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HomeMy WebLinkAbout1996-11-05; City Council; 13872; AMENDED JOINT POWERS AGREEMENT OF THE PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA - PARSAC.w .r a p 2 g &a 2 z 0 F 0 a 1 0 2 3 0 0 w OF CARLSBAD - AGWA BILL -?eT .+ AB # )?, 872- TITLE: DEPT. MTG. jI -5 c 96 CITY 1 AMENDED JOINT POWERS AGREEMENT OF THE PUBLIC AGENCY RISK SHARING DEPT. RM AUTHORITY OF CALIFORNIA (PARSAC) CITY I RECOMMENDED ACTION: Public Agency Risk Sharing Authority of California (PARSAC). Adopt Resolution No. 96 -3 59 approving the amended Joint Powers Agreement of the ITEM EXPLANATION The Public Agency Risk Sharing Authority of California (PARSAC), formerly the California Municipal Insurance Authority (CMIA), is the joint powers authority of which the City has been a member since 199 1. Article XXIX of the PARSAC Joint Bowers Agreement provides that the Agreement may be amended by a two-thirds vote ofthe PARSAC Board of Directors. On May 3 1,1996, the PARSAC Board of Directors approved several changes to the Agreement by a unanimous vote of the 25 member entity representatives present at the meeting. These 25 members make up 34 of the total number of PARSAC Directors. As a result, the amended Agreement was effective at the time of the vote by the Board. However, due to “past practice”, counsel to PARSAC has advised that in order to signi@ continuing membership in PARSAC, the governing bodies of the PARSAC member entities must sign the revised Agreement. The changes to the Agreement include a definition of “alternate”, a provision to allow the Agreement to be amended by a 2/3 vote of the Board of Directors present and voting at a meeting, and revisions to streamline references to the Executive Committee and participation programs. A summary of the changes to the Agreement are shown below and the applicable sections are cited for reference to the revised Agreement in Exhibit 2. 0 A definition of “Alternate” has been added, clarifjring that the alternate director shall have the same responsibility, power and authority of the Director (Article 1). 0 The ability of a Board Member to act on behalf of a member entity has been clarified. The member entity is still responsible for signing the Agreement and its amendments, but if the entity passes a generic resolution expressly authorizing its Board Member to approve amendments to the Agreement, such amendments will be effective without taking them back to City Council for formal approval (Article VI). The references to the composition of the Executive Committee have been streamlined. Instead of duplicate wording in both the Agreement and PARSAC Bylaws, the Agreement and Bylaws now contain policy and administrative wording respectively (Article X). e .I m (I) c 0 Conflicting wording has been corrected to clarifj that the General Manager is responsible to the Executive Committee for cawing out all the duties set forth in the Bylaws (Article XI). The section concerning participation programs has been deleted as repetitive of requirements in the various Participation Agreements and Memoranda of Coverage. In response to past problems with gathering a quorum at Board meetings, wording has been added to the Agreement to allow amendments by a two-thirds vote of the Board members present and voting at a meeting instead of requiring a two-thirds vote of the entire Board (Article XXVIII). The paragraph on filing the Agreement and its amendments with the Secretary of State has been deleted as duplicative of existing State law . To enhance administrative efficiency, wording has been added so that the Agreement may be executed in counterparts, each of which shall constitute an original, and altogether constitute one agreement (Article XXXI). 0 0 0 e To date, 32 cities out of the 34 members entities have approved the revised Agreement. Per PARSAC legal counsel, if a member entity declines to approve the amended Agreement, this declination constitutes the City’s notice of intent to withdraw from PARSAC. Under the terms of the Agreement, notice of a member entity’s intent to withdraw results in an effective date of withdrawal at the expiration of the two-year period beginning the first day of the next policy year. The policy year is fiscal year July 1 to June 30. This means that the earliest possible withdrawal date for any city considering withdrawal before July 1, 1997, is June 30, 1999. Staff is recommending approval of the revisions to the Agreement. Overall, the revisions provide clarification in the document and enhance the administrative efficiency of the organization. However, since joining PARSAC in 199 1 , staff has identified several issues which make it prudent to re-evaluate the City’s long term membership in this organization. The following points highlight some of these issues: 0 Carlsbad is a relatively large city in the pool. Out of 34 member entities, only 6 other cities provide both fire and police services. In addition, only 3 other cities have a self insured retention (SIR) of $500,000. The majority of members have an SIR well below $100,000. As a result, there are liability issues significant to Carlsbad that are not pertinent to many of the other members. Other pools may have advantages such as location and superior administration. Staff travels to Sacramento for PARSAC meetings four to five times a year. In addition to the time required for both meetings and travel, staff has been dedicating increasingly more time to PARSAC administrative oversight duties and employment issues. 0 - - Commercial coverage and/or other pools may have superior governing policies and procedures. Some examples include the investment policy, litigation management policies and procedures, settlement policies, and the length of notice required to withdraw, which directly impacts the City’s ability to periodically check the market to ensure that premiums and service remain competitive. According to Cal-Surance, the City’s insurance broker, some loss prevention services unavailable through PARSAC are provided by insurance carriers and brokers. Also, these services may be available fi-om other pools. Cal-Surance reports that commercial liability insurance for municipalities is very competitive. Earlier this year, the broker received an “indication” of price for commercial insurance from Insurance Company of the West (the current carrier of the excess coverage for PARSAC members) that is comparable to the most recent deposit premium paid to PARSAC. In addition, according to Cal-Surance, similar coverage is available from other insurance companies with a strong possibility of premiums comparable to, or better than that of PARSAC. 0 As a result of these issues, staff will conduct an analysis of liability coverage options in 1997 and return to Council with a recommendation. This recommendation will be provided before the end of this policy year so that if Council decides to withdraw from the pool, the effective date will not be later than June 30, 1999, the same date if Council decides not to approve the revised Agreement. FISCAL IMPACT None. EXHIBITS 1. 2. Resolution NO. 01 6 -3 5 9 PARSAC Joint Powers Agreement dated 1996 - * 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 l8 19 20 21 22 23 24 25 26 27 28 m - RESOLUTION NO. 9 6 - 3 5 9 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE AMENDED JOINT POWERS AGREEMENT OF THE PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA (PARSAC) WHEREAS, in 1991, the City of Carlsbad became a member of the California Municipal Insurance Authority (CMIA), now known as the Public Agency Risk Sharing Authority of California (PARSAC) for purposes of obtaining pooled liability coverage; and WHEREAS, Article XXIX of the PARSAC Joint Powers Agreement provides that the Agreement may be amended by a two-thirds vote of the Board of Directors of PARSAC; and WHEREAS, on May 3 1, 1996, upon recommendation by the Executive Committee, the Board of Directors amended the Joint Powers Agreement to add a definition of alternate, provide that the PA may be amended by a two-thirds vote of 1 Board of Directors present and voting at a meeting, and streamline the references to t Executive Committee and participation programs. ~ NOW, THEREFORE, BE IT RESOLVED by the City Council of the Cit of Carlsbad that the amended Joint Powers Agreement of the Public Agency Risk Sharing Authority of California (PARSAC) dated 1996 is hereby approved and adop I / I > * 1 2 3 4 5 6 7 8 9 10 11 12 13 14 l5 16 17 18 19 20 21 22 23 24 25 26 27 28 0 - PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 5 t h day of NOV . following vote, to wit: 1996, by the AYES: Council Members Lewis, Nygaard, Kulchin, Finnila, I NOES: None ABSENT: None ATTEST: ra-, hGvLGjJLRAN T 2, City Clerk KAREN R. KUNDTZ, Assistant City Clerk ~ 8 0 e PARSAC JOINT POWERS AGREEMENT Public Agency Risk Sharing Authority of California 0 Best Best & Krieger 0 0 TABLE OF CONTENTS E ARTICLE I DEFINITIONS ................................ ARTICLE I1 PARTIESTOAGREEMENT ...................... ARTICLE 111 PURPOSES ................................. ARTICLE IV CREATION OF THE PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA ............. ARTICLE V TERM OF AGREEMENT ........................ ARTICLE VI POWERSOFPARSAC .......................... ARTICLE VI1 RESPONSIBILITIES OF MEMBER ENTITIES ........... ARTICLE VIII BOARDOFDIRECTORS ........................ ARTICLE IX OFFICE RS,................................. ARTICLE X EXECUTIVE COMMITTEE ...................... ARTICLE XI ADMINISTRATION ........................... ARTICLE XI1 BUDG ET...........,...................... ARTICLE XIII ANNUAL AUDITS AND REVIEWS ................ ARTICLE XIV ESTABLISHMENT AND ADMINISTRATION OFFUNDS ................................ ARTICLE XV SUPPORT OF PARSAC’S GENERAL EXPENSES ....... ARTICLE XVI DEPOSIT PREMIUMS ......................... ARTICLEXVII L,IAElILITYPROGRAM ........................ ARTICLE Xvm MEMORANDA OF COVERAGE .................. ARTICLE XIX S.I.R. MANDATORY RESERVE ................. -1- RYPUBIDIA2633 0 0 ARTICLE XX RETROSPECTIVE PREMIUM ADJUSTMENTS AND ASSESSMENTS ............................... ARTICLE XXI NEW MEMBERS ............................. ARTICLE XXII WITHDRAWAL .............................. ARTICLE XXIII EXPULSION ................................ ARTICLE XXIV EFFECT OF WITHDRAWAL OR EXPULSION ON MEMBER ENTITY’S RESPONSIBILITIES ............. TERMINATION OF AGREEMENT AND DISTRIBUTION OF ASSETS ...................... ARTICLE XXVI NOTICES .................................. ARTICLE XXVII PROHIBITION AGAINST ASSIGNMENT .............. ARTICLE XXVIII AMENDMENTS .............................. ARTICLE XXIX SEVERABILITY .............................. ARTICLE XXX AGREEMENT COMPLETE ....................... ARTICLE XXXI EXECUTION OF COUNTERPARTS ................. APPENDIX “A” LIST OF MEMBER ENTITIES ..................... ARTICLE XXV .. RVWBIDIAZ833 -11- 0 e PUBLIC AGENCY RISK SHARING AUTHORITY OF CALIFORNIA FARSAC JOINT POWERS AGREEMENT THIS AGREEMENT is made in the State of California by and among 1 municipalities organized and existing under the laws of the State of California, herein referred to as "Member EntityEies]," which are parties signatory to this Agreement. All Member Entities are listed in Appendix "A", which is attached hereto and made a part he I RECITALS A. California Government Code Section 6500 and following permits two or public agencies by agreement to jointly exercise any power common to the contracting p; California Government Code Section 990.4 permits a local public entity tc insure, purchase insurance through an authorized carrier, or purchase insurane thro surplus line broker, or any combination of these; and B. C. California Government Code Section 990.6 provides that the cost of ins1 provided by a local public entity is a proper charge against that local public entity. D. California Government Code Section 990.8 permits two or more local enti by a joint powers agreement, provide insurance for any purpose by any one or more methods specified in Government Code Section 990.4 and provides that such pooling 1 insured claims or losses does not constitute the business of insurance under the Ca Insurance Code. 0 0 E. State law permits all political subdivisions of this State, including each men of a pooling arrangement under a joint exercise of powers agreement, to maintain in 1 standing a certificate of consent to self-insure against claims. F. Each of the Member Entities which is a party to this Agreement desires tc with the other Member Entities to fund programs of insurance for workers' cornpens: liability, property and other coverages to be determined and for other purposes set for Article I11 of this Agreement. G. The governing body of each Member Entity has determined that it is in its best interest and in the public interest that this Agreement be executed and that it particip a member of the Public Agency Risk Sharing Authority of California [PARSAC] created t Agreement. H. As of the effective date of this Agreement, this Agreement shall replac supersede the Joint Powers Agreement Creating the Public Agency Risk Sharing Autho California, dated May 21, 1986, as amended on November 20, 1987, July 1, 198' November 19, 1993. Now, therefore, in consideration of the above facts and the mutual benefits, promi! agreements set forth below, the Member Entities hereby agree as follows: -2- 0 0 AGREEMENT ARTICLE I DEFINITIONS The following terms shall have the following definitions: A. "Ameement" shall mean this Revised and Restated Joint Powers Agree Creating the Public Agency Risk Sharing Authority of California [PARSAC]. B. "Alternate" shall mean the person designated by the Member Entity to act director of PARSAC in the absence of the Director. The Alternate shall have the responsibility, power and authority as the Director when acting in the Director's stead. C. D. "Board" or "Board of Directors" shall mean the governing body of PAR "Bvlaws" shall mean the Bylaws of PARSAC, revised as of November 19, and as they may be further amended or revised. E. "ClaimS" shall mean any demandls] made against a Member Entity to recoi monetary damages within, or alleged to be within, the scope of coverage provided by PARSAC's Memorandums of Coverage [or any commercial insurance policy relata PARSAC Program]. F. "PARSAC" shall mean the Public Agency Risk Sharing Authority of Cal created by this Agreement. " Coveraee - Laver" shall mean a Program's layer[s] of coverage in excha G. which a Member Entity pays a Deposit Premium. H. "Covered Loss" shall mean any loss resulting from a claim or claims a; Member Entity which is in excess of its Self-Insured Retention and which is covered b PARSAC's Memorandums of Coverage (or insurance policy related to a PARSAC Pri -3- 0 0 I. "DeDosit Premium" shall mean the estimated amount determined for t Member Entity necessary to fund each layer of coverage for each Policy Year of each Prog of PARSAC. J. "Executive Committee" shall mean that committee of the Board, constitutec exercising the authority set forth in this Agreement and in the Bylaws. K. "Fiscal Year" shall mean the period of time ending on June 30 of each during which PARSAC is in existence. L. "Incurred Loss" shall mean the amount of monies paid and reserved by PAR to investigate, defend and satisfy a demand or demands made against a Member Entity. M. "Insurance" shall mean commercial insurance policies which PARSAC purchase for its Member Entities, from time to time, in order to effect a transfer of risk term "Insurance" shall not mean any self-insurance, risk-sharing or pooling of losses or "Member Entity" shall mean any California municipality which is a signatory to this Agreement including any other agency for which the City Council sits Governing board. 0. N. "Memorandum of Coverape" - shall mean the document or documents issl PARSAC specifying the type and mount of coverages provided under any Program Member Entities by PARSAC. P. "MuniciDfity" shall mean an incorporated General Law City, defi California Government Code Section 34102, or a Charter City, defined by Ca Government Code Section 34101. 4 e 0 Q- "ParticiDation Ameement" shall mean a written agreement between Pa and the Member Entities which participate in one of PARSAC's Programs, which Particip: Agreement shall incorporate this agreement by reference. R. "Policv Year" shall mean a period of time, usually 12 months, for which Program is to determine Deposit Premiums, Retrospective Premiums, and Retrospe Premium Adjustments. S. "Prom-am" shall mean arrangements to cover specific types of claims which include, but not be limited to, property, workers' compensation, and comprehensive lia claims. T. "Retroswctive Premium" shall mean, the amount determined retrospectiv each Member Entity's share of losses, reserves, expenses and interest income as m determined periodically for any Program. U. " RetrosDective Premium Adi ustment I' shall mean the amount necess periodically adjust the Deposit Premium, or prior Retrospective Premiums if any, to the calculated Retrospective Premium amount. V. "Self-Insured Retention" or "m" shall mean the amount of loss fro1 occurrence which the Member Entity shall retain and pay directly and which shall not be by the Member Entities of PARSAC. -5- 0 0 ARTICLE II PARTIES TO THE AGREEMENT Each Member Entity is a party to this Agreement and agrees that it intends to, and contract with, all other parties who are signatories of this Agreement and with such other ps as may later be added. Each Member Entity also agrees that the expulsion or withdrawal o member Entity from this Agreement shall not affect this Agreement nor the remaining p; as to the other Member Entities then remaining. ARTICLE III PURPOSES This Agreement is entered into by the Member Entities in order to: A. Create the Public Agency Risk Sharing Authority of California to carry ( purposes Iisted below and to exercise the powers contained in this Agreement; B. Develop effective risk management programs to reduce the amount and fret of their losses; C. D. Share some portion, or all, of the cost of their losses; Jointly purchase commercial insurance, associate with other risk-sharing or self-insure against risks; E. Jointly purchase administrative and other services including but not lh underwriting, risk management, loss prevention, claims adjusting, data processing, brc accounting and legal services when related to any of the other purposes; F. Provide other joint powers risk sharing authorities with management : and -6- 0 0 G. Do all things necessary to carry out the foregoing purposes, as well as all th necessary to implement the terms of this Agreement as permitted by law. ARTICLE IV CREATION OF THE PUBLIC AGENCY I RISK SHARING AUTHORITY OF CALIFORNIA Pursuant to the California Government Code, the Member Entities hereby agrc continue in existence a public entity, separate and apart from the parties to this Agreeme be known as the Public Agency Risk Sharing Authority of California ["PARSAC"]. The ( liabilities or obligations of PARSAC shall not constitute debts, liabilities or obligations c party to this Agreement. However, a Member Entity may separately contract for or as responsibility for, specific debts, liabilities or obligations of PARSAC. ARTICLE V TERM OF AGREEMENT This Agreement shall become effective as of the date hereof and shall continue force and effect until terminated in accordance with Article XXV. ARTICLE VI POWERS OF PARSAC PARSAC shall have the powers common to its Member Entities in California additional powers permitted to a joint powers authority by California law, and the partie! -7- 0 0 authorize PARSAC to do all acts necessary to exercise such powers to fulfill the purposes of Agreement , including, but not limited to, the following: A. B. C. Make and enter into contracts; Incur debts, liabilities and obligations; Acquire, hold, lease or dispose of real and personal property, contributions donations of property, funds, services and other forms of assistance; D. E. Employ agents and employees; F. Acquire, construct, manage, maintain or operate buildings, work Sue and be sued in its own name and settle any claim against it; improvements ; G. Receive, collect, and disburse monies; and invest money not requim immediate necessities; and H. of this Agreement. Exercise all powers necessary and proper to carry out the terms and prov: ARTICLE VII RESPONSIBILITIES OF MEMBER ENTITIES Each member entity shall : A. Sign this Agreement and its legally enacted amendments and particil PARSAC’S Liability Program; B. Program; Sign a Membership Resolution and Participation Agreement for each ad( -8- 0 e 1 C. Pay Deposit Premiums, Retrospective Premium Adjustments, and any Sp Assessments to PARSAC on or before the due date; D. Appoint, eIect or remove representatives to serve as director and alternate ( Board, which representatives are expressly authorized to act on behalf of the Member Ent all matters coming before the Board; E. Assure that its representative director or alternate attends at least the F meeting of the Board; F. Assure that its representative director and alternate keep informed PARSAC’s activities and assist them in doing so; G. H. Approve amendments to this Agreement as set forth in Article XXVXII; File, in a prompt and timely manner, all statewide, county, and locally-mz reports and filings, including but not limited to the Fair Political Practices Commi Statement of Economic Disclosure and the Secretary of State’s Public Agency Roster St; of Facts; I. Undertake an annual risk management audit of its facilities and ac conducted by a person and/or fm approved by PARSAC’s Executive Committee, anc upon such audit report, to evidence correction, elimination and/or clarification of a deficiencies or audit recommended corrections to the satisfaction of PARSAC’s E Committee. Risk management audits may be required by the Executive Committ frequently than annually. Risk management audits may be paid by PARSAC and chiu to Member Entities as part of the Retrospective Premium Adjustment; J. Provide PARSAC with a copy of its most recent audited annual statements prepared by a Certified Public Accountant; or, if not available, provide I -9- 0 0 with the most recent set of unaudited monthly financial statements , and any other fm material as may be requested by PARSAC from time to time; K. Cooperate with, communicate and assist, in a timely manner, PARSAC ane insurer, claims adjuster, legal counsel or other service provider engaged or retained by PAR in all matters relating to this Agreement; L. Promptly cooperate with PARSAC to determine and/or clarify any incidents \ might become losses, the cause of any and all actual losses, and methods to bring settlement of claims; and M. Comply with ifs obligations and responsibilities under this Agreement, the BJ the Memorandum of Coverage, the Risk Management Standards, PARSAC’s policie procedures, and any other contract or requirement [as any of the foregoing may be crea amended] necessary to implement this Agreement or any Program . ARTICLE VIII BOARD OF DIRECTORS Except as otherwise provided in this Agreement or in the Bylaws, the PO\; PARSAC shall be exercised, its property shall be controlled, and its affairs shall be COI by its Board of Directors, whose meetings, functions and activities shall be governed Bylaws. The Board shall be composed of one director who represents and acts on behall respective Member Entity which participates in PARSAC’s Liability Program. The m persons on the Board shall be equal to the number of Member Entities which participa Liability Program. In addition, each Member Entity shall appoint a second indiv -10- 0 0 alternate director, who shall have the authority to attend, participate in, and vote at any met of the Board when the respective director is absent. Each director and alternate director be an elected official or employee of the respective Member Entity, shall be appointed b respective Member Entity’s governing body, and shall serve at its pleasure. If a direct alternate ceases to be an employee or elected official of a Member Entity for any reason, her position on the Board and any of its committees shall immediately terminate. The Board of Directors shall have the following powers and functions: The Board shall exercise all powers and conduct all business of PARSAC, directly or by delegation of authority to other bodies or persons pursuant to this Agreeme applicable law. A. B. The Board shall form an Executive Committee from its membership. Bylaws the Board shall delegate to that Committee such powers as it sees fit. C. The Board may form such other committees as it deems appropriate in con PARSAC’s business. D. E. The Board shall elect PARSAC’S officers. The Board shall cause to be prepared and adopt PARSAC’s annual 01 budget. F. The Board shall develop, or cause to be developed, and shall review, m necessary, and adopt each of PARSAC’s Programs, including all provisions for reinsun administrative services necessary to cany out such Program. G. The Board shall contract or otherwise provide for necessary services to P and to Member Entities, These necessary services may include, but shall not be lhite -1 1- 0 0 management consulting, loss prevention and control, centralized loss reporting, actu consulting, claims adjusting, and legal defense services. H. The Board, either directly or through the Executive Committee, shall prf policy direction to PARSAC’s General Manager. I. The Board shall receive and act upon reports of its committees and the Gc Manager, either directly or through the Executive Committee. J. The Board shall establish monetary limits upon any delegation of the ‘ payment and settlement authority, beyond which a proposed settlement must be referred Board for approval. K. The Board may require that PARSAC review, audit, report upon, and recommendations with regard to the safety or claims administration functions of any IV Entity insofar as those functions are affecting PARSAC’s liability or potential liabilig 3oard may forward any or all such recommendations to the Member Entity with a reqi compliance and a statement of potential consequences for noncompliance. L. PARSAC’S funds. M. The Board shall receive, review and act upon periodic reports and ar The Board may amend, repeal or adopt new Bylaws, this Agreement or o documents. N. The Board may increase, decrease, or otherwise amend the coverages, li other terms of any Memorandum of Coverage. 0. The Board shall approve any proposal by the Executive Committee fo Assessments from the Member Entities before such Special Assessments are billed. -12- 0 0 . P. The Board may expel a Member Entity from any Program or from member in PARSAC pursuant to Article XXIII of this Agreement. Q. The Board may ratify actions of the Executive Committee, where such ratific is required before the action becomes final. R. The Board may enter into a joint venture or contractual arrangement witl similar entity and may also enter into a merger or acquisition agreement with a similar e provided that if PARSAC is not the surviving entity in any such merger or acquisition, action shall require approval by the vote of three-fourths of the Member Entities. S. The Board shall have such other powers and functions as are provided for Agreement, the Bylaws, and applicable law. ARTICLE IX OFFICERS The officers of PARSAC shall be the President, Vice President, ( Manager/Secretary , Treasurer, and AuditorKontroller , and their qualifications and duti be those set forth in the Bylaws. ARTICLE X EXECUTIVE COMMIT'IZE There shall be an Executive Committee, all of whose members shall be directc Executive Committee shall set policy for and direct the administration of PARSAC on day basis. The composition, specific authority and meeting arrangements of the f Committee shall be set forth in the Bylaws. -13- a 0 ARTICLE XI ADMINISTRATION PARSAC shall have a general manager, who shall be appointed or terminated bj Executive Committee, shall be responsible to the Executive Committee for the efficient effective administration of PARSAC, and who shall serve as the Secretary of the Authority. General Manager shall attend all meetings of the Board, the Executive Committee and committees of the Board (but shall have no vote), shall prepare and maintain all minut meetings of the Board and its Committees, notices of meetings, and records of PARSAC shall carry out all duties set forth in the Bylaws. ARTICLE XII BUDGET The Executive Committee shall recommend and the Board shall adopt an annual opc budget prior to the beginning of each Fiscal Year. - ARTICLE XIII ANNUAL AUDITS AND REVIEWS A. F’inmcial Audit. The Auditor/Controller shall cause an annual financial the accounts and records to be prepared by a Certified Public Accountant in compliar California Government Code Sections 6505 and 6505.5 or 6505.6 with respect to all : disbursements, other transactions and entries into the books of PARSAC. The n requirements of the audit shall be those prescribed by the State Controller for special under Government Code Section 26909 and shall conform to generally accepted ac -14- e 0 standards. A report of each such audit shall be filed as a public record with the Board, eacl the Member Entities, and each county auditor of the county in which each of the Men Entities is located. The report shall be filed within twelve [ 123 months of the end of the f year under examination. PARSAC shall pay all costs for such financial audits. B. Actuarial Review. The Board shall cause an annual actuarial review tl prepared for each of the Programs of PARSAC and a report of such actuarial review sk made available for inspection by the Board and the Member Entities. PARSAC shall pz costs for such actuarial review. C. Claims Audit. The Board shall cause a biannual claims audit 01 administration of the claims for each of the Programs of PARSAC. A report of such c review shall be made available for inspection by the Board and the Member Entities. PAI shall pay all costs of such claims reviews. ARTICLE XIV ESTABLISHMENT AND ADMINISTRATION OF FUNDS PARSAC shall be responsible for the strict accountability of all funds and the rei of all receipts and disbursements in accordance with generally accepted accounting prh It will comply with all provisions of law relating to this subject, including Ca Government Code Sections 6500-6525. The Treasurer of PARSAC shall establish and maintain such funds and accounts be required by good accounting practices and by the Board. Separate accounts ! established and maintained for each Program Year of each Program of PARSAC. Bc records of PARSAC in the hands of the Treasurer or other designated person shall be -15- 0 0 inspection at all reasonable times by members of the Board or authorized representatives o Member Entities. The Treasurer shall have the custody of and disburse PARSAC’s funds. He or she delegate disbursing authority to such persons as may be authorized by the Board to perforn function; provided that, pursuant to Government Code Section 6505.5, the Treasurer sha Receive and acknowledge receipt of all funds of PARSAC and place them A. treasury to the credit of PARSAC; B. Be responsible upon his or her official bond for the safekeeping and disburs of PARSAC’s funds so held by him or her; C. Pay any sums due from PARSAC as approved for payment by the Board any body or person to whom the Board has delegated approval authority, making such pq from PARSAC’s funds upon warrants drawn by the Auditor; D. Verify and report in writing to PARSAC and to Member Entities, as oft day of each quarter of the fiscal year, the amount of money then held for PARSAC, the of receipts since the last report, and the amount paid out since the last report; E. Prepare a complete written report of all financial activities within one hund twenty [ 1201 days after the close of each fiscal year for such fiscal year to the Board anc Member Entity; and F. Receive, invest, and disburse funds in accordance with the procedures esl by the Board or the Bylaws and in conformity with applicable law. Pursuant to Government Code Section 6505.1, the General Manager, the Treas such other persons as the Board may designate shall have charge of, handle, and have PARSAC’S property. -16- . 0 0 PARSAC shall secure and pay for a fidelity bond or bonds, in an amount or amounQ in form specified by the Board covering all officers and employees of PARSAC whc authorized to hold or disburse PARSAC’s funds, and all officers and employees whc authorized to have charge of, handle, and have access to PARSAC’s property. ARTICLE XV SUPPORT OF PARSAC’S GENERAL EXPENSES Costs of staffing and supporting PARSAC [hereinafter called PARSAC’s g expenses] shall be equitably allocated among the various Programs by the Board, and sl funded by the Member Entities which participate in such Programs [and ex-Member E in accordance with such allocations. ARTICLE XVI DEPOSIT PREMIUMS The Deposit Premiums for each Member Entity shall be set by PARSAC using rating and underwriting criteria, such as: [l] The Member Entity’s payroll; [2] [3] 141 [5] Total insurable values; and/or [6] Employee classification ratings. The Member Entity’s exposure base; The results of an on-site underwriting inspection; The Member Entity’s prior claims history; -17- 0 0 Deposit Premiums shall be billed to the Member Entities at least thirty [30] days prior tc inception of coverage or a new Policy Year. All Deposit Premiums shall be due and pax before the inception of coverage or on or before the fKst day of a new Policy Year. ARTICLE XVII LIABILITY PROGRAM Member Entities shall participate in PARSAC’s Liability Program as a conditi membership in PARSAC. Policy Years shall begin on July 1 of each year and shall continue through the fol June. Retroactive coverage may be provided as approved by the Board and documented Declaration Page of the respective Memorandum of Coverage. ARTICLE XMII MEMORANDA OF COVERAGE The types and amounts of coverage for each Program available to Member Entit be specified in a Memorandum of Coverage which shall be issued by PARSAC to each 1 Entity for each Program Year in which the Member Entity has coverage. The Board sk the power and authority to decrease, increase, or amend the coverage providt Memorandum of Coverage. If any such amendment is approved by the Board during Year, no Member Entity participating in that Policy Year shall be entitled to withdraw t of any said amendment prior to the termination of that Policy Year. -18- .. 0 0 ARTICLE XM S.I.R. MANDATORY RESERVES The Board may determine and require that Member Entities establish and ma’ mandatory loss reserves for claims which are less than Member Entities’ self-insured rete [S.I.R.] or deductible. ARTICLE XX RETROSPECTIVE PREMIUM ADJUSTMENTS AND ASSESSMENTS Retrospective Premium Adjustments for each Program shall be calculated period as determined by the Board and specified in the respective Participation Agrement. The may determine and levy special assessments on Member Entities by majority vote. ARTICLE XXI NEW MEMBERS Any California municipality may apply for membership in PARSAC and particip any of PARSAC’s Programs at any time. Municipalities must participate in at least the I program. PARSAC shall review all requests for membership and shall determine which a] shall be accepted for membership, in which Programs they may participate, and wt participation shall begin. Municipalities shall become new Member Entities as of the date of coverage under the Liability Program. Municipalities which are in the pr incorporation shall be covered only as of the effective date of incorporation. - 19- b 0 0 Deposit Premiums for coverage which begins during a Policy Year may be prorate the remainder of the Policy Year, in accordance with the provisions of the respe Participation Agreement. ARTICLE XXII WITHDRAWAL Member Entities shall be obligated to participate in the Liability Program for 1 three-year periods [the current Policy Year plus the two next consecutive Policy k Participation in other Programs shall be specified in the respective Participation Agreem In order to withdraw from participation from the Liability Program, a Member shall give PARSAC written notice of its intent to withdraw at any time during a Policj which withdrawal shall be effective on the expiration of the two-year period which begi the first day of the next Policy Year. Withdrawal from the Liability Program shall te coverage under it and shall constitute withdrawal from this Agreement and from membe PARSAC, subject to the ex-Member Entity’s continuing obligations under Article XXIV, Any notice of intent to withdraw may be rescinded in writing with Executive Co consent at any time earlier than ninety days before the expiration of the withdrawal pt Any Member Entity which withdraws as a participant in any Program ma participation in that Program by complying with all Program rules and regulations. -20- a a ARTICLE Xxm EXPULSION Regardless of its three-year commitment under the Liability Program, a Member Ei may be expelled from PARSAC or a Program either with or without cause. The Gen Manager shall review any lack of satisfactory performance or other problem with the Men Entity and shall attempt to resolve the matter. If the General Manager determines tha Member Entity is unwilling or unable to correct the problem, the General Manager shall prc the matter to the Executive Committee. The Executive Committee may recommend to the B that the Member Entity be expelled, either with or without cause. Action by the Board require the vote of a majority of the total number of directors. A. ExDulsion Without Cause. The Executive Committee may decide to recom that a Member Entity be expelled without cause [for no stated cause]. Written notice Executive Committee’s recommendation for expulsion shall be delivered to the Member with return receipt at least fourteen [14] days before the Board meeting at which the mattc be discussed. B. ExDuhion for Cause. If the Executive Committee’s recommendation is tc a Member Entity for cause, the Board shall appoint a hearing officer to conduct a hea the mater, and the hearing officer shall be responsible for all notices, procedures and rei connection with the hearing. Written notice of the date, time and place of the hearing with a summary of the reasons supporting the expulsion for cause shall be delivered witl receipt to the Member Entity at least fourteen [14] days before the hearing. The notj also include any guidelines concerning the procedures to be followed at the hearin hearing officer shall preside at the hearing and shall be responsible for the conduct of the -21- a 0 0 . and all rulings on procedure, evidence and law during the hearing. Both the Member Entity PARSAC shall be represented by legal counsel at the hearing. Both parties may present WI and oral evidence. A transcript of the proceedings shall be kept, either by a court report by a good quality tape recorder, a written transcription of which may be prepared a requesting party’s expense. Within thirty [30] days after the hearing is declared closed b hearing officer, he or she shall prepare written rulings of fact and law, with a recommene for further action by the Board, and shall deliver the decision to the Member Entit PARSAC. Within thirty [30] days after receipt of the hearing officer’s decision, the Boarc consider and act on the hearing officer’s recommendation. The Board shall permit the Mc Entity to present a written response to the hearing officer’s recommendations. The E decision shall be final, and if it decides to expel the Member Entity, it shall also st; effective date on which coverage terminates. C. ODDortunitv to Remedy. In considering the expulsion of a Member Ent Executive Committee shall allow the affected Member Entity a reasonable opportunity to I and remedy the reasons, if any, for the proposed expulsion. The period of time SO allowc be within the sole discretion of the Executive Committee. If such a reasonable opport allowed, PARSAC may require quarterly audits to monitor the affected Member remedial actions or any other conditions to its continued participation in PARSA( Programs. D. Alternative Coverape. A Member Entity which is the subject of a 1 expulsion shall be responsible for investigating the availability of alternate coverage. request of the Member Entity, the Board may permit the Member Entity a reasonabll -22- 0 make arrangements for alternative coverage, but such period of time shall be at the Board’s discretion. ARTICLE XXIV EFFECT OF WITHDRAWAL OR EXPULSION ON MEMBER ENTITY’S RESPONSIBILITIES The withdrawal or expulsion of any Member Entity after its participation in any Prc shall not terminate its responsibility with respect to the following: A. Provide PARSAC with such statistical and loss experience data and information as may be necessary for PARSAC to carry out the purposes of this Agreem Pay to PARSAC when due any Deposit Premiums or Retrospective Prt B. Adjustments for each Policy Year of each Program in which it participated; C. of claims; D. Cooperate fully with PARSAC in determining the cause of losses in the sett Cooperate with and assist PARSAC and any insurer, claims adjuster, legal ( or other service provider engaged or retained by PARSAC in all matters relating Agreement or a Participation Agreement; and E. Comply with the Bylaws, Participation Agreements, and all polic procedures of PARSAC not inconsistent with the provisions of this Agreement inconsistent with its withdrawal from PARSAC. In addition, PARSAC may retain all deposit Premiums, assessments, property charges paid or transferred to PARSAC, and the ex-Member Entity is obligated to future assessments made with respect to the Policy Years of any Program in -23- A 0 0 t participated, until all claims relating to such Policy Year[s] and Program[s] are settled, pa resolved, at which time PARSAC shall refund to the ex-Member Entity any premiums, dep or property which it has retained and which were not expended in settling, paying or othe resolving claims against the ex-Member Entity. ARTICLE XXV TERMINATION OF AGREEMENT AND DISTRIBUTION OF ASSETS This Agreement shall continue in full force and effect until terminated. Termina this Agreement shall also constitute the termination of all Participation Agreements i Programs. This Agreement may be terminated at any time by the vote of three-fourths Member Entities; provided, however, that this Agreement and PARSAC shall continue ’ for the purpose of disposing of all claims, the distribution of assets, and any other fu necessary to wind up the affairs of PARSAC. Upon termination of this Agreement, all assets of each Program of PARSAC ! distributed among the Member Entities [and ex-Member Entities which previously with were expelled] which participated in such Programs, in accordance with and proportic their net premium payments made during the term of this Agreement. Such distributic be determined within six [6] months after the disposal of the last pending claim or other covered by each Program. Following the termination of this Agreement, any Member Entity which was a pi in any Program of PARSAC shall pay any additional amount of premium, determirX Board or its designee in accordance with a retrospective premium adjustment, whid -24- m 0 0 ? necessary to enable final disposition of all claims arising from losses under that Program du the Member Entity's period of participation. The Board is vested with all powers of PARSAC for the purpose of concluding dissolving the business affairs of PARSAC. The Board may designate legal counsel anc committee or person to carry out a plan of dissolution adopted by the Board. ARTICLE XXVI NOTICES Notices to Member Entities under this Agreement, a Participation Agreement, ( Bylaws shall be sufficient if mailed to their respective addresses on file with PARSAC. N to PARSAC shall be sufficient if mailed to the address of the principal executive off PARSAC, addressed to the General Manager. ARTICLE XXVII PROHIBITION AGAINST ASSIGNMENT No Member Entity may assign any right, claim, or interest it may have unc Agreement, and no creditor, assignee or third party beneficiary of any Member Entity sh; any right, claim or title to any part, share, interest, fund, premium or asset of PARSA ARTICLE Xxvm AMENDMENTS This Agreement may be amended by a two-thirds vote of the Board present an at any duly convened regular or special meeting; provided that, any such amendment -25- - e 0 b submitted to the directors and the Member Entities at least thirty [30] days in advance of meeting. Any such amendment shall become effective immediately, unless otherwise si therein. ARTICLE XXM SEVERABILITY Should any portion, term, condition or provision of this Agreement be decided by a of competent jurisdiction to be illegal or in conflict with any law of the State of Californ be otherwise rendered unenforceable or ineffectual, the validity of the remaining portions, tl conditions and provisions shall not be affected thereby. ARTICLE XXX AGREEMENT COMPLETE The foregoing constitutes the full and complete agreement of the parties. There oral understandings or agreements not set forth in writing herein, except as noted with I to the Bylaws, Participation Agreements, and Memorandums of Coverage. If any provi! this Agreement conflicts with a provision of the Bylaws, a Participation Agreem Memorandum of Coverage or other document, such conflicting provisions shall be intei to avoid any such conflict, but this Agreement shall govern. -26- e e I t APPENDIX "A" LIST OF MEMBER ENTITIES City of Alturas City of Amador City City of Avalon City of Blue Lake City of Calimesa City of Calistoga City of Canyon Lake City of Carlsbad City of Clearlake City of Coalinga City of Ferndale City of Grass Valley City of Hesperia City of Highland City of Nevada City City of Pacific Grove City of Placentia City of Placerville City of Plymouth City of Point Arena City of Rancho Cucamonga City of Rialto City of Ridgecrest City of San Juan Bautista City of South Lake Tahoe City of Tehama City of Trinidad City of Truckee City of Twentynine Palms City of Watsonville City of Wheatland Town of Yountville City of Yucaipa Town of Yucca Valley RYWB/DIA2633 -28- 0 0 - c ARTICLE XXXI EXECUTION OF COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which whe executed shall be deemed to be an original, but altogether shall constitute one and the s Agreement. Public Agency Risk Sharing Authority of California ["PARSAC'I] Date: 6/25/96 By: v&& r v General Manager SI- ,: \ (. {\ I. \ J,, r* <, {I Attest: 'Dhuty Secretary, PARSAC 1. r, & 18 I Date: 11/7/96 By: Attest: Ch$Tow&& KAREN R. KUNDTZ, Assistant City Clerk -27-