The room was filled to capacity when Board Chair Scott Sanders called the 2017 MCIT Annual Meeting to order at the Best Western Kelly Inn in St. Cloud Dec. 4.
Following adoption of the agenda and approval of the 2016 Annual Meeting Minutes, Finance Manager Cheri Donovan reported on the financial health of the organization. Donovan began her presentation by advising that MCIT had once again received an unmodified audit from the independent audit firm of Eide Bailly.
Donovan then highlighted notable items of the 2016 audit:
- Member contributions totaled $37 million in 2016, which represents a $1.2 million increase over 2015. Although aggregate rates in workers’ compensation and property/casualty decreased, the increased contribution is the result of members’ increased exposures (e.g., growth in property values, staff, vehicles and budgets).
- Net realized investment income rose slightly from $2.5 million in 2015 to $2.8 million in 2016.
- Claims paid and changes in reserves increased significantly from $9.1 million in 2015 to $19 million in 2016. The difference is attributed to resolution of several Driver’s Privacy Protection Act and jail suicide claims and increases in reserves for workers’ compensation claims.
- Reinsurance premiums decreased by $100,000 from 2015 to $4.6 million in 2016.
- A dividend of $12.2 million was returned to members.
- MCIT’s 2016 year-end fund balance of $84 million was $4 million less than year-end 2015 and is a factor of the decrease in investment income and increase in claims.
Donovan also provided a report on MCIT’s unaudited financial statements as of Sept. 30, 2017. Items she highlighted:
- Investment income of $3.5 million is comparable to the amount at that time during 2016.
- Total paid claims (net of recoveries) are $15.5 million, compared to $14.2 million at the same time in 2016. The increase is influenced by several large property losses in early 2017.
- Total revenues year-to-date are $29.6 million, and total expenses year-to-date are $25.1 million.
- Dividends of $10.332 million declared in July 2017 were paid in November.
Following the board election (see below) and vote on amendments to the MCIT Joint Powers Agreement (see above), Executive Director Robyn Sykes reviewed highlights of 2017 and outlined priorities for 2018.
She reported that members continue to take advantage of on-site training sessions provided as part of membership. MCIT staff delivered 32 sessions during 2017 on popular topics, such as social media, performance management, data practices and the Open Meeting Law. Thirty-two members have taken advantage of Resiliency II training presented by Sand Creek, the Employee Assistance Program administrator (read more).
2017 also gave MCIT the opportunity to work with several other associations (Minnesota Association of Soil and Water Conservation Districts, Board of Water and Soil Resources, Minnesota Sheriffs’ Association, and Association of Minnesota Counties) to develop and deliver programs to the groups’ mutual membership.
Sykes also praised MCIT staff who developed and designed two loss prevention best practices guides that earned MCIT a national first-place award from the Public Risk Management Association. This is the second time in four years that MCIT has received this honor.
Other highlights included:
- introduction of data compromise/Cyber
One coverage, which includes access to counsel, forensic staff and media assistance.
- the announcement of MCIT’s 26th consecutive dividend of $10.332 million, bringing the total fund balance returned to members to more than $323 million.
- 2018 will be the fifth consecutive year of rate reductions in both divisions.
Sykes went on to explain that when the board decided to end its reliance on a third-party administrator in 2014, it required MCIT to build internal expertise for property/casualty claims administration and underwriting activities. Almost all positions were filled by the end of 2017.
The software conversion that started in 2016 was completed in early December, at which time MCIT became independent of the third party’s support. The conversion required that every process and product be reviewed and revised. According to Sykes, these changes will improve MCIT efficiency and reduce operating costs.
Looking Ahead to 2018
Priorities in 2018 include wrapping up Driver’s Privacy Protection Act claims, addressing legislation to add post-traumatic stress disorder as a presumption for first responders to receive workers’ compensation, and focusing on developing materials to assist members with managing cyber-business risks.
Sykes reminded the group that the success of MCIT is the result of their commitment to managing risks. She concluded her comments by thanking the membership for their continued trust and support of the work that MCIT does for them.
Membership Votes to Amend MCIT Joint Powers Agreement
Members attending the annual meeting voted unanimously to adopt the proposed amendments to the MCIT Joint Powers Agreement (JPA). This vote culminated a year of review and discussion by the MCIT Board of Directors.
The changes better reflect the operations of MCIT relative to the provisions of Minnesota Statutes, Section 471.59 and follow MCIT’s standard risk management advice. The changes include:
- more clearly defining the responsibilities of the MCIT Board of Directors.
- adding provisions regarding meetings of the board.
- clarifying the process to terminate the JPA.
- adding language about how the JPA can be amended.
- adding indemnification and hold harmless language.
The adoption of these amendments by the membership at the Annual Meeting constitutes a change in the JPA and does not require execution by individual members. Written in 1987, this represents only the fourth time in the history of MCIT that the JPA has been amended.
Members received the amended JPA along with their 2018 Coverage Document in December.