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Sec. 18-7.1. The board of trustees shall include five (5) joint trustees, all of whom shall be at least twenty-one (21) years old, citizens of the United States of America and reside or work in the City of Tucson, Arizona. One trustee shall be the city's finance director and no other trustee shall be an officer or employee of the City of Tucson. Except for the city's finance director, the trustees shall be appointed by the mayor and council and preferably shall have experience or expertise in the field of finance, risk management, insurance, actuarial science or investment management. Except for the finance director, the trustees shall be appointed by the mayor and council, serve staggered terms of no more than four (4) years by a written appointment, which shall detail the duration of a trustee's term and be lodged with the clerk and records of the trust.
Sec. 18-7.2. No person shall qualify as trustee until he or she has been bonded. The bond requirement may be satisfied by the blanket performance bond or other coverage provided by the city.
Sec. 18-7.3. Trustees are subject to removal and substitution by the mayor and council with or without cause. Trustees also may elect to resign from their position on the board of trustees for any or no reason. Upon the expiration of a trustee's term, the mayor and council may appoint another individual to serve as trustee or the mayor and council may reappoint the exiting trustee to serve a subsequent term. Alternatively, and if necessary, the mayor and council may request that the exiting trustee agree to extend the expiring term until a replacement trustee is appointed by the mayor and council.
Sec. 18-7.4. The resignation, incompetency, death or termination of any of the trustees shall not terminate the trust or affect its continuity; however, a quorum of the trustees is required for the trustees to take action. During a vacancy, the remaining trustee or trustees may exercise the power of the trustees hereunder, subject to the quorum requirement. If necessary, the board of trustees may determine, by majority vote of the remaining trustees, that a vacancy exists by reason of absence, incompetency or any other reason. Any such determination made by the board of trustees shall be delivered to the mayor and council. Vacancies among the trustees shall be filled by the mayor and council and can be filled on an interim basis if the mayor and council determine that circumstances warrant a temporary appointment.
Sec. 18-7.5. Trustees shall not be entitled to receive compensation for their services as trustees, except trustees shall be entitled to reimbursement for any reasonable out-of-pocket costs and expenditures made by the trustees in the performance of their duties as trustees. The finance director shall not receive any additional compensation for service as a trustee.
Sec. 18-7.6. The board of trustees shall be responsible for the investment of trust fund assets. Trust investments shall be prudently managed and shall take into account the liquidity needs of the trust, as established by the administrator and the finance director. The board of trustees shall make recommendations annually to the mayor and council, through the city manager, regarding the amount of funding recommended to achieve and maintain adequate reserves in the trust. The trustees shall work together with the administrator to submit annual funding recommendations to the mayor and council, and to provide advance review and comment on the administrator's annual report to the mayor and council on the overall status of the city's self-insurance program. The trustees may make other recommendations to the mayor and council regarding the self-insurance program and/or the trust fund, as they deem necessary and appropriate.
Sec. 18-7.7. The board of trustees shall work with the administrator to take all necessary precautions to safeguard the assets of the trust.
Sec. 18-7.8. The board of trustees shall act in conformance with this chapter and the terms of the trust agreement.
Sec. 18-7.9. The board of trustees shall be exempt from the provisions of chapter 10A, title XIII of the Tucson Code.
(Ord. No. 11832, § 2, 5-4-21)
Sec. 18-8.1. The financial activities, management and business affairs of the trust, with the exception of trust investments managed by board of trustees in accordance with Section 18-7.6, shall be managed effectively and efficiently by the administrator in consultation with the finance director. The administrator shall submit reports on the status of the trust to the board of trustees periodically and no less frequently than annually.
Sec. 18-8.2. The trust shall comply with all federal, state and local laws, rules, regulations, standards and executive orders, without limitation to those designated within the trust agreement.
Sec. 18-8.3. The trust shall not discriminate against any individual in any way on account of such individual's race, color, religion, sex, age, disability, or national origin.
Sec. 18-8.4. The trust shall be audited annually by an external auditor engaged in accordance with the city's procurement code. The audit shall be conducted in accordance with state law requirements and the city's audit policies, and a copy of the audit report kept on file in the office of the city clerk for a period of not less than five (5) years. In the event that the audit of the trust's financial statements is included in the city's CAFR, the trust's financial statements shall be audited separately, and the external auditor shall issue an audit opinion with regard to the trust's financial statements.
Sec. 18-8.5. All purchases by or on behalf of the trust, with the exception of the purchase of insurance contracts and coverages, shall comply with Chapter 28 of the Code (the Tucson procurement code). Purchases completed with trust assets for purposes of settling claims against the city shall not be considered purchases by or on behalf of the trust and shall not be subject to the Tucson procurement code. Payment for materials and services contracted for by the trust shall be the exclusive obligation of the trust, subject to the termination provisions of section 18-12 and the termination provisions of the trust agreement.
(Ord. No. 11832, § 2, 5-4-21)
Sec. 18-9.1. The administrator is authorized to establish, manage, and administer a program to finance the risk of loss arising from losses, claims, costs, and expenses that are the obligation of the city. The administrator is authorized to make disbursements for and on behalf of the city, as necessary to operate and administer the program. Any program established by the administrator shall conform to the provisions of the trust agreement regarding areas of coverage under the trust and applicable law. In the event that the city, by written policy or directive, requires the administrator to obtain the consent of the board of trustees regarding disbursements or transfers from the trust, the administrator shall comply with such policy or directive.
Sec. 18-9.2. The administrator may procure insurance from any insurer authorized to do business in the State by the Arizona department of insurance, establish self-insured retention programs, or combine self-insured retention programs and procurement of insurance. If a self-insured retention is maintained, and subject to the city's appropriation of funds, the administrator is authorized to establish adequate and appropriate reserves, which may include an allowance for claims incurred but not reported for any claims made against the city which may be funded by the trust.
Sec. 18-9.3. The administrator has the authority to establish terms and conditions of coverage including exclusions of coverage, ensure that all claims payable through the trust are paid promptly, and enter into contracts required for the management or administration of the trust.
Sec. 18-9.4. The administrator, or their designee, is authorized to purchase all materials and services required for the operation of the program and the trust. Any and all bids or proposals may be rejected by the administrator if it is determined by the administrator that rejection is in the best interest of the city.
Sec. 18-9.5. The administrator, together with the city's finance director and the board of trustees, shall make an annual recommendation to the mayor and council regarding the level of trust funding necessary to achieve and then maintain adequate reserves in the trust fund.
Sec. 18-9.6. The administrator shall work with the city's procurement department to select and appoint an independent qualified actuary for the trust and shall approve the actuarial assumptions used to value the trust assets and liabilities, based on recommendations of the actuary.
Sec. 18-9.7. The administrator is authorized to establish loss control and prevention programs designed to reduce or eliminate losses and claims against the physical and financial assets, and human resources, of the city.
Sec. 18-9.8. The administrator is authorized to settle claims against the city, its officers, appointees and employees, subject to the following conditions:
(1) The administrator or the administrator's designated representative has made a thorough investigation regarding questions of liability and damages and has determined the reasonable dollar value of the claim; and
(2) If the settlement involves a matter in litigation, the settlement has first been approved by the city attorney, regardless of the settlement amount; and
(3) The administrator has the authority to approve administratively the settlement of claims where the settlement does not exceed:
(A) twenty thousand dollars ($20,000.00) for a bodily injury or property damage claim;
(B) forty thousand dollars ($40,000.00) for a combined bodily injury/property damage claim; or
(C) the amount of the deductible under the city's property insurance policy for a property damage claim .
(4) If the settlement of a claim or lawsuit exceeds the authority levels stated in subsection (3), the administrator must counsel with the city attorney prior to approval. Settlement of claims for amounts that exceed the authority levels stated in subsection (3) above also requires mayor and council approval.
(5) If the claim is a workers' compensation claim and the proposed settlement would be a structured and/or full and final workers' compensation claim settlement, the administrator is required to secure the approval of the city attorney prior to settlement. Structured and/or full and final workers' compensation claims are governed by the Arizona Industrial Commission and must be in accordance with A.R.S. § 23-941.01; and must be approved by the Arizona Industrial Commission prior to finalization. Settlement of a workers' compensation claim under this subsection also requires mayor and council approval if the amount of the settlement exceeds forty thousand dollars ($40,000).
(6) Any and all settlements are conditioned upon an appropriate written release by the claimant in favor of the city, its officers, appointees, and employees.
Sec. 18-9.9. The administrator shall work with the board of trustees to take all necessary precautions to safeguard the assets of the trust and assist in the facilitation and administration of the trust in whatever manner is appropriate and necessary.
Sec. 18-9.10. In accordance with the provisions of this Chapter 18 and the terms of the trust agreement, the administrator shall coordinate the activities of the trustees, prepare and submit annual reports to the mayor and council on the status of the city's self-insurance program and the status of the trust.
(Ord. No. 11832, § 2, 5-4-21; Ord. No. 12003, § 1, 5-23-23)
To the extent permitted by law, the board of trustees, the trustees and the administrator shall be indemnified and held harmless against any and all liabilities (including defense costs and expenses) arising by reason of an act or failure to act in their fiduciary and administrative capacities to the system, and for liability and costs resulting from the acts and omissions of their duly appointed agents, except for those acts, omissions, or conduct resulting from their own willful misconduct, willful failure to act, or gross negligence.
(Ord. No. 11832, § 2, 5-4-21)
Pursuant to the city's risk management program, self-insured retention levels and reserve requirements will be established for classifications of risk, depending upon the reasonable availability of excess or stop loss insurance. The self-insured retention level for a particular type of a risk, if any, shall be established by the administrator in consultation with the finance director and the board of trustees.
(Ord. No. 11832, § 2, 5-4-21)
Sec. 18-12.1. The trust agreement may be amended by the mayor and council at any time, following consultation with the board of trustees.
Sec. 18-12.2. The mayor and council shall have the exclusive authority to terminate the City of Tucson Self-Insured Trust Fund, in accordance with the terms of the trust agreement.
(Ord. No. 11832, § 2, 5-4-21)