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ITEM 12
City Council Memorandum Human Resources Memo No.
Date:
October 14, 2021
To:
Mayor and Council
Thru:
Joshua H. Wright, City Manager
From:
Rae Lynn Nielsen, Human Resources Director
Subject:
Resolution No. 5519, Renewal Request to Industrial Commission of Arizona for Continued Exemption from Requirement to Post Security for Self-Insured Workers' Compensation Program
Proposed Motion:
Move City Council pass and adopt Resolution No. 5519, renewing the request to the Industrial Commission of Arizona for continued exemption from requirement to post security for Self-Insurance Workers' Compensation Program.
Background:
The City of Chandler was approved by the Industrial Commission of Arizona (ICA) to self-insure workers' compensation benefits on January 1, 2003. A requirement of self-insured programs is to post a security bond with the ICA in order to ensure performance in the event that a self-insured program becomes insolvent.
On April 4, 2005, the ICA implemented rules governing management of the workers' compensation self-insurance program. Rule No. R20-5-1114 includes an “Exemption from Requirement to Post Security,” reproduced below:
“A public entity application or public entity self-insurer is exempt from the requirement under this Article to post or provide security if the public entity:
Has a fully funded risk management fund sufficient to cover actuarial liabilities for workers' compensation as determined by the self-insurer in accordance with Government Accounting Standards Board Statement #10; and
Provided funding to the risk management fund each year sufficient to cover actuarial liabilities for workers' compensation as determined by the self-insurer in accordance with Government Accounting Standards Board Statement #10.”
The Industrial Commission of Arizona requires a majority of the members of the City of Chandler governing body to certify that it meets the conditions required for a public entity to be self-insured and exempt to post or provide a security bond under A.A.C. Section R20-5-1114(A) and A.A.C. R20-5-114(B)(1-3).
Financial Implications:
Since the inception of its self-insured program in January 2003, the City has expended a total of
$16,745
to purchase Security Bonds. The City's application for exemption to post security was accepted and the City will no longer incur expenditures for bonds.
Attachments
Resolution No. 5519
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