06. Worker's compensation insurance
CITY OF
CUPEIUINO
City Hall
10300 Torre Avenue
Cupertino, CA 95014-3255
Telephone: (408) 777-3213
FAX: (408) 777-3109
Human Resources
SUMMARY
Agenda Item No. (0
Meeting Date: April 17, 2007
SUBJECT AND ISSUE
Authorize the City Manager to sign a joint powers agreement with the California State
Association of Counties Excess Insurance Authority to purchase excess workers'
compensation insurance.
BACKGROUND
In January 2004, the City joined the California Public Entities Insurance Authority
(CPEIA) to purchase low cost excess workers' compensation insurance. By joining
CPEIA, the city was able to participate in an insurance pool underwritten by the
California State Association of Counties Excess Insurance Authority (CSAC EIA).
With over 85 cities joining the insurance pool, CSAC EIA is restructuring to provide
cities and other non-county public entities with greater participation in its governance.
Under the new structure, cities will be allowed to join CSAC EIA directly, and CPEIA
will dissolve at the end of this fiscal year. By executing the attached joint powers
agreement, the City will continue to have the option of purchasing excess workers'
compensation insurance through CSAC EIA.
RECOMMENDA nON
Staff recommends that the City Council authorize the City Manager to sign the attached
joint powers agreement with CSAC EIA.
Submitted by:
Approved by:
~
Sandy Abe
Human Resources Director
DaVi~app
City Manager
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Printed on Recycled Paper
DRAFT
RESOLUTION NO. 07-061
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
AUTHORIZING THE CITY MANAGER TO SIGN A JOINT POWERS AGREEMENT
WITH THE CALIFORNIA STATE ASSOCIATION OF COUNTIES EXCESS
INSURANCE AUTHORITY TO PURCHASE EXCESS WORKERS' COMPENSATION
INSURANCE
WHEREAS, the City Council of the City of Cupertino approved Resolution No. 04-241 on
January 5,2004 authorizing the City Manager to sign a joint powers agreement with the California
Public Entities Insurance Authority (CPEIA) to purchase excess workers' compensation
insurance; and
WHEREAS, the CPEIA Board of Directors and the California State Association of
Counties Excess Insurance Authority (CSAC EIA) Executive Committee have worked on
restructuring CSAC EIA to allow cities and other non-county public entities to join directly; and
WHEREAS, CPEIA members may transition into CSAC EIJ\ by signing a joint powers
agreement with CSAC EIJ\ (a copy of which is attached as Exhibit A); and
WHEREAS, the City of Cupertino desires to continue the ability to purchase excess
workers' compensation insurance through CSAC EIA.
NOW, THEREFORE, BE IT RESOLVED that the City Council ofthe City of Cupertino
hereby authorizes the City Manager to sign a joint powers agreement with CSAC ErA.
PASSED AND ADOPTED at a regular City Council meeting of the City of Cupertino this
17th day of April, 2007 by the following vote:
VOTE
MEMBERS OF THE CITY COUNCIL
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
APPROVED:
City Clerk
Mayor, City of Cupertino
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Exhibit A
Adopted: October 5, 1979
Amended: May 12, 1980
Amended: January 23, 1987
Amended: October 7, 1988
Amended: March 1993
Amended: November 18, 1996
Amended: October 4, 2005
Amended: February 28, 2006
JOINT POWERS AGREEMENT
CREATING THE CSAC EXCESS INSURANCE AUTHORITY
This Agreement is executed in the State of California by and a"mong those counties and public
entities organized and existing under the Constitution of the State of California which are parties signatory
to this Agreement. The CSAC Excess Insurance Authority was formed under the sponsorship of CSAC.
All such counties, hereinafter called member counties, and public entities, hereinafter called member
public entities, [collectively "members"] shall be listed in Appendix A, which shall be attached hereto and
made a part hereof.
RECITALS
WHEREAS, Article 1, Chapter 5, Division 7, Title 1 of the California Government Code (Section
6500 et seq.) permits two or more public agencies by agreement to exercise jointly powers common to
the contracting parties; and
WHEREAS, Article 16, Section 6 of the California Constitution provides that insurance pooling
arrangements under joint exercise of power agreements shall not be considered the giving or lending of
credit as prohibited therein; and
WHEREAS, California Government Code Section 990.4 provides that a local public entity may
self-insure, purchase insurance through an authorized carrier, or purchase insurance through a surplus
line broker, or any combination of these; and
WHEREAS, pursuant to California Government Code Section 990.6, the cost of insurance
provided by a local public entity is a proper charge against the local public entity; and
WHEREAS, California Government Code Section 990.8 provides that two or more local entities
may, by a joint powers agreement, provide insurance for any purpose by anyone or more of the methods
specified in Government Code Section 990.4 and such pooling of self-insured claims or losses is not
considered insurance nor subject to regulation under the Insurance Code; and
WHEREAS, the counties and public entities executing this Agreement desire to join together for
the purpose of jointly funding and/or establishing excess and other insurance programs as determined;
NOW THEREFORE, the parties agree as fonows:
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ARTICLE 1
DEFINITIONS
"CSAC" shall mean the County Supervisors Association of California, dba California State
Association of Counties.
"Authority" shall mean the CSAC Excess Insurance Authority created by this Agreement.
"Board of Directors" or "Board" shall mean the governing body of the Authority.
"Claim" shall mean a claim made against. a member arising out of an occurrence which is
covered by an excess or primary insurance program of the Authority in which the member is a participant.
"Executive Committee" shall mean the Executive Committee of the Board of Directors of the
Authority.
"Fiscal year" shall mean that period of twelve months which is established by the Board of
Directors as the fiscal year of the Authority.
"Government Code" shall mean the California Government Code.
"Insurance program" or "program" shall mean a program of the Authority under which
participating members are protected against designated losses, either through joint purchase of primary
or excess insurance, pooling of self-insured claims or losses, purchased insurance or any other
combination as determined by the Board. The Board of Directors or the Executive Committee may
determine applicable criteria for determining eligibility in any insurance program, as well as establishing
program policies and procedures.
"Joint powers law" shall mean Article 1, Chapter 5, Division 7, Title 1 (commencing with Section
6500) of the Government Code.
"Loss" shall mean a liability or potential liability of a member, including litigation expenses,
attorneys' fees and other costs, which is covered by an insurance program of the Authority in which the
member is a participant.
"Member county" shall mean any county which, through the membership of its supervisors in
CSAC, has executed this Agreement and become a member of the Authority. "Member county" shall
also include those entities or other bodies set forth in Article 3 (c).
"Mert:lber Public Entity" shall mean any Califomia public entity which does not maintain a
membership in CSAC, has executed this Agreement and become a member of the Authority, "Member
Public Entity" shall also include those entities or other bodies set forth in Article 3(c).
"Occurrence" shall mean an event which is more fully defined in the memorandums of coverage
and/or policies of an insurance program in which the participating county or participating public entity is a
member.
"Participating county" shall mean any member county which has entered into a program
offered by the Authority pursuant to Article 14 of this Agreement and has not withdrawn or been canceled
therefrom pursuant to Articles 20 or 21.
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"Participating public entity" shall mean any member public entity which has entered into a
program offered by the Authority pursuant to Article 14 of this Agreement and has not withdrawn or been
canceled therefrom pursuant to Articles 20 or 21.
"Self.insured retention" shall mean that portion of a loss resulting from an occurrence
experienced by a member which is retained as a liability or potential liability of the member and is not
subject to payment by the Authority.
"Reinsurance" shall mean insurance purchased by the Authority as part of an insurance
program to cover that portion of any loss which exceeds the joint funding capacity of that program.
ARTICLE 2
PURPOSES
This Agreement is entered into by the member counties and member public entities in order to
jointly develop and fund insurance programs as determined. Such programs may include, but are not
limited to, the creation of joint insurance funds, including primary and excess insurance funds, the pooling
of self-insured claims and losses, purchased insurance, including reinsurance, and the provision of
necessary administrative services. Such administrative services may include, but shall not be limited to,
risk management consulting, loss prevention and control, centralized loss reporting, actuarial consulting,
claims adjusting, and legal defense services.
ARTICLE 3
PARTIES TO AGREEMENT
(a) There shall be two classes of membership of the parties pursuant to this Agreement
consisting of one class designated as Member Counties and another class designated as Member Public
Entities.
(b) Each member county and member public entity, as a party to this Agreement, certifies
that it intends to and does contract with all other members as parties to this Agreement and, with such
other members as may later be added as parties to this Agreement pursuant to Article 19 as to all
programs of which it is a participating member. Each member also certifies that the removal of any party
from this Agreement, pursuant to Articles 20 or 21, shall not affect this Agreement or the member's
obligations hereunder.
(c) A member for purposes of providing insurance coverage under any program of the
Authority, may contract on behalf of, and shall be deemed to include:
Any public entity as defined in Government Code S 811.2 which the member requests to
be added and from the time that such request is approved by the Executive Committee of the Authority.
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Any nonprofit entity, including a nonprofit public benefit corporation formed pursuant to
Corporations Code 99 5111,5120 and, 5065, which the member requests to be added and from the time
that such request is approved by the Executive Committee.
(d) Any public entity or nonprofit so added shall be subject to and included under the
member's SIR or deductible, and when so added, may be subject to such other terms and conditions as
determined by the Executive Committee.
(e) Such public entity or nonprofit shall not be considered a separate party to this
Agreement. Any public entity or nonprofit so added, shall not affect the member's representation on the
Board of Directors and shall be considered part of and represented by the member for all purposes under
this Agreement.
(f) The Executive Committee shall establish guidelines for approval of any public entity or
nonprofit so added in accordance with Article 3(c) and (d).
(g) Should any conflict arise between the provisions of this Article and any applicable
Memorandum of Coverage or other document evidencing coverage, such Memorandum of Coverage or
other document evidencing coverage shall prevail.
ARTICLE 4
TERM
This Agreement shall continue in effect until terminated as provided herein.
ARTICLE 5
CREATION OF THE AUTHORITY
Pursuant to the joint powers law, there is hereby created a public entity separate and apart from
the parties hereto, to be known as the CSAC Excess Insurance Authority, with such powers as are
hereinafter set forth.
ARTICLE 6
POWERS OF THE AUTHORITY
The Authority shall have all of the powers common to General Law counties in California, such as
Alpine County and all additional powers set forth in the joint powers law, and is hereby authorized to do
all acts necessary for the exercise of said powers. Such powers include, but are not limited to, the
following:
(a) To make and enter into contracts.
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(b) To incur debts, liabilities, and obligations.
(c) To acquire, hold, or dispose of property, contributions and donations of property, funds,
services, and other forms of assistance from persons, firms, corporations, and government entities.
(d) To sue and be sued in its own name, and to settle any claim against it.
(e) To receive and use contributions and advances from members as provided in
Government Code Section 6504, including contributions or advances of personnel, equipment, or
properly.
(f) To invest any money in its treasury that is not required for its immediate necessities,
pursuant to Govemment Code Section 6509.5.
(g) To carry out all provisions of this Agreement.
Said powers shall be exercised pursuant to the terms hereof and in the manner provided by law.
ARTICLE 7
BOARD OF DIRECTORS
The Authority shall be govemed by the Board of Directors, which shall be composed as follows:
a) One director from each member county, appointed by the member county board
of supervisors and serving at the pleasure of that body. Each member county board of supervisors shall
also appoint an altemate director who shall have the authority to attend, participate in and vote at any
meeting of the Board when the director is absent. A director or alternate director shall be a county
supervisor, other county official, or staff person of the member county, and upon termination of office or
employment with the county, shall automatically terminate membership or alternate membership on the
Board.
b) Ten directors consisting of seven directors and three alternate directors chosen
in the manner specified in the Bylaws from those participating as public entity members. A director or
alternate public entity director shall be an official, or staff person of the public entity member, and upon
termination of office or employment with the public entity, shall automatically terminate membership or
alternate membership on the Board.
c) Member county directors shall consist of a minimum of 80% of the eligible voting
members on the Board. The public entity member directors shall be reduced accordingly to ensure at
least 80% of the Board consists of county director members (By way of example, if the number of county
members is reduced from the current 54 by member withdrawals to a level of 28, then county members
would be at the 80% level, 28/35. If the county members go to 27, then the public entity members would
lose one seat and would only have 6 votes).
Any vacancy in a county director or alternate director position shall be filled by the appointing
county's board of supervisors, subject to the Provisions of this Article. Any vacancy in a publiC entity
director position shall be filled by vote of the public entity members.
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A majority of the membership of the Board shall constitute a quorum for the transaction of
business. Each member of the Board shall have one vote. Except as otherwise provided in this
Agreement or any other duly executed agreement of the members, all actions of the Board shall require
the affirmative vote of a majority of the members; provided, that any action which is restricted in effect to
one of the Authority's insurance programs, shall require the affirmative vote of a majority of those Board
members who represent counties and public entities participating in that program. For purposes of an
insurance program vote, to the extent there are public entity members participating in a program, the
public entity Board members as a whole shall have a minimum of one vote. The public entity Board
members may in no event cast more votes than would constitute 20% of the number of total county
members in that program (subject to the one vote minimum). Should the number of public entity Board
votes authorized herein be less than the number of public entity Board members at a duly noticed
meeting, the public entity Board members shall decide among themselves which Board member shall
vote. Should they be unable to decide, the President of the Authority shall determine which director(s)
shall vote.
ARTICLE 8
POWERS OF THE BOARD OF DIRECTORS
The Board of Directors shall have the following powers and functions:
(a) The Board shall exercise all powers and conduct all business of the Authority, either
directly or by delegation to other bodies or persons unless otherwise prohibited by this Agreement, or any
other duly executed agreement of the members or by law.
(b) The Board of Directors may adopt such resolutions as deemed necessary in the exercise
of those powers and duties set forth herein.
(c) The Board shall form an Executive Committee, as provided in Article 11. The Board may
delegate to the Executive Committee and the Executive Committee may discharge any powers or duties
of the Board except adoption of the Authority's annual budget. The powers and duties so delegated shall
be specified in resolutions adopted by the Board.
(d) The Board may form, as provided in Article 12, such other committees as it deems
appropriate to conduct the business of the Authority. The membership of any such other committee may
consist in whole or in part of persons who are not members of the Board; provided that the Board may
delegate its powers and duties only to a committee of the Board composed of a majority of Board
members and/or alternate members. Any committee which is not composed of a majority of Board
members and/or alternate members may function only in an advisory capacity.
(e) The Board shall elect the officers of the Authority and shall appoint or employ necessary
staff in accordance with Article 13.
(f) The Board shall cause to be prepared, and shall review, modify as necessary, and adopt
the annual operating budget of the Authority. Adoption of the budget may not be delegated.
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(g) The Board shall develop, or cause to be developed, and shall review, modify as
necessary, and adopt each insurance program of the Authority, including all provisions for reinsurance
and administrative services necessary to carry out such program.
(h) The Board, directly or through the Executive Committee, shall provide for necessary
services to the Authority and to members, by contract or otherwise, which may include, but shall not be
limited to, risk management consulting, loss prevention and control, centralized loss reporting, actuarial
consulting, claims adjusting, and legal services.
(i) The Board shall provide general supervision and policy direction to the Chief Executive
Officer.
U) The Board shall receive and act upon reports of the committees and the Chief Executive
Officer.
(k) The Board shall act upon each claim involving liability of the Authority, directly or by
delegation of authority to the Executive Committee or other committee, body or person, provided, that the
Board shall establish monetary limits upon any delegation of claims settlement authority, beyond which a
proposed settlement must be referred to the Board for approval.
(I) The Board may require that the Authority review, audit, report upon, and make
recommendations with regard to the safety or claims administration functions of any member, insofar as
those functions affect the liability or potential liability of the Authority. The Board may forward any or all
such recommendations to the member with a request for compliance and a statement of potential
consequences for noncompliance.
(m) The Board shall receive, review and act upon periodic reports and audits of the funds of
the Authority, as required under Articles 15 and 16 of this Agreement.
(n) The Board may, upon consultation with a casualty actuary, declare that any funds
established for any program has a surplus of funds and determine a formula to return such surplus to the
participating counties and participating public entities which have contributed to such fund.
(0) The Board shall have such other powers and duties as are reasonably necessary to carry
out the purposes of the Authority.
ARTICLE 9
MEETINGS OF THE BOARD OF DIRECTORS
(a) The Board shall hold at least one regular meeting each year and shall provide for such
other regular meetings and for such special meetings as it deems necessary.
(b) The Chief Executive Officer of the Authority shall provide for the keeping of minutes of
regular and special meetings of the Board, and shall provide a copy of the minutes to each member of the
Board at the next scheduled meeting.
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(c) All meetings of the Board, the Executive Committee and such committees as established
by the Board pursuant to Article 12 herein, shall be called, noticed, held and conducted in accordance
with the provisions of Government Code Section 54950 et seq.
ARTICLE 10
OFFICERS
The Board of Directors shall elect from its membership a President and Vice President of the
Board, to serve for one-year terms.
The President, or in his or her absence, the Vice President, shall preside at and conduct all
meetings of the Board and shall chair the Executive Committee.
ARTICLE 11
EXECUTIVE COMMITTEE
The Board of Directors shall establish an Executive Committee of the Board which shall consist
of eleven members: the President and Vice President of the Board, and nine members elected by the
Board from its membership.
The terms of office of the nine non-officer members shall be as provided in the Bylaws of the
Authority.
The Executive Committee shall conduct the business of the Authority between meetings of the
Board, exercising all those powers as provided for in Article 8, or as otherwise delegated to it by the
Board.
ARTICLE 12
COMMITTEES
The Board of Directors may establish committees, as it deems appropriate to conduct the
business of the Authority. Members of the committees shall be appointed by the Board, to serve two year
terms, subject to reappointment by ttie Board. The members of each committee shall annually select one
of their members to chair the Committee.
Each committee shall be composed of at least five members and shall have those duties as
determined by the Board, or as otherwise set forth in the Bylaws.
Each committee shall meet on the call of its chair, and shall report to the Executive Committee
and the Board as directed by the Board.
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ARTICLE 13
STAFF
(a) Principal Staff. The following staff members shall be appointed by and serve at the
pleasure of the Board of Directors:
(1) Chief Executive Officer. The Chief Executive Officer shall administer the
business and activities of the Authority, subject to the general supervision and policy direction of the
Board of Directors and Executive Committee; shall be responsible for all minutes, notices and records of
the Authority and shall perform such other duties as are assigned by the Board and Executive
Committee.
(2) Treasurer. The duties of the Treasurer are set forth in Article 16 of this
Agreement. Pursuant to Government Code Section 6505.5, the Treasurer shall be the county treasurer
of a member county of the Authority, or, pursuant to Government Code Section 6505.6, the Board may
appoint one of its officers or employees to the position of Treasurer, who shall comply with the. provisions
of Government Code Section 6505.5 (a-d).
(3) Auditor. The Auditor shall draw warrants to pay demands against the Authority
when approved by the Treasurer. Pursuant to Government Code Section 6505.5, the Auditor shall be the
Auditor of the county from which the Treasurer is appointed by the Board under (2) above, or, pursuant to
Government Code Section 6505.6, the Board may appoint one of its officers or employees to the position
of Auditor, who shall comply with the provisions of Government Code Section 6505.5 (a-d).
(b) Charges for Treasurer and Auditor Services. Pursuant to Government Code Section
6505, the charges to the Authority for the services of Treasurer and Auditor shall be determined by the
board of supervisors of the member county from which such staff members are appointed.
(c) Other Staff. The Board, Executive Committee or Chief Executive Officer shall provide
for the appointment of such other staff as may be necessary for the administration of the Authority.
ARTICLE 14
DEVELOPMENT, FUNDING AND IMPLEMENTATION
OF INSURANCE PROGRAMS
(a) Program Coverage. Insurance programs of the Authority may provide coverage,
including excess insurance coverage for:
(1) Workers' compensation;
(2) Comprehensive liability, including but not limited to general, personal injury,
contractual, public officials errors and omissions, and incidental malpractice liability;
(3) Comprehensive automobile liability;
(4) Hospital malpractice liability;
(5) Property and related programs;
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and may provide any other coverages authorized by the Board of Directors. The Board shall determine,
for each such program, a minimum number of participants required for program implementation and may
develop specific program coverages requiring detailed agreements for implementation of the above
programs.
(b) Program and Authority Funding. The members developing or participating in an
insurance program shall fund all costs of that program, including administrative costs, as hereinafter
provided. Costs of staffing and supporting the Authority, hereinafter called Authority general expenses,
shall be equitably allocated among the various programs by the Board, and shall be funded by the
members developing or participating in such programs in accordance with such allocations, as hereinafter
provided. In addition, the Board may, in its discretion, allocate a share of such Authority general expense
to those members which are not developing or participating in any program, and require those counties
and public entities to fund such share through a prescribed charge.
(1) Development Charge. Development costs of an insurance program shall be
funded by a development charge, as established by the Board of Directors. The development charge
shall be paid by each participant in the program following the program's adoption by the Board.
Development costs are those costs actually incurred by the Authority in developing a program for review
and adoption by the Board of Directors, including but not limited to: research, feasibility studies,
information and liaison work among participants, preparation and review of documents, and actuarial and
risk management consulting services. The development charge may also include a share of Authority
general expenses, as allocated to the program development function.
The development charge shall be billed by the Authority to all participants in the
program upon establishment of the program and shall be payable in accordance with the Authority's
invoice and payment policy.
Upon the conclusion of program development: any deficiency in development
funds shall be billed to all participants which have paid the development charge, on a pro-rata or other
equitable basis, as determined by the Board; any surplus in such funds shall be transferred into the
Authority's general expense funds.
(2) Annual Premium. Except as provided in (3) below, all post-development costs
of an insurance program shall be funded by annual premiums charged to the members participating in the
program each policy year, and by interest earnings on the funds so accumulated. Such premiums shall
be determined by the Board of Directors upon the basis of a cost allocation plan and rating formula
developed by the Authority with the assistance of a casualty actuary, risk management consultant, or
other qualified person. The premium for each participating member shall include that participant's share
of expected program losses including a margin for contingencies as determined by the Board, program
reinsurance costs, and program administrative costs for the year, plus that participant's share of Authority
general expense,allocated to the program by the Board.
(3) Premium Surcharge
(i) If the Authority experiences an unusually large number of losses under a
program during a policy year, such that notwithstanding reinsurance coverage for large individual losses,
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the joint insurance funds for the program may be exhausted before the next annual premiums are due,
the Board of Directors may, upon consultation with a casualty actuary, impose premium surcharges on all
participating members; or
(ii) If it is determined by the Board of Directors, upon consultation with a
casualty actuary, that the joint insurance funds for a program are insufficient to pay losses, fund known
estimated losses, and fund estimated losses which have been incurred but not reported, the Board of
Directors may impose a surcharge on all participating members.
(iii) Premium surcharges imposed pursuant to (i) and/or (ii) above shall be in
an amount which will assure adequate funds for the program to be actuarially sound; provided that the
surcharge to any participating member shall not exceed an amount equal to three (3) times the member's
annual premium for that year, unless otherwise determined by the Board of Directors.
Provided, however, that no premium surcharge in excess of three times
the member's annual premium for that year may be assessed unless, ninety days prior to the Board of
Directors taking action to determine the amount of the surcharge, the Authority notifies the governing
body of each participating member in writing of its recommendations regarding its intent to assess a
premium surcharge and the amount recommended to be assessed each member. The Authority shall,
concurrently with the written notification, provide each participating member with a copy of the actuarial
study upon which the recommended premium surcharge is based.
(iv) A member which is no longer a participating member at the time the
premium surcharge is assessed, but which was a participating member during the policy year(s) for which
the premium surcharge was assessed, shall pay such premium surcharges as it would have otherwise
been assessed in accordance with the provisions of (i), (ii), and (iii) above.
(c) Program Implementation and Effective Date. Upon establishment of an insurance
program by the Board of Directors, the Authority shall determine the manner of program implementation
and shall give written notice to all members of such program, which shall include, but not be limited to:
program participation levels, coverages and terms of coverage of the program, estimates of first year
premium charges, program development costs, effective date of the program (or estimated effective date)
and such other program provisions as deemed appropriate.
(d) Late Entry Into Program. A member which does not elect to enter an insurance
program upon its implementation, pursuant to (c) above, or a county or public entity which becomes a
party to this Agreement following implementation of the program, may petition the Board of Directors for
late entry into the program. Such request may be granted upon a majority vote of the Board members,
plus a majority vote of those board members who represent participants in the program. Altematively, a
county or public entity may petition the Executive Committee for late entry into the program, or a program
committee, when authorized by an MOU governing that specific program, may approve late entry into that
program. Such request may be granted upon a majority vote of the Executive Committee or program
committee.
As a condition of late entry, the member shall pay the development charge for the
program, as adjusted at the conclusion of the development period, but not subject to further adjustment,
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and also any costs incurred by the Authority in analyzing the member's loss data and determining its
annual premium as of the time of entry.
(e) Reentry Into A Program. Any county or public entity that is a member of an insurance
program of the Authority who withdraws or is cancelled from an insurance program under Articles 21 and
22, may not reenter such insurance program for a period of three years from the effective date of
withdrawal or cancellation.
ARTICLE 15
ACCOUNTS AND RECORDS
(a) Annual Budget. The Authority shall annually adopt an operating budget pursuant to
Article 8 of this Agreement, which shall include a separate budget for each insurance program under
development or adopted and implemented by the Authority.
(b) Funds and Accounts. The Auditor of the Authority shall establish and maintain such
funds and accounts as may be required by good accounting practices and by the Board of Directors.
Separate accounts shall be established and maintained for each insurance program under development
or adopted and implemented by the Authority. Books and records of the Authority in the hands of the
Auditor shall be open to inspection at all reasonable times by authorized representatives of members.
The Authority shall adhere to the standard of strict accountability for funds set forth in
Government Code Section 6505.
(c) Auditor's Report. The Auditor, within one hundred and twenty (120) days after the
close of each fiscal year, shall give a complete written report of all financial activities for such fiscal year
to the Board and to each member.
(d) Annual Audit. Pursuant to Government Code Section 6505, the Authority shall either
make or contract with a certified public accountant to make an annual fiscal year audit of all accounts and
records of the Authority, conforming in all respects with the requirements of that section. A report of the
audit shall be filed as a public record with each of the members and also with the county auditor of the
county where the home office of the Authority is located and shall be sent to any public agency or person
in California that submits a written request to the Authority. The report shall be filed within six months of
the end of the fiscal year or years under examination. Costs of the audit shall be considered a general
expense of the Authority.
ARTICLE 16
RESPONSIBILITIES FOR FUNDS AND PROPERTY
(a) The Treasurer shall have the custody of and disburse the Authority's funds. He or she
may delegate disbursing authority to such persons as may be authorized by the Board of Directors to
perform that function, subject to the requirements of (b) below.
(b) Pursuant to Government Code Section 6505.5, the Treasurer shall:
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(1) Receive and acknowledge receipt for all funds of the Authority and place them in
the treasury of the Treasurer to the credit of the Authority.
(2) Be responsible upon his or her official bond for the safekeeping and
disbursements of all Authority funds so held by him or her.
(3) Pay any sums due from the Authority, as approved for payment by the Board of
Directors or by any body or person to whom the Board has delegated approval authority, making such
payments from Authority funds upon warrants drawn QY the Auditor.
(4) Verify and report in writing to the Authority and to members, as of the first day of
each quarter of the fiscal year, the amount of money then held for the Authority, the amount of receipts
since the last report, and the amount paid out since the last report.
(c) Pursuant to Government Code Section 6505.1, the Chief Executive Officer, the
Treasurer, and such other persons as the Board of Directors may designate shall have charge of, handle,
and have access to the property of the Authority.
(d) The Authority shall secure and pay for a fidelity bond or bonds, in an amount or amounts
and in the form specified by the Board of Directors, covering all officers and staff of the Authority, and all
officers and staff who are authorized to have charge of, handle, and have access to property of the
Authority.
ARTICLE 17
RESPONSIBILITIES OF MEMBERS
Members shall have the following responsibilities under this Agreement.
(a) The board of supervisors of each member county shall appoint a representative and one
alternate representative to the Board of Directors, pursuant to Article 7.
(b) Each member shall appoint an officer or employee of the member to be responsible for
the risk management function for that member and to serve as a liaison between the member and the
Authority for all matters relating to risk management.
(c) Each member shall maintain an active safety program, and shall consider and act upon
all recommendations of the Authority concerning the reduction of unsafe practices.
(d) Each member shall maintain its own claims and loss re,cords in each category of liability
covered by an insurance program of the Authority in which the member is a participant, and shall provide
copies of such records to the Authority as directed by the Board of Directors or Executive Committee, or
to such other committee as directed by the Board or Executive Committee.
(e) Each member shall pay development charges, premiums, and premium surcharges due
to the Authority as required under Article 14. Penalties for late payment of such charges, premiums
and/or premium surcharges shall be as determined and assessed by the Board of Directors. After
withdrawal, cancellation, or termination action under Articles 20, 21, or 23, each member shall pay
promptly to the Authority any additional premiums due, as determined and assessed by the Board of
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Directors under Articles 22 or 23. Any costs incurred by the Authority associated with the collection of
such premiums or other charges, shall be recoverable by the Authority.
(f) Each member shall provide the Authority such other information or assistance as may be
necessary for the Authority to develop and implement insurance programs under this Agreement.
(g) Each member shall cooperate with and assist the Authority, and any insurer of the
Authority, in all matters relating to this Agreement, and shall comply with all Bylaws, and other rules by
the Board of Directors.
(h) Each member county shall maintain membership in CSAC.
(i) Each member shall have such other responsibilities as are provided elsewhere in this
Agreement, and as are established by the Board of Directors in order to carry out the purposes of this
Agreement.
ARTICLE 18
ADMINISTRATION OF CLAIMS
(a) Subject to subparagraph (e), each member shall be responsible for the investigation,
settlement or defense, and appeal of any claim made, suit brought, or proceeding instituted against the
member arising out of a loss.
(b) The Authority may develop standards for the administration of claims for each insurance
program of the Authority so as to permit oversight of the administration of claims by the members.
(c) Each participating member shall give the Authority timely written notice of claims in
accordance with the provisions of the Bylaws.
(d) A member shall not enter into any settlement involving liability of the Authority without the
advance written consent of the Authority.
(e) The Authority, at its own election and expense, shall have the right to participate with a
member in the settlement, defense, or appeal of any claim, suit or proceeding which, in the judgment of
the Authority, may involve liability of the Authority.
ARTICLE 19
NEW MEMBERS
Any California public entity may become a party to this Agreement and participate in any
insurance program in which it is not presently participating upon approval of the Board of Directors, by a
majority vote of the members, or by majority vote of the Executive Committee.
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ARTICLE 20
WITHDRAWAL
(a) A member may withdraw as a party to this Agreement upon thirty (30) days advance
written notice to the Authority if it has never become a participant in any insurance program pursuant to
Article 14, or if it has previously withdrawn from all insurance programs in which it was a participant.
(b) After becoming a participant in an insurance program, a member maywithdraw from that
program only at the end of a policy year for the program, and only if it gives the Authority at least sixty
(60) days advance written notice of such action.
ARTICLE 21
CANCELLATION
(a) Notwithstanding the provisions of Article 20, the Board of Directors may:
(1) Cancel any member from this Agreement and membership in the Authority, on a
majority vote of the Board members. Such action shall have the effect of canceling the member's
participation in all insurance programs of the Authority as of the date that all membership is canceled.
(2) Cancel any member's participation in an insurance program of the Authority,
without canceling the member's membership in the Authority or participation in other programs, on a vote
of two-thirds of the Board members present and voting who represent participants in the program.
The Board shall give sixty (60) days advance written notice of the effective' date
of any cancellation under the foregoing provisions. Upon such effective date, the member shall be
treated the same as if it had voluntarily withdrawn from this Agreement, or from the insurance program,
as the case may be.
(b) A member that does not enter one or more of the insurance programs developed and
implemented by the Authority within the member's first year as a member of the Authority shall be
considered to have withdrawn as a party to this Agreement at the end of such period, and its membership
in the Authority shall be automatically canceled as of that time, without action of the Board of Directors.
(c) A member which withdraws from all insurance programs of the Authority in which it was a
participant and does not enter any program for a period of six (6) months thereafter shall be considered to
have withdrawn as a party to the Agreement at the end of such period, and its membership in the
Authority shall be automatically canceled as of that time, without action of the Board of Directors.
(d) A member county that terminates its membership in CSAC shall be considered to have
thereby withdrawn as a 'party to this Agreement, and its membership in the Authority and participation in
any insurance program of the Authority shall be automatically canceled as of that time, without the action
of the Board of Directors.
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ARTICLE 22
EFFECT OF WITHDRAWAL OR CANCELLATION
(a) If a member's participation in an insurance program of the Authority is canceled under
Article 21, with or without cancellation of membership in the Authority, and such cancellation is effective
before the end of the policy year for that program, the Authority shall promptly determine and return to
that member the amount of any unearned premium payment from the member for the policy year, such
amount to be computed on a pro-rata basis from the effective date of cancellation.
(b) Except as provided in (a) above, a member which withdraws or is canceled from this
Agreement and membership in the Authority, or from any program of the Authority, shall not be entitled to
the return of any premium or other payment to the Authority, or of any property contributed to the
Authority. However, in the event of termination of this Agreement, such member may share in the
distribution of assets of the Authority to the extent provided in Article 23 provided; however, that any
withdrawn or canceled member which has been assessed a premium surcharge pursuant to Article 14 (b)
(3) (ii) shall be entitled to return of said member's unused surcharge, plus interest accrued thereon, at
such time as the Board of Directors declares that a surplus exists in any insurance fund for which a
premium surcharge was assessed.
(c) Except as provided in (d) below, a member shall pay any premium charges which the
Board of Directors determines are due from the member for losses and costs incurred during the entire
coverage year in which the member was a participant in such program regardless of the date of entry into
such program. Such charges may include any deficiency in a premium previously paid by the member,
as determined by audit under Article 14 (b) (2); any premium surcharge assessed to the member under
Article 14 (b) (3); and any additional amount of premium which the Board determines to be due from the
member upon final disposition of all claims arising from losses under the program during the entire
coverage year in which the member was a participant regardless of date of entry into such program. Any
such premium charges shall be payable by the member in accordance with the Authority's invoice and
payment policy.
(d) Those members which who have withdrawn or been canceled pursuant to Articles 20
and 21 from any program of the Authority during a coverage year shall pay any premium charges which
the Board of Directors determines are due from the members for losses and costs which were incurred
during the county's participation in any program.
ARTICLE 23
TERMINATION AND DISTRIBUTION OF ASSETS
(a) A three-fourths vote of the total voting membership of the Authority, consisting of member
counties, acting through their boards of supervisors, and the voting Board members from the member
public entities, is required to terminate this Agreement; provided, however, that this Agreement and the
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Authority shall continue to exist after such election for the purpose of disposing of all claims, distributing
all assets, and performing all other functions necessary to conclude the affairs of the Authority.
(b) Upon termination of this Agreement, all assets of the Authority in each insurance
program shall be distributed among those members which participated in that program in proportion to
their cash contributions, including premiums paid and property contributed (at market value when
contributed). The Board of Directors shall determine such distribution within six (6) months after disposal
of the last pending claim or other liability covered by the program.
(c) Following termination of this Agreement, any member which was a participant in an
insurance program of the Authority shall pay any additional amount of premium, determined by the Board
of Directors in accordance with a loss allocation formula, which may be necessary to enable final
disposition of all claims arising from losses under that program during the entire coverage year in which
the member was a participant regardless of the date of entry into such program.
ARTICLE 24
LIABILITY OF BOARD OF DIRECTORS, OFFICERS, COMMITTEE MEMBERS
AND LEGAL ADVISORS
The members of the Board of Directors, Officers, committee members and legal advisors to any
Board or committees of the Authority shall use ordinary care and reasonable diligence in the exercise of
their powers and in the performance of their duties pursuant to this Agreement. They shall not be liable
for any mistake of judgment or any other action made, taken or omitted by them in good faith, nor for any
action taken or omitted by any agent, employee or independent contractor selected with reasonable care,
nor for loss incurred through investment of Authority funds, or failure to invest.
No Director, Officer, committee member, or legal advisor to any Board or committee shall be
responsible for any action taken or omitted by any other Director, Officer, committee member, or legal
advisor to any committee. No Director, Officer, committee member or legal advisor to any committee
shall be required to give a bond or other security to guarantee the faithful performance of their duties
pursuant to this Agreement.
The funds of the Authority shall be used to defend, indemnify and hold harmless the Authority
and any Director, Officer, committee member or legal advisor to any committee for their actions taken
within the scope of the authority of the Authority. Nothing herein shall limit the right of the Authority to
purchase insurance to provide such coverage as is hereinabove set forth.
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ARTICLE 25
BYLAWS
The Board may adopt Bylaws consistent with this Agreement which shall provide for the
administration and management of the Authority.
ARTICLE 26
NOTICES
The Authority shall address notices, billings and other communications to a member as directed
by the member. Each member shall provide the Authority with the address to which communications are
to be sent. Members shall address notices and other communications to the Authority to the Chief
Executive Officer of the Authority, at the office address of the Authority as set forth in the Bylaws.
ARTICLE 27
AMENDMENT
A two-thirds vote of the total voting membership of the Authority, consisting of member counties,
acting through their boards of supervisors, and the voting Board members from member public entities, is
required to amend this Agreement.
ARTICLE 28
PROHIBITION AGAINST ASSIGNMENT
No member may assign any right, claim or interest it may have under this Agreement, and no
creditor, assignee or third party beneficiary of any member shall have any right, claim or title to any part,
share, interest, fund, premium or asset of the Authority.
ARTICLE 29
AGREEMENT COMPLETE
This Agreement constitutes the full and complete Agreement of the parties.
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ARTICLE 30
EFFECTIVE DATE OF AMENDMENTS
Any amendment of this Agreement shall become effective upon the date specified by the Board
and upon approval of any Amended Agreement as required in Article 27. Approval of any amendment by
the voting boards of supervisors and public entity board member's must take place no later than 30 days
from the effective date specified by the Board.
ARTICLE 31
DISPUTE RESOLUTION
When a dispute arises between the Authority and a member. the following procedures are to be
followed:
(a) Request for Reconsideration. The member will make a written request to the Authority
for the appropriate Committee to reconsider their position, citing the arguments in favor of the member
and any applicable case law that applies. The member can also, request a personal presentation to that
Committee, if it so desires.
(b) Committee Appeal. The committee responsible for the program or having jurisdiction
over the decision in question will review the matter and reconsider the Authority's position. This
committee appeal process is an opportunity for both sides to discuss and substantiate their positions
based upon legal arguments and the most complete information available. If the member requesting
reconsideration is represented on the committee having jurisdiction, that committee member shall be
deemed to have a conflict and shall be excluded from any vote.
(c) Executive Committee Appeal. If the member is not satisfied with the outcome of the
committee appeal, the matter will be brought to the Executive Committee for reconsideration upon
request of the member. If the member requesting reconsideration is represented on the Executive
Committee, that Executive Committee member shall be deemed to have a conflict and shall be excluded
from any vote.
(d) Arbitration. If the member is not satisfied with the outcome of the Executive Committe~
appeal, the next step in the appeal process is arbitration. The arbitration, whether binding or non-binding,
is to be mutually agreed upon by the parties. The matter will be submitted to a mutually agreed arbitrator
or panel of arbitrators for a determination. If Binding Arbitration is selected, then of course the decision of
the arbitrator is final. Both sides agree to abide by the decision of the arbitrator. The cost of arbitration
will be shared equally by the involved member and the Authority.
(e) Litigation. If, after following the dispute resolution procedure paragraphs a-d, either party
is not satisfied with the outcome of the non-binding arbitration process, either party may consider litigation
as a possible remedy to the dispute.
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ARTICLE 32
FILING WITH SECRETARY OF STATE
The Chief Executive Officer of the Authority shall file a notice of this Agreement with the office of
California Secretary of State within 30 days of its effective date, as required by Government Code Section
6503.5 and within 70 days of its effective date as required by Government Code Section 53051.
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IN WITNESS WHEREOF, the undersigned party hereto has executed this Agreement on the date
indicated below.
DATE:
Seal:
MEMBER:
(Print Name of Member)
BY:
(Authorized signature of Member)
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IN WITNESS WHEREOF, the undersigned party hereto has executed this Agreement on the date
indicated below.
DATE:
MEMBER:
(Print Name of Member)
BY:
(Authorized signature of Member)
Seal:
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APPENDIX A
JOINT POWERS AGREEMENT
CREATING THE CSAC EXCESS INSURANCE AUTHORITY
MEMBER COUNTIES (AS OF MARCH 2005)
ALAMEDA
ALPINE
AMADOR
BUTTE
CALAVERAS
COLUSA
CONTRA COSTA
DEL NORTE
ELDORADO
FRESNO
GLENN
HUMBOLDT
IMPERIAL
INYO
KERN
KINGS
LAKE
LASSEN
MADERA
MARIN
MARIPOSA
MENDOCINO
MERCED
MODOC
MONO
MONTEREY
NAPA
NEVADA
PLACER
PLUMAS
RIVERSIDE
SACRAMENTO
SAN BENITO
SAN BERNARDINO
SAN DIEGO
SAN JOAQUIN
SAN LUIS OBISPO
SANTA BARBARA
SANTA CLARA
SANTACRUZ
SHASTA
SIERRA
SISKIYOU
SOLANO
SONOMA
STANISLAUS
SUTTER
TEHAMA
TRINITY
TULARE
TUOLUMNE
VENTURA
YOLO
YUBA
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