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HomeMy WebLinkAboutCommittee of the Whole - 25 Mar 2024 - Agenda - Pdf CITY OF RENTON AGENDA - Committee of the Whole Meeting 5:45 PM - Monday, March 25, 2024 7th Floor Conferencing Center 1. RETIREMENT SAVINGS AND HEALTH INSURANCE PLAN REVIEW a) Presentation 2. RISK MANAGEMENT INSURANCE REVIEW a) Presentation Employee Benefits Review Retirement Savings & Health Insurance Plan March 25, 2024 Erika Eddins, PHR, SHRM-CP Benefits Manager AGENDA ITEM #1. a) Deferred Compensation 457(b) Retirement Savings Plan AGENDA ITEM #1. a) Deferred Compensation Plan •In addition to the WA State pension plans, the City offers an additional opportunity for retirement savings through a Deferred Compensation Plan (DCP) under IRS code 457(b). •Multi-employer plan with the Renton Regional Fire Authority. •The DCP Committee oversee the plan and are the named fiduciaries. Fiduciaries are to act solely in the best interest of plan participants. •The Committee selects and monitors investment options, negotiates plan fees, and selects and monitors the work of a record keeper and investment advisor. AGENDA ITEM #1. a) Governance Structure Committee Voting members: •City CAO •City HRRM Administrator •City Finance Administrator •RFA Fire Chief •The Committee maintains due diligence through quarterly review meetings and relies on services of a co-fiduciary investment advisor. •The Committee bases their work on adopted: •Investment Policy Statement •Operating Guidelines AGENDA ITEM #1. a) Investment Options The Committee ensures there are investment options encompassing a variety of risk/return characteristics. Participants self-direct their portfolio based on time horizon and/or risk tolerance. •Multi-Asset Target Date Funds - Default investment •70% of participants in target date funds holding just over 30% of total assets •Core Funds - includes a stable value fund and a variety of mutual funds to allow for diversification across market segments. •Brokerage Window AGENDA ITEM #1. a) •The Committee negotiates fees and expenses with service providers. •Fees are paid by participants through withdrawals from their accounts. •Benchmark for similar size plans in 2023 Deferred Compensation – Fees 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 2019 2020 2021 2022 2023 Benchmark 2023 Total Fees & Expenses to Benchmark City/RFA Deferred Compensation Plan 2019 2020 2021 2022 2023 Benchmark 2023 2019 2020 2021 2022 2023 Weighted Average Fund Expense 0.22%0.20%0.19%0.20%0.18% Record Keeping Expense 0.14%0.14%0.11%0.11%0.11% Plan Admin Expense 0.06%0.05%0.05%0.04%0.04% OVERALL PLAN WEIGHTED AVERAGE EXPENSE 0.42%0.39%0.35%0.35%0.33%AGENDA ITEM #1. a) Plan & Participant Profile Year end 2023 City Participants - 102.7 Million (70%) RFA Participants - 43.2 Million (30%)AGENDA ITEM #1. a) Health Plans AGENDA ITEM #1. a) •The City offers a self-funded medical, prescription, dental, and vision plan administered by HMA, with Stop Loss insurance set at a $250,000 limit per individual claimant per year. •Kaiser Permanente is offered as a fully-insured medical plan option. •The Renton Employee Health Plan (REHP) board sets plan design and premium contribution rates for the HMA plan, based on actuarial projected future claims, other expenses, and the current reserve balance. •Voting members of REHP are the CAO and the two union presidents. •Premium cost share between the City and employees is determined through collective bargaining and is currently 91%/9%. Health Benefits Plan Overview AGENDA ITEM #1. a) Administrative Fees (approved by Council) •HMA +4.6% •Kaiser Permanente +7.00% •Stop Loss = Rate pass +0.0% •Costco Health Services (CHS) Pharmacy Benefit +3.0% Premiums (approved by Renton Health Plan Board) •Medical +2.71% •Dental +1.93% •Vision +0.00% Other Benefits •Life and Long-Term Disability (LTD): Rate decrease; rate lock thru 2026 •Employee Assistance Program: No change •Flexible Spending Account: No change •Employee Wellness Program: Budgeted Expenses and Premiums 2024 AGENDA ITEM #1. a) Medical •Paid claims ratio 91.6% (2022 was 93.6%) •Pharmacy claims account for 20.4% of total claims (2022 was 21%) Dental •Paid claims ratio 86.4% (2022 was 96%) Vision •Paid claims ratio 81.4% (2022 was 106.1%) Enrollment/Claims processed: •577 total employees enrolled (average monthly enrollment increase of 3.9% from 2022) •1476 total members (employees + eligible dependents) •27,723 total claims processed Claims Overview 2023 AGENDA ITEM #1. a) Claims and Cost Trend Cost Per Employee Per Month Percent difference from prior year 8.4% 1.0%8.0%6.3%12.5% 3.4% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 20232022202120202019201820172016201520142013 Med/Vis Rx Dental Excess/Admin City Prog -2.0%-5.4%-5.6% -0.93%-2.19%AGENDA ITEM #1. a) Plan Reserve Trend Target reserve 40% of actuarial expected claims Minimum reserve 30% of actuarial expected claims Rate holiday WAC 200-110-040 requires reserves of approximately 30% of actuarial projected expenses for the year. The Board targets reserves at 40% and sets contributions considering actuarial projected expenses and reserve balances. Reserves will increase or decrease each month, depending on whether actual expenses are higher or lower than contributions. $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 Rate Holiday AGENDA ITEM #1. a) Plan Financials Target Reserves for 2024 Expected Claims $13,283,492 Target Reserves 40.0% Target Reserves Amount $5,313,397 Change in Reserves during 2023 1/1/2023 Reserve Balance $6,406,482 Plus: Premiums Paid $14,070,240 Plus: Stop Loss Reimbursement $182,163 Less: Expenses - $12,272,903 12/31/2023 Reserves $8,385,982 Change in Reserves $1,979,500 Actual Reserve to Begin 2024 Reserves/Expected Claims 63.1% Excess Reserve Amount $3,072,585 AGENDA ITEM #1. a) Questions What questions do you have?AGENDA ITEM #1. a) Risk Management 502 Insurance Fund Review - 2023 March 25, 2024 Krista Kolaz, CSP, ARM Risk Manager AGENDA ITEM #2. a) 502 Insurance Fund The 502 Fund is an Internal Service Fund that is used for four main purposes: 1.Claim Costs and Losses •Workers’ Compensation •Unemployment •Liability Claims •Property Damage Losses 2.Premiums for Excess Insurance Coverage and Insurance 3.Administrative Expenses, including Litigation 4.Recovered Funds/ Subrogation AGENDA ITEM #2. a) 502 Insurance Fund History Total Expenditures •2019 $3,206,310 •2020 $2,719,753 •2021 $3,880,421 •2022 $4,363,304 •2023 $5,337,272 AGENDA ITEM #2. a) 1. Claims and Losses Self-Insured Retentions (SIRs) & Deductibles •Workers’ Compensation ($750,000/$1M SIR) •Liability ($300,000 SIR) •Auto Liability ($300,000 SIR) •Property ($50,000 Deductible)AGENDA ITEM #2. a) Workers’ Compensation Statutory coverage of employees plus the optional coverage of volunteers for occupational injuries and illnesses as directed by the Washington Department of Labor & Industries. •Partnership between HR Benefits and Risk Management. •City is self-insured; excess insurance begins at $750K/$1M per claim •Third -Party Administrator, Eberle Vivian, Inc., processes and manages claims. •100% Employer Paid – Employees do not contribute toward benefits.AGENDA ITEM #2. a) Workers’ Compensation Claims Claims and Costs •2019 42 claims $327,314 •2020 32 claims $258,567 •2021 30 claims $567,810 •2022 90 claims $592,138 •2023 49 claims $772,141 AGENDA ITEM #2. a) Unemployment insurance benefits provide temporary financial assistance to workers unemployed through no fault of their own that meet Washington's eligibility requirements. •The HR Labor Division manages Unemployment. •100% Employer Paid – Employees do not contribute toward benefits. Unemployment AGENDA ITEM #2. a) Unemployment Claims Comparison 2023: 17 Claims $94,109 *Pandemic-related separations of supplemental employees $47,860 $141,860 $59,376 $21,001 $94,109 2019 2020*2021 2022 2023 AGENDA ITEM #2. a) Liability Liability coverage helps protect the city’s financial assets from the risks imposed by tort lawsuits and claims of negligence; damage to third parties- typically injury & property (including auto). •$300,000 Self-Insured Retention •Excess Liability Insurance begins at $300,000 per claim. •Managed by Risk Management Division AGENDA ITEM #2. a) Number of Liability Claims Average 62 Claims/Year 59 80 37 60 65 0 10 20 30 40 50 60 70 80 90 2019 2020 2021 2022 2023 AGENDA ITEM #2. a) Liability Claim Cost Trends $110,439 $117,694 $523,215 $543,208 $275,302 2019 2020 2021 2022 2023 AGENDA ITEM #2. a) Property Property insurance provides protection to city-owned property from perils such as fire, theft, vandalism, flood, earthquake, and weather damage. Property covered includes the insurable portions of buildings, contents, public artwork, and equipment. •Value of Insured Property: $407,673,334 •$50,000 Deductible, Scheduled Property •$500,000 Deductible, Unscheduled Property •Managed by Risk Management Division AGENDA ITEM #2. a) Renton Property Loss Costs •2019 $113,969 •2020 $35,636* •2021 $102,701 •2022 $656,048 •2023 $107,144 AGENDA ITEM #2. a) Liability (January Renewal) •General Commercial (XS) •Automobile •Public Officials and Employment Practices •Storage Tank Pollution •Unmanned Aircraft (Drone) •Law Enforcement •Stop Gap (Employer’s Liability) •Airport •Workers’ Compensation (XS) Property (July Renewal) •Flood and Earthquake •Boiler and Machinery •Cyber Liability •Pollution Liability •Deadly Weapon Response Program •Fidelity/Crime 2. Insurance Premiums/Lines of Coverage XS = Excess AGENDA ITEM #2. a) Property Insurance Premiums •2023: Property Insurance Costs $1,180,565 •25.8% increase over 2022 premium •Property Insurance, including Cyber, is expected to go up as much as 20-30% for our July 1, 2024, renewal. AGENDA ITEM #2. a) Liability Insurance Premiums General Excess Liability •2019: $305,834 (10%) •2020: $328,105 (7%) •2021: $393,687 (20%) •2022: $463,437 (17.7%) •2023: $535,319 (15.5%) •Renton has experienced a very good loss run record for the last 5 years, with only one loss over $300,000 (2021).AGENDA ITEM #2. a) 3. Administrative Expenses Broker Fees •Broker, Alliant Insurance Services •Services Total Cost: $53,492, +0.3% Liability Claim Management •31% Third Party Administrator, Carl Warren Company •69% by Risk Management •Services Total Cost: $19,714 Litigation Defense •$31,840 Defense Costs 2023 (down 88% from 2022) •4 Open Cases Risk Mitigation Measures •Safety "Loss prevention yields greater results than loss control."AGENDA ITEM #2. a) 4. Recovery of Costs/ Subrogation Risk Management attempts to recover the costs incurred to repair damage to City-owned vehicles and property from responsible third parties and insurance. •Risk Management Division •Average >$100,000/year or 50% •Last 5 Years $575,523 recovered •2023* $23,270 recovered *Still collecting; 3-Year Statute of Limitations AGENDA ITEM #2. a) Risks of Concern for Municipalities •Aging Subsurface Infrastructure •Law Enforcement Liability •Joint and Several Liability •Public Records Violations AGENDA ITEM #2. a) Additional Information •Council approves: January 1, 2016, departure from WCIA Risk Pool •Savings: Insurance Premiums >$200,000/year, Administrative Costs Savings, Control of Liability Claim and Litigation Outcomes •Increased involvement by City Attorney’s office on liability claims with litigation potential. •In-house Risk Mitigation (Safety, Claim Management, and Risk Strategies) remains key to savings.AGENDA ITEM #2. a) Questions What questions may I answer?AGENDA ITEM #2. a)