sr-051110-1c~®
~;~Y of City Council Report
Santa Monica
City Council Meeting: May 11, 2010
Agenda Item: ~ -"~
To: .Mayor and City Council
From: Carol Swindell, Finance Director
Subject: Risk Management Actuarial Services
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
.execute a modification to Professional Services Agreement No: 1356 in the amount of
$33,499 with the Tiller Consulting Group Inc. for actuarial preparation services. This will
result in a new contract amount of $83,429.
Executive Summary
In 2006 the .City entered into an agreement with The Tiller Consulting Group Inc. for
actuarial preparation services in support of the City's self insurance programs. Staff is
requesting to extend the contract term through 2012 to include preparation of the 2010
actuarial reports and expand the scope of work to include an update of the City's
insurance charges cost allocation methodology. The contract modification will cost
$33,499 and bring the total contract value to $83,429.
Background
Every two years, Risk Management has a professional actuary review each of the City's
four self insurance funds (Comprehensive; Bus, Auto, and Workers' Compensation) and
provide recommendations on the self insurance funding requirements for the upcoming
annual budget cycles. Once the funding requirements are established, Risk
Management prepares insurance charges for every department. The departments, in
turn, include these charges in their budget requests. The insurance charges are
developed using a cost allocation formula prepared by the actuary.
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Discussion
In the fall of 2006, the City entered into a four year agreement with the Tiller Consulting
Group Inc. (Tiller Group) for actuarial report preparation services. The agreement was
not presented to the City Council for approval at that time as the compensation amount
was below the dollar threshold requiring Council approval. The Tiller Group agreement
will expire this fall, but contains an option to renew for an additional two year term. Staff
is recommending that the City exercise this option and expand the scope of the
agreement. This will allow staff to use the Tiller Group for preparation of the 2010
actuarial reports. These reports will serve as the basis for determining department
insurance charges for the FY 2011/12 budget.
The revised scope of the agreement would include an update of the City's insurance
charge cost allocation formula. The current formula has been in place for nearly twenty
years and is in need of review to insure the allocation methodology reflects
contemporary conditions and remains equitable.
Consultant Selection
Risk Management conducted a competitive bidding process for actuarial services in
2006. Three firms submitted bids and the Tiller Group was selected based on its past
performance for the City, experience, and credentials. Staff intends to re-bid this
contract at the conclusion of the extension.
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Financial Impacts & Budget Actions
The contract amendment will cost $33,499 ($28,500 for the 2010 actuarial reports and
$4,999 for the formula update) and bring the new total contract amount to be awarded
to the Tiller Group to $83,429. The $33,499 has been included in Risk Management's
FY 2010/11 budget in the following accounts:
56232 .555060: $ 7,936
57233 .555060: $ 7,980
58234 .555060: $ 5,656
59235 .555060: $ 11,927
Total: $ 33,499
Prepared by: Deb Hossli, Risk Manager
Approved:
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i
Carol Swindell
Finance Director
Forwarded to Council:
Rod Gould
City Manager
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Reference Contract No.
9209 (CCS).