HomeMy WebLinkAboutRES 89-030 RESOLUTION OPPOSING THE IMPOSITION OF AN INSTITUTIONAL FEE BY THE LEAGUE OF MINNESOTA CITIES UPON THE LEAGUE OF MINNESOTA CITIES INSURANCE TRUST Meeting Sheet
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Box: 23
Folder: RES 1989
Document: RES 89-030 RESOLUTION OPPOSING THE IMPOSITION OF
AN INSTITUTIONAL FEE BY THE LEAGUE OF MINNESOTA CITIES UPON
THE LEAGUE OF MINNESOTA CITIES INSURANCE TRUST
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RESOLUTION 89-030
• A RESOLUTION OPPOSING THE IMPOSITION OF AN INSTITUTIONAL
FEE BY THE LEAGUE OF MINNESOTA CITIES UPON THE
LEAGUE OF MINNESOTA CITIES INSURANCE TRUST
WHEREAS, the League of Minnesota Cities Insurance Trust was
created under the authority of the Joint Powers Act, M.S.
471.59 in 1980 to provide a means through which cities
can cooperate to obtain the insurance coverage they need
at a reasonable cost; and
WHEREAS, the League of Minnesota Cities Insurance Trust (LMCIT)
is governed by a five member board of trustees appointed
by the League of Minnesota Cities (LMC) ; and
WHEREAS, Article VI. of the LMCIT Insurance Trust Agreement
established a fund into which all of the Trust's income
is to be deposited and which is used to pay the expenses
of operating LMCIT's risk protection programs, including
administrative, legal, and other expenses; and
WHEREAS, Article VI . directs that any excess in the fund be
returned to the individual LMCIT members and that each
member's refund will be determined on the basis of (1)
the total amount paid by the member to the Trust; and (2 )
• to the extent that the trustees decide it is advisable,
the member's individual loss experience; and
WHEREAS, since the beginning of LMCIT'sinsurance program,
brochures and other marketing tools promoting the
insurance program, as well as frequent articles in the
Minnesota Cities' magazine, have consistently stated
that, if premiums exceed what is needed to fund losses
and expenses, the only thing which can be done with the
surplus is to return the money to the cities; and
WHEREAS, many cities bought into the program with confidence that
this promise would be kept; and
WHEREAS, since the creation of LMCIT by LMC, LMC has been, and
continues to be, reimbursed by LMCIT for LMC cost of
administering the insurance program. Such costs include
personnel, overhead, direct costs, and pro-rated expenses
and
WHEREAS, the trustees of LMC and LMCIT did, in 1988, enter into
a management services agreement which, for the first
time, included an institutional charge of 1.5% of the
gross premiums of the LMCIT workers compensation and
property/casualty programs to "constitute reimbursement
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to LMC for the use by LMCIT of LMC's name, good will ,
reputation, municipal and legislative expertise, and
organizational capacity" ; and
WHEREAS, the LMC has transferred, or will transfer, the amounts
of $425,226 for fiscal year 1988-89 and $584,466 for
fiscal year 1989-90 and LMC subsequently appropriated
$387,292 and $554 ,019 respectively of the transfers in
fiscal years 1988-89 and 1989-90 to the LMC special
projects budgets to fund a property tax model, a tax
increment financing project, and a personnel project; and
WHEREAS, the City Council of the City of St. Anthony has
determined that the .institutional fee is an inappropriate
profit taking by the LMC, particularly in light of
representations which have been made to the members that
all unused funds will be rebated to LMCIT members, and
questions the appropriateness of raising funds from LMCIT
members to pay for expenses and programs of the LMC for
which they are already paying dues, thereby in effect
penalizing LMCIT members by requiring them to pay a
disproportionate share of the costs of projects approved
in the LMC special projects budget solely because they
are participants in the LMCIT.
• NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
St. Anthony to request the trustees of the League of
Minnesota Cities Insurance Trust to remove the
institutional charge from the management services
agreement and for LMC to return to LMCIT all funds
transferred for institutional charges; and
BE IT FURTHER RESOLVED that the City Clerk be directed to forward
a copy of this resolution to the trustees of the LMC and
the LMCIT.
Adopted this day of NooemY e_r 1989.
Mayor Pro Tem
ATTEST:
Cit.y Clerk
• Reviewed for administration:
City Manager Q�