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HomeMy WebLinkAbout1989-175 CCR1 1 Member Celia Scott introduced the following resolution and moved its adoption: RESOLUTION NO. 89 175 RESOLUTION OPPOSING THE IMPOSITION OF AN INSTITUTIONAL FEE BY THE LEAGUE OF MINNESOTA CITIES UPON THE LEAGUE OF MINNESOTA CITIES INSURANCE TRUST WHEREAS, The League of Minnesota Cities' Insurance Trust was created under the authority of the joint Powers Act, M.S. 471.59 in 1980 to provide a means through which cities can cooperate to obtain the insurance coverage they need at a reasonable cost; and WHEREAS, the League of Minnesota Cities Insurance Trust (LMCIT) is governed by a five member board of trustees appointed by the League of Minnesota Cities (LMC); and WHEREAS, Article VI. of the LMCIT Insurance Trust Agreement established a fund into which all of the Trust's income is to be deposited and which is used to pay the expenses of operating LMCIT's risk protection programs, including administrative, legal, and other expenses; and WHEREAS, Article VI. directs that any excess in the fund be returned to the individual LMCIT members and that each member's refund will be determined on the basis of (1) the total amount paid by the member to the Trust; and (2) to the extent that the trustees decide it is advisable, the member's individual loss experience; and WHEREAS, since the beginning of LMCIT's insurance program, brochures and other marketing tools promoting the insurance program, as well as frequent articles in the Minnesota Cities' magazine, have consistently stated that, if premiums exceed what is needed to fund losses and expenses, the only thing which can be done with the surplus is to return the money to the cities; and WHEREAS, many cities bought into the program with confidence that this promise would be kept; and WHEREAS, since the creation of LMCIT by LMC, LMC has been, and continues to be, reimbursed by LMCIT for LMC cost of administering the insurance program. Such costs include personnel, overhead, direct costs, and pro -rated expenses; and WHEREAS, the trustees of LMC and LMICT did, in 1988, enter into a management services agreement which, for the first time, included an institutional charge of 1.5% of the gross premiums of the LMCIT workers compensation and property/ casualty programs to "constitute reimbursement to LMC for the use by LMCIT of LMC's name, good will, reputation, municipal and legislative expertise, and organizational capacity and WHEREAS, this charge is in addition to other reimbursed costs; and 1 RESOIUTION NO. 89 -175 WHEREAS, the LMC has transferred, or will transfer, the amounts of $425,226 for fiscal year 1988 -89 and $584,466 for fiscal year 1989 -90 and LMC subsequently appropriated $387,292 and $554,019 respectively of the transfers in fiscal years 1988 -89 and 1989 -90 to the LMC special projects budgets to fund a property tax model, a tax increment financing project, and a personnel project; and WHEREAS, the City Council of the City of Brooklyn Center has determined that the institutional fee is an inappropriate profit taking by the LMC, particularly in light of representations which have been made to the members that all unused funds will be rebated to LMCIT members, and questions the appropriateness of raising funds from LMCIT members to pay for expenses and programs of the LMC for which they are already paying dues, thereby in effect penalizing LMCIT members by requiring them to pay a disproportionate share of the costs of projects approved in the LMC special projects budget solely because they are participants in the LMCIT. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Brooklyn Center to request the trustees of the League of Minnesota Cities and the League of Minnesota Cities Insurance Trust to remove the institutional charge from the management rvices agreement and for LMC to return to LMICT all funds transferred for institutional charges; and BE IT FURTHER RESOLVED that the City Clerk be directed to forward a copy of this resolution to the trustees of the LMC and the LMCIT. ATTEST: September 11, 1989 Date t".1)-Xa-A1)-- Deputy Clerk The motion for the adoption of the foregoing resolution was duly seconded by member Todd Paulson and upon vote being taken thereon, the following voted in favor thereof: Dean Nyquist, Celia Scott, Todd Paulson, Jerry Pedlar, and Philip Cohen; and the following voted against the same: none, whereupon said resolution was declared duly passed and adopted.