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Ordinance No. 3,68430922 -6 ORDINANCE NO. 3684 AN ORDINANCE AUTHORIZING AND DIRECTING THE MAYOR AND CITY CLERK OF THE CITY OF BAYTOWN TO EXECUTE AND ATTEST TO AN INTERLOCAL AGREEMENT WITH THE TEXAS MUNICIPAL LEAGUE WORKERS' COMPENSATION JOINT INSURANCE FUND FOR THE PURPOSE OF PROVIDING WORKERS' COMPENSATION BENEFITS FOR EMPLOYEES OF THE CITY OF BAYTOWN AND PROVIDING FOR THE EFFECTIVE DATE HEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That the City Council of the City of Baytown hereby authorizes and directs the Mayor and City Clerk to execute and attest to an Interlocal Agreement with the Texas Municipal Leaque Workers' Compensation Joint Insurance Fund for the purpose of providing Workers' Compensation Benefits for employees of the City of Baytown. A copy of said agreement is attached hereto, marked Exhibit "A," and made a part hereof for all intents and purposes. Section 2: This Ordinance shall take effect immediately from and after its passage by the City Council of the City of Baytown. INTRODUCED, READ, and PASSED by the affirmative vote of the City Council of the City of Baytown, this the 22nd day of September, 1983. ALLEN CANNON, Mayor ATTEST: LEEN P. HALL, City Clerk APPROVED: RANDALL B. STRONG, CA rney - 1 30922 -6a Texas Municipal League Yorkers' Compensation Joint Insurance Fund 1020 Southwest Tower Building, Austin, Texas 78701 INTERLOCAL AGREEMENT This Contract and Interlocal Agreement is entered into by and between the Texas Municipal League Workers' Compensation Joint Insurance Fund (hereinafter referred to as "Fund ") and the undersigned political subdivision of the State of Texas (hereinafter referred to as "Employer Member") for the purpose of providing the statutory benefits prescribed by Article 8309h of the Texas Workers' Compensation Act for employees of political subdivisions. WITNESSETH: The undersigned Employer Member in consideration of the adoption of a plan of self- insurance as authorized in Article 8309h, Vernon's Annotated Texas Statutes, to provide workers' compensation benefits at a minimum cost and in further consideration of other political subdivisions executing identical € nterlocal Agreements does hereby agree to become a sett- insured workers' compensation employer by becoming one of the members of the Fund Pool of self- insured Employer Members. The conditions of membership agreed upon by and between the parties are as follows: 1. Definition of terms used in this Interlocal Agreement a. "Board" — refers to the Board of Trustees of the Texas Municipal League Workers' Compensation Joint Insurance Fund. b. "Premium" and "Contribution" — are used interchangeably in some parts of this Interlocal Agreement. "Premium" is used to identify the rating formulas established by the State Board of Insurance, which are used as guidelines to establish Employer Members' cash contributions to the Fund. Any reference at any time in this Interlocal Agreement to an insurance term not ordinarily a part of self- insurance shall be deemed for convenience only and is not to be construed as being contrary to the self- insurance concept except where the context clearly indicates no other possible interpretation such as, but not limited to, the reference to "reinsurance." c. "Servicing Contractor" --- Johnson and Higgins of Texas, Inc. d. "Manual Rates" — the basic workers' compensation rates applicable to each classification of employees promulgated by the State Board of Insurance. e, "Experience Modifier" — refers to the factor applied to the manual rates that reflects the political subdivision's loss experience, which is based on the State Board of Insurance promulgated insurance plan. f. "Standard Rates" — rates that are determined by applying the experience modifier of each individual Employer Member to the annual rates. g. "Fund Modifier" — 75% that is applied to the standard rates by the Fund to reflect the savings to the Employer Member by entering into the Interlocal Agreement. 2. The term of this Contract shall be for a term commencing 12:01 a.m. and Terminating 12.01 a.m. October 1, 1986, unless the same is sooner terminated by sixty (60) days' written notice of intent to terminate by either party unless otherwise specified under the terms and agreements of this Contract or by the Bylaws of the Fund,The Fund will have the right to terminate this agreement only for noncompliance with paraoraphs 3, 5, and B. Annually, each Employer Member shall submit to the Fund on a Premium Worksheet form supplied bythe Fund, its estimated payroll for each classification of employee. The rates established by the State Board of Insurance shall be applied to arrive at a manual premium. If the Employer Member has established, through experience, a modifier, then the experience modification of that Employer Member shall be used to arrive at the standard premium to be paid by the Employer Member. In the absence of an earned experience modification for the Employer Member, the manual rate as established by the Stale Board of Insurance in effect at the beginning of each Fund Year will be used as a guide to produce a manual, as well as a standard contribution. The Fund modifier of 75% shall then be applied to the standard premium to produce the annual contribution that the Employer Member shall payto the Fund. The Employer Member agrees to paythe standard annual contribution to the Fund in twelve (12) equal monthly installments, in advance, commencing at the beginning of each Fund Year, with subsequent installments due the first of each month thereafter, provided that if the payable annual contribution shall be less than S5,D00, it shall be payable in four (4) equal quarterly installments, in advance, commencing at the beginning of each Fund Year, with subsequent installments due the first of each quarter thereafter. It is understood by the Employer Member thFt there will be contribution adjustments based upon the increased benefit levels mandated by the Texas Workers' Compensation Act. UNIBIT A 30922 -6b 11. As the administrators of the self- insurance Fund, the Board shall primarily and constantly keep foremost in its deliberations and decisions in operating the Fund that each of the participating Employer Members is a "self- insured." At least annually, the Board shall carefully review, study and consider the actual claims or loss experience (including reserves for future claims payments) of each of the Employer Members, the experience rating modification developed or earned by each of the Employer Members, the pro rata savings to the Fund resulting from overall loss experience attributed to each Employer Member, and the pro rata portion of the cost of all catastrophic loss protection reinsurance and aggregate stop loss reinsurance allocated to each Employer Member, as well as the pro rata allocation, as determined by the Board of the other and necessary administrative expenses of the Fund, in order to reasonably determine the actual pro rata cost, expense and loss experience of each Employer Member in orderto maintain as nearly as possible an equitable and reasonable "self- insurance" administration of the Fund as applied to each Employer Member. The Fund shall maintain case reserves and supplemental reserves computed in accordance with the standard actuarial principles, taming into account historical and other data, designed to measure claims development and claims incurred but not yet reported, so that funds will be available to meet these claims as they become due. The Fund shall also establish and maintain a reserve for Return of Contributions to insure further the fiscal integrity of the Fund in the event of a potential, adverse loss development. This Reserve shall be calculated on a Fund Year basis, avid shall be held for twelve (12) years period in decreasing amounts computed as a percent of standard contributions, as follows: 10% First Fund Year Past IOOA Second Fund Year Past 1D% Third Fund Year Past 8% Fourth Fund Year Past 6% Fifth Fund Year Past 4% Sixth Fund Year Past 2% Seventh Fund Year Past 2% Eighth Fund Year Past 2% Ninth Fund Year Past 2% Tenth Fund Year Past 2% Eleventh Fund Year Past 2% Twelfth Fund Year Past 0% Thirteenth Fund Year Past The Fund shall determine its net income for federal income tax purposes at the close of each Fund Year. The Fund's income so determined shall be distributed to Employer Members, as soon as practical, following the close of the Current Fund Year, pursuant to the following distribution formula: The Fund shall distribute to Employer Members the sum of the Current Fund Year Savings and the Additional Fund Year Savincs, Current Fund Year Savings shall equal the excess of contributions and other Fund income, over (a) incurred losses (less reinsurance losses), including the amount of any Actuarial Reserves, expense and other amounts which are allowable as deductions for federal income tax purposes, (b) the amount, if any, of any Actuarial Reserves for the Current Fund Year in excess of the adcition to these Reserves allowable as deductions for federal income fax purposes for the Current Fund Year, and (c) the Reserve for Return of Contributions for the Current Fund Year Additional Fund Savings shall equal (a) amounts, if any, included within Actuarial Reserves for any prior Fund Year, the retention of which on an actuarial basis is no longer necessary, and (b) the sum of the net decreases, if any, in the Reserve for Return of Contributions for each Fund Year prior to the Current Fund Year after adjustment for loss development attributable to such prior Fund Year. The Fund shall issue a certificate to each Employer Member which shall evidence its share of the Fund's net income, as determined for federal income tax purposes, which is retained and to be returned under the formula for distribution of such net income. A certificate shall be issued under this procedure for all prior Fund Years. 12. The Employer Member executir.g this Agreement shall designate in the following space the seating capacity of any aircraft presently owned or leased by that Employer Member. Further, the Employer Member acrees to notify the Fund within fifteen (15) days if any new aircraft are purchased or leased during the term of this Agreement, and the seating capacity of said newly acquired aircraft. Texas Municipal League Workers' Compensation Joint Insurance Fund 1020 Southwest Tower Building, Austin, Texas 78701 INTERLOCAL AGREEMENT This Contract and Interlocal Agreement is entered into by and between the Texas Municipal League Workers' Compensation Joint Insurance Fund (hereinafter referred to as"Fund") and the undersigned political subdivision of the State of Texas(hereinafter referred to as"Employer Member")for the purpose of providing the statutory benefits prescribed by Article 8309h of the Texas Workers' Compensation Act for employees of political subdivisions. WITNESSETH: The undersigned Employer Member in consideration of the adoption of a plan of self-insurance as authorized in Article 8309h,Vernon's Annotated Texas Statutes,to provide workers'compensation benefits at a minimum cost and in further consideration of other political subdivisions executing identical Interlocal Agreements does hereby agree to become a self-insured workers' compensation employer by becoming one of the members of the Fund Pool of self-insured Employer Members. The conditions of membership agreed upon by and between the parties are as follows: 1. Definition of terms used in this Interlocal Agreement a. "Board"—refers to the Board of Trustees of the Texas Municipal League Workers'Compensation Joint Insurance Fund. b. "Premium" and "Contribution"—are used interchangeably in some parts of this Interlocal Agreement. Premium"is used to identify the rating formulas established by the State Board of Insurance,which are used as guidelines to establish Employer Members'cash contributions to the Fund.Any reference at any time in this Interlocal Agreement to an insurance term not ordinarily a part of self-insurance shall be deemed for convenience only and is not to be construed as being contrary to the self-insurance concept except where the context clearly indicates no other possible interpretation such as,but not limited to,the reference to"reinsurance." c. "Servicing Contractor"— Johnson and Higgins of Texas, Inc. d. "Manual Rates"—the basic workers'compensation rates applicable to each classification of employees promulgated by the State Board of Insurance. e. "Experience Modifier" — refers to the factor applied to the manual rates that reflects the political subdivision's loss experience, which is based on the State Board of Insurance promulgated insurance plan. f. "Standard Rates" — rates that are determined by applying the experience modifier of each individual Employer Member to the annual rates. g. "Fund Modifier" — 75% that is applied to the standard rates by the Fund to reflect the savings to the Employer Member by entering into the Interlocal Agreement. 2. The term of this Contract shall be for a term commencing 12:01 a.m. and terminating 12:01 a.m. October 1,1986,unless the same is sooner terminated by sixty(60)days'written notice of intent to terminate by either party unless otherwise specified under the terms and agreements of this Contract or by the Bylaws of the Fund.-The Fund will have the right to terminate this agreement only for noncompliance with paragraphs 3,5,and 8. 3. Annually,each Employer Member shall submit to the Fund on a Premium Worksheet form supplied by the Fund, its estimated payroll for each classification of employee.The rates established by the State Board of Insurance shall be applied to arrive at a manual premium. If the Employer Member has established,through experience,a modifier, then the experience modification of that Employer Member shall be used to arrive at the standard premium to be paid by the Employer Member. In the absence of an earned experience modification for the Employer Member,the manual rate as established by the State Board of Insurance in effect at the beginning of each Fund Year will be used as a guide to produce a manual, as well as a standard contribution. The Fund modifier of 75% shall then be applied to the standard premium to produce the annual contribution that the Employer Member shall pay to the Fund.The Employer Member agrees to pay the standard annual contribution to the Fund in twelve (12)equal monthly installments, in advance,commencing at the beginning of each Fund Year,with subsequent installments due the first of each month thereafter,provided that if the payable annual contribution shall be less than $5,000, it shall be payable in four (4) equal quarterly installments, in advance, commencing at the beginning of each Fund Year, with subsequent installments due the first of each quarter thereafter. It is understood by the Employer Member that there will be contribution adjustments based upon the increased benefit levels mandated by the Texas Workers' Compensation Act. At the end of each and every Fund Year,there shall be submitted by the Employer Member actual payrolls as reflected by the books of the Employer Member,and any additional amounts payable to the Fund based upon the actual payroll shall be paid, and lesser amounts payable shall be adjusted by refund to the Employer Member.The Fund reserves the right to audit the payroll records of any Employer Member.Annual field audits will be made on each Employer Member with standard consideration estimated to exceed$30,000.A field audit will be made at least once every three (3) years on Employer Members with standard consideration less than 30,000 annually.For each new enrolling Employer Member,a pre-audit contact will be made to counsel proper payroll classifications and record keeping, and a field audit will in all cases be made covering the first year. In the event that the Employer Member fails or refuses to make the payments of premiums as herein provided, the Fund reserves the right to terminate such Employer Member by giving ten (10) days'written notice and to collect any and all premiums that are earned pro rata for the period preceding contract termination. 4. The Fund has obtained unlimited aggregate stop-loss reinsurance to assure that the incurred losses for the total Fund shall not exceed the maximum 75%of standard premium paid or payable by Employer Members into this Fund. In addition, the Fund has unlimited catastrophic loss protection in excess of $400,000 for any one accident or occurrence,covering the contract period.The reinsurance is provided so that Employer Members will have no joint or several liability other than the maximum of 75%of standard premium payable and to insure that the Employer Member shall at no time be on an assessable basis beyond the amount set forth in this Interlocal Agreement. The Board, however, reserves the right to adjust either one of these reinsurance provisions in the event that the fiscal soundness of the Fund will justify such adjustment and result in a savings to the Employer Members. Before any such adjustment is made, notice will be given to all the Employer Members together with an accounting from the Fund, in order that the Employer Members may appear before the Board to discuss the fiscal soundness of the Board's action. 5. The Fund has contracted with the Servicing Contractor to supply loss control services through its sub- contractor, Hartford Specialty Company (hereinafter referred to as"Hartford"), to the Employer Members to assist them in following a plan of loss control that may result in reduced losses. The Servicing Contractor, through Hartford, shall provide all of the services as provided in the Service Contract entered into by and between the Servicing Contractor and the Fund on behalf of the Employer Member. The Employer Member agrees that it will cooperate in instituting any and all reasonable safety regulations that may be recommended for the purpose of eliminating or minimizing hazards that would contribute to workers'compensation losses.In the event that the recommendations submitted by the Servicing Contractor or Hartford on behalf of the Fund seem unreasonable,the Employer Member has a right to appeal to the Board of Trustees.The Board shall hear the objections of the Employer Member at its next regularly scheduled meeting and its decision will be final and binding on all parties. 6. The Employer Member agrees that it will appoint a Workers' Compensation Coordinator of department head rank, and that the Fund and its Servicing Contractor or sub-contractors shall not be required to contact any other individual except this one person. Any notice to or any agreements with the Workers' Compensation Coordinator shall be binding upon the Employer Member.The Employer Member reserves the right to change the Coordinator from time to time by giving written notice to the Fund and to the Servicing Contractor. 7. The Fund, through the Servicing Contractor and its sub-contractor General Adjustment Bureau, (hereinafter referred to as"GAB"), agrees to handle any and all claims after notice of injury has been given,to prepare all required Industrial Accident Board forms,and provide a defense.The Employer Member hereby appoints the Servicing Contractor and its sub-contractor,GAB,as its agents to act in all matters pertaining to processing and handling of workers' compensation claims and shall cooperate fully in supplying any information needed or helpful in such defense.They shall carry on all negotiations with the injured employee and his attorney at the prehearing conference and negotiate within authority previously granted by the Fund.If a personal appearance by the employer or a co-employee is necessary,the expense of this appearance will be paid by the Employer Member.With the advice and consent of the Fund,the Servicing Contractor,through its sub-contractor,GAB, will retain and supervise legal counsel on behalf of and at the expense of the Fund necessary for the prosecution of any litigation.All decisions on individual cases shall be made by the Fund through the Servicing Contractor and GAB,which includes the decision to appeal or not to appeal an Industrial Accident Board's final ruling and decision. However, any Employer Member shall have the right in any case involving one of its employees, to consult with the Fund on any decision made by the Servicing Contractor or GAB. The Board shall hear the objections of the Employer Member at its next regularly scheduled meeting and its decision will be final and binding on all parties.Any suit brought or defended by the Servicing Contractor or GAB and the Fund shall be in the name of the political subdivision. Notwithstanding any provisions of this paragraph,all reports and filings required by the Workers' Compensation Law and the Industrial Accident Board of any employer will be the responsibility of the Employer Member. It is further understood that this agreement does not cover discrimina- tion suits under Article 8307c.There shall be supplied quarterly to each Employer Member a computer printout involving a statement of claims, claims status, and activity report cumulative for each Fund Year. 8. The Employer Member acknowledges that it has received a copy of the Bylaws of the Fund and agrees to abide by the Bylaws and any amendments thereto. 9. The Fund agrees that all Fund transactions will be annually audited by a nationally recognized certified public accounting firm. 10. The Fund,through the Servicing Contractor,will file all necessary tax forms with the Internal Revenue Service. 11. As the administrators of the self-insurance Fund,the Board shall primarily and constantly keep foremost in its deliberations and decisions in operating the Fund that each of the participating Employer Members is a self-insured."At least annually,the Board shall carefully review,study and consider the actual claims or loss experience (including reserves for future claims payments)of each of the Employer Members,the experience rating modification developed or earned by each of the Employer Members,the pro rata savings to the Fund resulting from overall loss experience attributed to each Employer Member,and the pro rata portion of the cost of all catastrophic loss protection reinsurance and aggregate stop loss reinsurance allocated to each Employer Member,as well as the pro rata allocation,as determined by the Board of the other and necessary administrative expenses of the Fund,in order to reasonably determine the actual pro rata cost,expense and loss experience of each Employer Member in order to maintain as nearly as possible an equitable and reasonable"self-insurance" administration of the Fund as applied to each Employer Member. The Fund shall maintain case reserves and supplemental reserves computed in accordance with the standard actuarial principles,taking into account historical and other data,designed to measure claims development and claims incurred but not yet reported,so that funds will be available to meet these claims as they become due. The Fund shall also establish and maintain a reserve for Return of Contributions to insure further the fiscal integrity of the Fund in the event of a potential,adverse loss development.This Reserve shall be calculated on a Fund Year basis,and shall be held for twelve(12)years period in decreasing amounts computed as a percent of standard contributions, as follows: 10% First Fund Year Past 10%Second Fund Year Past 10%Third Fund Year Past 8% Fourth Fund Year Past 6% Fifth Fund Year Past 4%Sixth Fund Year Past 2%Seventh Fund Year Past 2% Eighth Fund Year Past 2%Ninth Fund Year Past 2%Tenth Fund Year Past 2% Eleventh Fund Year Past 2%Twelfth Fund Year Past 0%Thirteenth Fund Year Past The Fund shall determine its net income for federal income tax purposes at the close of each Fund Year.The Fund's income so determined shall be distributed to Employer Members, as soon as practical, following the close of the Current Fund Year, pursuant to the following distribution formula: The Fund shall distribute to Employer Members the sum of the Current Fund Year Savings and the Additional Fund Year Savings.Current Fund Year Savings shall equal the excess of contributions and other Fund income, over(a)incurred losses(less reinsurance losses),including the amount of any Actuarial Reserves,expense and other amounts which are allowable as deductions for federal income tax purposes,(b)the amount,if any,of any Actuarial Reserves for the Current Fund Year in excess of the addition to these Reserves allowable as deductions for federal income tax purposes for the Current Fund Year, and (c) the Reserve for Return of Contributions for the Current Fund Year; Additional Fund Savings shall equal (a) amounts, if any, included within Actuarial Reserves for any prior Fund Year, the retention of which on an actuarial basis is no longer necessary,and(b)the sum of the net decreases,if any,in the Reserve for Return of Contributions for each Fund Year prior to the Current Fund Year after adjustment for loss development attributable to such prior Fund Year. The Fund shall issue a certificate to each Employer Member which shall evidence its share of the Fund's net income,as determined for federal income tax purposes,which is retained and to be returned under the formula for distribution of such net income.A certificate shall be issued under this procedure for all prior Fund Years. 12. The Employer Member executing this Agreement shall designate in the following space the seating capacity of any aircraft presently owned or leased by that Employer Member. Further, the Employer Member agrees to notify the Fund within fifteen (15) days if any new aircraft are purchased or leased during the term of this Agreement, and the seating capacity of said newly acquired aircraft. IN WITNESS WHEREOF, the parties have hereunto set their hands by their representatives thereunto duly authorize this 23rd day of September Contract Number A 0 0 7 6 TEXAS MUNICIPAL LEAGUE WORKERS' COMPENSATION JOINT INSURANCE FUND BY Director Austin,Texas The Workers' Compensation Coordinator for the Employer Member is: FOR City of Baytown Employer Member NAME Richard Hare , Personnel Director ADDRESS P . 0 . Box 424 BY 4/e /:))//-1we Authorized Official CITY Baytown ZIP 77520 TELEPHONE 713/422-8281 Baytown Texas ALLEN CANNON, Mayor ATTEST: 1.7‘t Eileen P. Hall , City Clerk NOTICE THAT EMPLOYER HAS BECOME SELF INSURER TEXAS WORKERS' COMPENSATION ACT '' e-,, c 4 ARTICLE-8309h, RCS Ongi : Board 200 E.I reersIde Drive,_;First Floor•:Austin, Texas T8704" Is hereby given by the named employer as required by Article B309h,RCS,including any amendments thereto,that the named employer hes become insurer under said article,including any amendments thereto,and provided for the payment of compensation to employees under the terms and provisions thereof.Any employer feiMrg•10file ttYs notice shall boilable for and shall pay to the State of Texas a penalty of not more than Five Hundred D$1SSO0.00)for-each off e E e YER, Cs; D ,- . .I a wi - ? ....' , , y ADDR - •`r" E a a ''`tree -t.a w• irl Texas . . -15-20 NSURED NDER' `' 37 OBSCRIB L s'_ S OM, ?H $OARD OF A CHANGE OF NAME-OR ADDRESS 1y CONTRACT.OR CERTIFICATE•NUMBER a 0- r >•VE DATE 1d. 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