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* Editor's note – Ord. No. 10299, §§ 1 and 2, adopted June 27, 2006, effective July 1, 2006, repealed chapter 18, §§ 18-1 – 18-9, which pertained to libraries and derived from Ord. No. 4015, § 1, adopted May 7, 1973, as amended.
Current ch. 18 was enacted by Ord. No. 10904, §§ 1 and 2, adopted June 28, 2011.
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Sec. 18-1. Purpose.
Sec. 18-2. Definitions.
Sec. 18-3. Self-insurance program.
Sec. 18-4. Establishment of self-insured risk trust fund.
Sec. 18-5. Manner of financing self-insured risk trust fund.
Sec. 18-6. Expenditure of trust funds.
Sec. 18-7. Board of trustees.
Sec. 18-8. Administration of the trust.
Sec. 18-9. Powers and duties of the administrator.
Sec. 18-10. Indemnification.
Sec. 18-11. Stop loss provision.
Sec. 18-12. Authority to amend trust agreement or terminate trust.
*Editor’s note – Ord. No. 10299, §§ 1 and 2, adopted June 27, 2006, effective July 1, 2006, repealed chapter 18, §§ 18-1 – 18-9, which pertained to libraries and derived from Ord. No. 4015, § 1, adopted May 7, 1973, as amended.
Ch. 18, enacted by Ord. No. 10904, §§ 1 and 2, adopted June 28, 2011, was repealed and replaced by Ord. No. 11832, §§ 1 and 2, adopted May 4, 2021.
Ch. 18, enacted by Ord. No. 10904, §§ 1 and 2, adopted June 28, 2011, was repealed and replaced by Ord. No. 11832, §§ 1 and 2, adopted May 4, 2021.
The purpose of this chapter is to codify the city's self-insurance program for workers' compensation and general public liability, and to establish the self-insured risk trust fund so that the city can reach and maintain an adequate level of reserves to support self-insurance for the management and administration of a system for direct payment of benefits, losses or claims, or any combination of insurance and direct payments in conformance with A.R.S. § 11-981. Nothing contained herein shall modify or restrict the legal obligations of the city to administer and operate appropriate insurance programs for the city as those programs shall be modified from time to time hereafter by the mayor and council.
(Ord. No. 11832, § 2, 5-4-21)
“Administrator” means the risk manager appointed by the city manager. Any administrator appointed hereunder must be licensed as required by A.R.S. § 20-281 et seq., or certified as an insurance administrator under A.R.S. § 20-485 et seq.
“Trust” means the City of Tucson, Arizona, Self-Insured Risk Trust.
“Trust agreement” means the declaration of trust entered into by and between City of Tucson, a political subdivision of the State of Arizona and the individuals executing the declaration of trust, as trustees, setting forth the powers and duties of the trustees and the administrator; a stop loss provision, and other terms and conditions.
"Trustees" or "trustee" means individuals appointed by the mayor and council in accordance with section 18-7 to oversee the funding and investment of the trust. The trustees are collectively referred to herein as the board of trustees.
(Ord. No. 11832, § 2, 5-4-21)
The city's self-insurance program includes established terms and conditions of coverage and exclusions of coverage, insurance contracts, the trust, and contracts required for the management or administration of the program. The administrator is responsible for the self-insurance program and shall serve as the city's risk management consultant. Nothing herein shall be interpreted to expand or increase the liability of the city for any claim.
(Ord. No. 11832, § 2, 5-4-21)
Effective June 28, 2011, the city established the City of Tucson Self Insured Risk Trust Fund following approval by the mayor and council. The trust fund is a funding mechanism for the areas of potential liability described in the trust agreement as approved by the mayor and council. Initially the trust shall provide a funding source for workers' compensation and general public liability. The trust shall cover such other areas as are permitted by law and may be authorized by the annual appropriation of funds by the mayor and council. The trust shall provide separate accounting for the areas of coverage but shall not segregate funds within the trust. The finance director shall segregate all funds previously and hereinafter budgeted for trust purposes and maintain the trust separately from the city general fund.
(Ord. No. 11832, § 2, 5-4-21)
The trustees, following consultation with the administrator, shall annually recommend to the mayor and council the level of funding necessary to achieve and maintain adequate trust funds. The determination of the appropriate amount of funding for the trust shall be made annually and shall be solely within the discretion of the mayor and council. The trust shall be funded by allocation of funds from general fund and non-general fund departments. General public liability funds shall be based upon the administrator's analysis of claims history and pending claims. The trust may also be funded by gifts, grants, any special taxes levied to satisfy judgments, payment of claims or other involuntary indebtedness and by monies recovered from litigation, statutory liens, recovery from insurers, subrogation and salvage value of damaged property, and interest earned on the funds held by the trust. Additionally, the trust may be funded through other available financial techniques and methods permissible under state or federal law and authorized by the trustees and the mayor and council.
(Ord. No. 11832, § 2, 5-4-21)
Funds of the trust shall be expended solely for payment of claims, administration of the trust, training for reduction in liability and other loss control and loss prevention purposes, in accordance with A.R.S. 11-981. The administrator shall have final decision making authority with regard to the expenditure of trust funds, and shall consult with or report to the trustees regarding appropriate types of expenditures.
(Ord. No. 11832, § 2, 5-4-21)
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)
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