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HomeMy WebLinkAboutItem 12 - Approval of insurance coverage bonding City Officials Department Name: Human Resources Cost Center: 3001 For Agenda of: February 2, 2021 Placement: Consent Estimated Time: N/A FROM: Monica Irons, Director of Human Resources Prepared By: Candace Havens, Senior Administrative Analyst SUBJECT: APPROVAL OF INSURANCE COVERAGE BONDING CITY OFFICIALS RECOMMENDATION Adopt a Resolution (Attachment A) authorizing Master Bond or Purchase of Insurance in lieu of purchasing individual official bonds. DISCUSSION In July 1984, the City Council adopted Resolution 5408 (Attachment B) which authorized the City Council to designate city officials with financial responsibilities to each give a faithful performance bond. It also enabled the City Council to establish the bond value. Today, the Government Code allows the City Council to authorize a master bond or government crime insurance policy to cover and satisfy these bonding requirements. The City maintains crime insurance that covers all employees for theft, fraud, or crime and for faithful performance of duties with a minimum limit of one million dollars ($1,000,000). Overall, coverage under the City’s Crime Insurance policy is more expedient and comprehensive in protecting the City against fraudulent activities than by requiring bonds of a few individua ls. In addition, periodic insurance renewals promote review of coverage to verify compliance with current legal requirements. Adopting a Resolution authorizing master bond or crime insurance policy in lieu of purchasing individual bonds provides greater breadth of coverage for the City and is compliant with all regulations and laws. Policy Context Certain individuals are required to be bonded by statue, City Charter, ordinance, or resolution as detailed in the proposed Resolution (Attachment A), These include: ▪ Section 712 of the City Charter. This indicates that the Council shall by ordinance or resolution determine which officials shall give either an individual or master bond and establishes amounts for such bonds, subject to review by the City Attorney, approval by the City Council, and filing by the City Clerk or City Manager (for City Clerk’s filing). Item 12 Packet Page 119 ▪ Government Code Section 1481(b). When a legislative body of a local public agency finds it expedient, it may use a master bond to cover more than one individual that is required to be bonded. ▪ Government Code Section 1463. This section specifies that a government crime insurance policy may be provided as an alternative to the official bond requirement subject to approval of the legislative body. ENVIRONMENTAL REVIEW The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378. FISCAL IMPACT Budgeted: N/A Budget Year: N/A Funding Identified: N/A Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund N/A State Federal Fees Other: Total There is no fiscal impact related to this request. The existing insurance coverage provides the necessary protections. ALTERNATIVES The Council could maintain the current practice of requiring bonds for designated individuals. If this option is selected, it is recommended that the Council reconsider the dollar value of bonds to reflect current monetary values. Attachments: a - Draft Resolution b - Resolution No. 5408 (1984 Series) Item 12 Packet Page 120 R ______ RESOLUTION NO. _____ (2021 SERIES) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AUTHORIZING MASTER BOND OR PURCHASE OF INSURANCE IN LIEU OF PURCHASING INDIVIDUAL OFFICIAL BONDS WHEREAS, Section 712. Official Bonds of the Charter of the City of San Luis Obispo provides: The Council shall, by ordinance or resolution, determine what officials and other persons in the service of the City shall give bond either of an individual type or be included in a master bond, for the faithful performance of their duties and/or honesty, and shall fix the amounts of such bond or bonds, and each of such officers and other persons shall before entering upon the duties of office or employment, execute a resolution, including in the same bond the duties of all offices of which the official or person is made, by this Charter or otherwise, ex officio incumbent. Such bonds must be examined by the City Attorney and approved by the City Council. All bonds when approved shall be filed with the City Clerk, except the City Clerk's bond, if any, which shall be filed with the City Manager. All the provisions of any law of this State relating to the official bonds of officials as then existing shall apply to such bonds, except as herein otherwise provided. In all cases where surety company bonds are approved by the Council, the premium therefore shall be paid by the City; and WHEREAS, Government Code section 1481(b) provides: Notwithstanding any other provision of law, when deemed expedient by the legislative body of a local public agency, a master official bond or other form of master bond may be used which shall provide coverage on more than one officer, employee, or agent of the local public agency, whether elected or appointed, who is required by statute, regulation, the appointing power, the governing board of a local public agency, or the board of supervisors of a chartered or general law county to give bond; and, WHEREAS, Government Code section 1463 provides: For the purposes of this chapter, a government crime insurance policy or employee dishonesty insurance policy, including faithful performance, may be provided as an alternative to the official bond by any county or city, subject to approval by the presiding judge of the superior court and recording and filing as provided in Sections 1457 to 1460.1, inclusive. An insurance policy procured pursuant to this section may be used as a master bond as though it were an official bond, subject to approval of the appointing power or the legislative body as provided in Section 1481; and Item 12 Packet Page 121 Resolution No. _____ (2021 Series) Page 2 R ______ WHEREAS, the City of San Luis Obispo has purchased through California Joint Powers Insurance Authority (CJPIA) an Insurance Policy that covers all City employees for theft, fraud or crime and for faithful performance of duties with a minimum limit of one million dollars ($1,000,000); and WHEREAS, this policy covers all City employees, including those required to be bonded by Council and all other employees required by law to be individually bonded, and provides broader and higher coverage with limited increase in costs. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1: The above recitals are true and correct and are incorporated herein by this reference. SECTION 2: The use of a master bond in lieu of individual bonds of City officers and employees is expedient and therefore a master bond may be substituted for individual bonds. SECTION 3: The City’s Risk Manager is authorized to acquire insurance for City officers and/or employees in lieu of a master bond in an amount not less than one million dollars ($1,000,000). Item 12 Packet Page 122 Resolution No. _____ (2021 Series) Page 3 R ______ SECTION 4: Any prior resolutions establishing bonding requirements for City officers or employees are hereby superseded and repealed. Upon motion of Council Member ____________, seconded by Council Member ___________, and on the following role call vote: AYES: NOES: The foregoing resolution was adopted this _____ day of ____________ 2021. ____________________________________ Mayor Heidi Harmon ATTEST: _______________________________ Teresa Purrington City Clerk APPROVED AS TO FORM: _____________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ____________________________. ____________________________________ Teresa Purrington City Clerk Item 12 Packet Page 123 Item 12 Packet Page 124 Item 12 Packet Page 125 BLANK PAGE This page is intended to be blank so that you can print double-sided. Item 12 Packet Page 126