Ordinance No. 6,686930708 -3
ORDINANCE NO. 6686
AN ORDINANCE AUTHORIZING AND DIRECTING THE MAYOR TO
• EXECUTE AND THE CITY CLERK TO ATTEST TO AN PROFESSIONAL
SERVICES CONTRACT WITH TILLINGHAST, INC. FOR AN ACTUARIAL
REVIEW OF THE CITY'S WORKER'S COMPENSATION FUND;
AUTHORIZING PAYMENT BY THE CITY OF BAYTOWN, UP TO THE SUM
OF SIX THOUSAND AND N01100 DOLLARS ($6,000.00); AND
PROVIDING FOR THE EFFECTIVE DATE THEREOF.
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
Section 1: That the City Council of the City of Baytown,
Texas, hereby authorizes and directs the Mayor and City Clerk of
the City of Baytown to execute and attest to an professional
services contract with Tillinghast, Inc. for an an actuarial review
of the City's Worker's Compensation Fund. A copy of said contract
is attached hereto, marked Exhibit "A," and made a part hereof for
all intents and purposes.
Section 2: That the City Council of the City of Baytown
authorizes payment to Tillinghast, Inc. up to the sum of SIX
THOUSAND AND N01100 DOLLARS ($6,000.00), pursuant to the Contract.
Section 3: 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 8th day of July,
1993.
PETE C. AL O, Mayor
ATTEST
/ �-o I -
LEEN P. HALL, City Clerk
i �
NACIO RAMIREZ, S . City Attorney
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Forsaei Centre
175 Powder Forea Drive
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203 813 -7000
Fax: 203 $43 -7001
Tilfirghae
A Towers Perrin Company
June 30, 1993
Mr. Donald Richard
Risk Manager
City of Baytown
P.O. Box 424
Baytown, Texas 77522
Re: Proposal for Actuarial Services - City of Baytown
Dear Mr. Richard:
Thank you for your interest in our services. We appreciate the opportunity to present
you with this proposal outlining the scope of our services as they relate to: (1) a review
of the City's self- insured unpaid outstanding liability as of September 30, 1993 for
workers compensation, and (2) estimates of projected retained losses for fiscal year
1994. The City is currently a cash flow member of the Texas Municipal League
Intergovernmental Risk Pool (TML -IRP) workers compensation program.
Scope of Work
Based on our understanding of the situation, we propose a study encompassing five
steps:
1. Hold a discussion with the risk management and other staff of the City of Baytown
and TML-IRP about current issues and data requirements.
2. Project ultimate losses (paid losses, case reserves plus IBNR reserves) for the current
and all prior fiscal years of the self - insured workers compensation program.
3. Project the ultimate losses for the upcoming 1994 fiscal year.
4. Determine net loss reserves with respect to the specific and aggregate retentions of
the program as of September 30, 1993.
5. Prepare a report summarizing our observations, conclusions, and recommendations.
p(HOT A
Mr. Donald Richard
June 30, 1993
• Page 2.
Tm*baat
A TOWM P"A C&710&
We will present the analysis initially in a draft report for your review and comment. Any
warranted changes will be incoJporated into the final version.
Data Requirements
We will work with the City and TML-IRP staff to collect the data necessary for our
analysis. We anticipate that this would include:
-- 6/30/93 loss run;
-- payroll by classification and year;
-- excess premium and SIR's by year; and
-- manual, standard and TML-IRP premium by year.
We anticipate using TML IRP loss costs and loss development patterns as our starting
point, and modifying the loss costs for the City's loss experience to the extent possible.
Proposed Timing
Our review will be completed 3-4 weeks after we receive data valued as of 6/30/93.
After our review is completed, a draft report will be issued for your review and
comments. Following the resolution of your comments and questions, a final report will
be issued.
Project Staff
I will serve as the account executive, with overall responsibility for the quality and timely
completion of the work. As you know, I am the account executive for Tillinghast's
relationship with the TML -IRP, for whom we have been the primary actuary since 1986.
1 am very familiar with the provisions of GASB #10, having been a member of the
PRIMA working group on financial reporting that dealt with GASB issues, and spoken
at PRIMA and other conferences on this and other topics.
0 My resume is attached for your information.
Tilltf bast
A rowNS Armn CwroOWW
•
Mr. Donald Richard
June 30, 1993
Page 3.
Professional Fees
Tillinghast's professional fees are based on the time individual staff members actually
spend on the project, computer and data processing costs, travel, and out -of- pocket
expenses. We estimate that our total professional fees for the estimates of reserves and
projected losses for 1994 will not exceed $6,000. This estimate would be increased
somewhat (i.e., about $1,000 to $2,000) for a full funding study, in which the past and
future projections are discounted for future investment income and we calculate risk
margins +higher confidence levels) for adverse deviations in loss experience.
The fee estimate is significantly below the typical charges for similar studies, due to the
anticipated high data quality and ease of data gathering from TML -1RP.
The above fees do not contemplate any meetings with any of the management of the
City of Baytown to discuss our findings. These would be separately billed for the
professionals' time and expenses as incurred.
Confidentiality
We agree to keep confidential ail information provided to us under this engagement,
from whatever source, and shall not disclose such information except to our employees
who have a need to know. However, this obligation of confidentiality shall not apply to
any information disclosed by us (a) if required by applicable law or any court,
governmental agency, or regulatory authority or by subpoena or discovery request in
pending litigation, (b) if the information is available or ascertainable from public
information (other than as a result of our prior unauthorized disclosure), (c) if the
information was or is received from a third party not known to us to be under a
confidentiality obligation with regard to such information, (d) if the information was in
our possession prior to the commencement of the engagement or (e) if the information
was otherwise independently developed by us.
IC
A Towaa Wmn ConprW
10
Mr. Donald Richard
June 30, 1993
Page 4.
Acceptance
If this proposal is acceptable as written, you may indicate your acceptance by signing
below and returning one copy to us, retaining the original for your files. If you have any
questions regarding this proposal or wish to modify the scope of the proposal, please
call or write us.
Thank you for giving us the opportunity to submit this proposal. We look forward to
working with the City of Baytown.
Project
Manager:
Date:
Accepted
By:
Title:
Date:
Lisa Gattel Chanzit, FCAS, MAAA, ARM
Principal
LGC:rb
cc: Ms. Carol Loughlin -- TML
Tillinghast, a
Towers Perrin company
City of Baytown