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ITEM 23

City Council Memorandum Human Resources Memo No.

Date:

October 14, 2024

To:

Mayor and Council

Thru:

Joshua H. Wright, City Manager
Tadd Wille, Assistant City Manager
Rae Lynn Nielsen, Human Resources Director

From:

Sarah Meland, Management Analyst

Subject:

Resolution No. 5840, 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. 5840, renewing the request to the Industrial Commission of Arizona for continued exemption from the requirement to post security for the 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 to ensure performance in the event that a self-insured program becomes insolvent.

The ICA implemented rules governing management of the workers' compensation self-insurance program. The regulation setting forth the requirements for a waiver from the requirement to post security for a public entity or public entity pool was renumbered and clarified as part of a comprehensive recodification of the Workers’ Compensation Self-Insurance ICA regulations completed in late 2022. Rule No. 20-5-1525 includes an "Exemption from Requirement to Post Security," reproduced below:

"A public entity or public entity pool is eligible for a waiver from posting security if:

1. The Public Entity has conducted business or the Public Entity Pool has operated in Arizona for a minimum of five consecutive years;
2. The Public Entity Trust Fund (for the Public Entity) or the Workers' Compensation Pool Loss Account (for the Public Entity Pool) continually maintains a positive fund/account balance; and
3. The Public Entity Trust Fund (for the Public Entity) or the Workers' Compensation Pool Loss Account (for the Public Entity Pool) is continually funded to cover actuarial liabilities of the Self-Insurer's incurred claims in accordance with the February 1996 Governmental Accounting Standards Board Statement No. 30 (Risk Financing Omnibus, An Amendment of GASB Statement No. 10)."

Financial Implications:

Since its self-insured program's establishment in January 2003, the City has made only one initial payment in 2003, amounting to $16,745, to purchase security bonds. Since then, the city's application for exemption from posting security has been continually accepted. The City expects this trend to continue this year, thereby avoiding any further expenditures on bonds once acceptance is confirmed.

Attachments

Resolution 5840