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R-82-482 - 10/14/1982WHEREAS, Article 8309h, Vernon's Annotated Texas Statutes authorize the adoption of a plan of self- insurance to provide Workers' Compensation benefits, and WHEREAS, the Texas Municipal League has established a workers' compensation joint insurance fund, and WHEREAS, the City of Round Rock wishes to enter into an interlocal agreement with the Texas Municipal League Workers' Compensation Joint Insurance Fund, and WHEREAS, the City Council wishes to appoint a Workers' Compensation Coordinator, NOW THEREFORE BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City an Interlocal Agreement with the Texas Municipal League Workers' Compensation Joint Insurance Fund, a copy of said agreement being attached hereto and incorporated herein for all purposes, and BE IT FURTHER RESOLVED That the Director of Finance is hereby appointed as the Workers' Compensation Coordinator for the City of Round Rock. ATTEST: RESOLUTION NO. RESOLVED this 14th day of Octo QAND City Secretary et' a2 /2 1982. I LARD L. TON , Ma or City of Round Rock, Texas WORKERS' COMPENSATION JOINT INSURANCE FUND 1020 Southwest Tower, Austin, Texas 78701 INTERLOCAL AGREEMENT This Contract and Interlocal Agreement entered Into by and between the Texas Municipal League Workers' Compensation Joint Insurance Fund (hereinafter referred to as "Fund ") and the undersigned political subdivi- sion of the State of Texas (hereinafter referred to as "Employer Member ") for the purpose of providing the statu- tory benefits prescribed by Article 8309h of the Texas Workers' Compensation Act for employees of political subdivisions. WITNESSETH: The undersigned Employer Member in consideration of the adoption of a plan of self - insurance as authorized in Article 8309h, Vernon's Annotated Texas Statutes, to provide Workers' Compensation benefits at a minimum cost and in further consideration of other political subdivisions executing identical interlocal agreements does hereby agree to become a self - insured workers' compensation employer by becoming one of the members of the Fund Pool of self- insured Employer Members. The conditions of membership agreed upon by and between the parties are as follows: 1. Definition of terms used in this Interlocal Agreement. a. "Board" — refers to the Board of Trustees of the Texas Municipal League Workers' Compensation Joint Insurance Fund. b. "Premium" and "Contribution" —are used interchangeably in some parts of this Interlocal Agree- ment. "Premium" is used to identify the rating formulas established by the State Board of Insurance, which are used as guidelines to establish Employer Members' cash contributions to the Fund. Any reference at any time in this Interlocal Agreement to an insurance term not ordinarily a part of self -in- surance shall be deemed for convenience only and is not to be construed as being contrary to the self - insurance concept except where the context clearly indicates no other possible interpretation such as but not limited to the reference to "reinsurance ". c. "Servicing Contractor" —Texas Employers Insurance Association. d. "Manual Rates" —the basic worker's compensation rates applicable to each classification of em- ployees promulgated by the State Board of lnsurance. e. "Experience Modifier " — refers to the factor applied to the manual rates that reflects the political subdi- visions' loss experience, which is based on the State Board of Insurance promulgated insurance plan. f. "Standard Rates" —rate that is determined by applying the experience modifier of each individual Em- ployer Member to the annual rates. g. "Fund Modifier " -75% that is applied to the standard rates by the Fund to reflect the savings to the Employer Member by entering Into the Interlocal Agreement. 2. The term of this Contract shall be for a term commencing 12:01 a m and terminating 12:01 a.m. October 1, 1983, unless the same is sooner terminated by sixty (60) days written notice of intent to terminate by either party unless otherwise specified under the terms and agreements of this Contract or by the Bylaws of the Fund. The Fund will have the right to terminate this agreement only for noncompliance with paragraphs 3, 5 and 8. 3. Annually, each Employer Member shall submit to the Fund, on a Premium Worksheet form supplied by the Fund, its estimated payroll for each classification of employees. The rates established by the State Board of In- surance shall be applied to arrive at a manual premium. If the Employer Member has established, through expe- rience, a modifier, then the experience modification of that Employer Member shall be used to arrive at the standard premium to be paid by the Employer Member. In the absence of an earned experience modification for the Employer Member, the manual rate as established by the State Board of Insurance in effect, at the beginning of each Fund Year, will be used as a guide to produce a manual, as well as a standard, contribution. The Fund modifier of 75% shall then be applied to the standard premium to produce the annual contribution that the Em- ployer Member shall pay to the Fund. The Employer Member agrees to pay the standard annual contribution to the Fund in twelve (12) equal monthly installments, in advance, commencing at the beginning of each Fund Year, with subsequent installments due the first of each month thereafter, provided that if the payable annual contri- bution shall be less than $5,000, it shall be payable in four (4) equal quarterly installments, in advance, com- mencing at the beginning of each Fund Year, with subsequent installments due the first of each quarter there- after. It is understood by the Employer Member that there will be contribution adjustments based upon the in- creased benefit levels mandated by the Texas Workers' Compensation Act. 11. As the administrators of the self- Insurance Fund, the Board shall primarily and constantly keep fore- most in their deliberations and decisions In operating the Fund that each of the participating Employer Mem- bers is a "self-insured". At least annually, the Board shall carefully review, study and consider the actual claims or loss experience (including reserves for future claims payments) of each of the Employer Members, the experi- ence rating modification developed or earned by each of the Employer Members, the pro rata savings to the Fund resulting from overall loss experience attributed to each Employer Member, and the pro rata portion of the cost of all catastrophic loss protection reinsurance and aggregate stop loss reinsurance allocated to each Employer Member, as well as the pro rata allocation, as determined by the Board of the other and necessary administra- tive expenses of the Fund, in order to reasonably determine the actual pro rata cost, expense and loss experi- ence of each Employer Member In order to maintain as nearly as possible an equitable and reasonable "self -in- surance" administration of the Fund as applied to each Employer Member. The Fund shall maintain case reserves and supplemental reserves computed in accordance with the stan- dard actuarial principles, taking into account historical and other data, designed to measure claims develop- ment and claims incurred but not yet reported, so that funds will be available to meet these claims as they be- come due. The Fund shall also establish and maintain a reserve for Return of Contributions to insure further the fiscal integrity of the Fund in the event of a potential, adverse loss development. This Reserve shall be calcu- lated on a Fund Year basis, and shall be held for a 12 -year period in decreasing amounts computed as a percent of standard contributions, as follows: 10% First Fund Year Past 10% Second Fund Year Past 10% Third Fund Year Past 8% Fourth Fund Year Past 6% Fifth Fund Year Past 4% Sixth Fund Year Past 2"/ Seventh Fund Year Past 2"/ Eighth Fund Year Past 2"/ Ninth Fund Year Past 2% Tenth Fund Year Past 2% Eleventh Fund Year Past 2% Twelfth Fund Year Past 0% Thirteenth Fund Year and Beyond The Fund shall determine its net income for Federal Income Tax purposes at the close of each Fund Year. The Fund's income so determined shall be distributed to Employer Members, on or before the April 1 following the close of the Current Fund Year, pursuant to the following distribution formula: The Fund shall distribute to Employer Members the sum of the Current Fund Year Savings and the Addi- tional Fund Year Savings. Current Fund Year Savings shall equal the excess of contributions and other Fund in- come, over (a) incurred losses (less reinsurance losses), including the amount of any Actuarial Reserves, ex- pense and other amounts which are allowable as deductions for Federal Income Tax purposes, (b) the amount, if any, of any Actuarial Reserves for the Current Fund Year in excess of the addition to these Reserves allowable as deductions for Federal Income Tax purposes for the Current Fund Year, and (c) the Reserve for Return of Contributions for the Current Fund Year, Additional Fund Year Savings shall equal (a) amounts, if any, included within any Actuarial Reserves for any prior Fund Year, the retention of which on an actuarial basis is no longer necessary, and (b) the sum of the net decreases, if any, in the Reserve for Return of Contributions for each Fund Year prior to the Current Fund Year after adjustment for foss development attributable to such prior Fund Year. The Fund shall issue a certificate to each Employer Member, which shall evidence its share of the fund's net income, as determined for Federal Income Tax purposes, which is retained and to be returned under the For- mula for distribution of such net income. A certificate shall be Issued under this procedure for all prior Fund Years. At the end of each and every Fund Year, there shall be submitted by the Employer Member actual payrolls as reflected by the books of the Employer Member, and any additional amounts payable to the Fund based upon the actual payroll shall be paid, and lesser amounts payable shall be adjusted by refund to the Employer Mem- ber. The Fund reserves the right to audit the payroll records of any Employer Member. Annual field audits will be made on each Employer Member with standard consideration estimated to exceed $30,000. A field audit will be made at least once every 3 years on Employer Members with standard consideration less than $30,000 annually. For each new enrolling Employer Member, a pre -audit contact will be made to counsel proper payroll classifica- tions and record keeping, and a field audit will in all cases be made covering the first year. In the event that the Employer Member fails or refuses to make the payments of premiums as herein provided, the Fund reserves the right to terminate such Employer Member by giving ten (10) days written notice and to col- lect any and all premiums that are earned pro rata for the period preceding contract termination. • 4. The Fund has obtained aggregate stop -loss reinsurance up to $20 million, to assure that the incurred losses for the total Fund shall not exceed the maximum 75% of standard premium paid or payable by Employer Members into this Fund. In addition, the Fund has catastrophic loss protection in excess of $400,000 for any one accident or occurrence, to a limit of $30 million, covering the contract period. The reinsurance is provided so that Employer Members will have no joint or several liability other than the maximum 75% of standard premium payable and to insure that the Employer Member shall at no time be on an assessable basis beyond the amount set forth in this Interlocal Agreement. The Board, however, reserves the right to adjust either one of these rein- surance provisions in the event that the fiscal soundness of the Fund will justify such adjustment and result in a savings to the Employer Members. Before any such adjustment is made, notice will be given to all the Employer Members together with an accounting from the Fund, in order that the Employer Members may appear before the Board to discuss the fiscal soundness of the Board's action. 5. The Fund has contracted with the Servicing Contractor to supply safety engineering services to the Em- ployer Members to assist them in following a plan of loss control that may result in reduced losses. The Servic- ing Contractor shall provide all of the services as provided in the service contract entered into by and between the Servicing Contractor and the Fund on behalf of the Employer Member. The Employer Member agrees that it will cooperate in instituting any and all reasonable safety regulations that may be recommended for the purpose of eliminating or minimizing hazards that would contribute to workers' compensation losses. In the event that the recommendations submitted by the Servicing Contractor cn behalf of the Fund seem unreasonable, the Em- ployer Member has a right to appeal to the Board of Trustee . The Board shall hear the objections of the Em- ployer Member at its next regularly scheduled meeting and it , decision will be final and binding on all parties. 6. The Employer Member agrees that it will appoint a worlcr's compensation coordinator of department head rank, and that the Fund and its Servicing Contractor shall not 3e required to contact any other individual except this one person. Any notice to or any agreements with the we kers' compensation coordinator shall be binding upon the Employer Member. The Employer Member reserves the right to change the coordinator from time to time by giving written notice to the Fund and to the Servicing Contractor. 7. The Fund, through the Servicing Contractor employed by the Fund, agrees to handle any and all claims after notice of injury has been given, to prepare all required Industrial Accident Board forms, and provide a de- fense. The Employer Member hereby appoints Servicing Contractor as its agent to act in all matters pertaining to processing and handling of workers' compensation claims and shall cooperate fully in supplying any informa- tion needed or helpful in such defense. They shall carry on all negotiations with the injured employee and his at- torney at the prehearing conference and negotiate within authority previously granted by the Fund. If a personal appearance by the employer or a co- employee is necessary, the expense of this appearance will be paid by the Employer Member. The Servicing Contractor will retain and supervise legal counsel on behalf of and at the ex- pense of the Fund necessary for the prosecution of any litigation. All decisions on individual cases shall be made by the Fund through the Servicing Contractor, which includes the decision to appeal or not to appeal an In- dustrial Accident Board's final ruling and decision. However, any Employer Member shall have the right in any case involving one of their employees, to consult with the Fund on any decision made by the Servicing Contrac- tor. The Board shall hear the objections of the Employer Member at Its next regularly scheduled meeting and their de- cision will be final and binding on all parties. Any suit brought or defended by the Servicing Contractor and the Fund shall be in the name of the political subdivision. Notwithstanding any provisions of this paragraph, all re- ports and filings required by the Workers' Compensation Law and the Industrial Accident Board of any employer will be the responsibility of the Employer Member. It is further understood that this agreement does not cover discrimination suits under Article 8307c. There shall be supplied periodically to each Employer Member a com- puter printout involving a statement of claims, claims status, and activity report cumulative for each Fund Year. 8. The Employer Member acknowledges that it has received a copy of the Bylaws of the Fund and agrees to abide by the Bylaws and any amendments thereto. 9. The Fund agrees that all Fund transactions will be annually audited by a nationally recognized, certified public accounting firm. • 10. The Fund shall pay on behalf of each Employer Member the Industrial Accident Board maintenance tax (Ar- ticle 8306, Sec. 28, V.A.T.S.) and file the necessary tax forms with the Internal Revenue Service. IN WITNESS WHEREOF, the parties have hereunto set their hands by their representatives thereunto duly authorized this /I/ TN day of _ DC TD /3 E.C. , fa- Contract Number The Workers' Compensation Coordinator for the Employer Member is: NAME SP/Vl /1 r U E ADDRESS X141 G • /V A /Ai ' CITY JU /e^ ZIP /7,62/4 ! TELEPHONE 5h2 o2J5 3 ?/.20 BY Fund Secretary Austin, Texas TEXAS MUNICIPAL LEAGUE WORKERS' COMPENSATION JOINT INSURANCE FUND FOR /TY OF �OLf/U� /WCK ployer Meg ber BY Authorizes fficia ROLANo ROCK , Texas