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HomeMy WebLinkAboutCommittee of the Whole - 03 May 2021 - Agenda - Pdf CITY OF RENTON AGENDA - Committee of the Whole Meeting 6:00 PM - Monday, May 3, 2021 Videoconference 1. 2020 BENEFITS AND LIABILITY INSURANCE REVIEW a) Benefits Presentation b) Insurance Review Presentation Currently, due to the spread of COVID-19, all regularly-scheduled committee meetings will be held as necessary via video-conference. City Hall is closed to the public. If you would like to attend this week's meeting remotely, you can do so by going to https://us02web.zoom.us/j/86753290028?pwd=M2pOc09HWWNrY05uVnlIWnpGS1E4UT09 Zoom Meeting ID: 867 5329 0028, Passcode: 881839 You can call through Zoom at (253) 215-8782 and use the Meeting ID. Employee Benefits Retirement Savings Plan & Health Plans May, 2020 AGENDA ITEM #1. a) Deferred Compensation 457(b) Retirement Savings Plan AGENDA ITEM #1. a) 457(b) Deferred Compensation Plan •In addition to the pension plans offered by the State Department of Retirement Systems, the City offers a Deferred Compensation Plan for supplemental savings toward retirement. •This is a multi-employer plan, managed in coordination with the Renton Regional Fire Authority.AGENDA ITEM #1. a) Governance Structure •Voting Committee members are: •City CAO •Renton RFA Fire Chief •City HRRM Administrator •City Administrative Services Administrator •The Committee welcomes involvement and input from all employees. Meeting material and minutes are posted on SharePoint. Members of the unions and non-represented staff regularly attend Committee meetings. •The Committee maintains due diligence through quarterly review meetings and relies on services of co-fiduciary investment advisors. Fiduciary training is conducted for new Committee members. •The Committee reviewed governance documents, including: •Investment Policy Statement •Operating Guidelines AGENDA ITEM #1. a) 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% City & RFA Plan Benchmark Fees & Expenses to Benchmark Plan Admin Expense Record Keeping Expense Investment Average Expense •As the Plan fiduciaries, it is the Committee’s responsibility to maintain reasonable fees for the services provided, in addition to offering appropriate investment options. •The Committee negotiates fees and expenses with service providers. •Fees are paid by participants through withdrawals from their accounts. •Benchmark fees against the National Association of Government Defined Contribution Administrators (NAGDCA) 2019 survey Deferred Compensation – Fees & Expenses AGENDA ITEM #1. a) Investment Options The Committee works with our co-fiduciary advisors to select and monitor 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) •Core Funds •Fixed / Stable Value (1 fund) •Money Market (1 fund) •Bond (4 funds) •Large Cap US Equity (5 funds) •Mid Cap US Equity (3 funds) •Small Cap US Equity (2 funds) •International Equity (4 funds) •Specialty – Real estate (1 fund) •Brokerage Window AGENDA ITEM #1. a) Assets & Contributions by Asset Class Year end 2019 to 2020 AGENDA ITEM #1. a) •The City provides print material at hire and annual open enrollment and makes information available on SharePoint. •We utilize the services of our record keeper, TIAA, to conduct one-on-one remote or in persons meetings at no additional cost. •We bring in speakers from Social Security and Medicare. •TIAA uses participant data to target email and regular mail communications to specific demographics. •The City offers workshops with small groups to help participants determine whether they’re saving enough for retirement, and to plan retirement income strategies. Participant Education AGENDA ITEM #1. a) Questions What questions do you have?AGENDA ITEM #1. a) Health Plans AGENDA ITEM #1. a) •The City offers a self-funded medical, prescription, dental, and vision plan, administered through HMA and CHS, and a fully insured alternative through Kaiser Permanente. •The City is the plan sponsor and plan fiduciary. The Renton Employee Health Plan (REHP) board makes plan design decisions and sets contribution rates, based on actuarial valuations and prior claims experience. •Voting members of REHP are the CAO, and two union presidents. •Cost share between the City and employees are set through collective bargaining. •Stop Loss coverage is at $250,000 per individual per year. •Also offered are Life and Disability insurance, an Employee Assistance Plan (EAP), and Flexible Spending Accounts (FSA) Benefits Plan Overview AGENDA ITEM #1. a) Summary of changes previously approved by Council •HMA Medical Plan 2.5% increase in administration •Kaiser 5.1% increase in fully insured premiums •Stop Loss 8.5% increase in premium •Life and Disability rates were reduced nearly 30% •No change in fees or benefits for First Choice EAP, or BAC Flex Spending Vendor Fee Changes AGENDA ITEM #1. a) Rate Action •Medical Plan (HMA): 3.7% increase in self-insured funding rates Kaiser 5.1% increase in fully insured premiums •Stop Loss: 25% increase in premium •Dental Plan (HMA): -15.4% decrease in self-insured funding rates •Vision Plan (HMA): 34.9% increase in self-insured funded rates •Life and Disability lines of coverage (Standard) Insurance are in rate guarantee. No change. •EAP (First Choice Health): 3.2% increase in Per Employee Per Month (PEPM) fee •Flex Spending (BAC) no change to administration fees or benefits 2021 Plan Year Premiums AGENDA ITEM #1. a) $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Med/ Vision RX Dental Excess / Admin City Prog -5.6%+2.7% Claims and Cost Trend +8.3% +8.5% Total cost – Per Employee Per Month (PEPM) +3.4% +12.5%-2.0%+6.3%-5.4% +8.0% Percent increase each year AGENDA ITEM #1. a) Plan Reserve Balances $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 Target reserve 40% of actuarial expected claims Minimum reserve 30% of actuarial expected claims Rate holiday The Board sets rates based on projected expenses and target for reserves. If actual expenses exceed projections, reserves are drawn down. If actual expenses are less than expected, reserves grow. During the one month “rate holiday” last fall when employees and the City did not contribute to the plan, reserves were drawn down. Reserves were at 44% as of 2/1/2021, exceeding the target. Future projection AGENDA ITEM #1. a) Plan Reserves Target Reserves for 2021 Expected Claims (Actuarial projection) $12,337,118 Target Reserve Percentage 40.0% Target Reserves Amount $4,934,847 Change in Reserves during 2020 1/1/2020 Reserve Balance $4,696,692 Plus: Premiums Paid $11,341,668 Less: Claims and Expenses - $10,995,532 Plus: Stop Loss Reimbursement $239,482 12/31/2020 Reserves $ 5,282,310 Change in Reserves $585,618 Actual Reserve to Begin 2021 Reserves/Expected Claims 42.8% Excess Reserve Amount $347,463 AGENDA ITEM #1. a) Questions What questions do you have?AGENDA ITEM #1. a) 2020 Risk Management 502 Insurance Fund Review May 3, 2021 Kelsey R. Ternes, MBA, ARM-P, PHR Risk Manager AGENDA ITEM #1. b) 502 Insurance Fund History Total Expenditures •2015 $3,672,618 •2016 $4,285,494* •2017 $2,761,531 •2018 $3,043,070 •2019 $3,206,310 •2020 $2,719,753 *2016 includes 1-1/2 years of property insurance premiums and numerous workers’ compensation claim settlements from previous years.AGENDA ITEM #1. b) 502 Insurance Fund The 502 Fund is an Internal Service Fund that is used for four main purposes: 1.Claim Costs for Workers’ Compensation, Unemployment, Liability Claims, and Property Damage losses 2.Premiums for Insurance and Excess Insurance Coverage 3.Administrative Expenses, including Litigation 4.Recovered Funds/ Subrogation AGENDA ITEM #1. b) 1. Claims and Losses Self-Insured Retentions (SIRs) & Deductibles •Workers’ Compensation ($500,000 SIR) •Liability ($250,000 SIR) •Auto Liability ($250,000 SIR) •Property ($50,000 Deductible) •Airport (No Deductible) •Crime ($10,000 Deductible) •Cyber ($50,000 Deductible) •Auto Physical Damage ($25,000 Deductible)AGENDA ITEM #1. b) Workers’ Compensation •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 Benefits and Risk Management. •The City utilizes a Third Party Administrator, Eberle Vivian Inc, to process and manage its Workers’ Compensation claims.AGENDA ITEM #1. b) •Excess insurance begins at $500,000 per claim. •Excess insurance premium is based upon an actuarial analysis of the past 10-years claim history. •100% Employer Paid –Employees do not contribute toward benefits. Workers’ Compensation Insurance AGENDA ITEM #1. b) Workers’ Compensation Claims Claims and Costs •2015 $2,094,851 103 claims •2016*$594,725 71 claims •2017 $172, 940 35 claims •2018 $306,537 56 claims •2019 $314,098 42 claims •2020 $439,429 32 claims *Note: Decrease in claims from Renton Regional Fire Authority formation 7/1/2016.AGENDA ITEM #1. b) •Unemployment 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 #1. b) Unemployment Claims Comparison $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 2014 2015 2016 2017 2018 2019 2020* 2020:99 Claims $141,860 *Pandemic-related separations of supplemental employees AGENDA ITEM #1. b) Property Insurance Property insurance provides internal financial 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 mobile equipment. Property Insurance AGENDA ITEM #1. b) 2020 Insured Property Values* •Structures $302,807,388 •Building Contents $19,494,254 •Automobiles $10,317,244 •Inland Marine (Equipment) $1,645,991 •Public Art $260,078 •Total Insured Property $334,524,955 *City-Wide as of 5/1/20 AGENDA ITEM #1. b) Renton Property Loss Costs •2015 •2016 •2017 •2018 •2019 •2020 $93,492 $185,581 $255,668 $216,455 $113,969 $35,636 AGENDA ITEM #1. b) Liability •Liability Helps protect the city’s financial statement from the financial risks imposed by lawsuits and claims of negligence. •Excess Liability Insurance begins at $250,000 per claim. •$250,000 Self-Insured Retention AGENDA ITEM #1. b) Most Common / High Cost / High Visibility •Bodily Injury •Property Damage •Automobile •Civil Rights Violations Partnership with City Attorney fundamental to our success. Liability Claims AGENDA ITEM #1. b) Number of Liability Claims Average 65 Claims/Year 85 75 76 69 66 67 52 67 59 80 37 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Number of Claims AGENDA ITEM #1. b) Number of Liability Claims by Division 2020 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Police - Patrol PW Water PW Street Maintenance PW Engineering/Transportation PW Surface Water CS Police- Special Ops CED Number of Claims by Division AGENDA ITEM #1. b) Numbers of Liability Claims by Department 2020 Note: Settle 30-40% of Claims 50-60% Claims are Auto 54%38% 3%5% 2020 CLAIM PERCENTAGE BY DEPARTMENT Public Works Police CED Community Services AGENDA ITEM #1. b) City’s Cost of Liability Claim Trends $316,040 $440,388 $673,552 $229,154 $455,475 $545,599 $99,845 $211,682 $95,249 $110,439 $117,694 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Liability Claim Settlement Costs by Year AGENDA ITEM #1. b) Lines of Coverage: •Liability --General, Automobile, Public Officials, Employment Practices, Employee Benefits, Airport, Cyber, Underground Storage Tank, Pollution, Stop-Gap & Law Enforcement •Property --Buildings, Inland Marine (Equipment) & Public Art •Flood and Earthquake •Automobile Physical Damage (not auto replacement) •Workers’ Compensation •Boiler and Machinery •Employee Fidelity/Crime Bonds 2. Insurance Premiums AGENDA ITEM #1. b) Property Insurance Premiums Property •2020 Property Insurance Costs $561,749 •Up from 2019’s 436,576 for a 28.6% increase •Hardening of the Insurance Market •Property Insurance, including Cyber, is expected to go up 30% for our July 1, 2021 renewal. AGENDA ITEM #1. b) Liability Insurance Premiums General Excess Liability •2014 WCIA $484,447 •2015 WCIA $477,240 •2016 Self-Insured $272,039 •2017 Self-Insured $271,081 •2018 Self-Insured $276,916 •2019 Self-Insured $305,834 •2020 Self-Insured $328,105 AGENDA ITEM #1. b) Liability Insurance Premiums Liability •Insurance Premiums continue to go up. •Liability Grouping of Insurance for 2021 increased by 22% (15% in 2020). •Renton has experienced a very good loss run record for the last 5 years, with zero losses over $250,000. AGENDA ITEM #1. b) 3. Administrative Expenses Broker Fees •Broker Alliant Liability Claim Management •2020 84% by Risk Management 16% Third Party Administrator Carl Warren Defense Costs for Litigation •Resolved 5 Cases, 4 Open in 2020 Risk Mitigation Measures •Safety "Loss prevention yields greater results than loss control."AGENDA ITEM #1. b) 4. Recovery of Costs/ Subrogation Subrogation Recovery of costs incurred to repair damage to city- owned vehicles and property from responsible third parties and insurance. •Average >$100,000/year in recovered funds •2016-2019 ~$500,000 •2020 $97,658 AGENDA ITEM #1. b) Additional Information •Council approves becoming self-insured for January 1, 2016 departure from WCIA. •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) is key to savings. Renton has saved over $200,000 per year. Total savings since leaving WCIA is well over $1 M.AGENDA ITEM #1. b) Top Risk Concerns •Liability with COVID-19 •Aging Subsurface Infrastructure •Police Liability •Joint and Several Liability •Public Records Violations AGENDA ITEM #1. b) Questions What questions may I answer?AGENDA ITEM #1. b)