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Item Coversheet Page 1 of 2
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<br /> Financial Management
<br /> DATE: 10/10/2016
<br /> MEMO: Letter to Decatur City Council,Financial Management Department,#2016- 18
<br /> TO: Honorable Mayor Julie Moore Wolfe and City Council Members
<br /> FROM: Tim Gleason,City Manager
<br /> Gregg D.Zientara,City Treasurer and Director of Finance
<br /> SUBJECT: Resolution Authorizing Agreement with Arthur J.Gallagher and Co.for Risk Management Advisory Services
<br /> SUMMARY RECOMMENDATION:
<br /> It is recommended that the City Council approve the resolution.
<br /> BACKGROUND:
<br /> The City Council adopted Council Resolution R2014-21 on March 17, 2014 authorizing the City Manager to enter into a risk
<br /> management advisory service consulting agreement with Arthur J.Gallagher and Co.for the period October l,2014 to September
<br /> 30,2019,for an annual fee of$62,000.
<br /> Now,with this resolution,City staff requests Council approval to extend the term of the agreement for risk management advisory
<br /> services with Arthur J. Gallagher and Co. for an additional two(2)year period of time,to September 30, 2021. Furthermore,the
<br /> annual fee will increase to$65,000 for the agreement period October l,2019 to September 30,2020,and increase additionally to
<br /> $67,000 for the agreement period October 1,2019 to September 30,2020.The annual fee of$62,000 will remain in effect for the
<br /> original agreement period to September 30,2019.
<br /> The City has operated with a full time Risk Manager position for the last many years. Upon the retirement of the former risk
<br /> manager, the City Manager and City Treasurer elected to re-organize the risk management function whereby the risk manager
<br /> position would be vacated.This decision was based upon evaluation of City staffing levels and revised staffing priorities.As well,
<br /> comparative research into organization best practices of comparable sized municipal governmental City's reported structures
<br /> operating without a full time risk manager position.
<br /> The City solution includes the following:
<br /> � City Treasurer assumption of the decision authority,under the direction of the City Manager,previously assigned to
<br /> the Risk Manager,under the direction of the City Treasurer and the City Manager,and
<br /> � Increase in the claim management services for workers compensation and liability insurance provided by Gallagher
<br /> Basset,the City's TPA(Third Party Administrator),and
<br /> � Increase in the advisory service activities provided by Arthur J.Gallagher and Co.
<br /> The increased service level for claims management and advisory services have been defined,discussed and agreed with Gallagher
<br /> Basset and Arthur J.Gallagher and Co.
<br /> Arthur J.Gallagher and Co.accepted the City request for the provision of additional services with the proviso that the City:
<br /> • Agree to extend the current agreement for two(2)years,extension to expire September 30,2021,and
<br /> • Set the annual advisory service fee at$65,000 for extension year 1 and$67,000 for extension year 2
<br /> Thus, the agreement extension will cost the City a sum of $8,000, and will extend the agreement period by two (2) years.
<br /> Furthermore,the decision to reorganize the risk management function saves the City approximately $125,000, in 2017 budgetary
<br /> dollars,either to be captured as savings,or re-directed to other priorities as defined by the City Manager.The City will potentially
<br /> save or re-direct in excess of$650,000 over the budget years 2017—2021,and cost the City a sum of$8,000,of increased advisory
<br /> service fees.
<br /> POTENTIAL OBJECTIONS: There are no known objections to this resolution.
<br /> INPUT FROM OTHER SOURCES: None
<br /> https://decatur.novusagenda.com/AgendaWeb/CoverSheet.aspx?ItemID=867 10/17/2016
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