WCIA 320. October 12, 2018 (206) Roll Call. Minutes August Page Page. Page Page Page Page. Page. Page Page Page Page Page.

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1 EXECUTIVE COMMITTEE MEETING October 12, 2018 WCIA OFFICES 320 Andover Park East, Ste. 104 Tukwila, WA (206) :30 a.m. - Call to Order/Self Roll Call Committee Attendance Excuse Absent Committee Members Consent Calendar: Executive Committee September Minutes August 2018 Expenditures Action Item: New Membership: Olympic View Water and Sewer District Approval of the 2019 Operating Budget Resolution : Equity Policy and Procedure Approval of Changes to WCIA Bylaws Director s Report: State Auditor's Office Audit Staff Quarterly Reports: Rob Roscoe, Deputy Director Reed Hardesty, Claims Manager Jared Burbidge, Treasurer/Finance & Admin. Services Manager Robin Aronson, Risk Services Manager Patti Crane, Member Services Manager Executive Session Claim Settlements and Litigation Page Page Page Page Page Page Page Page Page Page Page Page

2 September 7, 2018 EXECUTIVE COMMITTEE MEETING Bavarian Lodge - Leavenworth, WA Members Present President David Timmons, Port Townsend; Vice President Paul Loveless, Steilacoom; Stan Strebel, Pasco; Julie Underwood, Mercer Island; Deborah Knight, Monroe; and Jay Burney, Olympia. Others Present Ann Bennett, Executive Director; Mark Bucklin, Counsel; Michele Neumann, Authority Secretary; Rob Roscoe, Deputy Director; Jared Burbidge, Treasurer/Finance and Administrative Services Manager; Patti Crane, Member Services Manager; Reed Hardesty, Claims Manager; and Robin Aronson, Risk Services Manager. Committee Absence Log January: March: April: Knight, Monroe Strebel, Pasco Howard, Sammamish Taylor, Kelso Knight, Monroe Strebel, Pasco June: July: September: Timmons, Port Townsend Farris, Othello Morton, Duvall Loos, Longview Taylor, Kelso Call to Order Timmons called the meeting to order at 9 a.m. and began with a self-roll call. President's Appointment: Executive Committee Position #3 and #7 Timmons announced his appointments of Brian Loos (Longview) and Jay Burney (Olympia) to fill Executive Committee Positions #3 and #7, respectively. These positions were vacated by Wade Farris and Lyman Howard. At this time, Position #6, which was vacated by Matthew Morton, remains open. Committee Attendance Loveless moved to excuse Brian Loos and Steve Taylor. Strebel seconded. Motion carried unanimously. Consent Calendar Consent calendar items include: July 2018 Executive Committee meeting minutes; June 2018 and July 2018 expenses in the total amount of $5,500,356.29; and lawsuits and/or claims settlements as of September 7, 2018, in the total amount of $1,332, Loveless moved to approve the consent calendar as presented. Strebel seconded. Motion carried unanimously. Action Items 2019 WCIA Goals The Executive Committee developed new goals for The original broad heading goals were retained and specific work plan goals were developed during the retreat. Staff recommended approval of the goals drafted by the Committee. Page 1 of 4 Draft 1

3 September 7, 2018 EXECUTIVE COMMITTEE MEETING Bavarian Lodge - Leavenworth, WA Loveless moved to approve the 2019 WCIA Goals as presented and recommend for approval by the Full Board. Burney seconded. Motion carried unanimously COMPACT Aronson presented the 2019 COMPACT. The COMPACT was instituted in 1995 as a means to improve WCIA's loss experience and improve member participation. Aronson reported that members will again be presented with three audit options for consideration: 1) Traditional Audit - topics are public works (emphasis on roadways), personnel, and parks and recreation programs; 2) Targeted Risk Management Review (addition of focus on Risk 101 basics/analysis); and 3) Loss and Exposure Reduction Plan. She noted that the Member Services Department will add training classes on parks and recreation and on public works to the current CORE COMPACT training list. Loveless moved to approve the 2019 COMPACT recommendations from the Long Range Planning Committee to be presented to the Full Board for final action. Strebel seconded. Motion carried unanimously. New Membership: SPOCOM Roscoe reported that the City of Spokane and Spokane County recently formed the Spokane Integrated Communications Center Public Authority (SPOCOM), which will provide countywide enhanced 911 services. SPOCOM's board is comprised of eleven persons, and approximately 100 full time equivalent employees will be transferred to SPOCOM along with $75 million in assets. The process is expected to be completed on or before April Roscoe indicated that staff recommends approval of this membership, as 911 centers are a good fit for WCIA. Knight moved to approve membership of SPOCOM as a Group 5 member, effective September 7, Underwood seconded. Motion carried unanimously. Annual Adjustment: Staff 2019 Compensation WCIA staff compensation is presented to the Committee for incorporation into the next year's budget which is presented in October. Resolution established a policy regarding compensation and benefits for employees. Salary ranges and benefit package components were set by the Committee. There are no set cost of living or merit elements; instead, an annual adjustment component is reviewed each year as employees are on a step system. The resolution states that the Committee is to perform this review during the business meeting portion of the annual retreat for development of the 2019 budget. Bennett explained that the annual adjustment is applied to the salary band ranges and steps, and currently, nine of twenty staff members are at the top of their respective bands. She noted that a comprehensive salary survey was conducted in 2013 and an updated salary survey is scheduled to be performed in Bennett stated that salary ranges and merit have been reviewed. This year has been especially challenging with the implementation of the new Risk Management Information System (Origami) and the hiring of two new managers. She indicated that during this year of transition, staff has been outstanding in their responsiveness to the membership and to the new management staff members. Therefore, Bennett recommended an overall adjustment increase of 3%. Page 2 of 4 Draft 2

4 September 7, 2018 EXECUTIVE COMMITTEE MEETING Bavarian Lodge - Leavenworth, WA Discussion on the matter ensued. Responding to inquiries, Bennett replied that WCIA does not have a policy pertaining to the Consumer Price Index; that the salary grid contains ten steps; that salary comparables reviewed include the insurance industry and insurance pools; and that if this adjustment is approved by the Committee, it will be included in the 2019 budget. Knight recommended that the salary matrix be included with the action item in the future. Burney commented that this is well deserved by WCIA staff and Timmons commented that the performance of the pool has been exceptional. Knight moved to approve the 3% annual adjustment increase on a merit and other economic basis. Burney seconded. Motion carried unanimously. Director s Report Upcoming Property and Liability Insurance Renewals Bennett reported that staff has been working with WCIA's broker March to prepare for the upcoming marketing of WCIA's property and liability programs. The annual visit to the Lloyd's property market will take place the third week of September. Stressing that this process will be challenging, she highlighted that last year's hurricanes and a very significant new property loss make for a very challenging property renewal. Bennett emphasized that all options will be reviewed and analyzed and she predicts some big increases for both property and liability. Responding to Strebel's inquiry, Bennett indicated that WCIA schedules for replacement cost value and is still reviewing the recent significant property loss. She indicated that staff will be analyzing for the future whether other costs such as demolition should be factored in. Additionally, she noted that WCIA will also look at technology that can assist with the valuation of property Assessments Bennett reported that the increase in the individual loss limits has made the individual loss assessments more loss sensitive, which was the desired effect. This has resulted in multiple inquiries from the membership. Group 4 members were the hardest hit and realized significant increases. She relayed that Roscoe reached out to members who were hitting the top end of the rate cap to offer an explanation if needed. Bennett said it will be interesting to see the effect of this change over time. State Auditor's Office Audit Stating that although the State Auditor's Office (SAO) completed the field portion off WCIA's financial statement audit, Bennett reported that the SAO will not meet the State Risk Manager's Office deadline for submission of audited financials. She explained the reason for delay involves WCIA's reporting of funding needed to meet a 75% confidence level as a liability. This has been a practice of WCIA for over 20 years and has never been an issue with prior audits. SAO has advised that they are submitting their question to the Governmental Accounting Standards Board (GASB). Discussion ensued regarding the matter and Loveless explained the various options that may result when an opinion is issued. Burbidge noted that the State Risk Manager is supportive of how WCIA's reports its funding. Page 3 of 4 Draft 3

5 September 7, 2018 EXECUTIVE COMMITTEE MEETING Bavarian Lodge - Leavenworth, WA Executive Session Strebel moved to enter executive session for 25 minutes to discuss claims and litigation pursuant to RCW (i). Loveless seconded. Motion carried unanimously. Committee members Timmons, Loveless, Strebel, Underwood, Knight and Burney entered into executive session at 9:34 a.m. Staff members Bennett, Roscoe, Aronson, Burbidge, Hardesty, Crane, Neumann and Counsel Bucklin were present at the session. The executive session ended at 9:51 a.m. Loveless moved to authorize settlement authority for claims discussed and in the amounts discussed during executive session. Strebel seconded. Motion carried unanimously. The Committee adjourned at 9:52 a.m. David Timmons, President Michele Neumann, Authority Secretary Approved on: / /2018 Page 4 of 4 Draft 4

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12 New Membership: Olympic View Water and Sewer District Action Item-10/12/2018 Background WCIA finds value in membership of municipal entities, which perform tangential service to the membership. Tangential members include fire authorities, regional interlocal 911 agencies, park and utility districts, which service member cities. Such membership creates a litigation advantage when a combined defense against a common plaintiff is formed, for example, by a 911 agency and a member police force, rather than two individual defendants finger-pointing against each other to the plaintiff s advantage. Discussion Olympic View Water and Sewer District is a Special Purpose District which was originally formed in 1937 to provide water to unincorporated Snohomish County. The District added sewer to its services in In 1986, the District purchased the Deer Park Water System located in the Town of Woodway. Throughout the years the City of Edmonds and the Town of Woodway have expanded throughout the District. There is still a small portion of unincorporated Snohomish County being served by the District. Water for the Olympic View system comes from two sources. About 60% is purchased from the City of Seattle. The remaining 40% is produced at the District s Deer Creek Treatment Plant located in the Town of Woodway. The District is also responsible for the operations and maintenance of a sanitary sewage collection system that is treated at the City of Edmonds Wastewater Treatment Plant. As a public utility authorized under RCW Title 57 (sewer and water districts), the District operates under a three member Board of Commissioners elected at-large by District residents. Olympic View Water and Sewer District agrees to the terms of membership participation, agrees to COMPACT requirements and assessment responsibilities. The District becomes an actuarial Group 5 member for assessment purposes. Recommendation Approval for membership of Olympic View Water and Sewer District as a Group 5 member, effective November 1,

13 Action Item-10/12/ Authority Operating Budget Page 1 of 4 Background After receiving the Actuary s loss projections and proposed member assessments, the Budget Committee met on June 22 to finalize the revenue side of the budget. Following the Executive Committee retreat, staff incorporated the 2019 goals into the administrative expenditure side of the budget. The Budget Committee reviewed the proposed budget on September 28 and recommended passing it to Executive Committee for review. The Executive Committee then reviews and recommends the proposed budget to the Full Board for approval. The proposed 2019 General Operating Budget reflects WCIA s mission statement and 2019 goals for providing stable assessments while continuing to deliver state of the art risk management and insurance services. Discussion The budget dedicates increased funds to support 2019 goals. Implementation of new technologies and innovative solutions to assist members while creating more efficient processes is a theme of many of the goals. The 2019 administrative budget assists members in reducing potential losses through training, and early legal advice under the pre defense review and consultation programs. Members are also supported in their staff development through credentialing and certification programs under the reimbursement program. It is estimated that the overall liability assessment will increase 5.8% on average, and property rates remained stable. Property values and re-insurance rates have increased resulting in increased property assessments. The following pages highlight significant areas of change from the 2019 budget. GENERAL OPERATING FUND The Executive Committee approved a 3.0% annual adjustment to be applied to staff salary ranges for Changes in two senior management positions due to retirement included hiring both the Deputy Director and the Finance and Administrative Services Manager in Changes in salaries and benefit levels resulted in personnel cost savings. Changes in employee benefits line items increased/decreased in each department depending on staffing changes. Employee Health Benefit rates through AWC are expected to increase roughly 3-5% for PERS retirement contribution rates increased on September 1, 2018 from 7.38% to 7.41% (employee contribution) and 12.7% to 12.83% (employer contribution). Finally, as salaries increase, other mandatory deductions including Medicare and WCIA s social security replacement deduction amounts increase resulting in a net increase of about 4%. 12

14 Action Item-10/12/ Authority Operating Budget Page 2 of 4 The actual budget increase for salaries on average between the three departments was just under 1% compared to General Administration Program: The General Administration budget includes several items to support 2019 goals that implement new technologies to better assist the needs of the membership. The 2019 budget includes the following: o Website re-design, updated event management system, and various other software and cloud-based technology solutions. Some of these services replace on premise hardware, such as servers and related software. o Consulting fees for assisting with the MS Office 365 implementation. o Target Fund Balance Study. This study occurs every three years and will be performed by our contracted actuary firm, PwC. o Compensation Study to determine adequacy of our current staffing plan and make recommendations for any adjustments to stay competitive and retain staff. The last study of this type was performed in Increases and decreases were made to professional and operating expenses based on 2018 actual usage and expected 2019 activity. Overall budget for the General Administration Program increased 8.47%. Member Services Program: Member Training is increased $50,000 to meet the goals outlined for The success of the supervisor skills credentialing program have resulted in requests for more trainings. In addition staff wants to expand the usage of the popular forums. Expanding offerings in Public Works, and Parks and Recreation, as well as expansion of video based trainings and webinars also contribute to the increase. Pre-defense moved from a Claims Administration function to a Member Services function and is now included under the Risk Management program. The budget proposal reflects a slight decrease in the Pre-defense Program commensurate with member usage trends. The Risk Reduction Grant Program line item remains the same in 2019 ($150,000). This was based on the outcome of this year s grant submittals and the desire of the Grant Committee to continue to support member risk reduction projects. Overall budget increase for the Member Services Program is 34.01%. 13

15 Action Item-10/12/ Authority Operating Budget Page 3 of 4 Claims Administration Program: Claims Administration funds the third party claims adjusting fees. Evergreen Adjustment Service provides these services to the Claims Department on losses that need field assistance. Approximately 20-25% of all claims are assigned to this firm, although other firms are being increasingly utilized. The budget reflects a slight increase for these services in Audit Services was decreased due to the fact that there will not be a claims audit in A claims audit is required every two years by GEM (Government Entities Mutual) and the State Risk Manager and was last completed in Overall program budget is a decrease of 37.31% for Claims Administration. Liability Program: The 2019 liability assessments will generate $33,585,971. The actuary recommended a 5.8% increase to rates. On July 13, 2018 the Executive Committee accepted the actuary s recommendation. Uncertainty with public entity risks is diminishing the amount of carriers in the liability market, leading to a hardening of the market. Obtaining overall limits is not expected to be an issue, but reinsurers may look for pricing increases as a result of large verdicts around the country involving police and road design. The actuary projected member assessments based on the current Operating Fund budget level. Any increase/decrease made by the Committee to the Operating Fund will directly decrease/increase the fund balance, not 2019 member assessments. The budget does not anticipate new membership beyond those already approved. Interest by other cities, which could significantly modify the budget, can be recognized periodically throughout the coming year if needed. Interest earnings are conservatively estimated. We anticipate interest rate returns to remain close to current levels throughout The Fed has increased rates in 2018 but has done so gradually. There will likely be increases in 2019 but the market is unpredictable. As interest rates rise, the value of bonds decline. Unless the investments are liquidated early, this is a low risk but we continue to monitor the overall investment portfolio. Property and Automobile Physical Damage Program: The automobile physical damage program has remained financially stable through the years. Due to continued favorable loss experience, the member s automobile physical damage rates will be flat. This will mark the twelfth straight year of the same or lower rates. 14

16 Action Item-10/12/ Authority Operating Budget Page 4 of 4 The budget reflects the same member rates for Property reinsurance rates are anticipated to increase as a result of last year s hurricanes and fires as well as making up for several years of low pricing. The budget estimates a 20.9% increase in property reinsurance. Boiler & Machinery premiums, included in the property program, are expected to remain flat in Other Insurance Programs: The crime/fidelity coverage is a joint purchased insurance program. The program also includes the various bonds purchased by individual members. The crime/fidelity and bond premium is estimated to increase due to increased participation and slight rate increase. The Specialized Insurance Fund was established to account for participation in airport, builders risk, underground storage tanks, notary, and worker comp insurance programs. These Funds are basically a pass through of dollars. They are commercially insured and no risk is retained by WCIA. EQUIPMENT REPLACEMENT FUND The fund was created to set aside funds for capital furniture and equipment purchase. WCIA defines capital purchases as those with a cost of $5,000 or greater. The 2019 budget includes the annual transfer of $15,000 to the equipment replacement fund. No capital purchases are anticipated for OFFICE BUILDING FUND The WCIA Office Building Fund has a current reserve of almost $2 million. This fund was built up deliberately over the last 14 years from tenant rental income and WCIA allocations to the Fund in order to create reserves to cover large repairs or replacements. The building is currently almost fully leased through the next several years. A significant building upgrade is scheduled for 2019 (roof replacement), which is covered under the current reserves. Staff recommends no WCIA transfers to the Office Building Fund at this time. If conditions change fund allocations can be resumed again. Summary The 2019 operating budget has been increased 3.2%. Staff was diligent in reducing areas of the budget where cuts could be made and only essential operational increases or funding of goals are proposed. The budget is within the estimate made to the actuary as part of the rate setting process for Technology and professional services are the main drivers of the increase while personnel and benefits keep pace with inflation. Recommendation Recommend to the Full Board approval of Resolution to establish the 2019 Authority Operating Budget. 15

17 RESOLUTION A Resolution to establish the 2019 Budget for the Washington Cities Insurance Authority and to establish the 2019 Assessment Contributions to be paid by Authority members. WHEREAS, Article 8, Section C of the Interlocal Agreement creating the Authority requires the Board to review, modify, if necessary, and approve the annual operating budget of the Authority; and, WHEREAS, the Authority s Executive Director has developed a 2019 Budget identifying Authority revenues and expenditures for the 2019 calendar year operation, as well as identifying assessments for members. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE WASHINGTON CITIES INSURANCE AUTHORITY: 1. The 2019 Budget of the Authority is approved as shown on Attachment #1, which is incorporated herein by reference. 2. The authorized liability assessments for members in 2019 are approved as listed on Attachment #2, which is incorporated herein by reference. Member assessments will be invoiced by January 1, 2019, and will be paid in full by January 31, The Executive Committee shall be empowered by the Full Board of Directors to make fund and/or line item transfers as necessary. Date David Timmons, President Washington Cities Insurance Authority 16

18 WASHINGTON CITIES INSURANCE AUTHORITY PROPOSED BUDGET 2019 ATTACHMENT #1 Page 1 ALL WCIA FUNDS 2017 ACTUAL 2018 ADOPTED BUDGET 2018 ACTUALS as of 8/ PROJECTED 2019 BUDGET PROPOSAL PERCENT INCR/ (DECR) Beginning Fund Balance $ 67,973,686 $ 71,153,547 $ 60,001,234 $ 60,001,234 $ 62,687, % Operating Reserve $ 65,914,487 $ 69,123,541 $ 57,840,127 $ 57,840,127 $ 60,410, % Building Reserve 2,028,897 2,003,806 2,115,805 2,115,805 2,249, % Equipment Reserve 30,302 26,200 45,302 45,302 27, % OPERATIONS Revenue Member Assessments 40,270,860 41,500,893 41,555,850 41,697,426 45,465, % Member Services & Other Income 28,613 25,000 9,054 15,000 25, % Investment Income 6,128,044 5,000,000 4,075,056 5,000,000 5,000, % Total Revenue 46,427,517 46,525,893 45,639,960 46,712,426 50,490, % Expenses Claims Losses 35,880,217 28,735,000 17,309,212 29,300,000 31,064, % Insurance Expense 8,363,372 9,468,760 4,259,517 9,170,933 10,726, % Administrative Expenses (Attachment #1, Pages 3 5) 5,628,191 6,444,950 3,463,529 5,688,802 6,556, % Total Expenses 49,871,780 44,648,710 25,032,258 44,159,735 48,347, % NET OPERATIONS (3,444,263) 1,877,183 20,607,702 2,552,691 2,142, % OFFICE BUILDING (Attachment #1, Page 6) 86, ,385 87, ,679 (74,489) 147.9% EQUIPMENT REPLACEMENT (Attachment #1, Page 7) Non Cash Adjustments: Depreciation (177,466) Change in FMV of Investments (4,899,979) Other Adjustments 462,348 Total Non Cash Adjustments (4,615,097) Net Change in Fund Balance (7,972,452) 2,032,568 20,694,707 2,686,370 2,068, % Ending Fund Balance $ 60,001,234 $ 73,186,115 $ 80,695,941 $ 62,687,604 $ 64,755, % Operating Reserve $ 57,840,127 $ 71,007,224 $ 78,465,880 $ 60,410,868 $ 62,538, % Building Reserve 2,115,805 2,159,191 2,202,810 2,249,484 2,174, % Equipment Reserve 45,302 19,700 27,252 27,252 42, % 17

19 WASHINGTON CITIES INSURANCE AUTHORITY PROPOSED BUDGET 2019 OPERATING ACCOUNT 2017 ACTUAL 2018 ADOPTED BUDGET 2018 ACTUALS as of 8/ PROJECTED 2019 BUDGET PROPOSAL Beginning Balance $ 48,621,840 $ 68,467,178 $ 65,914,487 $ 65,914,487 68,467,178 ATTACHMENT #1 Page 2 PERCENT INCR/ (DECR) Revenue Charges for Services: Member Assessments Liability 30,017,524 30,574,791 30,480,633 30,500,000 33,585, % Member Assessments Property/Auto 10,406,921 10,612,625 10,883,727 10,920,000 11,542, % Member Assessments Fidelity 130, , , , , % Member Assessments Specialized 166, ,000 66, , , % Total Charges for Services 40,721,708 41,500,893 41,555,850 41,697,426 45,465, % Member Services & Other Income 28,613 25,000 9,054 15,000 25, % Investment Income 6,128,044 5,000,000 4,075,056 5,000,000 5,000, % Total Revenue 46,878,365 46,525,893 45,639,960 46,712,426 50,490, % Claims Losses Liability 28,225,696 23,735,000 15,070,325 25,000,000 25,964, % Property 1,844,060 3,600,000 1,543,653 3,000,000 3,600, % Auto Physical Damage (APD) 1,764,704 1,400, ,234 1,300,000 1,500, % Total Claims Losses 31,834,460 28,735,000 17,309,212 29,300,000 31,064, % Insurance Expense Liability Reinsurance 3,286,334 4,000,000 3,804,422 4,000,000 4,100, % Property Reinsurance 4,490,685 4,837, ,000 4,607,923 5,850, % APD Reinsurance 335, , , , % Fidelity Insurance 128, , , , , % Specialized Insurance (net) 171, ,000 69,445 90, , % Total Insurance Expense 8,412,273 9,468,760 4,259,517 9,170,933 10,726, % Administrative Expenses (Attachment #1, Pages 3 5 ) 5,628,191 6,369,950 3,463,529 5,688,802 6,556, % Total Claims Losses & Expenses 45,874,923 44,573,710 25,032,258 44,159,735 48,347, % Capital Expenditures: Equipment (Attachment #1, Page 7) 21,500 33, % Building 150,000 Total Capital Expenditures 21,500 33, , % Non Cash Adjustments: Depreciation (177,466) Change in FMV of Investments (4,899,979) Other Adjustments 462,348 Total Non Cash Adjustments (4,615,097) Net Change (3,611,656) 1,930,683 20,574,652 2,552,691 1,992, % Ending Account Balance $ 45,010,184 $ 70,397,861 $ 86,489,139 $ 68,467,178 70,460, % 18

20 WASHINGTON CITIES INSURANCE AUTHORITY PROPOSED BUDGET 2019 ATTACHMENT #1 Page 3 OPERATING ACCOUNT GENERAL ADMINISTRATION 2017 ACTUAL 2018 ADOPTED BUDGET 2018 ACTUALS as of 8/ PROJECTED 2019 BUDGET PROPOSAL PERCENT INCR/ (DECR) PERSONNEL SERVICES: PERSONNEL SALARIES $ 766,052 $ 920,000 $ 627,248 $ 940,873 $ 922, % PERSONNEL BENEFITS 261, , , , , % VEHICLE ALLOWANCE 6,000 6,000 4,000 6,000 6, % SUBTOTAL 1,033,192 1,296, ,772 1,280,657 1,309, % PROFESSIONAL SERVICES: LEGAL SERVICES 71,841 70,000 52,861 79,292 70, % FINANCIAL SERVICES 17,223 24,000 19,731 29,597 24, % AUDIT SERVICES 16,606 18,000 14,051 17,000 18, % ACTUARIAL SERVICES 46,400 40,900 39,400 70, % CONSULTING SERVICES 78,978 71,000 51,379 77,069 71, % STATE RISK MGMT. FEE (DES) 11,720 11,750 5,860 11,734 11, % SUBTOTAL 242, , , , , % OPERATING EXPENSES: SUPPLIES & SERVICES 23,846 29,200 14,078 27,000 34, % POSTAGE & SHIPPING 7,427 8,500 3,752 6,432 8, % TELECOMMUNICATIONS 21,786 16,000 12,394 16,000 27, % TRANSPORTATION & PER DIEM 15,938 20,200 9,476 12,000 20, % LEASED EQUIPMENT 7,051 5,700 2,732 5,700 5, % SOFTWARE/LICENSE FEES 199, ,000 29,121 44, , % REPAIRS/MAINT AGREEMENTS 6,000 4,400 6, % DUES/CONFERENCES/SUB 20,695 18,000 10,596 16,200 20, % PRINTING 5,426 10,000 3,045 7,600 10, % EX COMM/BOARD MEETINGS 31,508 34,000 23,966 32,000 34, % EX COMM/BOARD TRANSPORTATION 7,905 19,000 5,912 11,000 19, % SUBTOTAL 340, , , , , % CAPITAL OUTLAY: FURNITURE/EQUIPMENT 0.00% COMPUTERS/EQUIPMENT 18,086 20,000 5,130 20,000 35, % SUBTOTAL 18,086 20,000 5,130 20,000 35, % TOTAL ADMINISTRATION $ 1,634,799 $ 1,928,250 $ 1,117,856 $ 1,737,080 $ 2,091, % 19

21 WASHINGTON CITIES INSURANCE AUTHORITY PROPOSED BUDGET 2019 ATTACHMENT #1 Page 4 MEMBER SERVICES 2017 ACTUAL 2018 ADOPTED BUDGET 2018 ACTUALS as of 8/ PROJECTED 2019 BUDGET PROPOSAL PERCENT INCR/ (DECR) PERSONNEL SERVICES: PERSONNEL SALARIES $ 811,456 $ 860,000 $ 567,481 $ 851,222 $ 886, % PERSONNEL BENEFITS 310, , , , , % SUBTOTAL 1,121,840 1,220, ,003 1,174,505 1,265, % OPERATING EXPENSES: SUPPLIES & SERVICES 20,392 12,000 16,358 24,537 12, % TRANSPORTATION & PER DIEM 49,415 74,700 26,335 39,503 74, % DUES/CONFERENCES 6,442 10,000 1,065 1,598 11, % TRAINING & SEMINARS 696, , , , , % RISK REDUCTION GRANT PROGRAM 149, ,000 31, , , % PRE DEFENSE REVIEW 700,000 #DIV/0! RISK MANAGEMENT CONSULT 145, ,000 50, , , % SUBTOTAL 1,067,888 1,136, , ,345 1,892, % CAPITAL OUTLAY: FURNITURE/EQUIPMENT % SUBTOTAL % TOTAL MEMBER SERVICES $ 2,189,729 $ 2,356,700 $ 1,272,948 $ 2,116,850 $ 3,158, % 20

22 WASHINGTON CITIES INSURANCE AUTHORITY PROPOSED BUDGET 2019 ATTACHMENT #1 Page 5 CLAIMS ADMINISTRATION 2017 ACTUAL 2018 ADOPTED BUDGET 2018 ACTUALS as of 8/ PROJECTED 2019 BUDGET PROPOSAL PERCENT INCR/ (DECR) PERSONNEL SERVICES: PERSONNEL SALARIES $ 558,287 $ 550,000 $ 357,861 $ 556,792 $ 529, % PERSONNEL BENEFITS 250, , , , , % SUBTOTAL 808, , , , , % PROFESSIONAL SERVICES: AUDIT SERVICES (CLAIMS AUDIT) 0 12, , % CLAIMS ADMINISTRATION 505, , , , , % PRE DEFENSE REVIEW 474, , , , % SUBTOAL 979,547 1,282, ,929 1,029, , % OPERATING EXPENSES: SUPPLIES/MATERIALS/MISC. 3,065 5, ,000 4, % TRANSPORTATION & PER DIEM 7,571 15,000 2,671 9,500 15, % DUES/CONFERENCE/SUB 1,428 4, ,500 4, % RECORDS MANAGEMENT 3,179 3,500 1,853 3,500 3, % SUBTOTAL 15,243 28,000 5,463 20,500 27, % CAPITAL OUTLAY: FURNITURE/EQUIPMENT % SUBTOTAL % TOTAL CLAIMS ADMINISTRATION $ 1,803,663 $ 2,085,000 $ 1,072,725 $ 1,834,873 $ 1,307, % TOTAL ADMINISTRATIVE EXPENSES $ 5,628,191 $ 6,369,950 $ 3,463,529 $ 5,688,802 $ 6,556, % 21

23 WASHINGTON CITIES INSURANCE AUTHORITY PROPOSED BUDGET 2019 ATTACHMENT #1 Page 6 OFFICE BUILDING ACCOUNT 2017 ACTUAL 2018 ADOPTED BUDGET 2018 ACTUALS as of 8/ PROJECTED 2019 BUDGET PROPOSAL PERCENT INCR/ (DECR) BEGINNING RESERVE BALANCE $ 2,028,897 $ 2,003,806 $ 2,115,805 $ 2,115,805 $ 2,249, % REVENUES RENTAL INCOME TENANTS 305, , , , , % GENERAL OPER. FUND TRANSFER IN TOTAL REVENUES 305, , , , , % EXPENDITURES BUILDING OPERATING EXPENSES REPAIRS & MAINT 12,023 19,626 20,564 36,066 24, % JANITORIAL 38,515 36,170 22,928 35,000 39, % PROPERTY MANAGEMENT FEES 21,000 21,000 14,000 21,000 21, % ELEVATOR CONTRACT 4,061 3,950 4,903 5,033 4, % HVAC 10,564 9,000 4,302 10,600 10, % SECURITY 12,488 8,121 14,478 17,278 6, % GROUNDS 27,608 21,299 14,715 21,000 22, % UTILITIES/TRASH 50,638 52,121 34,100 52,100 51, % TAXES 13,978 14,073 9,946 10,000 14, % GENERAL & ADMINISTRATIVE 628 2,734 3,500 4,200 #DIV/0! BLDG DATA SERVICE (COMCAST FOR BLDG) 10,685 12,800 7,056 10,680 10, % SUBTOTAL 202, , , , , % CAPITAL EXPENSES LAND & BUILDING 150, % LEASING COMMISSIONS TENANT IMPROVEMENTS 16,871 13,269 SUBTOTAL 16,871 13, ,000 TOTAL EXPENDITURES 219, , , , , % REVENUES OVER EXPENSES 86, ,385 87, ,679 (74,489) % ENDING RESERVE BALANCE $ 2,115,805 $ 2,159,191 $ 2,202,810 $ 2,249,484 $ 2,174, % 22

24 WASHINGTON CITIES INSURANCE AUTHORITY PROPOSED BUDGET 2019 ATTACHMENT #1 Page 7 EQUIPMENT REPLACEMENT ACCOUNT 2017 ACTUAL 2018 ADOPTED BUDGET 2018 ACTUALS as of 8/ PROJECTED 2019 BUDGET PROPOSAL PERCENT INCR/ (DECR) BEGINNING RESERVE BALANCE $ 30,302 $ 26,200 $ 45,302 $ 45,302 $ 27, % REVENUES OPERATING TRANSFER IN 15,000 15,000 15,000 15,000 15, % TOTAL REVENUES 15,000 15,000 15,000 15,000 15, % EXPENSES EQUIPMENT REPLACEMENT 21,500 33,050 33, % TOTAL EXPENSES 21,500 33,050 33, % REVENUES OVER EXPENSES 15,000 (6,500) (18,050) (18,050) 15, % ENDING RESERVE BALANCE $ 45,302 $ 19,700 $ 27,252 $ 27,252 $ 42, % 23

25 WCIA PROPOSED LIABILITY ASSESSMENTS 2019 ATTACHMENT #2 Page 1 MEMBER 2018 ASSESSMENT 2019 ASSESSMENT A Regional Coalition for Housing $4,697 $5,205 Aberdeen 381, ,934 Anacortes 339, ,085 Arlington 168, ,504 Arlington Transportation Benefit District 2,500 - Auburn 916, ,939 Bainbridge Island 330, ,487 Battle Ground 126, ,862 Benton City 37,055 39,894 Benton County Emergency Services 19,032 17,184 Bonney Lake 290, ,661 Bothell 736, ,880 Brewster 65,762 71,593 Brier 65,903 73,012 Burien 269, ,787 Burlington 290, ,863 Camas 323, ,459 Cashmere 63,021 58,111 Centralia 282, ,016 Chehalis 169, ,314 Chelan 206, ,026 Cheney 161, ,293 Chewelah 85,065 - Clark Regional Emergency Services Agency 46,291 41,094 Clarkston 186, ,463 Cle Elum 67,654 70,535 Clyde Hill 69,109 80,648 Coupeville 50,601 58,865 Covington 62,471 62,130 Cowlitz ,596 Cowlitz-Wahkiakum Council of Governments 5,000 5,000 Des Moines 472, ,150 Des Moines Pool Metropolitan Park District 5,000 5,000 Duvall 170, ,132 Eastside Public Safety Communications Agency 2,769 2,462 ecity Gov Alliance 5,000 5,000 Edgewood 56,175 63,842 Edmonds 748, ,113 Ellensburg 246, ,991 Elma 102,383 97,760 Enumclaw 265, ,130 Enumclaw Transportation Benefit District 2,500 - Everson 63,188 62,344 Ferndale 137, ,535 Fife 388, ,865 Fife Transportation Benefit District 2,500 2,500 George 11,655 12,795 Goldendale 85,024 85,886 Grandview 154, ,388 Grays Harbor Communications Center, E ,494 33,222 Hoquiam 187, ,249 Issaquah 469, ,954 24

26 WCIA PROPOSED LIABILITY ASSESSMENTS 2019 ATTACHMENT #2 Page 2 MEMBER 2018 ASSESSMENT 2019 ASSESSMENT Jefferson County ,595 14,768 Kelso 558, ,705 Kenmore 244, ,648 Kennewick 607, ,971 Kirkland 1,080,976 1,115,330 Kitsap ,465 49,911 Kitsap Regional Coordinating Council 5,000 5,000 La Conner 40,324 43,141 Lacey 400, ,577 Lake Forest Park 229, ,285 Lake Stevens 389, ,152 Lakewood 1,022,458 1,242,879 Leavenworth 219, ,668 Leavenworth Transportation Benefit District 2,500 2,500 Long Beach 87,317 89,986 Longview 834,683 1,008,607 LOTT Clean Water Alliance 21,260 22,467 Mabton 58,243 80,029 Maple Valley 97,946 96,423 Marysville 766, ,576 Marysville Fire District 24,663 27,580 Mason County Emergency Communications 15,695 16,904 McCleary 76,314 84,355 Medical Lake 61,892 69,925 Medina 167, ,793 Mercer Island 695, ,118 Metropolitan Park Dist. of Tacoma 350, ,489 Mill Creek 83,457 94,112 Millwood 23,314 21,328 Milton 181, ,388 Monroe 394, ,924 Monroe Transportation Benefit District 2,500 2,500 Moses Lake 273, ,213 Mount Vernon 309, ,063 Mountlake Terrace 372, ,681 Mukilteo 208, ,688 Multi Agency Communications Center 12,838 12,694 Newcastle 53,674 56,103 Normandy Park 93, ,012 Normandy Park Metropolitan Park District 5,000 5,000 North Bonneville 20,598 13,997 Northshore Utility District 146, ,172 Northwest Incident Management Team 5,000 5,000 Oak Harbor 393, ,450 Ocean Shores 104,322 92,228 Olympia 1,371,642 1,530,115 Olympia Metropolitan Park District 5,000 5,000 Olympia Transportation Benefit District 2,500 2,500 Othello 132, ,504 Othello TBD - Joined 11/2016 2,500 - Pasco 463, ,514 PENCOM 16,149 16,055 25

27 WCIA PROPOSED LIABILITY ASSESSMENTS 2019 ATTACHMENT #2 Page 3 MEMBER 2018 ASSESSMENT 2019 ASSESSMENT Port Angeles 383, ,518 Port Townsend 338, ,401 Poulsbo 326, ,345 Pullman 407, ,633 Pullman Metropolitan Park District 20,986 17,736 Pullman-Moscow Regional Airport Board 6,404 6,639 Puyallup 434, ,414 Richland 782, ,399 Ridgefield 207, ,296 Sammamish 196, ,449 Seattle Southside Regional Tourism Authority 9,215 9,644 Sequim - 186,370 Shelton 190, ,754 Shelton Metropolitan Park District 5,000 5,000 Shoreline 208, ,055 Silver Lake Water and Sewer District 29,869 32,708 Skagit ,368 56,325 Skagit Council of Governments 5,000 5,000 SNOCOM 30,510 - Snohomish 149, ,802 Snohomish County ,190 Snohomish County Emergency Radio System 16,332 16,958 SNOPAC 26,496 - Snoqualmie 148, ,726 Soap Lake 88, ,476 South Correctional Entity (SCORE) 150, ,419 South Sound , ,595 SpoCOMM - 80,687 Spokane Valley 253, ,229 Stanwood 98, ,796 Steilacoom 182, ,594 Sumner 180, ,618 Sunnyside 283, ,292 Three Rivers Regional Wastewater Authority 14,178 15,524 Thurston Communications 27,004 25,009 Thurston Public Utility District 12,227 19,031 Thurston Regional Planning Council 21,103 21,330 Toppenish 162, ,241 Tukwila 924, ,897 Tukwila Pool Metropolitan Park District 5,577 6,899 Tumwater 295, ,693 Union Gap 156, ,741 University Place 61,041 49,770 Valley Communications Center 45,193 41,967 Valley Regional Fire Authority 45,419 45,053 Walla Walla 615, ,887 Walla Walla Transportation Benefit District 2,500 - Walla Walla Valley Metro Planning Organization 5,000 5,000 Warden 57,539 59,413 Washington Multi-City License & Tax Portal Agency 5,000 5,000 Washougal 94,356 96,614 26

28 WCIA PROPOSED LIABILITY ASSESSMENTS 2019 ATTACHMENT #2 Page 4 MEMBER 2018 ASSESSMENT 2019 ASSESSMENT Water Operating Board 5,003 5,240 West Richland 156, ,384 Westport 62,931 65,073 WHITCOM ,361 26,995 William Shore Memorial Pool District 15,043 16,537 Woodinville 102, ,440 Woodway 24,287 21,868 Yakima Valley Conference of Governments 9,038 9,357 Yarrow Point 11,275 13,685 Zillah 53,246 63,469 TOTAL $30,574,791 $33,585,971 27

29 Resolution : Equity Policy and Procedure Action Item-10/12/2018 Background During the Budget Committee s meeting to determine 2019 rates, members proposed changing the all years confidence level funding from 75% to be in-line with Washington Administrative Code (WAC) confidence level funding requirements (currently 80%). The topic was discussed at the retreat in September, resulting in a request that staff prepare a draft resolution for approval by the Executive Committee. In the past, the Executive Committee has determined that the design and development of an equity position is both a short term and strategic necessity, which has led to several resolutions over the years to establish that policy (Resolutions 65-86, , and ). A working definition of equity can be derived from the Balance Sheet as member s undesignated reserve plus reserves for increased confidence levels, and from the actuary report as all reserves above an expected loss or the actuarial confidence level of 54%. It is prudent to periodically reaffirm and improve upon by policy an expanded purpose, additional potential uses, revised funding levels, more sophisticated measurement techniques and systematic tracking procedures for desired equity levels. The equity levels should be consistent with the Authority s mission, goals, self-insurance operating parameters, and such authorities as GASB, FASB, and State regulatory agencies. Discussion This action enables WCIA to pay for unanticipated, covered, member liability losses which exceed reserves, maintain competitive rates, absorb losses or program expense fluctuations, and reduce dependency on the insurance industry. Increasing the stated goal of the confidence level funding to be equal to, or greater than, the percent required by WAC demonstrates alignment with state law and allows the percentage to change if the WAC changes. Recommendation Approve Resolution increasing the confidence level funding to match the language in the WAC, which is currently set at 80%. 28

30 RESOLUTION A Resolution to further develop undesignated members reserve policies and practices. WHEREAS, through it s own history and through use of actuaries, the Authority has determined that the design and development of an equity position is both a short term and strategic necessity, originally recognized and revisited through Resolutions 65-86, , and , and WHEREAS, a working definition of equity can be derived from the Balance Sheet as member s undesignated reserve plus reserves for increased confidence levels, and from the actuary report as all reserves above an expected loss or the actuarial confidence level of 54 percent, and WHEREAS, it is prudent to periodically reaffirm and improve upon by policy an expanded purpose, additional potential uses, revised funding levels, more sophisticated measurement techniques and systematic tracking procedures for desired equity levels, and WHEREAS, it is desirable that established equity levels be consistent with the Authority s mission, goals, self-insurance operating parameters, and such authorities as GASB, FASB, and State regulatory agencies, NOW THEREFORE BE IT RESOLVED, by the Board of Directors of the Washington Cities Insurance Authority that: a minimum annual claim year funding confidence level of 54 percent be reaffirmed to create flexibility of individual year operation and related impacts upon equity a minimum all-years actuarial confidence level equal to, or greater than the percent required by Washington Administrative Code (WAC) , to reaffirm the establishment of a minimum equity position a minimum annual rate of growth of the member equity reserves shall be 3 percent annually and this rate reviewed annually, to ensure comparative growth relative to other financial conditions, while avoiding excessive accumulation of public funds potential uses of the undesignated members reserve equity include but are not limited to; paying for unanticipated, covered, member liability or property losses which exceed loss reserves, maintaining competitive rates in all phases of the insurance cycle, marketing of financial strength to new membership and continued loyalty of current members, absorbing loss cost or WCIA Resolution Page 1 of 2 29

31 program expenses fluctuations, reducing dependency upon the insurance industry and creating additional self-insurance options certain financial ratios provided by the actuary shall be used to analyze equity levels in relation to other self-insurance financial parameters, in coordination with State Risk Manager requirements. The above process shall be conducted annually by the Executive Committee, in conjunction with the actuary report analysis and related ratesetting options. Any future modifications to these equity parameters shall be identified in resolution form. Date David Timmons, President Washington Cities Insurance Authority WCIA Resolution Page 2 of 2 30

32 Bylaw Change: Powers of the Executive Committee Action Item-10/12/2018 Background The WCIA Bylaws indicate that the officers of the Authority shall be a President, Vice President, a Treasurer, and a Secretary. The power to appoint and remove officers, other than the President and Vice President, lies with the Full Board. The WCIA Full Board meets three times annually, January, May and October. While the appointment and removal of Treasurer and Secretary remain entirely with the Board, business necessity requires interim measures to be put in place. Discussion WCIA staff has traditionally held the positions of Treasurer and Secretary. The position of Treasurer has been held by the Finance and Administrative Services Manager and the position of Secretary has been held by the Administrative Services Assistant of WCIA. When WCIA staff transitions, the need to conduct the duties of Treasurer and/or Secretary is immediate upon hire and conversely the need to stop should occur upon separation. The proposed Bylaw changes to Article III, Section 12(b), would give the Executive Committee ability to take interim measures regarding the Treasurer and Secretary until the next scheduled Full Board meeting where official appointment or removal occurs. Recommendation Recommend to the Full Board approval of Resolution , changing the Bylaws to allow the Executive Committee to take interim measures regarding the Treasurer and Secretary until the next scheduled Full Board meeting. 31

33 RESOLUTION A Resolution revising the WCIA Bylaws and adding new sub-sections to Article III, Section 12 (b) to the current Bylaws of WCIA. WHEREAS, WCIA relies upon the Treasurer and Secretary for the performance of necessary duties; and, WHEREAS, the power to appoint the Treasurer and Secretary, lies with the WCIA Full Board that meets three times a year; and, WHEREAS, business necessities require interim appointments and/or immediate removal of Treasurer and Secretary; and WHEREAS, the Executive Committee currently has the authority to appoint interim Executive Director and Authority Counsel until the next regularly scheduled Full Board meeting; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE WASHINGTON CITIES INSURANCE AUTHORITY: The Bylaws of WCIA are revised to add new subsections (18) and (19) to Article III, Section 12 (b) of the current Bylaws as follows: (18)The Executive Committee may for any reason, upon request of the President or Executive Director, suspend a currently serving Secretary or Treasurer to the Board and may appoint an interim Secretary or Treasurer to serve until the next regularly scheduled Full Board meeting at which time the Full Board may reinstate or terminate and replace the Secretary or Treasurer. (19)The Executive Committee may elect an interim Secretary or Treasurer to the Board in the event of resignation, termination, death, illness or inability that prevents the currently serving person from performing the duties of the office held. Any interim appointee shall serve until the next regularly scheduled Full Board meeting at which time the Full Board may elect a permanent replacement for the office. Date David Timmons, President Washington Cities Insurance Authority 32

34 B BYLAWS WASHIN NGTON CITIES INSURANCE AUTHORITY Revised and Annotated September 12, 1988 March 8, 1991 October 9, 1992 January 13, 1995 October 11, 1996 May 13, 1998 July 8, 2005 October 20, 2006 November 9, 2006 June 8, 2007 October 10, 2008 March 12, 2010 October 21, 2011 February 3, 2012 January 17, 2014 Date TBD,

35 WCIA Bylaws Page 9 SECTION 10. SECRETARY The Secretary shall record or cause to be recorded, and shall keep or cause to be kept, at the principal executive office or such other place as the Board may order, a book of minutes of actions taken at all meetings of the Board whether regular or special (and, if special, how authorized), the notice thereof given, the names of those present at the meetings and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal executive office of the Authority a list of all designated representatives and alternate of each member. The Secretary shall give, or cause to be given, notice of all the meetings of the Board required by the Bylaws or by law to be given. The Secretary shall keep, or cause to be kept, at the principal executive office of the Authority, the official Authority documents and records, and shall distribute or cause to be distributed, to the appropriate members, copies of the same, and shall have such other and related duties as may be prescribed by the Board, Interlocal, or by the Bylaws. (New Section 10. Secretary added 7/8/82 by Resolution effective 7/8/82.) SECTION 11: GENERAL COUNSEL The General Counsel is the Chief Legal Officer and Attorney for WCIA as provided in ARTICLE 11(d) of the Interlocal Agreement creating WCIA and is the primary legal advisor to the Full Board of Directors, Executive Committee, President and Executive Director of WCIA. The General Counsel must be an attorney admitted to practice in the State of Washington, in good standing, and may be either an independent contractor to WCIA or an employee of WCIA. The General Counsel has primary responsibility to oversee and/or represent WCIA in any legal actions directly involving WCIA as a party. The General Counsel is to provide legal counsel and advice as he/she deems required to the Board or Directors, Executive Committee, President and Executive Director of WCIA on any and all matters of legal concern regarding the operations of WCIA or on such other related legal matters or tasks as any of them may request. The General Counsel may only be appointed/hired or removed by approval of a vote of the majority of the Full Board of Directors (New Section 11. General Counsel, added 7/8/05) SECTION 12. EXECUTIVE COMMITTEE. (a) Establishment of the Executive Committee: (1) An Executive Committee of the Authority shall exist consisting of nine members including the President and Vice President by virtue of their office and seven other members nominated by the Board and elected by the Board at its annual meeting in January. The elected Executive Committee member(s) shall each serve a three (3) year term of office and shall be limited to serving no more than two (2) consecutive elected terms in office, exclusive of any service as President, Vice President, or ex-officio member. Anyone appointed to complete a term on the Executive Committee created by a vacancy as authorized under Section 11(a) (5) of these Bylaws shall be eligible to serve two consecutive elected terms as an Executive Committee member thereafter, exclusive of any service as President or Vice President; (2) The Treasurer shall be an ex-officio member of the Executive Committee and shall attend all meetings. All official committee chairpersons shall be ex-officio members and shall be invited to attend all meetings; 34

36 WCIA Bylaws Page 10 (3) Candidates for Executive Committee shall be chosen for their personal knowledge and expertise and may be either a delegate or an alternate for the members. Executive Committee members may not be substituted by alternates or proxy; (4) The President shall serve as Chairman of the Executive Committee and in his/her absence, the Vice-President shall preside. In the event neither the President or the Vice President are able to attend, the Executive Committee shall elect a chairman pro tem as appropriate; (5) Vacancies in membership to the Executive Committee, other than the President or Vice President, shall be filled by appointment made by the President and ratified by the Board at their next regular meeting. Any appointee appointed by the President and ratified by the full Board shall serve until the vacated term is completed; and (6) The Executive Committee shall meet on a monthly basis (before any regular full Board meetings if coinciding on the same date) unless such meetings are cancelled by the President or Vice President acting as presiding officer. (7) The full Board shall meet on a quarterly basis unless a special meeting shall be called by the President, Vice President, acting as the presiding officer, or a majority of the acting Board. (b) Powers of the Executive Committee The Executive Committee shall have the following powers and duties to act on behalf of the full Board: (1) Power to approve new members admission to the Authority; (2) Power to excuse a member from Executive Committee session due to conflict of interest of that member; (3) Power to determine issues concerning the coverage or protection afforded to a member by the Authority, including hearing any appeals by a member to a letter of denial of coverage executed by the Executive Committee. Any decision of the Executive Board determining coverage or protection afforded a member may be appealed to the full Board by any member ; (4) Power to select and approve the purchase of necessary insurance for the Authority and its members, including excess insurance, limits of liability, policy language and scope of coverage, when necessary, and when the Executive Committee determines, in its own discretion, that such action cannot await determination at the next full Board meeting; (5) Power to authorize commencement of lawsuits in the name of the Authority; (6) Power to authorize settlement of any claim or lawsuit made against the Authority or any member on a covered claim; (7) Executive Committee Members who have three or more unexcused absences from scheduled meetings of the Executive Committee, in a row or within a twelve (12) month period of time, may be removed from office as an Executive Committee member by a majority vote of the Executive Committee. A members attendance at a meeting of the Executive Committee may be excused at the discretion of the Committee by vote due to illness, unavoidable conflicts in schedule, family commitments or any other reason deemed justified by a majority of the Committee at a meeting. Any excused absence of a member shall be announced on the record at the meeting where the members attendance has been excused. (8) The power to terminate any and all insurance coverage afforded by the Authority, including but not limited to, any coverages under the Joint Protection Program and any policy of excess insurance, to any member whenever the Executive Board determines that the circumstances set forth in Article 21 of the Interlocal warrants such cancellation or whenever it appears to the Executive Committee that a member has failed to pay any premium or assessment within fifteen (15) days after the date upon which such premium or assessment was due to be paid to the Authority; (9) Power to take any action on behalf of the full Board, at any scheduled full Board Meeting, whenever a quorum of the full Board shall not be present; 35

37 WCIA Bylaws Page 11 (10) Power to conduct any other authorized general business of the Authority as is necessary for its operation unless such power has been specifically preempted by the Bylaws, Interlocal or previous Resolutions of the Board. It is the intent of this Section that the Executive Committee shall not interfere or usurp the authority of the Executive Director which lies within the scope of the Executive Director's job description and Employment Agreement; (11) Power to appoint an acting Executive Director and/or General Counsel. In the event of the death, disability, disappearance, termination, or resignation of the Executive Director or General Counsel in the event of the Executive Committee being presented with substantial credible allegations of serious misconduct by either, the Executive Committee may suspend the Executive Director and/or General Counsel with pay and/or appoint an acting Executive Director and/or General Counsel, who shall serve in that capacity for as long as the Executive Committee deems necessary, but, no longer than the date of the next Full Board meeting. At the next Full Board meeting following a suspension of either or appointment of an acting Executive Director and/or General Counsel by the Executive Committee, the Full Board shall be fully informed of the action taken by the Executive Committee and shall determine what appropriate further action shall be taken to either permanently replace the Executive Director and/or General Counsel or to reinstate either of them by ending the prior suspension of the Executive Committee; (12) Authority to determine the amount of any initial charge of any proposed new member to the Authority and authority to establish or modify the member assessments or premiums to be paid to the Authority; (13) Authority to approve the monthly register of expenditures upon recommendation by the Executive Director; (14) Authority to authorize any officer or officers, agent or agents of the Authority to enter into contracts on behalf of the Authority; and the (15) Authority to hear and determine grievances of any employee of the Authority according to the procedures and within the scope defined in Article IX of these Bylaws (16) Power and authority for any reason and at any time within a current coverage year, or any future year, as deemed appropriate by the Committee, to modify the terms and conditions of membership and WCIA coverage for any Member or readmitted Member as follows: a. Institute a per loss deductible or annual aggregate limits of coverage, elimination of an entire line of coverage or specific coverage language, term or condition to effect reduction(s) of individual member coverage, and/or b. Restrict a current member s coverage renewal options applied towards anew coverage year based upon changes to a member s liability exposures, risk profile or management, and/or c. Restrict or deny past members re-admission to WCIA membership do to the former Members past usage of any form of self insurance or insurance industry competition as a basis or reason for the previous withdrawal as a Member. The restriction for readmission may include, but not be limited to, requiring as a condition of readmission that the readmitted Members waive its right to withdraw from WCIA Membership for a period of up to five (5) years after readmission and/or be required to pay a surcharged assessment of up to 15% during such period. (17) Authority to approve amendments to the annual budget of WCIA, as adopted by the Full Board, due to unforeseen events and/or emergencies and to increase the total annual budget in amounts up to and including one million dollars ($1,000,000) without requirement of Full Board approval or ratification. Executive Committee budget amendments that would individually or cumulatively increase the total expenditures in the approved annual budget for any given fiscal year beyond the limit of one million dollars ($1,000,000) requires Full Board approval or ratification. If the Executive Committee declares there to be an emergency, it may pass budget amendments cumulatively exceeding on million dollars in any given fiscal year and may obtain emergency ratification for such amendments form the Full Board by a majority of the members of the Full Board signifying 36

38 WCIA Bylaws Page 12 their consent via electronic media messaging sent to the President who shall report and record the results of said electronic messages publicly at the next scheduled meeting of the Executive Committee. (18) The Executive Committee may for any reason, upon request of the President or Executive Director, suspend a currently serving Secretary or Treasurer to the Board and may appoint an interim Secretary or Treasurer to serve until the next regularly scheduled Full Board meeting at which time the Full Board may reinstate or terminate and replace the Secretary or Treasurer. (19) The Executive Committee may elect an interim Secretary or Treasurer to the Board in the event of resignation, termination, death, illness or inability that prevents the currently serving person from performing the duties of the office held. Any interim appointee shall serve until the next regularly scheduled Full Board meeting at which time the Full Board may elect a permanent replacement for the office. (Section 11. (b) amended 03/10/95 by Resolution effective 03/10/95) (Section 12. (b) (10) amended 7/8/05; Full Board ratified 10/20/06) (Section 12. (b) (15) amended 3/12/2010 by Resolution effective 3/12/2010) (Section 12. (b) (7) new subsection approved by Resolution ; Full Board ratified 10/21/2011) (Section 12. (b) (17) new subsection approved by Resolution ; Full Board ratified 2/3/2012) (c) Powers Reserved to the Full Board The Board shall continue to reserve and exercise the following authority and powers: (1) Authority to establish other business offices where the Authority is qualified to do business; (2) Authority to determine where the Book of Minutes of actions taken at all meetings of the Board is to be kept if other than the principal executive office; (3) Authority to establish the time, date and place of the Annual Meeting in January of each year; (4) Authority to elect the President, Vice President, Executive Committee and appoint or empower the President to appoint all other officers and committees, except the Executive Committee; (5) Authority to prescribe duties and powers of the President, Vice President, Executive Director, Treasurer and the Executive Committee; (6) Authority to remove the President and Vice President without cause and may remove any other officer or Committee member chosen by the Board without cause; (7) Authority to review, modify or override actions of the Executive Committee upon a majority vote of the full Board; (8) Authority to appoint an Executive Director and the Authority Legal Counsel to the Board on such terms and conditions as the Board may provide by agreement; (9) Authority to review, modify if necessary, and approve the annual operating budget of the Authority as recommended by a committee appointed by the President; (10) Authority to adopt, amend, or repeal the Bylaws by a majority vote of the full Board; (11) Authority to adopt, amend, or revise the rules, regulations, and coverages of the Joint Protection Program; (12) Authority to terminate any member 's membership in the Authority; and (13) The authority to terminate, when appropriate, the services of the Executive Director and/or the Legal Counsel to the Board upon majority vote of the Board. (Section 11. created and approved 5/12/88 by Resolution effective 5/12/88.) (Section 11. renumbered to Section 12. on 7/8/05) 37

39 October 12, 2018 Executive Committee Meeting Executive Director Report State Auditor's Office Audit The State Auditor s Office (SAO) is working to finalize WCIA s audit. As previously reported, SAO questioned WCIA s reporting of funding needed to meet a 75% confidence level as a liability. This has been a practice of WCIA s for over 20 years and has never been an issue with prior audits. SAO submitted their concern to the Governmental Accounting Standards Board (GASB) whose response was, per the auditor s office, not cut and dried and therefore indicated they are not requiring an adjustment on this year s financials. SAO indicated that they will recommend that WCIA carefully consider the practice going forward to ensure that our inclusion of this amount is a reasonable estimate of the ultimate cost of settling claims. Our exit conference has yet to be scheduled but our understanding is that the audit was concluded September

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43 2018 Third Quarter Report Programs By Rob Roscoe, Deputy Director Page 1 of 2 Renewal Meetings With the exception of cyber insurance, the majority of the insurance and reinsurance for the WCIA programs renews on either December 1 or December 31. Through our broker, WCIA has met with or has set up meetings to meet with the underwriters of these programs as part of the renewal process. It is beneficial for WCIA to have good working relationships with the underwriters and, where possible, keep the same carriers. This may help with the renewals in the event of poor loss experience or a hardening of the insurance marketplace for WCIA. Liability Program The liability exposure questionnaire is near completion by the membership. As of October 2, 2018, WCIA is still waiting on 24 members to complete and return the questionnaire. The marketplace for public entity liability reinsurers is limited and appears to contract every year. The few reinsurers that remain are being more diligent in their review of our underwriting data. We cannot stress enough the importance of having all the members complete the questionnaire and to do so accurately. WCIA currently places liability reinsurance between five separate carriers. Crime Program The crime program carrier has requested updated crime applications from just 15 members, who in their opinion pose the greatest monetary exposures and/or have the most employees. This is a lot easier than trying to collect full applications from all members. WCIA has had crime coverage continually with AIG since the early 1990s. Property Program For the upcoming property renewal, WCIA provides a schedule of values and loss experience history to the insurance markets. In addition, WCIA provided a placemat to the underwriters to assist in presenting our message at the meetings to hopefully achieve a favorable renewal. On the following page are charts from the placemat illustrating two key points in the presentation. Unfortunately our property losses increased in 2017 and the insurer losses went from 9% to 49.6%. This made for a much more interesting renewal experience from previous years and we are still waiting on our renewal quote. Technology Origami, WCIA's Risk Management Information System, has been rolled out to the membership and WCIA is still working on finalizing the installation. Staff is in the process of migrating over to Microsoft 365 and moving our servers into the cloud. 42

44 By Rob Roscoe, Deputy Director 2018 Third Quarter Report Programs Page 2 of 2 43

45 2018 Third Quarter Report Claims By Reed Hardesty, Claims Manager Page 1 of 2 The number of new claims filed in the 3rd Quarter (Q3) was 458, an 8% increase from Q Auto Liab Gen. Liab. E&O Emp. Pract. Police 1st Party Q3 15 = Q3 16 = Q3 17 = Q3 18 = The total number of lawsuits received, including those filed on existing claim files, was 20, a 34% decrease from Auto General Land Use Emp. Pract. Police Q3 15 = Q3 16 = Q3 17 = Q3 18 = Indemnity and Legal payments totaled $5,138,064 (23% decrease from 2017). Indemnity - $3,997,832 (12% decrease from 2017) Legal/Expense - $1,140,232 (49% decrease from 2017) 44

46 2018 Third Quarter Report Claims By Reed Hardesty, Claims Manager Page 2 of 2 WCIA closed 361 files in Q3, an insurance closing ratio of 85%. 50% of closed claims resulted in payments, including member property and auto physical damage claims. Of 28 lawsuits closed (140% closing ratio), 43% resulted in payments being made to the plaintiff. The Pre-defense Program was moved this quarter from the Claims Department to Robin Aronson and WCIA s Risk Management Department. WCIA had two summary judgement dismissals this quarter: A Judge denied the pro se plaintiff s claim that the City s code enforcement action against his slum landlord violated his civil rights because he was required to move. A Judge ruled a large rainstorm event caused a private landslide that damaged a city water main and not vice versa. 45

47 2018 Third Quarter Report Treasurer By Jared Burbidge, Finance & Administrative Services Manager Page 1 of 2 Investment Diversification by Type Market Value Percent State Investment Pool $ 24,320, % Cash & Cash Equivalents 1,861, % US Treasury Notes/TBills/Agency Securities 11,383, % Agency Backed Securities/MBS FHLMC 5,093,713 FNMA 8,089,692 GNMA 39,553,535 SBA 79,430,108 Accrued Interest 268,797 Total Agency Backed Securities/MBS 132,435, % TOTAL as of 8/31/18 $ 170,001, % Investment Diversification by Institution Market Value Percent State Investment Pool $ 24,320, % Cambridge 81,751, % Morgan Stanley 63,928, % TOTAL as of 8/31/18 $ 170,001, % Expense Summary by Month Month Claims Expe ns e s * Operating Expe ns e s ** 2018 Total Expe ns e s 2017 Total Expe ns e s January $ 4,118,272 $ 3,932,274 $ 8,050,546 $ 4,449,696 February 2,151, ,581 $ 2,577,308 1,296,605 March 1,529, ,869 2,071,677 2,347,647 April 1,955, ,597 2,339,015 1,496,204 May 1,085, ,003 1,595,904 2,296,709 June 1,239, ,460 1,931,865 2,661,462 July 2,371, ,375 2,748,633 2,853,044 August 857, ,828 1,854,093 2,671,993 September 1,953,793 October 4,136,881 November 2,606,886 December 15,153,249 Total YTD $15,309,056 $ 7,859,986 $ 23,169,042 $ 43,438,978 Fiscal Year Budget $28,735,000 $ 15,913,710 $ 44,648,710 $ 44,327,340 Budget Remaining Fiscal Year $13,425,944 $ 8,053,724 $ 21,479,668 $ 888,362 *Claims expenses are reported on a cash basis net of deductibles/recoveries received. **Building operating expenses are not included in figures above. Includes insurance expense. 46

48 2018 Third Quarter Report Treasurer By Jared Burbidge, Finance & Administrative Services Manager Page 2 of 2 Total portfolio value dropped approximately 4% since the end of last quarter which is attributed mostly to transfers from the LGIP to cover expenses. The Investment Committee is scheduled to meet on October 17 to go over the portfolios with each broker and ensure that WCIA s investment goals are being met in regards to diversification and investment type. Finance staff continue to become familiarized with the new Risk Management Information System. This includes coordinating with fellow WCIA staff on work-flows and processes as well as providing feedback to the vendor for tweaks that need to be made to the program. The Wellness Committee has been busy implementing this year s activities. Eight staff members volunteered and participated to clean up a portion of the Interurban Trail near our Tukwila office. Other events included a put-put golf/bbq event and a Bingo game to kick off the next AWC campaign, Winter Warm-Up. 47

49 2018 Third Quarter Report Risk Services By Robin Aronson, Risk Services Manager Page 1 of 2 COMPACT The third quarter of 2018 kept staff busy continuing to prepare for and conduct this year s audits and Annual Reviews. Risk Services began on-site visits with members in March and have completed nearly 90% of the audits and annual reviews. To date, the Reps have conducted 74 Traditional audits (23 personnel, 23 parks and rec programs, 19 police), and 60 Targeted Risk Management Reviews (including contract review, facility inspections, playground assessments, and special events reviews using the Special Event Toolkit). The Reps are on track to complete their scheduled visits by the end of October. Risk Management Services The Reps also provided several new delegate and alternate orientations during the third quarter. In addition, the Reps arranged for and attended individualized meetings with members outside of the audit and annual review meetings, conducting more in-depth analyses of issues. The Reps visited members to assess parks, playgrounds, and other facilities. Risk Services also provided anti-harassment training to members, along with other risk management classes. Risk Services staff also actively participated in Human Resources and Police Chief Forums. Pre-Defense and Risk Consultations Risk Services assumed responsibility for Pre-Defense on August 1. Fifty-eight predefense files were opened in the third quarter. This brings the total for 2018 to 148. This compares to 170 for the same period in Risk Services responded to 13 requests from members this past quarter for Risk Consultations, bringing the total for the first three quarters of 2018 to 50. This compares to 49 for the same period in The majority of consultations continue to be in the area of employment, on a variety of issues including accommodation, sick leave policies, and background checks. WCIA continues to also support request for reviews of personnel handbooks. This past quarter the program also funded the review of agreements for police services with a tribe, SWAT agreements, and various other interlocal agreements. The program was also used to review a few complex land use issues for members. The Risk Consultation budget was also used to publish a Risk Bulletin this past quarter on the new bike share programs. 48

50 2018 Third Quarter Report Risk Services By Robin Aronson, Risk Services Manager Page 2 of st 3rd Quarter Requests for Risk Consultation

51 2018 Third Quarter Report Member Services By Patti Crane, Member Services Manager Page 1 of 2 Attendance at onsite trainings continues to grow totaling 5,110 at the end of the third quarter; which is up from last year at the same time at 4,867. Online courses are also up from last year at the same time to 5,130, as compared to 4,122 in This quarter s increase in participant numbers is based on the popularity of our personnel/employment law programs, as well as members partaking in the reimbursed and exclusive training programs. Member Training Personnel Anti-Harassment trainings continue to lead in the third quarter training with 918 attendees. This great turnout is due to the Risk Services Reps providing over 50 on-site trainings as well as Beth Kennar s five regional sessions of Promoting a Workplace Free of Harassment Discrimination and Retaliation. Current online training views are at 960 for the Employee video and 205 for the Supervisors and Managers video. The WCIA Supervisory Skills Credentialed Program maintains momentum, resulting in 151 individuals receiving certificates of completion by attending all four trainings and completing the exams. Members continue to request their own in-house sessions. The recognition of WCIA s Navigating the Performance Evaluation Process has produced requests from our members for on-site trainings in addition to a special request from the WA Fire Association for presenters, Mike Bolasina and Connie Poulsen to provide this training at their 2019 Annual Symposium. The audience demand for our Human Resources Forum topic covering Recently Passed Laws and Cases Impacting Government Employees not only spawned a repeat session, it also created an opportunity to address delegates and alternates at the October full board education session. Public Safety On September 25, Andy Cooley of Keating Bucklin and McCormack (KBM) and Tom Ovens with Police Training Solutions presented Law Enforcement Risk Management Advice in these Turbulent Times to five police chiefs and fifteen officers. This training focused on the report writing aspects of officer response calls, giving validation to police work through documentation. Evaluations confirmed the program value, creating additional trainings for The success of our partnership with WA Association of Sheriffs and Police Chiefs (WASPC) has flourished, generating more openings for expanding the law enforcement risk management message in our Police Chiefs Forum, WASPC conferences and sponsored trainings. WASPC Executive Director Steve Strachan will address I-940 legislation and KBM s Shannon Ragonesi will provide the legal perspective at our upcoming October 23 Police Chiefs Forum. Additionally, WASPC s Best Practices for Law Enforcement CEO s - 201, will be repeated on October 30 and 31 for central/eastern Washington audiences. On June 20, WCIA videotaped Shannon Ragonesi s presentation for dispatchers, communications officers, supervisors and management staff on 911 Communications Liability Prevention. The online video was introduced in August and has been viewed by over 122 participants. Parks On August 2, Risk Managing Parks and Recreation Programs was launched training 42 parks and recreation managers and supervisors. Evaluations revealed the need to break up 50

52 2018 Third Quarter Report Member Services By Patti Crane, Member Services Manager Page 2 of 2 the content into two separatee programs, one covering employment risks and another focused on recreation programs. Reimbursement Programs Public Safety accounted for 30% of the reimbursement dollars. Police Lexipol tops the most dollars spent in this category. Next, the Criminal Justice Training Commission (CJTC) NW Law Enforcement Command Collegee course. Other programs that comprise the public safety training category include: Emergency Vehiclee Operators Course (EVOC), CALEAA Accreditation Program, as well as APCO-NENA s Western Regional Conference. Administration accounted for 25% of the reimbursements consisting of Cyber Security Awareness trainings and WA Municipal Clerks Instituted Professional Development courses. Personnel reimbursements accounted for 18% and were primarily comprised of the Labor Relations Institute (LRI), which also generated attendance of 177 member employees. Multiple reimbursements were provided for the NW Leadership Seminar as well as DES Leading Others, a counterpart to our Credentialed program. Parks accounted for 14% of the reimbursed dollars, primarily forr the WA Recreation and Park Association Risk Management School and Certified Playground Safety Inspector (CPSI). Also, the Pacific NW Resource Managemen nt School. Reimbursement Distribution by Percentage Exclusive Trainings Exclusive trainings continue to account for 10% of the training dollars spent. Members scheduled 64 exclusive sessions to date. The most popular exclusive programs continue to be our personnel topics such as the Credentialed Program series and Anti-Harassment. Actuarial Group 4 members take the most advantagee of the Exclusive Training program, accounting for 51% of the dollars spent. Claims and Risk Services staff provided 27 new delegate, alternate, police chief, claims contact and city attorney orientations. Additionally our members requested and received training on: Taking the Mystery out of Insurance andd Indemnity for Contracts, Introduction to Risk Management Essentialss and Risk Management t 101 classes for Senior Centers, Special Events and Volunteers. 51