CC PACKET 11221989 - Laserfiche WebLink

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November 8, 1989 Page 2 we discuss the issue before putting everyone in a corner on the question. After that meeting, I held a meeting with the authors of the resolution. In reviewing the resolutions passed by the cities and offered at the Coalition meeting, I believe some issues need clarification. The resolutions suggest that the League/LMCIT fee is an "excess profits tax". 'This is not the case. LMCIT has no profits. Any funds not used to pay claims, reserved for future claims, or to pay for the operation of LMCIT are returned to the LMCIT members. The trustees, in fact, voted to return $7 , 000, 000 at their October meeting. This means that LMCIT has returned $15, 000, 000 to members over the past three years. What does the 1. 5 percent fee cover and 'why is it hard to calculate an exact cost for League services? Consider how difficult it is to answer the following questions: How valuable to the LMCIT are the retention of the statutory limits on municipal liability? How valuable to LMCIT is the tort reform act which materially limited tort claims against cities? How valuable to LMCIT are many of the briefs filed at the - Minnesota Court of Appeals and the Supreme Court on issues affecting municipal liability and personnel management issues? And, how valuable to LMCIT is the lobbying which the League conducts on personnel and management issues at the Legislature and with the Governor? , How valuable to LMCIT was League sponsorship and endorsement when LMCIT was established? And, how valuable to LMCIT was the three years of staff and board work which the League undertook to establish LMCIT? How valuable to LMCIT is the promotion of the insurance trust through articles in Minnesota Cities magazine? And, how valuable to LMCIT is the preparation of press releases and other promotional materials? Finally, how valuable is it to LMCIT to provide promotional materials and programs to city officials at the LMC annual meetings, regional meetings, and other meetings? These League services are unreimbursed by LMCIT and an exact valuation is difficult, if not impossible to achieve. How does LMCIT pay for the services it receives? LMCIT pays North Star Risk Services 12 percent of casualty program's premium volume for its services in managing the program. Employee Benefit Administration (EBA) is paid 9.4 percent of the workers compensation premium volume for similar services with respect to this program. This is a customary method of paying for some services and value received by LMCIT. Is the LMCIT fee structure unique? Is it unusual for LMCIT to pay a percentage of premium volume for the value it receives? No, it is not. A number of state municipal leagues sponsor pooled self insurance programs. Most charge a flat fee for these same kind of services and most charge more than 1 . 5 percent of premium volume. The LMCIT trustees suggested the proceeds from this fee be placed in a special account and not be combined with the League's general fund.