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MINUTES OF THE VLCT PROPERTY AND CASUALTY INTERMUNICIPAL FUND, INC. BOARD OF DIRECTORS MEETING
VLCT OFFICES, MONTPELIER VERMONT AND VIA ZOOM
THURSDAY, DECEMBER 15, 2022

Directors Present: Carl Rogers, Jackie Higgins, Aaron Frank, David Atherton (remote), Jared Cadwell (10:30 a.m.), Rob Gaiotti (remote), Stuart Hurd (remote), Bryan Young, Bruce Urie, Erik Wells (remote) Judy Frazier and Kathleen Ramsay (10:02 a.m.)

Staff Present: Joe Damiata, Fred Satink, Phil Woodward, Ted Brady, Kelley Avery, Seth Abbene, Abby Friedman (remote), Kelly Kindestin (remote), Peggy Gates and Jill George

President Rogers called the meeting to order at 9:34 a.m.  President Rogers noted, per request of staff, item #8 on the agenda would be moved to the end of the meeting under Executive Session. 

Upon motion (Frank/Urie) duly adopted, the board voted unanimously to approve the agenda as amended.

Upon motion (Higgins/Atherton) duly adopted, the board voted unanimously to approve the minutes of the special meeting held October 21, 2022.

To save some time for this meeting, a memo was emailed last night to the board from Joe Damiata and Fred Satink which detailed items 4a and 4e, the organizational and PACIF renewal updates.  There were no questions from the board on these items.

Seth Abbene reviewed the third quarter financial statements. Net position decreased by 11.8% from year-end largely due to investment losses. Despite the investment losses driving the overall decrease in net position, year to date the fund generated an operating surplus of $5,923,562. Revenues are up by $366,404 compared to this time last year mostly due to increased contributions from members. General and administrative expenses are 16.7% higher compared to this time last year mainly due to an increase in the admin contract with VLCT including a technology assessment and a diversity, equity and inclusion training assessment. Claims paid and reserved were down 56.2% compared to this time last year primarily as a result of favorable prior fund year development.

Upon motion (Urie/Higgins), duly adopted, the board voted unanimously to accept the staff organizational and financial reports.

Instead of having the auditors appear in person to discuss the 2022 audit plan, Seth Abbene briefly reviewed the 2022 audit plan outline supplied by Johnson Lambert.  The document included the timeline, risks, deliverables, testing details and new auditing guidelines on subscription-based information technology arrangements.  Mr. Abbene suggested the board review the plan carefully and let him know if they have any questions.

Jill George briefly reviewed the third quarter claims report that was included in the meeting packet. 

Upon motion (Young/Higgins), duly adopted, the board voted unanimously to accept the Q3 Claims report.

Fred Satink reviewed a recent coverage exclusion that PACIF’s equipment breakdown reinsurer imposed on the Fund after the DFR filing was complete. As a result, staff recommended that the same exclusion be added to the Property and Casualty Coverage Document to protect the fund now that there is no reinsurance protection. The board expressed some concern about this new exclusion due to the exposure it poses to members. Staff agreed with these concerns, but noted due to the extensive exposure to PACIF, it seemed prudent to at least include the new language for the coming year.  Staff will make every effort to educate members on this coverage change through various channels and continue to research the issue.  

Upon motion (Frank/Hurd), duly adopted, the board voted unanimously to approve the changes to the Equipment Breakdown Extension as presented.

Joe Damiata briefly reviewed PACIF’s Three-Year Business Plan and highlighted recent updates.

Mr. Damiata reviewed VLCT’s current insurance coverage.  In accordance with VLCT’s Administrative Contract, staff will periodically review VLCT’s coverage with the trust boards.  

Abby Friedman reviewed the Municipal Assistance Center’s Memorandum of Understanding and Service Proposal for 2023.  Ms. Friedman briefly reviewed the services provided throughout 2022 and the scope of services and anticipated costs for 2023. Ms. Friedman expressed her gratitude to the board for the increased funding for these services. 

Upon motion (Urie/Hurd), duly adopted, the board voted unanimously to approve the 2023 MAC Service Proposal as presented and authorized the President to sign the 2023 Memorandum of Understanding.

Phil Woodward, PACIF’s general counsel, reviewed recommended changes to the PACIF Member Claim Appeal Policy.  This policy was drafted and put into place in 2015 to establish a formalized process for member appeals of claims determinations, so that members would have clear procedures to follow, prior to resorting to litigation. Upon recent review by Mr. Woodward, some language was altered to provide clarification and updating to align with current practices, and to make clear that mediation is required before moving to litigation.

Upon motion (Cadwell/Higgins), duly adopted, the board voted unanimously to approve the changes to the Member Appeal of PACIF Coverage Determination Policy as presented.

Joe Damiata, Fred Satink and Jill George reviewed a memo detailing a proposal for the new Risk Management Information System (RMIS) for Policy and Claims.  Mr. Damiata reviewed the background and the timeline on the vetting process staff undertook to review potential vendors. After careful consideration, staff chose Origami as the new system vendor, which is currently being utilized by several other pools. Based on several demos conducted with the vendor and a thorough system analysis, staff is comfortable recommending this system based on its increased functionality and capabilities.  The current system (Ventiv) will still run concurrently while the new system is being built. Staff is requesting that a portion of the project be funded by net position, as the implementation costs and 2023 recurring costs had to be built into the 2023 budget and resulted in a budget deficit. The board expressed their appreciation for the work staff has and will be undertaking with a system implementation of this magnitude and expressed approval of staff hiring a technology strategy consultant to assist in the process.  

Upon motion (Frank/Cadwell) duly adopted, the board voted unanimously to authorize Joe Damiata to sign the RMIS Origami contract and to commit $500,000 of net position to support product implementation and annual recurring costs in 2023, while acknowledging total system costs will be significantly more than that.

Mr. Damiata briefly reviewed the proposed budget.  Contribution revenue is higher than the actuarial target because of increased exposures being reported by the members on their renewal applications. Expenses are up significantly due to inflation driven increases to admin costs, reinsurance premiums, costs associated with the new RMIS system, and some other program related expenses.  The bottom line now yields a deficit largely due to the new RMIS system costs. 

Upon motion (Higgins/Urie), duly adopted, the board voted unanimously to approve the 2023 Proposed PACIF Budget as presented.

Joe Damiata presented the 2023 Proposed Meeting Schedule which includes meetings of both trust boards, the VLCT Board, the Joint Investment Committee and the VLCT Budget Advisory Committee.  Due to trust board consolidation, VERB board meetings have been coordinated to take place on the same dates as some of the PACIF board meetings.  Every effort was made by staff to avoid conflict with conferences and training programs.

Upon motion (Cadwell/Atherton), duly adopted, the board voted unanimously to approve the 2023 Proposed Meeting Schedule.

President Rogers pointed out that Conflict of Interest Forms were included in the packet and should be completed by the board members and returned to staff.

Under board governance, with both Carl Rogers and Stuart Hurd leaving the board at year-end, there will be two open seats.  Past practice has been to promote Alternate Director positions to full board positions.  The current board Alternates are Judy Frazier of Rutland City and Kathleen Ramsay of Middlebury.

Upon motion (Young/Urie), duly adopted, the board voted unanimously to appoint Kathleen Ramsay and Judy Frazier as full board members effective 1/1/2023.

With the board Alternate positions now open, the board has the option of filling these positions with the two new nominations from the VERB Board, Charles Safford of Stowe and Todd Odit of Hinesburg.  Dave Atherton requested staff solicit additional nominations for the future to try to get some additional representation on the board from the northern parts of the state. 

Upon motion (Hurd/Frank), duly adopted, the board voted unanimously to appoint Charles Safford and Todd Odit as Alternate board members effective 1/1/2023.

Under election of officers, with President Rogers’ retirement, the President position is now open.  President Rogers has spoken with Jackie Higgins, the current Vice President, and she has expressed her interest and willingness to serve in this capacity.

Upon motion (Urie/Hurd), duly adopted, the board voted unanimously to appoint Jackie Higgins as PACIF Board President for 2023.

With the Vice President position now vacated, this position is now open. Aaron Frank was nominated to fill this vacancy.

Upon motion (Cadwell/Higgins), duly adopted, the board voted unanimously to appoint Aaron Frank as PACIF Board Vice President for 2023.

With the Secretary/Treasurer position now vacated, this position is now open.  Bruce Urie was nominated to fill this vacancy.

Upon motion (Cadwell/Atherton), duly adopted, the board voted unanimously to appoint Bruce Urie as PACIF Board Secretary/Treasurer for 2023.

Upon motion (Young/Atherton), duly adopted, the board voted unanimously to approve the slate of staff officers as Ted Brady, Executive Secretary, Fred Satink, Assistant Secretary and Joe Damiata, Assistant Treasurer.

President Rogers recommended delaying the 2023 committee appointments until the first meeting of 2023 to allow the new President to make them.
Based on the advice of counsel, a motion was made to enter into Executive Session to obtain confidential consultation and advice from legal counsel and legal services concerning pending/potential litigation and a contract.  All personnel present in this meeting were invited to participate.

Upon motion (Rogers/Hurd), duly adopted, the board voted unanimously to enter into Executive Session (11:41 a.m.).

The board and staff returned to General Session at 12:00 p.m.

Upon motion (Frank/Cadwell), duly adopted, the board voted unanimously to approve the Master Administrative Support Service Agreement as presented with recommended changes and the Addendum for 2023 and authorized the Board President to sign it.

President Rogers thanked Stuart Hurd for his many years of service to the board and wished him well.  Joe Damiata thanked both President Rogers and Mr. Hurd for their years of service to PACIF. Aaron Frank asked that President Rogers be formally recognized for his many years of service on the PACIF Board and stated that his leadership and commitment made PACIF stronger.  

Upon motion (Urie/Cadwell) duly adopted, the board voted unanimously to adjourn the meeting (12:04 p.m.).

Respectfully submitted,    

Fred Satink, 
Assistant Secretary
 

Board or Committee: 
PACIF Board of Directors
Board/Committee Meeting Date: 
Thursday, December 15, 2022

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