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COMMITTEE OF THE WHOLE - MINUTES - 1/22/2008 Approved 2/12/08 COMMITTEE OF THE WHOLE – CITY (City) OF MUSKEGO MINUTES OF MEETING HELD TUESDAY, JANUARY 22, 2008 Mayor Johnson called the meeting to order at 6:53 p.m. and led those present in the Pledge of Allegiance. ROLL CALL Mayor Johnson, Ald. Snead, Ald. Pavelko, Ald. Borgman, Ald. Werner, Ald. Melcher and Ald. Schaefer. Ald. Fiedler was excused. Also present Deputy Clerk Blenski, City Administrator Sheiffer, Attorney Molter, R & R Insurance Representatives Rick Kalscheuer and Dennis Tweedale, Cities and Villages Mutual Insurance Company (CVMIC) Representatives Mike DeMoss and Thomas Mann STATEMENT OF PUBLIC NOTICE Deputy Clerk Blenski noted that the meeting had been noticed in accordance with the Open Meeting Law. APPROVAL OF AGENDA Mayor Johnson advised that there were no issues with the agenda. APPROVAL OF MINUTES Ald. Pavelko moved to approve the minutes of the meeting held January 8, 2008 as presented. Seconded by Ald. Werner, motion carried. UNFINISHED BUSINESS Purchase of Liability and Workers’ Compensation Insurance for 2008 Mayor Johnson and City Administrator Sheiffer were recommending the CVMIC $25,000 self- insured retention plan. There are risks with the CVMIC insurance. Representatives from the insurance companies were present to answer questions on either policy. City Administrator Sheiffer advised the members that this issue should be resolved at the Common Council meeting following and a resolution had been prepared that could be edited depending on what they decided. Attorney Molter stated it is a matter of how much risk the City wants to take. One of the things to question, is Muskego different than a lot of other communities. In some ways, Attorney Molter said it was as in going forward, it is going to experience an increase in growth. Also, the more activity you have, the more risk you take. With each development, you have more sewer lines, more water lines, special assessments, RCA, 10-10 development reimbursement, etc. The items that concerned Attorney Molter were the dropping of the no-fault sewer back-up coverage and it could be considerable exposure, pollution coverage, no contract liability coverage, non- monetary claims, injunctive relief coverage for tax claims. The League offers coverage for some of these things which could be expensive such as the non-monetary claims for the litigation. These are the difference of the two in general terms. You get into the policy coverage issues when everything isn’t covered. Things that the City has covered and would elect not to cover now by going with a different company is the additional risk the City would be assuming. CVMIC insurance representative stated that if they were uncomfortable with the large deductible program, going with the League program is a better choice. If they are looking at an excess program, the CVMIC policy provides a huge amount of risk management loss control services that Committee of the Whole January 22, 2008 Page 2 weren’t so far mentioned. They put on over 600 training programs, average between 12-15 on-site visits, provide a dividend on the workers compensation program, historically have paid a 20% dividend with the first 10% being a level dividend and the balance is based on the experience of the individual communities over their time period in the program. He continued to speak on the CVMIC dividend liability program and their plan. R & R Insurance representative highlighted the benefits of the League program which is the City’s current insurance program. If the City is looking at an excess program and is willing to take risks, then CVMIC is the program. If they are concerned about the risk taking and that the City is growing and they see more claims with larger communities, then the benefits of the League program should be considered. However, he asked them to look at the difference in employment practice liability, dividends, and workers’ compensation. Alderman Pavelko stated it was a matter of cost, not unhappy with the service that the City was getting. Mayor Johnson said the difference in cost was about $30,000; however, it does depend on the claims. CVMIC representative commented their first decision should be are they willing to take on some of the risks. They have to assume the risk they can afford because that is the cheapest way to insure that risk. If they like the first dollar program, the League is the program as CVMIC does not provide a first dollar program. If they are looking at a self-insured option, there are a few dollars difference but in the long haul, they will save money in the CVMIC program. City Administrator Sheiffer inquired if they had any indication which one they were going with so that Deputy Clerk Blenski could be prepared the resolution for the following Common Council meeting. Ald. Schaefer asked Attorney Molter about the liability and issues that the City has currently on the table. Attorney Molter had given his thoughts earlier in the meeting, but added that he did not think there was a right or a wrong answer. It comes down to a matter of policy, how much risk are they willing to take. City Administrator Sheiffer called their attention to the January 4 memorandum which outlined the risks the City would be taking and the differences in the two programs. She and Mayor Johnson are recommending the City make the change to the CVMIC program. Attorney Molter reiterated the three or four areas that the CVMIC did not cover and wanted the Common Council members to understand everything is not covered. Mayor Johnson felt sure the members did understand the areas that are not covered. Based on this, Alderman Pavelko questioned if the maximum liability would be $100,000 in a given year between the difference in the two programs. Mayor Johnson stated for claims of $25,000 each maximum. As in the January 8 meeting, they discussed setting aside the money saved in a special account if the City made the change to the CVMIC insurance. Ald. Schaefer questioned the claims administration. City Administrator Sheiffer advised that the claims administration is included with either program. They would be purchasing the administration of claims service which under the CVMIC is $400 per official claim no matter how long or how involved. Issues that are not deemed official claims would be at no cost. The City has done this with the health insurance reimbursement program, paying a different company to process the claims. Ald. Borgman asked if the no-fault sewer cost resulted in $33,000 in liability. Mayor Johnson said that was an average price over 25 years. Under the CVMIC plan, it would not be covered either the liability or the no-fault. Ald. Schaefer added if that is the case, right now it is covered under sewer utility and on the sewer bills so we would actually be lowering the sewer bill. Mayor Johnson said they would be lowering the sewer billing by $23,000. Ald. Borgman wanted to make sure if the City did this, that the residents be notified. Ald. Melcher inquired about the boiler/machinery coverage, if the boiler goes out on the weekend and the pipes begin to freeze, is that totally covered by CVMIC? Mayor Johnson was not sure of the details of the plan, but he recommended this coverage because if a pump motor were to go out, it could cost thousands of dollars. Attorney Molter questioned as CVMIC has no sewer back up coverage, would they administer those claims for that $400/claim. This would be for sewer claims that the Committee of the Whole January 22, 2008 Page 3 City might be liable. Mayor Johnson and City Administrator Sheiffer did not think so as it’s not covered under the policy. Attorney Molter further inquired if they would have anyone in-house to handle the claims or would they hire someone. City Administrator stated in that event, you could always hire someone. Mayor Johnson stated he is concerned with the 2009 budget and he and City Administrator Sheiffer are looking for ways to reduce expenditures. Mayor Johnson polled the Common Council members on whether or not they wanted to take the risk. Aldermen Schaefer, Snead and Melcher were in favor of staying with the current carriers whereas Aldermen Werner, Pavelko and Borgman were in favor of going with CVMIC. Common Council Goals for City Administrator for 2008 Due to the lateness of the hour, this issue was not discussed. NEW BUSINESS None. COMMUNICATIONS AND MISCELLANEOUS BUSINESS AS AUTHORIZED BY LAW None proffered. ADJOURNMENT Ald. Snead moved to adjourn at 7:32 p.m. Seconded by Ald. Borgman, motion carried unanimously. Stella Dunahee, CPS Transcribing Secretary