions of the excess coverage and the pooled underlying coverage in response to the needs and abilities of the LP participants, as well as in response to availability of coverage from outside sources.

1.5.3 The Authority offers participation in a risk sharing pool, covering losses of participants in accordance with the Agreement.

The assets of the pooled program shall be maintained at all times as the assets of the participants collectively. The assets may be disbursed only pursuant to the provisions of these Bylaws, and no participant shall have an individual right to exercise control over said assets except as provided in the Agreement.

1.5.4 The LP will provide coverage under the terms and conditions set forth in the MOC. The amount of coverage to be pooled

and/or purchased is at the discretion of the Governing Board. ARTICLE 2 - PROGRAM ELEMENTS Section 2.1 Program Years

2.1.1 A program year is defined by the term of the coverage period, generally a period of twelve (12) months. The program

Page 230 of 251



years generally will begin at 12:01 a.m. on July 1 and end at 12:01 a.m. on the following July 1. 2.1.2 Each program year shall be accounted for separately. The income and expenses of each program year shall be accounted

for separately from any other program years' income or expenses. 2.1.3 A program year shall not be closed until the Governing Board authorizes closure, being convinced that known claims for

the year are all closed and the probability of further claims being discovered is minimal. Any closed years, however, may be reopened if deemed necessary and approved by the Governing Board.

Section 2.2 Retained Limits

2.2.1 The LP shall annually establish the limit of coverage for the pool. The underlying coverage of the LP shall provide participants retained limits of $100,000, $200,000, $250,000, $300,000, $400,000, $500,000, $750,000 $1,000,000, $1,500,000 $2,000,000 and $5,000,000 per occurrence, or other limits as modified by resolution.

2.2.2 The participant may only alter the retained limit at the inception of a program year upon (60) days advance written notice. 2.2.3 The Governing Board, as provided in Section 5.1.3.5 of the Authority Bylaws, may also require, at the inception of a

program year, a member entity to have a retained limit different from the expiring program year, upon 60 days advance written notice.

2.2.4 The amount of each loss, including expenses, which is less than the retained limit chosen by the applicable participant,

shall be paid by the participant. Section 2.3 Deposit Premiums

22.47 2.3.1 The General Manager, in conjunction with an actuary, shall establish rates and deposit premiums, subject to Governing Board approval with the adoption of the budget.

22.48 2.3.2 The annual deposit premium for each participant shall be calculated utilizing: 1) the Authority’s actuarially

determined discounted expected losses adjusted for a risk margin (confidence level), participant’s loss experience, and retained limit, 2) the cost of any excess coverage, and 3) a charge for the administrative expenses of the LP as determined by the General Manager. The due dates and failure to pay timely consequences are the same as those specified in the Authority Bylaws.

2.3.3 The administrative expenses charged to each participant are calculated as follows:

2.3.3.1 A percentage amount annually approved in the budget and allocated by each participant’s relative percentage of payroll.

2.3.3.2 Secondly, a percentage of the amount calculated is allocated equally to each participant. Section 2.4 Experience Modification

2.4.1 Each member entity shall be evaluated each year for an experience modification adjustment that shall be applied to the deposit premium.

2.4.2 The calculation of the adjustment shall include the actual loss experience of the individual member entity.

Section 2.5 Dividends and Assessments 2.5.1 Dividends

2.5.1.1 Five years after the end of the program year, the first dividend calculation shall be performed. Each year thereafter there shall be an additional dividend calculation made until such time as the program year is closed. Any dividends available to be declared and returned to the participants will be at the discretion of the Governing Board.

2.5.1.2 Calculation

2.5.1.2.1 Dividends are available to be declared only at such time as the LP has equity, with liabilities actuarially stated, discounted at a 90% confidence level. The calculated amount shall represent the maximum dividend available to be declared.

2.5.1.2.2 This amount shall be reduced if the two succeeding years (after the fifth program year reaches

eligibility) have negative equity, with liabilities actuarially stated at an expected confidence level.

2.5.1.2.3 Each participant’s share of any dividends shall be allocated based upon the method by which

the deposit premiums were collected, beginning with the oldest program year. However, until the last claim of a program year has been paid and the program year has been closed, the program year must maintain sufficient funds to satisfy the 90% confidence level discounted

Page 231 of 251



requirement. 2.5.2 Reserve Fund As approved by the Governing Board, declared dividends, or portions thereof, or other discretionary funds, may be

directed and deposited into the Reserve Fund. The Reserve Fund shall be invested in accordance with the ICRMA Investment Policy and shall earn interest at the prevailing rates. Such interest earnings will be allocated quarterly with the preparation of the financial statements. The total interest earned by ICRMA in any quarter shall be allocated proportionately between the average cash balance in the ICRMA program and the average Reserve Fund. An accounting will be maintained of the individual member’s portion of the Reserve Fund.

The Reserve Fund shall be accounted for as a component of the Liability Program’s equity. The Reserve Fund will be

utilized through Governing Board action for: 1) maintaining funds for disbursement of the dividend over an extended distribution period (over one year); 2) rate stabilization for future renewal increases; 3) enhancement or expansion of current programs; 4) development of new programs, or 5) other Governing Board approved terms.5

Section 2.6 Assessments

2.6.1 As approved by the Governing Board, assessments may be levied on the participant for the risk sharing layer of any program year(s) when an actuary finds that the assets of the LP, as a whole, do not meet the expected discounted losses of the LP. Each participant’s share of the assessment shall be allocated based upon the method by which the deposit premiums were collected for the risk sharing layer of each respective program year being assessed. If such assessment is not sufficient to relieve the pool of its actuarial determined deficit in the year of the assessment, such assessment shall be levied each subsequent year until the actuarial deficit is relieved. The timing of the payment shall be determined by the Governing Board at the time of the assessment.

2.6.1 Equity, from the risk sharing layer, may be exchanged between eligible program years if sufficient funds are available. The

transfer of equity will be performed such that the individual participant’s share of equity is separately applied so as to maintain the integrity of each participant’s balance.

Section 2.7 Excess Coverage

2.7.1 The Governing Board shall ensure that each program year is provided with excess liability coverage for the participants. It is the intent and purpose of the Authority to continue to provide such coverage to the participants, provided that such coverage can be obtained, and the coverage is not unreasonably priced. This coverage may be obtained from an insurance company, by participating in another pool established under the Government Code as a joint powers authority, or offered through another LP pooling procedure. If the coverage is purchased from an insurance company, such insurance company shall have an A.M. Best Rating Classification of A or better and an A.M. Best Financial Rating of VII or better or their equivalents.

2.7.2 Premiums for such coverages shall be paid by the LP from the proceeds received as deposit premiums from the

participants. 2.7.3 The Governing Board may, from time to time, alter excess coverage based on insurance market conditions, available

alternatives, costs, and other factors. The Governing Board shall place excess coverage with the two competing objectives of security and minimizing costs to the LP as a whole.

ARTICLE 3 - ADMINISTRATION Section 3.1 Governing Board or Administrative Committee

3.1.1 Discussion of developments and performance of the LP may occur as part of any scheduled meeting. 3.1.2 The Governing Board or Administrative Committee shall have the responsibility and authority to carry out and perform all

functions, and make all decisions affecting the LP, consistent with the powers of the Authority and not in conflict with the Agreement, the Bylaws, or the MOC.

Section 3.2 Claims Committee (Liability & Workers’ Compensation)

3.2.1 The Claims Committee (CC) shall have the responsibility and authority to carry out and perform all functions delegated to it by the Governing Board and make all decisions affecting the Liability and Workers’ Compensation Programs, provided that such functions and decisions are consistent with the powers of the Authority and are not in conflict with the Agreement, the Authority Bylaws, or the MOC.

3.2.2 The CC shall be responsible for reviewing all aspects of the Liability and Workers’ Compensation programs, including, but

not limited to:

Page 232 of 251



3.2.2.1 Claims Review and Settlement 3.2.2.2 Claims Handling 3.2.2.3 Memorandum of Coverage 3.2.2.4 Litigation Management Procedures 3.2.2.5 Proposals for Claims Adjusters, Claims Auditors, and Legal Defense Services 3.2.2.6 Items Referred by the Governing Board or Administrative Committee.

Recommendations of the CC shall be forwarded to the Governing Board or Administrative Committee for approval, except as provided in Section 4.3.2.

3.2.3 The CC shall have the authority to:

3.2.3.1 Approve all claims settlements as provided in Section 4.3.2. Any claim above the Authority of the CC must be brought to the Governing Board or Administrative Committee for approval, and

3.2.3.2 Negotiate and approve contracts within the scope of responsibilities, $50,000 or less, and within the approved budget appropriations.

3.2.4 The number of members of the CC shall be a minimum of five and a maximum of nine, and recommended by the CC from

member entities participating in the Liability or Workers’ Compensation Programs, and approved by the Administrative Committee or Governing Board. Members shall serve on the CC for a three-year term. Efforts shall be made to include on the CC at least one representative from each of the following disciplines: Risk Management, Finance, Legal, Human Resources, and Administration.

3.2.5 Procedures

3.2.5.1 The CC will meet as required for business, but not less than four times a year. Such meetings will be duly noticed, and an agenda will be distributed to all CC members.

All meetings of the CC shall be conducted in accordance with the Ralph M. Brown Act (Government Code

§54950, et seq.). 3.2.5.2 Attendance of CC members is essential to conducting claims management of the Authority. A CC member

missing a maximum of two meetings in a fiscal year (July 1 to June 30), shall be subject to review by the Governing Board or Administrative Committee concerning forfeiture of his/her membership on the CC. Claims Committee members may not appoint a delegate to attend the meetings in his/her place.

3.2.5.3. CC meetings shall be conducted by the Chairperson as elected by the CC. In the absence of or inability of the

Chairperson to act, the Vice Chairperson shall act as Chairperson. If either the Chairperson or Vice Chairperson ceases to be a member, the resulting vacancy shall be filled at the next meeting of the CC.

3.2.5.4 A majority of the members of the CC is a quorum for the transaction of business.

Section 3.3 General Manager

The General Manager, as outlined in the Agreement, shall be responsible for: 3.3.1 The overall operation of the LP; 3.3.2 Monitoring the status of the LP and its operations, the development of losses, the program’s administrative and

operational costs, service companies’ performance, and brokers’ performance; 3.3.3 Assisting in selecting brokers, actuaries, auditors, and other service companies; 3.3.4 Promoting the LP to prospective new participants; 3.3.5 Preparing, distributing, and maintaining all records of the LP, including its Bylaws and MOC as these may be amended

from time to time; and 3.3.6 Preparing Certificates of Coverage and Waivers of Subrogation as may be required by the participants in the LP.

ARTICLE 4 - CLAIMS ADMINISTRATION Section 4.1 Claims Adjuster

The Governing Board or Administrative Committee shall appoint a claims adjusting company whose duties shall include: 4.1.1 Assign an Account Manager to coordinate all activity. 4.1.2 Provide all personnel necessary to perform the services as agreed upon under the contract. 4.1.3 Complete all facets of excess claims handling and adjustment of all assigned losses. 4.1.4 Maintain an organized, well documented claim file on each claim. 4.1.5 Establish reserves for “indemnity” and “expense.” 4.1.6 Monitor claim reserves on an ongoing basis, adjust as necessary, appoint monitoring counsel, adjust all claims,

Page 233 of 251



recommend settling claims that exceed the participant’s SIR, and request approval for coverage opinions. 4.1.7 Maintain a computerized diary on each claim. 4.1.8 Review all invoices for which a claim is being made for reasonableness, causal relationship and conformity to appropriate

fee schedules. 4.1.9 Pursue all possibilities of subrogation, co-defendants and/or indemnity, as appropriate. 4.1.10 Coordinate all activity on litigated claims with defense counsel. 4.1.11 Report to the Authority’s excess carrier or reinsurer all claims where the payments are expected to reach or exceed the

Authority’s layer of coverage or when the claim falls into a category identified by the excess carrier or reinsurer. Coordinate claims handling with the excess carrier or reinsurer.

4.1.12 Ensure timely closure of all claims once settlement documents have been received. 4.1.13 Review, recommend for approval, and coordinate payment of the Authority’s claims and claim-related expenses. 4.1.14 Maintain closed claim files for five years after date of closure or until the applicable statute runs. 4.1.15 Provide Risk Management Information reports, the frequency and distribution of which will be agreed upon by the

Authority. 4.1.16 Create a Watch List of claims that have the potential to reach the Authority’s layer of coverage. 4.1.17 Report all Watch List claims to the CC. 4.1.18 Report to the Governing Board regarding potential settlement of claims that reach the Authority’s layer of coverage. 4.1.19 Implement and monitor the Litigation Management Policies and Procedures. 4.1.20 Participate in settlement conferences, mediations and arbitration hearings, as necessary.

Section 4.2 Claims Audit 4.2.1 At least once every two years, the adequacy of claims adjusting for both the Authority and the participants shall be

examined by an independent auditor who specializes in claims auditing. 4.2.2 The costs of such claims audit shall be paid by the Authority. 4.2.3 The claims audit report shall address the issues of both adequacy of claims procedures and accuracy of claims data. The

report shall be filed with the Authority and sent to each participant. Section 4.3 Claim Settlement Authority

4.3.1 Participants - Each participant shall have settlement authority for all claims, including attorney fees and other costs, which do not exceed 100% of the participant’s retained limit. The CC will review these claims from time to time and may offer its recommendation to the participant’s Third Party Administrator (TPA) and the participant regarding settlement.

4.3.2 The CC shall have the authority to settle any claim, as defined in the MOC, up to two hundred fifty thousand dollars

($250,000) in excess of the retained limit of the member entity involved. 4.3.3 The Administrative Committee shall have the authority to settle any claim, as defined in the MOC, up to five hundred

thousand dollars ($500,000) in excess of the retained limit of the member entity involved. 4.3.4 The General Manager shall have the authority to settle any claim as defined in the MOC, up to fifty thousand dollars

($50,000) in excess of the retained limit of the member entity involved. 4.3.5 The Governing Board, unless otherwise delegated, retains unto itself the authority to approve settlement of all other

claims. Section 4.4 Disputes Regarding Management of a Claim ANY CLAIMS SETTLEMENT OR ARBITRATION DECISION MADE BY THE CC MAY BE APPEALED. SUCH APPEAL SHALL BE IN ACCORDANCE WITH THE MOC AND THE AUTHORITY’S DISPUTE RESOLUTION POLICY. ARTICLE 5 - PARTICIPATION Section 5.1 Eligibility and Application

5.1.1 Eligibility 5.1.1.1 Any member of the Authority may apply to participate in the LP by providing an adopted resolution of its city

council and such other information/materials as may be required. The entity resolution shall commit the applicant entity to three full years of participation in the LP, if accepted, and consent to be governed for liability matters in accordance with the Bylaws, the approved MOC, and other documents and policies adopted by the Governing Board. The resolution may also state the retained limit desired by the applicant entity.

5.1.1.2 It is recommended that an entity only enter the LP at the commencement of a new program year. If an entity

chooses to enter the LP at any other time, the deposit premium for the remainder of the program year will be

Page 234 of 251



pro-rated. The new member entity will begin coverage on the date that is mutually acceptable to the entity and the Governing Board; however, the new participant will be required to share losses with the other members of the LP for the entire program year. The application for participation shall be submitted at least 60 days prior to the date the entity wishes coverage to begin to ensure the Governing Board has adequate time to review and evaluate the acceptability of the applicant.

5.1.2 Approval/Rejection of Application

5.1.2.1 The Governing Board shall, after reviewing the resolution and other underwriting criteria, determine the acceptability of the exposures presented by the applicant entity and shall advise the applicant entity in writing, of its decision to accept or reject the request within ten days after the decision has been made.

Section 5.2 Participants’ Duties

5.2.1 Each member entity shall be responsible for providing accurate and factual data required by the Authority on a timely basis to determine appropriate cost of coverage. Failure to comply may subject the member entity with sanctions, up to and including termination from the LP.

5.2.2 The participants shall provide payroll, using the Federal W-3 form and all other requested information in conformance

with the policies adopted by the Governing Board. 5.2.3 The participants shall disclose activities not usual and customary in their operation. 5.2.4 The participants shall at all times cooperate with the Authority's General Manager, CC, claims adjusting company, broker,

and loss control personnel, in regards to underwriting activities of the Authority, which shall include the collection of loss data in accordance with the ICRMA Third Party Claims Administration Data Request Standards.

5.2.4.1 Each year of the LP, each member entity will complete and return a renewal application to staff by the fourth

Monday of March or before an otherwise specified date. 5.2.4.2 Applications received by staff more than ten calendar days after their due date will be subject to a 5%

surcharge on the member’s next year’s LP premium. Staff will send by overnight mail a reminder to the member entity in question together with an additional application.

5.2.4.3 Applications received by staff more than 20 calendar days after their due date will be subject to a 10%

surcharge on the member’s next year’s LP premium. Staff will send a reminder by overnight mail to the member in question.

5.2.4.4 Applications not received by staff 60 calendar days prior to the beginning of the new LP year will subject the

member entity to the previously referenced surcharge and, in addition, the member may receive a rate different from the pooled rate obtained for the member entities as a group. Any rate obtained outside of the group rate may subject the member entity to additional broker fees. The member entity may also be subject to suspension of coverage until a completed application is received by staff, have no coverage placed, or be terminated from the LP. A written notice of this will be provided to the member entity not in compliance.

5.2.4.5 All surcharges levied against members in violation of this policy will be invoiced directly to the individual

member by the Treasurer of ICRMA. 5.2.4.6 Any late fee assessed in accordance with the provisions of this Section may be appealed. Such appeal shall be

in accordance with the Authority’s Dispute Resolution Policy.

5.2.5 Each year the Authority shall bill participants for a liability deposit premium for the next program year. The billings shall be due and payable in accordance with the Authority’s Bylaws.

5.2.6 Billings may be made to participants for a program year found to be actuarially unsound. All billings for payments to bring

a program year into an actuarially sound condition are due and payable upon receipt. 5.2.7 Participants that have formerly participated in the LP, but have withdrawn as a participant, shall be required to pay all

applicable billings for the program years in which they participated. Delinquent billings, together with penalties and interest, shall be charged and collected from the participant in accordance with the policies adopted by the Governing Board.

Page 235 of 251



5.2.8 Penalties and interest shall be charged against any amounts delinquent in accordance with the Authority’s Bylaws. Section 5.3 Termination

5.3.1 Voluntary Termination 5.3.1.1 A participant which has maintained participation in the LP for three full program years may terminate its

participation if, by December 1, a written notice to terminate participation is forwarded to the Authority from the participant. Any such timely notice to terminate participation may be revoked by the participant by providing written notice to the Authority by January 15. A member’s written notice to terminate participation must include the Council resolution or meeting minutes authorizing such action. Any notice of revocation of that notice shall be made in writing by the City Manager or other duly authorized official of the participant, and shall be followed as soon as reasonably practicable by the participant’s Council resolution or meeting minutes authorizing revocation of the notice to terminate participation.

5.3.1.2 A participant that has not maintained its participation in the LP for three full program years shall not be

permitted to withdraw from the LP prior to the end of its commitment period and shall be obligated for payment of premiums for these three years.

5.3.2 Involuntary Termination

5.3.2.1 The Governing Board may initiate termination of future participation for the following reasons: 5.3.2.1.1 Termination as a member of the Authority; 5.3.2.1.2 Declination to cover the participant by the entity providing excess coverage; 5.3.2.1.3 Nonpayment of premiums, assessments, or other charges; 5.3.2.1.3 Frequent late payment of premiums, assessments, and/or other charges, subject to interest

and penalty charges; 5.3.2.1.4 Failure to timely provide requested underwriting information; 5.3.2.1.5 Consistent poor loss history relative to the pool; 5.3.2.1.6 Substantial change in exposures which are not acceptable in this LP; and/or 5.3.2.1.6 Financial impairment that is likely to jeopardize this LP’s ability to collect amounts due in the

future.

5.3.2.2 The Governing Board shall have the authority, as provided in Section 5.1.3.14 of the Authority Bylaws to send termination notice to a participant. Such notice shall be sent at least 60 days prior to termination.

5.3.3 Termination of participation, whether voluntary or involuntary, in future program years does not relieve the terminated

entity of any benefits or obligations of those program years in which the entity participated. These obligations include payment of assessments, retrospective adjustments, or any other amounts due and payable. In addition, the obligation to provide timely claims data for evaluation of claims exposure does not cease with termination from the program. Any participant which voluntarily withdraws as a participant from the LP shall not be permitted to renew participation in the program until the expiration of three years from the date of the participant’s withdrawal.

ARTICLE 6 - TERMINATION AND DISSOLUTION The LP may be terminated and dissolved by written consent of two-thirds of the participants. However, this LP shall continue to exist for the purpose of disposing of all claims, distributing assets, and all other functions necessary to conclude the affairs of the LP. Upon termination of the LP, all assets of the LP shall be distributed only among the participants, including any which previously withdrew pursuant to Article 5, in accordance with and proportionate to their deposit premiums and assessments paid during the term of participation. The Governing Board shall determine such distribution within six months after the last pending claim or loss covered by the LP has been finally resolved and there is a reasonable expectation that no new claims will be filed. ARTICLE 7 - EFFECTIVE DATE and Supremacy These Bylaws shall be effective immediately upon the date of approval and upon adoption shall supersede and cancel any prior Bylaws and/or amendments thereto. ARTICLE 8 – AMENDMENTS These Bylaws may be amended or repealed by a two-thirds (2/3rds) vote of the participants’ representatives of the Governing Board present and voting at the meeting provided prior written notice, as provided within the Agreement, has been given to the Governing Board.

Page 236 of 251



B.3. PROPERTY PROGRAM BYLAWS Text here is as presented for approval at the July 2017 board meeting ARTICLE 1 - GENERAL

Section 1.1 Authority 1.1.1 The Property Program (PP) Bylaws of the Independent Cities Risk Management Authority (ICRMA) shall be treated as

one of ICRMA's governing documents and, as such, shall have the same effect as the Joint Exercise of Powers Agreement for Insurance and Risk Management Purposes (Agreement), the ICRMA Bylaws and Memorandum of Coverage (MOC).

1.1.2 The PP Bylaws are intended to be the primary source of information, contain the rules and regulations, and serve as the operational guide for the conduct of the PP.

1.1.3 The PP has been organized under authority granted by, and shall be conducted in accordance with the laws of the State of California and the standards set forth by the California Association of Joint Powers Authorities (CAJPA) in its accreditation standards.

Section 1.2 Purpose ICRMA provides a PP which has been designed to provide protection against physical damage to the member entities’ real and personal property. Section 1.3 Governance Each member entity’s appointed delegate representative, alternate representative, and substitute alternate representative to the Governing Board of ICRMA shall be the representatives for the PP. Each member entity of the Governing Board will be entitled to one vote on the Governing Board on all issues or decisions that involve the PP. It is expected, but not mandatory, that the delegate representative from each member entity will be the primary appointee to the Governing Board.

ARTICLE 2 - PROGRAM ELEMENTS

Section 2.1 Program Years 2.1.1 A program year is defined by the term of the coverage period, generally a period of twelve (12) months. The program

years generally will begin at 12:01 a.m. on July 1, and end at 12:01 a.m. on the following July 1. 2.1.2 The transactions relating to this PP shall be accounted for and the funds maintained separately from any other ICRMA

program. An annual contribution amount may be charged to each participating member entity at the inception of the program year to fund the losses and expenses anticipated during that program year, to fund the purchase of excess insurance coverage, and for administrative expenses.

Section 2.2 Coverage/Limits of Liability

ICRMA shall purchase a commercial, excess or reinsurance property insurance policy, with terms and limits acceptable to the Governing Board of ICRMA, which policy is to be excess over the Retention of ICRMA and to member’s deductibles as described herein.

Section 2.3 ICRMA’s Retention

ICRMA shall have a Retention in an amount to be established and approved by the Governing Board, and may be subject to a combined aggregate limit to be established and approved by the Governing Board for auto physical damage and/or property damage combined, per program year.

Section 2.4 Member’s Deductibles

For each program year, each member of the PP shall be responsible for a deductible amount, to be established and approved by the Governing Board, per occurrence per member for auto physical damage, and per occurrence per member for property losses. The amounts of the deductibles may be changed by vote of the participants’ representatives of the Governing Board present and voting at a Governing Board meeting.

Section 2.5 Financing the Program

2.5.1 Members shall be billed annually for participation in the PP. The amounts billed shall be sufficient to: 1) fund ICRMA’s Retention; 2) purchase the excess coverage, and 3) pay program administrative expenses for participating member entities.

2.5.2 Rates shall be recommended by the Executive Director in conjunction with ICRMA’s actuary, if deemed necessary, subject to Governing Board approval with the adoption of the budget for the program year.

2.5.3 The due dates and failure to pay consequences dates are the same as those as specified in the ICRMA Bylaws.

Page 237 of 251



2.5.4 The annual contribution amount for each participating member entity shall be approved by the Governing Board as part of the approved annual budget. The contribution amount shall be calculated according to an approved allocation formula or other guidelines approved by the Governing Board.

Section 2.6 Assessment

If the Governing Board determines the PP lacks sufficient funds to satisfy ICRMA’s Retention, or for other purposes, for a given program year, the Governing Board may assess the participating member entities an amount sufficient to fund incurred costs and completion of the program year, or may temporarily suspend the coverage under the PP until such time as the Governing Board may vote to terminate or continue the PP pursuant to Article 4.3 of these Bylaws. Assessments to participating member entities shall be fair and equitable as determined in the discretion of the Governing Board, and shall in general be proportionate to each member’s contribution amount for any program year assessed.

ARTICLE 3 - ADMINISTRATION

Section 3.1 Responsibility and Authority

1.. Governing Board 3.1.1.1 Discussion of developments and performance of the PP may occur as part of any meeting of the Governing

Board. 3.1.1.2 The Governing Board, or an appropriate committee created pursuant to the general Bylaws to which

certain powers are properly delegated, shall have the responsibility and authority to carry out and perform all functions, and make all decisions affecting the PP, consistent with the powers of ICRMA and not in conflict with the Agreement, the ICRMA Bylaws, these Bylaws or the MOC.

2.. Executive Director

3.1.1.3 The Executive Director shall use best efforts to administer the PP so as to achieve the purpose of the PP and ICRMA.

3.1.1.4 The daily operation of the PP shall be administered by ICRMA’s Executive Director, or designee of the Executive Director. The Executive Director shall report to ICRMA’s Governing Board.

3.1.1.5 The Executive Director, as outlined in the Agreement, shall be responsible for:

3.1.1.5.1 The overall operation of the PP;

3.1.1.5.2 Monitoring the status of the PP and its operations, the development of losses, the program’s administrative and operational costs, service companies’ performance, and brokers’ performance;

3.1.1.5.3 Assisting in selecting brokers, actuaries, auditors, and other service companies; 3.1.1.5.4 Promoting the PP to prospective new participants;

3.1.1.5.5 Preparing, distributing, and maintaining all records of the PP, including its Bylaws and MOC

as these may be amended from time to time; and 3.1.1.5.6 Ensuring that appropriate Certificates of Insurance or Certificates of Coverage and Waivers

of Subrogation are issued as may be required for self-insurance by the participants in the PP.

ARTICLE 4 - PARTICIPATION

Section 4.1 Eligibility and Application

4.1.1 All ICRMA members are eligible to participate in the PP.

4.1.2 The applicant must apply for participation in the PP by providing all information requested by the Executive Director, or designee of the Executive Director.

4.1.3 Upon receipt of the requested information, the Executive Director, in conjunction with the broker and ICRMA finance team, shall provide a quote for coverage, to the applicant.

4.1.4 The applicant must commit to at least three full program years of participation in the PP. Section 4.2 Participants’ Duties

4.2.1 Each member entity shall be responsible for providing accurate and factual data required by ICRMA on a timely basis to determine appropriate cost of coverage. Failure to comply may subject the member entity to monetary surcharges and other actions, up to and including termination from the PP.

Page 238 of 251



4.2.2 The participants shall at all times cooperate with ICRMA's Executive Director, claims adjusting company, broker, and loss control personnel, in regards to underwriting activities of ICRMA, which shall include the collection of loss data in accordance with ICRMA’s Universal Data Specifications.

4.2.2.1 Each year of the PP, each member entity will complete and return a renewal application to Staff by a date

specified by the Executive Director, or designee of the Executive Director. 4.2.2.2 Should complete exposure data not be received from a member by the stated deadline, a surcharge will be

assessed in the amount of 5% of the member’s premium or $1,000, whichever is less. 4.2.2.3 Should complete exposure data not be received from a member within ten

(10) days of the stated deadline, ICRMA may increase the member’s prior year total insured values (TIV) by 5% or the average TIV increase of the other ICRMA members, whichever is greater. ICRMA may then use that amount for budget calculations, generating member invoices, reporting to third parties, and other purposes.

4.2.2.4 Applications not timely received by staff and/or designee prior to the beginning of the new program year will subject the member entity to the previously referenced surcharge. In addition, the member may receive a rate different from the group purchase rate obtained for the member entities as a group. The member entity may also be subject to suspension of coverage until a completed application is received by staff, have no coverage placed, or be terminated from the PP.

4.2.2.5 All surcharges levied against members in violation of this policy will be invoiced directly to the individual member.

4.2.2.6 The member may appeal any surcharge assessed in accordance with these Bylaws to the Board at the next

Board meeting following notification of the assessed surcharge. The Board may waive or reduce the penalty(ies), for good cause shown by the member, no more than once every five years.

4.2.3 Each year ICRMA shall bill participants for a contribution amount for the next program year. The billings shall be due

and payable in accordance with the ICRMA Bylaws and these PP Bylaws. 4.2.4 Participants that have formerly participated in the PP, but have withdrawn as a participant, shall be required to pay all

applicable billings for the program years in which they participated. Delinquent billings shall be charged and collected from the participant in accordance with the ICRMA Bylaws.

4.2.5 In addition to any surcharge under these Bylaws, penalties and interest shall be charged against any amounts

delinquent in accordance with the ICRMA Bylaws.

Section 4.3 Termination of Participation 4.3.1 A participant which has maintained its participation in the PP for three full program years, may terminate its

participation if, on December 1 before the beginning of the next program year, a written notice to terminate participation is provided to ICRMA by the participant. Any such timely notice to terminate participation may be revoked by the participant by providing written notice to the Authority by January 15. The notice must include a participant’s Council resolution or meeting minutes authorizing such action. Any notice of revocation of that notice shall be made in writing by the City Manager or other duly authorized official of the participant, and shall be followed as soon as reasonably practicable by the participant’s Council resolution or meeting minutes authorizing revocation of the notice to terminate participation.

4.3.2 The Governing Board may initiate termination of future participation for the following reasons: 4.3.2.1 Termination as a member of ICRMA;

4.3.2.2 Declination to cover participant by the entity providing excess coverage;

4.3.2.3 Non-payment of premiums, assessments, or other charges;

4.3.2.4 Frequent late payment of premiums, assessments, and/or other charges, subject to interest and penalty

charges; 4.3.2.5 Failure to timely provide requested underwriting information;

4.3.2.6 Consistent poor loss history relative to the pool;

4.3.2.7 Substantial change in exposures which are not acceptable in the PP; and/or

4.3.2.8 Financial impairment that is likely to jeopardize the PP’s ability to collect amounts due in the future.

Page 239 of 251



ARTICLE 5 - TERMINATION AND DISSOLUTION The PP may be terminated and dissolved by written consent of two-thirds of the Governing Board. However, this PP shall continue to exist for the purpose of disposing of all claims, distributing assets, and all other functions necessary to conclude the affairs of the PP. Upon termination of the PP, all assets of the PP shall be distributed only among the members then participating in the PP, in accordance with and proportionate to their contribution amount and assessments paid during the term of participation. The Governing Board shall determine such distribution within six months after the last pending claim or loss covered by the PP has been finally resolved and there is a reasonable expectation that no new claims will be filed.

ARTICLE 6 - EFFECTIVE DATE AND SUPREMACY

These Bylaws shall be effective immediately upon the date of approval and upon adoption shall supersede and cancel any prior Bylaws and/or amendments thereto

ARTICLE 7 - AMENDMENTS

These Bylaws may be amended or repealed by a two-thirds (2/3rds) vote of the Governing Board present and voting at the meeting.

Page 240 of 251



B.4. WORKERS COMPENSATION BYLAWS Change record · Changes made prior to October 2014 are available in ICRMA minutes · 10/9/2014 - Amended Section 5.3 to change withdrawal notice date from January 15 to December 1, and to add revocation of

withdrawal notice date of January 15. ARTICLE 1 - GENERAL Section 1.1 Authority 1.1.1 The Workers’ Compensation Program (WCP) Bylaws of the Independent Cities Risk Management Authority (Authority)

shall be treated as one of the Authority's governing documents and, as such, shall have the same effect as the Joint Exercise of Powers for Insurance and Risk Management Purposes (Agreement), Authority Bylaws, and Memorandum of Coverage (MOC).

1.1.2 These WCP Bylaws are intended to be the primary source of information, contain the rules and regulations, and serve

as the operational guide for the conduct of the WCP.

22.49 1.1.3 In accordance with Authority Resolution 80-1, the WCP was established, effective February 1, 2003. It was one of the risk management programs provided to member entities pursuant to the Agreement.

1.1.4 The WCP has been organized under authority granted by, and shall be conducted in accordance with, the laws of the

State of California; regulations prescribed by the Department of Industrial Relations (DIR) and the State of California Audit Unit; and the standards set forth by the California Association of Joint Powers Authorities (CAJPA) in its accreditation standards.

Section 1.2 Purpose

The primary purpose in establishing the WCP is to create a method for providing coverage for legal exposures incurred by the member cities and the Authority, as provided in the MOC. Each member entity is herein referred to as member entity or participant.

Section 1.3 Participation

Each member entity of the Authority may become a participant in the WCP; however, the terms and conditions which may be imposed on a member entity that desires to join the WCP may be different, depending upon payroll, number of employees, the size of the entity, its loss record, and other pertinent information.

Section 1.4 Governance

Each entity’s appointed delegate representative, alternate representative, and substitute alternate representative to the Governing Board of the Authority shall be the representatives for the WCP. The member entity will be entitled to one vote on all issues or decisions that involve the WCP. It is expected, but not mandatory, that the delegate representative from each member entity will be the primary appointee to the Governing Board.

Section 1.5 Goals and Objectives

1.5.1 The WCP shall provide workers' compensation coverage for the participants utilizing an optimum mix of risk retention and risk transfer. The WCP shall provide various levels of retentions for the participants, provide a risk sharing pool for losses above individual retained limits to the Authority’s self-insured retention (SIR), and obtain excess coverage for the amount of the loss which exceeds the Authority’s SIR. Additionally, the WCP shall provide for the sharing of operating costs, administrative costs and payment of the excess coverage by charging all participants their share of such costs.

1.5.2 Although the WCP is provided to the participants under those terms and conditions which prevail when the participant

joins the WCP, the Authority’s Governing Board shall have the right to alter, from time to time, the terms and conditions of the excess coverage and the pooled underlying coverage in response to the needs and abilities of the WCP participants, as well as in response to availability of coverage from outside sources.

1.5.3 The Authority offers participation in a risk sharing pool, covering losses of participants in accordance with the

Agreement. The assets of the pooled program shall be maintained at all times as the assets of the participants collectively. The assets may be disbursed only pursuant to the provisions of these Bylaws, and no participant shall have an individual right to exercise control over said assets except as provided in the Agreement.

1.5.4 The WCP will provide coverage under the terms and conditions set forth in the MOC. The amount of coverage to be

pooled and/or purchased is at the discretion of the Governing Board.

Page 241 of 251



ARTICLE 2 - PROGRAM ELEMENTS Section 2.1 Program Years

2.1.1 A program year is defined by the term of the coverage period, generally a period of twelve (12) months. Except for the originating program year which will run for 17 months, the program years will generally begin at 12:01 a.m. on July 1 and end at 12:01 a.m. on the following July 1.

2.1.2 Each program year shall be accounted for separately. The income and expenses of each program year shall be

accounted for separately from any other program years' income or expenses.

2.1.3 A program year shall not be closed until such time that the Board authorizes closure, being convinced that known claims for the year are all closed and the probability of further claims being discovered is minimal. Any closed years, however, may be reopened if deemed necessary and approved by the Governing Board.

Section 2.2 Retained Limits

2.2.1 The WCP shall annually establish the limit of coverage for the pool. The underlying coverage of the WCP shall provide participants retained limits of $350,000, $500,000, $750,000, and $1,000,000 per occurrence, or other limits modified by resolution.

2.2.2 The participant may only alter the retained limit at the inception of a program year upon sixty (60) days advance written

notice.

2.2.3 The Governing Board, as provided in Section 5.1.3.5 of the Authority Bylaws, may also require, at the inception of a program year, a member entity to have a retained limit different from the expiring program year, upon sixty (60) days advance written notice.

2.2.4 The amount of each loss, including expenses, which is less than the retained limit chosen by the applicable participant,

shall be paid by the participant. Section 2.3 Deposit Premiums

2.3.1 Annually, each participant shall pay a deposit premium to the Authority for each program year. Such deposit premiums shall consist of the amount needed to cover excess insurance or reinsurance premiums (if any), administrative expenses and actuarially-determined losses, plus a margin for added confidence as determined by the Board.

2.3.2 The deposit premium shall be initially calculated for each participant by taking the participant’s expected annual

payroll, as provided by each participant, multiplied by the Board adopted rate per $100 of payroll. After the end of the program year, adjustments from expected to actual payroll shall be made using participant's Unemployment Insurance wages as reported to the State on form DE6 - Quarterly Wage and Withholding Report. Debit adjustments shall be billed to the participant, and credit adjustments will apply to next year’s billings. An annual audit of a participant’s payroll may be conducted by the Authority.

2.3.3 The deposit premium shall also include:

2.3.3.1 All volunteers, declared by resolution prior to any occurrence, or otherwise required to be covered. 2.3.3.2 All other persons engaged in work that could make the Authority liable under Part One (workers’

compensation insurance) of the MOC. If the participant does not have payroll records for these persons, the contract price remuneration for their services and materials may be used as the premium basis. This paragraph will not apply if the participant gives the Authority proof that the employers of these persons lawfully secured their workers’ compensation obligations.

22.50 2.3.3.3 The administrative expenses charged to each participant are calculated as follows:

2.3.3.3.1 A percentage amount annually approved in the budget and allocated by each participant’s relative percentage of payroll.

2.3.3.3.2 Secondly, a percentage of the amount calculated is allocated equally to each participant.

Section 2.4 Experience Modification 2.4.1 Each participant shall be evaluated each year for an experience modification adjustment that shall be applied to the

deposit premium. 2.4.2 The calculation of the adjustment shall include the actual loss experience of the individual member entity.

Section 2.5 Dividend and Assessments

2.5.1 Dividends

Page 242 of 251



2.5.1.1 Five years after the end of the program year, the first dividend calculation shall be performed. Each year thereafter there shall be an additional dividend calculation made until such time as the program year is closed. Any dividends available to be declared and returned to the participants will be at the discretion of the Governing Board.

2.5.1.2 Calculation

2.5.1.2.1 Dividends are available to be declared only at such time as the WCP has equity, with liabilities actuarially stated undiscounted at a 90% confidence level. The calculated amount shall represent the maximum dividend available to be declared.

2.5.1.2.2 This amount shall be reduced if the two succeeding years (after the fifth program year

reaches eligibility) have negative equity, with liabilities actuarially stated at an expected confidence level.

2.5.1.2.3 Each participant’s share of any dividends shall be allocated based upon the method in

which the deposit premiums were collected, beginning with the oldest program year. However, until the last claim of a program year has been paid and the program year has been closed, the program year must maintain sufficient funds to satisfy the 90% confidence level discounted requirement.

Section 2.6 Assessments

2.6.1 As approved by the Governing Board, assessments may be levied for the risk sharing layer of any program year(s) when an actuary finds that the assets of the WCP, as a whole, do not meet the expected discounted losses of the WCP. Each Participant’s share of the assessment shall be allocated based upon the method by which the deposit premiums collected for the risk sharing layer of each respective program year being assessed. If such assessment is not sufficient to relieve the pool of its actuarial determined deficit in the year of the assessment, such assessment shall be levied each subsequent year until the actuarial deficit is relieved. The timing of payment shall be determined by the Governing Board at time of assessment.

2.6.2 Equity, from the risk sharing layer, may be exchanged between eligible program years if sufficient funds are available.

The transfer of equity will be performed such that the individual participant’s share of equity is separately applied so as to maintain the integrity of each participant’s balance.

Section 2.7 Excess Coverage

2.7.1 The Governing Board shall ensure that each program year is provided with excess workers’ compensation coverage for the participants. It is the intent and purpose of the Authority to continue to provide such coverage to the participants, provided that such coverage can be obtained, and the coverage is not unreasonably priced. This coverage may be obtained from an insurance company, by participating in another pool established under the Government Code as a joint powers authority, or offered through another WCP pooling procedure. If the coverage is purchased from an insurance company, such insurance company shall have an A.M. Best Rating Classification of A- or better and an A.M. Best Financial Rating of VII or better or their equivalents.

2.7.2 Premiums for such coverage shall be paid by the WCP from the proceeds received as deposit premiums from the participants.

2.7.3 The Governing Board may, from time to time, alter excess coverage based on insurance market conditions, available

alternatives, costs, and other factors. The Governing Board shall place excess coverage with the two competing objectives of security and minimizing costs to the WCP as a whole.

ARTICLE 3 - ADMINISTRATION Section 3.1 Governing Board or Administrative Committee

3.1.1 Discussion of developments and performance of the WCP may occur as part of any scheduled meeting. 3.1.2 The Governing Board or Administrative Committee shall have the responsibility and authority to carry out and perform

all other functions, and make all decisions affecting the WCP, consistent with the powers of the Authority and not in conflict with the Agreement, the Bylaws, or the MOC.

Section 3.2 Claims Committee (Workers’ Compensation & Liability) 3.2.1 The Claims Committee (CC) shall have the responsibility and authority to carry out and perform all functions delegated

to it by the Governing Board and make all decisions affecting the Workers’ Compensation Program, provided that such functions and decision are consistent with the powers of the Authority and are not in conflict with the Agreement, the

Page 243 of 251



Authority Bylaws, or the MOC. 3.2.2 The CC shall be responsible for reviewing all aspects of the Workers’ Compensation and Liability program, including, but

not limited to:

3.2.2.1 Claims Review and settlement 3.2.2.2 Claims Handling 3.2.2.3 Memorandum of Coverage 3.2.2.4 Litigation Management Procedures 3.2.2.5 Proposals for Claims Adjusters, Claims Auditors, and Legal Defense Services 3.2.2.6 Items Referred by the Governing Board or Administrative Committee.

Recommendations of the CC shall be forwarded to the Governing Board or Administrative Committee for approval, except as provided in Section 4.3.3.

3.2.3 The CC shall have authority to:

3.2.3.1 Approve all claims settlements as provided in Section 4.3. Any claim above the Authority of the CC must be brought to the Governing Board or Administrative Committee for approval, and

3.2.3.2 Negotiate and approve contracts within the scope of responsibilities, $50,000 or less, and within the approved budget appropriations.

3.2.4 The number of members of the CC shall be a minimum of five and a maximum of nine, and recommended by the CC

from member entities participating in the Workers’ Compensation or Liability programs, and approved by the Administrative Committee or Governing Board. Members shall serve on the CC for a three-year term. Efforts shall be made to include on the CC at least one representative from each of the following disciplines: Risk Management, Finance, Legal, Human Resources, and Administration.

3.2.5 Procedures

3.2.5.1 The CC will meet as required by business, but not less than four times a year. Such meetings will be duly noticed, and an agenda will be distributed to all CC members. The Authority Secretary shall be responsible for the minutes of the meetings and send copies of such minutes to all Governing Board representatives.

All meetings of the Claims Committee shall be conducted in accordance with the Ralph M. Brown Act

(Government Code §54950, et seq.). 3.2.5.2 Attendance of CC members is essential to conducting claims management of the Authority. A CC member

missing a maximum of two meetings in a fiscal year (July 1 to June 30 shall be subject to review by the Governing Board or Administrative Committee concerning forfeiture of his/her membership on the CC. Claims Committee members may not appoint a delegate to attend the meetings in his/her place.

3.2.5.3. Claims Committee meetings shall be conducted by the Chairperson as elected by the Claims Committee. In

the absence of or inability of the Chairperson to act, the Vice Chairperson shall act as Chairperson. If either the Chairperson or Vice Chairperson ceases to be a member, the resulting vacancy shall be filled at the next meeting of the Claims Committee.

3.2.5.4 A majority of the members of the Claims Committee is a quorum for the transaction of business.

Section 3.3 General Manager The General Manager as outlined in the Agreement shall be responsible for:

3.3.1 The overall operation of the WCP; 3.3.2 Monitoring the status of the WCP and its operations, the development of losses, the program’s administrative and

operational costs, service companies’ performance, and brokers’ performance; 3.3.3 Assisting in selecting brokers, actuaries, auditors, and other service companies; 3.3.4 Promoting the WCP to prospective new participants; 3.3.5 Preparing, distributing, and maintaining all records of the WCP, including its Bylaws and MOC as these may be amended

from time to time; and 3.3.6 Preparing Certificates of Coverage and Waivers of Subrogation as may be required by the Participants in the WCP.

Section 3.4 Workers’ Compensation Program Manager’s Duties:

Page 244 of 251



The Workers’ Compensation Program Manager (WCPM), unless otherwise modified by resolution, shall: 3.4.1 Generally, oversee all workers' compensation claims administration and management and report to the General

Manager; 3.4.2 Develop for Governing Board approval, performance standards for third party administrators; 3.4.3 Maintain files on all claims reported to the Authority; 3.4.4 Recommend to the Governing Board the setting of reserves for those cases that are likely to penetrate to pooled funds; 3.4.5 Upon the reporting of each claim that has an expectation of exceeding the minimum incurred loss threshold set by the

Governing Board, review said claim for the Authority and report said claims to the Governing Board at the next scheduled meeting;

3.4.6 Review the progress of all reported claims for the Authority and, if directed by the Governing Board, propose reserve changes, and/or take control and assume settlement authority for the claim;

3.4.7 Recommend claim settlements to the Governing Board for approval; 3.4.8 Annually, prepare a detailed report on the WCP, showing the activity by program year and the cumulative activity of all

years, including number of claims, losses which have been incurred by each participant, and the losses which have been shared through pooling;

3.4.9 Assist the participants in training their personnel in the correct procedures for timely and accurately reporting claims; 3.4.10 As required, provide advice and assistance to participants; 3.4.11 Periodically review third party claims administrator’s claims files. The review should include the new indemnity claims

reported, claims currently open and reported twelve months prior, and those claims for which a participant has requested a specific review;

3.4.11.1 Provide guidance to the claims adjuster on the management of problem or complex claims; 3.4.11.2 Advise, where needed, on the selection of legal representation in anticipation of litigation; 3.4.11.3 Monitor and evaluate the effectiveness of the defense firms and the management of the litigation; 3.4.11.4 Monitor and evaluate the effectiveness of medical treatment in respect to claims costs, especially

those involving complex medical issues; 3.4.11.5 Evaluate, where needed, recommendations for settlement of claims; 3.4.11.6 Mediate differences, if any, between the claims adjuster and a participant; and 3.4.11.7 Review the performance of the claims adjusters’ personnel assigned to the Authority’s account with

special emphasis in the handling of “open claims.” ARTICLE 4 - CLAIMS ADMINISTRATION Section 4.1 Claims Procedures Manual

4.1.1 A Workers' Compensation Claims Procedures Manual (Manual) including reporting procedures, forms, and other vital information shall be adopted by the Governing Board and provided to all participants.

4.1.2 All participants shall be held accountable for understanding and abiding by the procedures stated in the manual, as well as any changes thereto.

Section 4.2 Claims Audit

4.2.1 At least once every two years, the adequacy of claims adjusting for both the Authority and the participants shall be examined by an independent auditor who specializes in claims auditing.

4.2.2 The costs of such claims audit shall be paid by the Authority. 4.2.3 The claims audit report shall address the issues of both adequacy of claims procedures and accuracy of claims data. The

report shall be filed with the Authority and sent to each participant. Section 4.3 Claim Settlement Authority

4.3.1 Participants - Each participant shall have settlement authority for all claims, including attorney fees and other costs, which do not exceed 100% of the Participant’s Retained Limit. The Claims Committee will review these claims from time to time and may offer its recommendation to the Participants’ Third Party Administrator (TPA) and the participant regarding settlement.

4.3.2 The General Manager shall have the authority to settle any claim, as defined in the MOC, up to fifty thousand dollars

($50,000) in excess of the retained limit of the member entity involved.

4.3.3 The CC shall have the authority to settle any claim, as defined in the MOC, up to two hundred fifty thousand dollars ($250,000) in excess of the retained limit of the member entity involved.

4.3.4 The Administrative Committee shall have the authority to settle any claim, as defined in the MOC, up to five hundred

thousand dollars ($500,000) in excess of the retained limit of the member entity involved.

Page 245 of 251



4.3.5 The Governing Board, unless otherwise delegated, retains unto itself the authority to approve settlement of all other

claims. Section 4.4 Disputes Regarding Management of a Claim

4.4.1 Any claims settlement or arbitration decision made by the CC may be appealed. Such appeal shall be in accordance with the MOC and the Authority’s Dispute Resolution Policy. ARTICLE 5 - PARTICIPATION Section 5.1 Eligibility and Application

5.1.1 Eligibility 5.1.1.1 Any member of the Authority may apply to participate in the WCP by providing an adopted resolution of its city

council or other governing body and such other information/materials as may be required. The entity resolution shall commit the applicant entity to three full years of participation in the WCP, if accepted, and consent to be governed for workers' compensation matters in accordance with the Bylaws, the approved MOC and other documents and policies adopted by the Governing Board. The resolution may also state the retained limit desired by the applicant entity.

5.1.1.2 It is recommended that an entity only enter the WCP at the commencement of a new program year. If an

entity chooses to enter the WCP at any other time, the deposit premium for the remainder of the program year will be pro rated. The new member entity will begin coverage on the date that is mutually acceptable to the entity and the Governing Board; however, the new participant will be required to share losses with the other members of the WCP for the entire program year. The application for participation shall be submitted at least 60 days prior to the date the entity wishes coverage to begin to ensure that the State Certificate of Consent to Self-Insure is received prior to the inception date, and that the Governing Board has adequate time to review and evaluate the acceptability of the applicant.

5.1.2 Approval/Rejection of Application

5.1.2.1 The Governing Board shall, after reviewing the resolution and other underwriting criteria, determine the acceptability of the exposures presented by the applicant entity shall notify in writing, of its decision to accept or reject the request within ten days after the decision has been made.

Section 5.2 Participants’ Duties

5.2.1 Each member entity shall be responsible for providing accurate and factual data required by the Authority on a timely basis to determine appropriate cost of coverage. Failure to comply may subject the member entity with sanctions, up to and including termination from the WCP.

5.2.2 The participants shall provide payroll, using the State DE-6 form and all other requested information in conformance with the policies adopted by the Governing Board.

5.2.3 The participants shall disclose activities not usual and customary in their operation.

5.2.4 The participants shall at all times cooperate with the Authority's General Manager, WCPM, CC, claims adjusting

company, and loss control personnel, in regards to underwriting activities of the Authority, which shall include the collection of loss data in accordance with the ICRMA Third Party Claims Administration Data Request Standards.

5.2.4.1 Each year of the WCP, each member entity will complete and return a renewal application to Staff

by a specified date. 5.2.4.2 Applications received by staff more than ten calendar days after their due date will be subject to a

5% surcharge on the member’s next year’s LP premium. Staff will send by overnight mail a reminder to the member entity in question together with an additional application.

5.2.4.3 Applications received by staff more than 20 calendar days after their due date will be subject to a

10% surcharge on the member’s next year’s LP premium. Staff will send a reminder by overnight mail to the member in question.

5.2.4.4 Applications not received by Staff 60 calendar days prior to the beginning of the new WCP year will

subject the participant to the previously referenced surcharge and, in addition, the participant may

Page 246 of 251



receive a rate different from the pooled rate obtained for the member entities as a group. Any rate obtained outside of the group rate may subject the participant to additional broker fees. The participant may also be subject to suspension of coverage until a completed application is received by staff, have no coverage placed, or be terminated from the WCP. A written notice of this will be provided to the participant not in compliance.

5.2.4.5 All surcharges levied against members in violation of this policy will be invoiced directly to the

individual member by the Treasurer of ICRMA.

5.2.4.6 Any late fee assessed in accordance with the provisions of this Section may be appealed. Such appeal shall be in accordance with the Authority’s Dispute Resolution Policy.

5.2.5 Each year the Authority shall bill participants for a workers' compensation deposit premium for the next program year.

The billings shall be due and payable in accordance with the Authority’s Bylaws.

5.2.6 Billings may be made to participants for a program year found to be actuarially unsound. All billings for payments to bring a program year into an actuarially sound condition are due and payable upon receipt.

5.2.7 Participants that have formerly participated in the WCP, but have withdrawn as a participant, shall be required to pay

all applicable billings for the program years in which they participated. Delinquent billings, together with penalties and interest, shall be charged and collected from the participant in accordance with the policies adopted by the Governing Board.

5.2.8 Penalties and interest shall be charged against any amounts delinquent in accordance with the policies adopted by the

Governing Board. Section 5.3 Termination

5.3.1 Voluntary Termination 5.3.1.1 A participant which has maintained participation in the WCP for three full program years may terminate its

participation if, by December 1, a written notice to terminate participation is forwarded to the Authority from the participant. Any such timely notice to terminate participation may be revoked by the participant by providing written notice to the Authority by January 15. A member’s written notice to terminate participation must include the Council resolution or meeting minutes authorizing such action. Any notice of revocation of that notice shall be made in writing by the City Manager or other duly authorized official of the participant, and shall be followed as soon as reasonably practicable by the participant’s Council resolution or meeting minutes authorizing revocation of the notice to terminate participation.

5.3.1.2 A participant that has not maintained its participation in the WCP for three full program years shall not

be permitted to withdraw from the WCP prior to the end of its commitment period and shall be obligated for payment of premiums for these three years.

5.3.2 Involuntary Termination

5.3.2.1 The Board may initiate termination of future participation for the following reasons: 5.3.2.1.1 Termination as a member of the Authority; 5.3.2.1.2 Declination to cover the participant by the entity providing excess coverage; 5.3.2.1.3 Nonpayment of premiums, assessments, or other charges; 5.3.2.1.4 Frequent late payment of premiums, assessments, and/or other charges: subject to interest

and penalty charges; 5.3.2.1.5 Failure to timely provide requested underwriting information; 5.3.2.1.6 Consistent poor loss history relative to the pool; 5.3.2.1.7 Substantial change in exposures which are not acceptable in this WCP; 5.3.2.1.8 Financial impairment that is likely to jeopardize this WCP’s ability to collect amounts due in the

future; and/or 5.3.2.1.9 Revocation of Certificate to Self-insure.

5.3.2.2 The Governing Board shall have the authority, as provided in Section 5.1.3.14 of the Authority Bylaws to send

termination notice to a participant. Such notice shall be sent at least 60 days prior to termination.

5.3.3 Termination of participation, whether voluntary or involuntary, in future program years does not relieve the terminated entity of any benefits or obligations of those program years in which the entity participated. These obligations include

Page 247 of 251



payment of assessments, retrospective adjustments, or any other amounts due and payable. In addition, the obligation to provide timely claims data for evaluation of claims exposure does not cease with termination from the program. Any participant which voluntarily withdraws as a participant from the WCP shall not be permitted to renew participation in the program until the expiration of three years from the date of the participant’s withdrawal.

ARTICLE 6 - TERMINATION AND DISSOLUTION The WCP may be terminated and dissolved any time during the first three years by the written consent of all participants, and thereafter by the written consent of two-thirds of the participants. However, this WCP shall continue to exist for the purpose of disposing of all claims, distributing assets, and all other functions necessary to conclude the affairs of the WCP. Upon termination of the WCP, all assets of the Authority shall be distributed only among the participants, including any which previously withdrew pursuant to Article 5, in accordance with and proportionate to their deposit premiums and assessments paid during the term of participation. The Governing Board shall determine such distribution within six months after the last pending claim or loss, covered by the WCP has been finally resolved and there is a reasonable expectation that no new claims will be filed. ARTICLE 7 – EFFECTIVE DATE AND SUPREMACY These Bylaws shall be effective immediately upon the date of approval and upon adoption shall supersede and cancel any prior Bylaws and/or amendments thereto. ARTICLE 8 – AMENDMENTS These Bylaws may be amended or repealed by a two-thirds (2/3rds) vote of the participants’ representatives of the Governing Board present and voting at the meeting provided prior written notice, as provided within the Agreement, has been given to the Governing Board.

Page 248 of 251


Subject: State of ICRMA Action for consideration Review and file Background: According to the Association of Governmental Risk Pools, public entity risk pooling is the single most successful example of inter-local cooperation in North America and beyond, saving billions of taxpayer dollars and thousands of lives. Beginning in earnest some 30 years ago, it is a success story that grew organically from the inability and unwillingness of much of the traditional insurance industry to understand and address the changing risk dynamics of governmental entities. Today, AGRiP estimates that 80% of the cities, towns, schools, counties and special districts in the United States address some or all of their risk management and risk financing needs through these member-owned, member-governed, non-profit pools. For over 30 years, ICRMA has been providing programs and services to its municipal members. ICRMA is a member-driven organization, and its members benefit from the pool’s coverage and initiatives. RPA staff will present an overview of the financial status of the pool, review changing claim trends, and provide a summary of issues critical to the pool’s future operations.

Attachments: None Prepared by: Beth Lyons, Executive Director

Page 249 of 251


Subject: ICRMA Strategic Planning Action for consideration Participate in strategic planning exercises and take action as appropriate. Background: Facilitator Sara Peterson will lead ICRMA members through a variety of exercises to perform a self-assessment, discuss issues of critical importance, outline the pool’s future, and determine priorities. At its April 2017 meeting, the board outlined broad goals for 2017-19.

1. Reduce uncertainty while improving long-term financial health. There is still uncertainty

for ICRMA and its members. Some of this is the nature of the work, but some of this can be actively managed by thoughtful board decisions related to:

a. Confidence level funding (80% ICRMA adopted) b. Discount factor (select the correct interest earnings) c. How much risk do we want to retain (pool SIR, class coverage, etc.) d. Other factors: Surplus, member retained limit, good loss data, consistent process and staff

work related to active claims management, handling, and reserving. There are also specific near term uncertainties such as the collection of assessments as ICRMA builds its financial health. Actively and thoughtfully working in all of these areas will continue to be front and center.

2. Increased visibility/engagement as well as member recruitment and retention. The

larger the base of a pool the more broadly its risks can be spread, the more data available to assess trends, the greater the opportunity for mutual support and learning. Given recent member withdrawals, ICRMA leadership sees this as a moment for refocusing and new growth. It is an opportunity we should take advantage of. As such ICRMA will focus on engaging its members and increasing positive visibility (e.g., ICA, city manager meetings, finance officer meetings) for the internal culture of the pool, for new growth, and for recruitment and retention of members.

3. Deepen the work. ICRMA can and must continue to deepen the impact of its work in three

key ways. First, we need to make ICRMA’s resources more accessible to members and ensure that members optimize their use. ICRMA may also consider creating a risk management strike team (training, implementation, loss control programs, etc.) of sorts. Second, we need to increase the knowledge at the Board and Member tables of ICRMA. Bring member knowledge of risk management to the fore and increase the knowledge across all. There is a long learning curve for the board of public entity pools – a learning curve that needs to be actively managed. Finally, as ICRMA continues to evolve out of this turnaround phase and grow again, we must do so with a greater “internal locus of control” – an understanding that ICRMA is can control is destiny. Members and ICRMA are one moving forward together versus in control of each other or working in opposition.

Page 250 of 251

ICRMA Strategic Planning Page 2 of 2

October 11-12, 2017

Attendees will continue this conversation to define member needs/wants for the collective future of ICRMA and its membership. In response to the State of ICRMA presentation, board and other member representatives will discuss questions such as: “Who will we be three years from now? What will it take to make this happen?” By doing so, all will: 1. Answer member questions about the status and health of the pool 2. Identify and address concerns about ICRMA 3. Agree on a timeline for the ongoing improvement processes 4. Begin to envision a positive ICRMA future with each city as a member Attachments: None Prepared by: Sara Peterson, Facilitator

Page 251 of 251