HomeMy WebLinkAboutDoc 326 - SRSD Insurance JoinderDeschutes County Board of Commissioners
1300 NW Wall St., Suite 200, Bend, OR 97701-1960
(541) 388-6570 -Fax (541) 385-3202 -www.deschutes.org
AGENDA REQUEST & STAFF REPORT
For Board Business Meeting of June 4, 2014
Please see directions for completing this document on the next page.
DATE: May 29,2014
FROM: Angie Powers Administrative Assistant 541-585-3720
TITLE OF AGENDA ITEM:
Consideration of Board signatures to the attached Special Districts Insurance Services (SDIS) Exhibit A
-Form of Joinder to Trust Agreement for Initial Members Intergovernmental Agreement.
Two attachments included:
(1) Special Districts Insurance Services Trust -First Restatement of Declaration of Trust (15 pages in
length) plus Exhibit A -Form of Joinder to Trust Agreement for Initial Members (1 page in length)
Requires signatures j (3) Memo from SDIS with subject line: "New SDIS Trust Agreement Requires Board Action" (3 pagesj in length)
PUBLIC HEARING ON THIS DATE? No.
BACKGROUND AND POLICY IMPLICATIONS:
From SDIS: "Oregon law requires that self-insured public entity programs be formed through an
intergovernmental agreement [IGA] between the participating entities, and the SDIS Declaration of
Trust is an IGA ... It is necessary to have all of the Trust members join the trust by having their Boards
adopt the Joinder of Trust Agreement. By signing the Joinder Agreement, [the SSD] Board will be
entering into an IGA under ORS Chapter 190." Prior to renewing the District's SDIS self-insured
property or liability insurance plan, the SSD Board is required to adopt the Joinder of Trust Agreement.
The SSD requires Governing Board approval prior to entering into intergovernmental agreements.
FISCAL IMPLICATIONS:
None.
RECOMMENDATION & ACTION REQUESTED:
Acceptance ofthe SDIS Exhibit A -Form of Joinder to Trust Agreement for Initial Members, with
Board signatures to the document entitled "Exhibit A -Form of Joinder to Trust Agreement for Initial
Members".
ATTENDANCE: None.
DISTRIBUTION OF DOCUMENTS:
Angie Powers, Administrative Assistant
Sunriver Service District
P.O. Box 2108
Sunriver, OR 97707
-AND-
Special Districts Insurance Services
PO Box 12613
Salem, OR 97309-0613
REVIEVlED
EXHIBIT A
FORM OF
JOINDER TO TRUST AGREEMENT
FOR INITIAL MEMBERS
By execution of this Joinder, the undersigned public body hereby agrees to become a
party to, and is bound by, the First Restatement of Dec1aration of Trust of the Special Districts
Insurance Trust effective as of April I, 2014 (and as the same may be amended, supplemented or
otherwise modified from time to time, the "Agreement"), by and among the Trustees and the
Members, in the same manner as if the undersigned were an original signatory to such
Agreement.
The undersigned represents and warrants that (i) the undersigned has received a copy of,
and has reviewed the tenus of, the Agreement and all related or relevant documents and
agreements, (ii) undertakes to become a Member of the Special Districts Insurance Trust with all
the rights and obligations thereof, and (iii) such undertaking has been duly authorized as an
intergovernmental agreement to create a program of self-insurance pursuant to ORS 30.282.
Capitalized terms used but not defined in this Joinder shall have the meanings set forth in
the Agreement. '
IN WITNESS WHEREOF, the undersigned has executed this Joinder as of this _ day
of ,2014.
~~hi~ 5e-r,r)~ 7hsfytc-r
[Name of District]
-5L1l-~-
Name: --------~~-----------
Title:
Address for Notices:
With copies to:
I I
I 03630810000 114360779v7
I First Restatement of Dec1aration of Trust Page 1
Special Districts Insurance Services Trust
Joinder Agreement -[name]
DC 2014· ... 3 261
THE BOARD OF COllNTY COMMISSIONERS OF DESCHUTES COllNTY,
OREGON, ACTING AS THE GOVERNING BODY OF THE SllNRIVER
SERVICE DISTRICT.
DATEDthis ____dayof __________2014.
TAMMY BANEY, Chair
ANTHONY DEBONE, Vice Chair
ALAN llNGER, Commissioner
ATTEST:
Recording Secretary
ISD S Special Districts
Insurance Services
OECEIVEn
** IMPORTANT ** nAPR 1 6 2014 U
REQUIRES BOARD ACTION
BY: ,.Ate
J
DATE: April 4, 2014
\
TO: 5015 Members
FROM: Frank Stratton, Executive Director
SUBJECT: New SOlS Trust Agreement Requires Board Action
Over the past year, the SOlS Board of Trustees has been working at creating a new SOlS Trust
Agreement. Oregon law requires that self-insured public entity programs be formed through
an intergovernmental agreement between the participating entities. The enclosed SOlS
Declaration of Trust is an intergovernmental agreement. The original SOlS Declaration of Trust
was adopted in 1985 and has never been comprehensively amended to take into account
changes to federal tax and state laws over the past 28 years. After a review of the original
Declaration of Trust, the Trustees decided that it was necessary to draft a new document which
would take into account tax and other legal matters.
Now that the new SOlS Declaration of Trust has been approved by the SOlS Board of Trustees, it
is necessary to have all of the Trust members join the Trust by having their Boards adopt the
Joinder of Trust Agreement. The Joinder of Trust Agreement is located on the last page of the
enclosed Declaration of Trust. By signing the Joinder Agreement your Board will be entering
into an intergovernmental agreement under DRS Chapter 190.
Before renewing in the SOlS self-Insured employee benefits, property, liability or workers'
compensation program, your Board will need to adopt the enclosed Joinder of Trust
Agreement and return a signed copy to SOlS. We understand that this is not an easy task for
many members to accomplish, but we assure you we would not be taking this action if the SOlS
Trustees did not feel it was absolutely necessary to protect the Trust's assets, which all of the
members have helped build over the past 28 years.
Following are the deadlines for sending back the signed resolution to SOlS:
• Districts participating in the new self-insured employee benefits program: 6/1/2014
• Districts participating in the self-insured workers' compensation program: 7/1/2014
f) Districts participating in the self-insured property a~rogram: 10/1/2014 ~
ADMINISIEREO BY SP Clft.L DISTRICTS ASSOCIATION OF OREGO')
I.!MIIOFFICE PO Box 12613 I Salem. Oregon 97309·0613 I PHOIiL 503·371·8667 I lOll·FREf: 1·800·285·5461 I fA), 503·371·4781 I f·MAII: sdao@sdao.com
www.sdao.com
I
1
i
You only need to submit one signed resolution regardless of the number of programs that your
District participates in.
I am sure you and your Board members will have many questions about the new Trust
Agreement. In anticipation of your questions, following are some frequently asked questions
and answers for your reference.
FREqUENTLY ASKED qUESTIONS:
What is my District's financial risk as part of a self-insured program?
The revised Declaration of Trust does not increase your District's financial liability any more
than you currently have under the existing Trust Agreement. The SDIS Trust is a non
assessable Trust. This means that your District can never be asked to contribute additional
funds, other than your annual contributions, to cover your claims or the claims of any other
member. It also means, though, that you are ultimately responsible for your own claims
liabilities in the event the Trust is not able to pay your claims. The SOlS Trustees are
dedicated to making sure this never happens by being extremely conservative with the
amount of funds the Trust retains to pay claims. SOlS has over $38 million more than what
its certified actuary estimates is needed to satisfy all claims liabilities. These funds are
invested to keep rates low and return to members as a dividend only when the actuary
determines that they will not likely be needed to pay claims. In addition, the Trust
purchases reinsurance that puts a cap on the Trust's and members' claims liability.
Why is the Trust Agreement an Intergovernmental Agreement?
Oregon law requires that for local governments to form their own self-insured programs
they must do so through joining into an intergovernmental agreement. Intergovernmental
agreements are governed under ORS 190 and require each participating organization to
have a resolution adopted by its Board of Directors. The enclosed Joinder of Trust
Agreement can be considered a board resolution.
What are the primary differences between this new Trust Agreement and the original
Agreement?
The original Trust Agreement was controlled by the Special Districts Association of Oregon
(SDAO) Board of Directors. The SDAO Board was the only body that could modify the Trust
Agreement and the SDAO Board was also responsible for appointing the SOlS Board of
Trustees. legal counsel has advised SDAO and SOlS that for tax and other legal (
considerations the members should have a greater participation in the Trust. SOlS and its
participating members will now be responsible for adopting and amending the Trust
Agreement. Also, the Trustees will now be appointed by the Trustees themselves. To
ensure continuity and ongoing support, the SDAO will still be closely aligned with SDIS as its
Sponsoring Member.
Why can't my District find a resolution adopting the original Trust Agreement?
When the original Trust Agreement was created in 1985, the originators did not believe the
Trust Agreement needed to be approved by the participating members. They had the
opinion that the coverage documents issued to members at their insurance renewals were
considered an intergovernmental agreement that was entered into with the members when
the members paid their contributions. With changes in law and philosophy over time, our
current legal counsel feels that the best course of action for the newly amended Declaration
of Trust is for each member to sign a resolution agreeing to enter into the Trust Agreement
as an intergovernmental agreement.
What happens If my District does not adopt the Resolution?
Unfortunately, if your District does not adopt the Trust Agreement then your District will no
longer be able to participate in the self-insured health, dental, property, liability or workers
compensation programs. Your District will not be able to renew its coverage in these
programs when your current policy term expires.
Who should I contact if I have questions about the enclosed materials?
Membership Services Department
sdao@sdao.com
(503) 371-8667
(800) 285-5461
Special Districts Insurance Services Trust oeCEIVEt\nAPR 1& 20111 U
First Restatement of Declaration of Trust BY:~"f
RECITALS
1. Oregon Revised Statutes Chapter 30.282 authorizes Public Bodies within the state of
Oregon to create and participate in self-insurance programs through intergovernmental
agreements;
2. On July 1, 1985, the Special Districts Association of Oregon and certain trustees entered
into a Declaration of Trust for the Special Districts Insurance Services Trust, which set
forth the tenns and conditions upon which a self-insurance program solely for the benefit
of governmental entities would be organized and operated pursuant to Oregon Revised
Statutes Chapter 30.282, which Declaration of Trust was amended on October 22, 1987,
February 18, 1988, January 25, 1989, June 27, 1991, June 2, 1994, December 9, 1999,
September 21,2000, January 10,2002, April 17, 2003, and June 7, 2006 (the "Amended
Trust Declaration");
3. The Initial Members have made Contributions to the trustees of the Trust and the trustees
have implemented a self-insurance program with multiple pools for the benefit of the
Initial Members, and the funds associated with such program constitute a trust fund that
has been held for the exclusive benefit of the Initial Members participating in a self
insurance program;
4. Article 7 of the Amended Trust Declaration provided that the Amended Trust Declaration
could be amended by the Board of Directors of the Special Districts Association of
Oregon, by delivery of a copy of the amendment to each Trustee, provided however, that
no amendment could operate to the prejudice of any vested rights held by any participant
in the program of the Trust under a policy, contract, or other document for the benefit of
such participant; and
5. The Board of Directors of the Special Districts Association of Oregon and the trustees of
the Trust have detennined that a restatement of the Amended Trust Declaration in the
fonn of this First Restatement of Declaration of Trust, is in the best interests of the Initial
Members and prospective Members, and have detennined that this First Restatement of
Declaration ofTrust should be submitted to the Initial Members, and to prospective
Members as appropriate, to allow them to become Members.
First Restatement of Declaration of Trust Page 1
Special Districts Insurance Services Trust
April 1,2014
SECTIONl
DEFINITIONS
1.1 Definitions. All capitalized terms in this Agreement shall have the meanings
given to them in this Section 1.
1.2 "Agreement" means this First Restatement of the Declaration of Trust.
1.3 "Amended Trust Declaration" means the Special Districts Insurance Services
Trust Declaration of Trust described in the Recitals.
1.4 "Associated" means, when used in the phrase "Associated with" an organization,
the status of being a current employee of, or a member of the governing body of, that
organization, or being a volunteer in good standing of an organization (in accordance with the
policies and procedures of that organization) who is nominated in a writing signed by the Chair
of the Board of Directors of the organization.
1.5 "Audit Committee" means the committee established by the Board, as described
in Section 4.8(c).
1.6 "Board" means the Board of Trustees of the Trust.
1.7 "Board Observer" means the person designated by the Sponsoring Member to
attend Board meetings pursuant to Section 4.1(b).
1.8 "Contribution" means the amount a Member contributes to the Trust annually
pursuant to the Coverage Document.
1.9 "Coverage Document" means a contract between the Trust and a Member with
respect to self-insurance coverage with respect to which a Member makes a Contribution.
1.10 "Deadlocked" means a situation in which the vote of the Trustees on a matter is
evenly split for two or more meetings at which such matter is submitted to a vote.
1.11 "Effective Date" means April 1, 2014.
1.12 "Executive Committee" means the committee established by the Board, as
described in Section 4.8(a).
1.13 "Former Member" means a Special District, Public Body or Sponsoring
Member that was at one time a Member, but whose membership has Terminated.
1.14 "Initial Members" means those Special Districts and Public Bodies that had in
effect a Coverage Document on the day before the Effective Date.
1.15 "Joinder" means a document, substantially in the form attached as Exhibit A, the
execution of which constitutes a Member's agreement to be bound by the terms and conditions of
this Agreement, and shall include a duly executed resolution in substantially the same form. (
First Restatement of Declaration of Trust Page 2
Special Districts Insurance Services Trust
April 1, 2014
1.16 "Majority" means more than 50%.
1.17 "Member" means a Special District or Public Body that has executed a Joinder
to this Agreement and the Sponsoring Member, the membership of which has not Terminated.
1.18 "Nominating Committee" means the committee established by the Board as
described in Section 4.8(b).
1.19 "Public Body" means an entity described in Oregon Revised Statutes 30.260.
1.20 "Quorum" means a Majority of the Trustees.
1.21 "Special District" means a governmental entity described in Oregon Revised
Statues 198.010.
1.22 "Sponsoring Member" means the Special Districts Association of Oregon.
1.23 "Termination" means the cessation of the membership of a Member pursuant to
this Agreement.
1.24 "Trust" means the Special Districts Insurance Services Trust.
1.25 "Trustee" means a person who has executed this Agreement or a duplicate
thereof agreeing to accept the responsibilities of trusteeship under this Agreement, and who has
not resigned or been removed as a Trustee.
1.26 "Trust Property" means cash, property or any asset held by the Trustees and
subject to this Agreement.
SECTION 2
PURPOSES AND OPERATON OF TRUST
2.1 Purposes. The purposes of the Trust shall continue to be the operation of a
program of self-insurance whereby the Members' exposures in the areas of tort liability, property,
workers compensation, and ancillary program areas may be effectively and economically
managed, and whereby insurance and risk retention strategies to manage such risks may be most
responsibly and economically funded, and to provide life, health, and disability programs and
other personnel benefit services to Members. The Trustees shall endeavor to accomplish these
goals by:
(a) Acting to ensure that there is available to Members markets for liability,
property, workers compensation, and ancillary coverages appropriate to risks to which such
Members are exposed and markets, programs and services for employee benefits and health, life,
and disability insurance coverage needs of Members.
(b) Aggregating the collective buying power ofMembers and the economic
advantages of individual and pooled risk retention and other strategies, where lawful and
actuarially sound, and to reduce and stabilize the cost of funding those risks.
First Restatement of Declaration of Trust Page 3
Special Districts Insurance Services Trust
April 1, 2014
(c) Making available to Members resources and expertise in the management
of risk through loss prevention and loss control programs, claims management, consulting, data
gathering, information sharing and related services.
(d) Acting as a representative and information resource for Members in
presenting to appropriate legislative and administrative bodies and committees, data and policy
issues related to the cost of public risk in Oregon.
(e) Creating, upon authorization by the Board, pooled self-insured programs
funded by Member Contributions and based on sound actuarial analysis, which may be
structured as separate pools for various types of risk., with physical or accounting segregation as
determined by the Board.
(f) Developing and providing other insurance programs, retirement programs
or other related services as are approved by the Board, including but not limited to loan or grant
programs in amounts not material to Trust operations and designed to further the objectives of
the Trust.
(g) Providing access for Members to coverages with respect to which the
Trust is not an indemnitor.
2.2 Trust Property. The Trustees shall collect and manage Trust Property, including
but not limited to insurance premiums, Contributions and other revenues, shall make appropriate
disbursements from the Trust, and shall oversee the management and administration of the
programs of the Trust, approving the necessary contracts, insurance policies, premium
contributions, fee schedule group purchases and making such other arrangements and
implementing such strategies as necessary to carry out putposes described herein regarding the
self-insurance programs, for the exclusive benefit of the Members and as described in this
Agreement.
SECTION 3
CONTINUATION OF TRUST AND FUTURE CONTRIBUTIONS
3.1 Trust Agreement. The Trustees and the Sponsoring Member hereby enter into
this First Restatement of Declaration of Trust, to be effective on the Effective Date. The
Trustees shall invite the Initial Members, and such other Special Districts or Public Bodies as
appropriate, to become Members.
3.2 Trust Continuation. The Trust shall continue without interruption on and after the
Effective Date and shall be operated from the Effective Date pursuant to this First Restatement
of Declaration of Trust.
3.3 Existing and Future Trust Property. The Members confirm that the Trust Property
subject to the Amended Trust Declaration as of the Effective Date of this Agreement, including
all Contributions and income and profits therefrom, shall remain Trust Property, to be held,
managed and distributed pursuant to this Agreement.
(
First Restatement of Declaration of Trust Page 4
Special Districts Insurance Services Trust
April 1, 2014
3.4 Contributions. Any Contributions made on or after the Effective Date of this
Agreement, along with any and all income and profits therefrom, shall be Trust Property, and
shall be held, managed and distributed pursuant to this Agreement. A contributing Memberts
Contribution is irrevocable.
3.5 Agreement by Trustees. The Trustees hereby declare that they will administer,
manage, collect, receive, dispose of and distribute all Trust Property for the exclusive benefit of
the Members as provided in this Agreement.
SECTION 4
BOARD OF TRUSTEES
4.1 Board of Trustees.
(a) In General. The Trust shall be governed by a Board of Trustees (lithe
Board") composed of not fewer than five, nor more than nine, Trustees. Until changed by a vote
of the Board, the number of Trustees shall be seven.
(b) Board Observer. As long as the Sponsoring Member is a Member, it shall
from time to time designate a Board Observer, who shall be entitled to attend all meetings of the
Board, but who shall not be a Trustee, shall have no fiduciary duties, and shall not vote. The
Board Observer shall advise the Board on matters potentially affecting Special Districts
throughout Oregon, as such matters relate to the activities of the Trust. The Board Observer shall
be a nonvoting member of all standing and ad hoc committees of the Board. If the Sponsoring
Member ceases to be a Member, there shall be no Board Observer position.
(c) Continuation ofTrustees. Notwithstanding any requirement of Section
4.3, Trustees of the Trust serving as of the Effective Date shall continue to serve as Trustees until
the expiration of their terms of office.
(d) Election ofTrustees. The Board shall elect a Trustee to fill any vacant
Trustee position, which elected Trustee shall serve until expiration of the vacated position.
4.2 Meetings.
(a) Annual Meeting. An annual meeting of the Trustees shall be held in June
of each year.
(b) Special Meetings. Special meetings of the Trustees may be called by the
Sponsoring Member, Chair, the Vice-Chair, or a Majority of Trustees, by giving written notice to
the Chair or the Vice-Chair.
(c) Quorum. A Quorum of Trustees must be present to conduct business at a
duly called meeting.
(d) Manner ofActing. With respect to any matter to be decided by the
Trustees, the Trustees shall act by Majority vote of all Trustees.
First Restatement of Declaration of Trust Page 5
Special Districts Insurance Services Trust
April I, 2014
(e) Location ofMeeting. All meetings shall be held within the State of
Oregon. While every meeting must have a physical location at which at least one Trustee
appears, Trustees may participate in the meeting by means of a conference telephone call or
electronic communication method if all persons participating in the meeting can hear each other
at the same time.
4.3 Qualifications of a Trustee.
(a) In General. Except as provided in Section 4.3(b), as a qualification for
appointment and continued service, each Trustee shall be a natural person Associated with a
Special District which is a Member.
(b) Continued Service by Trustee. If a Trustee becomes no longer Associated
with a Member during the Trustee's term of office, the Trustee may serve out the remainder of
the Trustee's term.
4.4 Term of Office of Trustee.
(a) Fixed Terms. Trustees shall be appointed for a fixed term. Terms shall be
three years and shall be staggered so that no more than three Trustees' terms expire during any
calendar year. There shall be assigned position numbers to each Trustee position.
(b) Reappointment. A Trustee may serve any number of consecutive terms.
4.5 Resignation of a Trustee. A Trustee may resign at any time by giving written
notice to the Chair, Vice-Chair or Secretary of the Trust, which resignation shall be effective
upon delivery or on such later date specified in the resignation.
4.6 Removal of a Trustee.
(a) Removal by Trustees. A Trustee may be removed by a Majority Vote of
the Trustees other than the Trustee who is being considered for removal.
(b) Deadlock Process. If the Board is Deadlocked on removal of a Trustee,
the matter shall be submitted pursuant to the Deadlock Process described in Section 4.13. The
Board of Directors of the Sponsoring Member shall determine whether the affected Trustee is to
be removed as a Trustee, which decision shall be final. Ifthe Board of Directors ofthe
Sponsoring Member determines that a Trustee should not be removed, that Trustee shall serve
until the expiration ofhis or her term, unless the other Trustees determine that the affected
Trustee has engaged in intentional misconduct or gross negligence in carrying out his or her
duties, in which case such Trustee may be removed using the processes described in Section (a)
and (b) ofthis Section 4.6.
4.7 Officers.
(a) Officers. The officers of the Board shall be a Chair, a Vice-Chair, a
Secretary, and a Treasurer. The same person may not concurrently occupy more than two ~~. (
First Restatement of Dec1aration of Trust Page 6
Special Districts Insurance Services Trust
April 1, 2014
(b) Appointment. Officers shall be elected by the Board at the annual meeting
and shall serve a one-year term or until their successors are elected by the Board.
(c) Resignation. An officer may resign at any time by giving written notice to
the Chair, Vice Chair or Secretary of the Trust, which resignation shall be effective upon
delivery or on such later date is specified in the resignation. In the event of a vacancy in an
officer's position, the Board shall fill the unexpired portion of the term by election at the next
Board meeting.
(d) Duties ofChair. The Chair shall, when present, preside at all meetings of
the Board and of the Members. He or she shall serve as the chair of the Executive Committee
and shall be an ex-officio Member of all other standing committees. The Chair shall perform all
duties required of him or her by the Board.
(e) Duties of Vice-Chair. The Vice-Chair shall preside at all meetings of the
Board and of the Members in the absence of the Chair. He or she shall perform such other duties
as assigned by the Board or the Chair. The Vice-Chair shall be the chair of the Nominating
Committee.
(f) Duties ofSecretary. The Secretary will keep or cause to be kept at the
Trust's principal office all of the minutes of the meetings of the Board and Members showing the
time and place of meeting, the notice given, the names of those present and the content of such
meeting in reasonable detail. The Secretary shall perform such other duties as assigned by the
Board or the Chair.
(g) Duties ofTreasurer. The Treasurer will be responsible for oversight of
(i) the funds of the Trust; (ii) deposits and withdrawals of such funds in such depositories as may
be authorized by the Board; and (iii) the keeping of a full and accurate account of receipts and
disbursements at the Trust's principal office. The Treasurer shall be the chair of the Audit
Committee and shall perform such other duties as assigned by the Board or the Chair.
4.8 Committees.
(a) Executive Committee. The Board shall establish an Executive Committee,
the objective of which is to prepare for Board meetings, address the business of the Trust
between Board meetings in a manner delegated by the Board, and recommend to the Board the
admission of new Members and Termination of existing Members, as necessary.
(b) Nominating Committee. The Board shall establish a Nominating
Committee, the objective of which is to identify and recommend to the Board appropriate
candidates for trusteeship from among the Members.
(c) Audit Committee. The Board shall establish an Audit Committee, the
objective of which is to assure that the Board is adequately and currently informed of the
financial condition of the Trust through reports and other methods.
First Restatement of Declaration of Trust Page 7
Special Districts Insurance Services Trust
Aprill,2014
(d) Other Committees. The Board may establish such other committees as it
deems necessary and appropriate to carry out its responsibilities, which committees may be
standing or ad hoc committees, in the discretion of the Board.
4.9 Salaries and Expenses. Trustees shall serve without compensation, but shall be
entitled to reimbursement for expenses in accordance with the applicable expense policies ofthe
Trust.
4.10 Policies and Procedures. The Trustees may from time to time adopt policies and
procedures for operation of the Board, committees, and the Trust that are not inconsistent with
this Agreement. The Trustees shall establish and maintain policies and procedures designed to
cause the Trust to retain net assets sufficient to satisfy projected liabilities at appropriately high
actuarially determined confidence levels in the event of catastrophic loss.
4.11 Powers of Trustees. The Trustees shall have each and every power accorded to
Trustees under Oregon law and the authority to act in all matters relating to the Trust and Trust
property, including but not limited to the power to:
(a) make and enter into contracts;
(b) incur debts, liabilities, and obligations;
(c) acquire, hold, or dispose of property, contributions and donations of
Property, funds, services, and other forms of assistance from any person;
(d) sue and be sued in the name of the Trust, and to settle or compromise any
claim;
(e) engage and employ agents, employees, consultants, contractors, advisers,
and any other personnel to assist in the activities of the Trust;
(f) receive, collect, and disburse monies from any source;
(g) authorize and payor credit to Members (and not Former Members) such
amounts, from the excess of available funds over amounts required or projected by the Board to
fund Trust operations and claim liabilities, as determined appropriate by the Board, in its sole
discretion; and
(h) do all other things necessary and appropriate to carry out the purposes of
the Trust and permitted by law.
4.12 Services Contract. The Trustees may enter into a contract with a Member to
perform duties of administration of the Trust, which duties shall include but not be limited to
claims administration, loss control, underwriting, and other consulting services as may be
specified by contract between the Trust and the service provider.
4.13 Deadlock. If at any time the Trustees are Deadlocked on any issue, the Chair or
Vice-Chair shall prepare a memorandum summarizing the facts and circumstances of the
First Restatement of Declaration of Trust Page 8
Special Districts Insurance Services Trust
April 1, 2014
situation in reasonable detail, and shall submit this memorandum to the Chair of the Board of
Directors of the Sponsoring Member. The Board of Directors of the Sponsoring Member shall
resolve the Deadlock and inform the Trustees of its decision, which decision shall be binding
upon the Board.
SECTIONS
MEMBERSHIP
5.1 Sponsoring Member. The Special Districts Association of Oregon is the
Sponsoring Member of the Trust. The role ofthe Sponsoring Member is to provide the
experience and continuity needed by the Trust to best serve its Members. The Sponsoring
Member shall have ongoing duties to the Trust, including:
(a) Working closely with others engaged by the Trust to provide various
services;
(b) Appointment ofa Board Observer, as described in Section 4.1 (b);
(c) Providing its Executive Director as Trust Administrator for the Trust, who
shall act in the role of chief operating officer and shall carry out the day-to-day duties of trust
administration, as delegated by the Trustees;
(d) Facilitating strategic planning for the Trust and recommending strategies
for improving services to Members and improvement of ongoing operations of the Trust; and
(e) Engaging in such other duties as reasonably requested by the Board to
carry out the objectives of the Trust.
5.2 Distribution to Sponsoring Member. The Trust shall make an annual distribution
to the Sponsoring Member in an amount to be determined by the Board in consultation with the
Sponsoring Member.
5.3 Qualifications for Membership. A Member other than the Sponsoring Member
must be a Special District or Public Body, within Oregon, that is a member in good standing ofthe
Special Districts Association of Oregon.
5.4 Effect of Membership. A Member shall be eligible to participate in the coverages
and services offered by or through the Trust on such terms and conditions as set forth in the
Coverage Documents. Once an entity becomes a Member, such membership shall continue until
terminated in accordance with this Agreement.
5.5 Initial Members. All entities who are Initial Members on the day before the
Effective Date shall be eligible to become Members of the Trust as of the Effective Date by
executing a Joinder.
5.6 New Members. Upon application by a Special District or Public Body to become
a Member of the Trust, the Board may approve membership of such entity on such terms and
First Restatement of Declaration of Trust Page 9
Special Districts Insurance Services Trust
Aprill,2014
conditions as Board detennines, in its sole discretion. The Board shall have the exclusive
authority to approve or deny an application for membership, in its sole discretion.
5.7 Tennination of Membership.
(a) Termination ofAll Coverages. Upon the tennination of all participation in
programs of the Trust, including but not limited to coverage under all Coverage Documents with
respect to a Member (other than the Sponsoring Member), a Member's membership shall cease.
(b) Sponsoring Member. The Board may Tenninate the membership of the
Sponsoring Member for intentional wrongdoing or gross negligence, in its conduct as a Member,
by a vote of two-thirds of the Trustees.
5.8 Liability after Termination of Membership. Upon Tennination of membership,
the Member will continue to be liable for the payment of any Contributions due as of the date of
Tennination. In the event the Trust is unable to perfonn its contractual obligations on a Fonner
Member's behalf, the Member will continue to be liable for the payment of its own claims and
liabilities arising out of the period when the Fonner Member was a Member.
5.9 Resumption ofMembership after Tennination. A Fonner Member may reapply
for membership three years after Tennination of membership. The Board in its discretion may
waive this time limit or impose additional waiting periods.
5.10 Duties and Obligations of Members.
(a) Joinder to First Restatement. Each Member (other than the Sponsoring
Member) shall execute a Joinder to this Agreement in a fonn approved by the Board and shall
execute such other documents as are reasonable and appropriate, in the determination of the
Board, to evidence membership in the Trust
(b) Information. Each Member will furnish to the Trustees such underwriting
and other infonnation as may be reasonably required to carry out the purposes of the Trust at
least 45 days prior to the end of the coverage period as described in the Coverage Documents.
(c) Contributions. Each Member shall make an annual Contribution based on
the coverages the Member elects to the Trust in the amount determined by the Trustees, which
amount shall be communicated to the Members within a reasonable period prior to renewal of
coverage. The amount of the Contribution of each Member shall be detennined by the Board, in
its sole discretion, based on the coverages the member elects.
(d) Cooperation. As participants in a self-insured program, Members have an
obligation to control claim costs by minimizing risk by establishing best management and safety
practices. Each Member shall cooperate fully with the Trustees and their agents in the mitigation
of risk and the administration of claims. Members' required cooperation shall include, but not be
limited to:
(
First Restatement of Declaration ofTrust Page 10
Special Districts Insurance Services Trust
April 1, 2014
(i) Following the loss prevention and risk management programs of
the Trust, and abiding by all conditions, requirements, rules or regulations regarding loss control
and risk management which may be promulgated by the Trust or its agents.
(ii) Annually completing a best practices checklist as requested by the
Trust and endeavoring to the best of its abilities to adhere to the best practices identified on the
checklist.
the Coverage D
(iii)
ocuments.
Giving prompt notification of any claim to the Trust as provided in
(iv) Permitting the Trust's agents at any reasonable time to inspect the
Member's properties and operations, and to examine the Member's books, documents and records
of any and every kind pertinent to membership or in the administration of the Trust.
(v) Answering questionnaires pertinent to the operation of the Trust, or
any particular pool maintained by the Trust, regarding the operations of the Member.
(e) Trust Insolvency. In the event of insolvency of the Trust, each Member or
Former Member will continue to be liable for the payment of its own claims and liabilities
arising during the period of membership.
5.11 Appointment as Agent. Each Member hereby appoints the Trust or its designated
agent to act as the Member's agent and attorney-in-fact to act on its behalf, to execute all
contracts, reports, waivers, agreements and service contracts, and to make an arrangement of
payment of claims and all other things required for the proper and orderly operation of the Trust.
Each Member agrees that the Trust or its designees shall have the sole responsibility for the
adjustment andlor settlement of any and all claims.
SECTION 6
LIABILITY OF TRUSTEES AND INDEMNIFICATION
6.1 Errors and Omissions Insurance. The Trustees shall secure errors and omissions
insurance covering each Trustee in such amounts and on such terms and conditions as
determined appropriate by the Board.
6.2 Indemnity.
(a) In General. The Trust will indemnify to the fullest extent permitted by law
any person who is made or threatened to be made a party to, witness in, or otherwise involved in,
any action, suit or proceeding, whether civil, criminal, administrative, investigative, or otherwise
(including an action, suit or proceeding by or in the right of the Trust) by reason of the fact that
the person is or was a Trustee, Board Observer, or a fiduciary within the meaning of the
Employee Retirement Income Security Act of 1974 with respect to any employee benefit plan of
the Trust. The Trust may indemnify to the fullest extent permitted by law any person who is
made or threatened to be made a party to, witness in, or otherwise involved in, any action, suit or
proceeding, whether civil, criminal, administrative, investigative, or otherwise (including an
action, suit or proceeding by or in the right ofthe Trust) by reason of the fact that the person is or
First Restatement of Declaration of Trust Page 11
Special Districts Insurance Services Trust
April 1, 2014
was an employee or agent of the Trust. Any indemnification provided pursuant to this Section
5.4(a) will not be exclusive of any rights to which the person indemnified may otherwise be
entitled under any provision of any agreement, statute, policy of insurance, vote or resolution of
the Board, contract, or otherwise. Notwithstanding the foregoing, the Trust shall not have any
obligation to indemnify any person based on actions of such person that are found to constitute
gross negligence or intentional misconduct by a court decision from which no appeal may be
taken.
(b) Advancement ofExpenses. The expenses incurred by a Trustee or other
person in connection with any threatened, pending or completed action, suit or proceeding
(except for an action, suit or proceeding by or in behalf of the Trust), whether civil, criminal,
administrative, investigative, or otherwise, which the Trustee or other person is made or
threatened to be made a party to or witness in, or is otherwise involved in, will be paid by the
Trust in advance upon the written request of the Trustee or other person if he or she (i) furnishes
the Trust a written affirmation that in good faith the Trustee believes that he or she is entitled to
be indemnified by the Trust; and (ii) furnishes the Trust a written undertaking to repay such
advance to the extent that it is ultimately determined by a court that such Trustee or other person
is not entitled to be indemnified by the Trust.
(c) Amendment. No amendment to this Section 6.2 that limits the Trust's
obligation to indemnifY any person will have any effect on such obligation for any act or
omission that occurs prior to the later of the effective date of the amendment or the date notice of
the amendment is given to the person.
(d) Further Action. To the fullest extent permitted by law, no Trustee of the
Trust or Board Observer will be personally liable to the Trust or the Members for monetary
damages for conduct as a Trustee. Without limiting the generality of the preceding, if after this
Section 6.2 becomes effective the Oregon statutes are amended to authorize Trust action further
eliminating or limiting the personal liability of a Trustee or Board Observer, then the liability of
Trustees of the Trust and the Board Observer will be eliminated or limited to the fullest extent
permitted by the Oregon statutes, as so amended. No amendment or repeal of this Section 6.2
nor a change in the law, will adversely affect any right or protection that is based upon this
Section 6.2 and that pertains to conduct that occurred prior to the time of such amendment,
repeal, adoption or change. No change in the law will reduce or eliminate the rights and
protections set forth in this Section 6.2 unless the change in the law specifically requires such
reduction or elimination.
6.3 Use of Trust Assets to Defend Trust. Trust Property may be used to defend
claims of any type made against the Trust or Trustees, and such use shall not be deemed a
conflict of interest for any Trustee.
SECTION 7
TERMINATION OF TRUST
7.1 Termination of Trust. The Trust shall terminate upon a vote to terminate the
Trust by (A) the Board of Directors of the Sponsoring Member (if the Sponsoring Member is a
Member) and (B) either (i) two-thirds of the Trustees or (ii) three-fourths of the Members. The (
First Restatement of Declaration of Trust Page 12
Special Districts Insurance Services Trust
April 1, 2014
Trust shall terminate upon a determination by a court of competent jurisdiction that the purposes of
the Trust cannot be accomplished, even with amendment or modification of the Agreement or Trust
structure. In the event of termination, the Trust shall continue for the purpose of making
allowances for claims, retiring any debt, distributing all assets, and performing all other functions
necessary to conclude the affairs ofthe Trust, all of which shall be the responsibility of the
Sponsoring Member, for which it will be paid reasonable compensation.
7.2 Distribution of Assets. Upon termination of the Trust, all Trust Property shall be
distributed among the Special Districts and Public Bodies who are Members at the date of
termination of the Trust, in proportion to their Contributions to the Trust during the 5 years
immediately preceding the effective date of termination of the Trust.
7.3 No Assessments. The Trust shall not have the authority to assess Members or
Former Members for additional Contributions in the event of Trust insolvency.
SECTION 8
AMENDMENT
8.1 Method of Amendment. This Agreement may be amended by vote of two-thirds of
the Trustees and the approval of the Board of Directors of the Sponsoring Member. Amendments
shall be distributed to the Members within 60 days of adoption.
8.2 Limitation on Amendments. No amendment to this Agreement shall be adopted
which provides for distribution upon dissolution to other than the Members, that causes gratuitous
diversion of Trust Property for the benefit of private interests, or retroactively divests a Member of
a vested right granted to that Member pursuant to a Coverage Document.
SECTION 9
MISCELLANEOUS
9.1 Title to Trust Property. Legal title to all Trust Property shall be held by the Trustees
for the exclusive benefit of the Members as described in this Agreement.
9.2 No Interest in Trust Property by Members. No Member shall have any right to or
interest in Trust Property, and no creditor of any Member shall have any claim against Trust
Property for any debt or obligation of a Member.
9.3 Intergovernmental Agreement. This Agreement is intended to be an
intergovernmental agreement as described in Oregon Revised Statutes 30.282 for three or more
Public Bodies to create a program of self-insurance, and shall be interpreted for all purposes as such
an agreement.
9.4 Governing Law. This Agreement shall be governed by the laws of the State of
Oregon.
9.5 Joinders. Any Joinder to this Agreement executed by a Member will be deemed to
be that Member's assent to the entirety of this Agreement, as if such Member had executed an
original of this Agreement.
First Restatement of Declaration of Trust Page 13
Special Districts Insurance Services Trust
April I, 2014
9.6 Dispute Resolution.
(a) Appeal to Board ofTrustees. In the event of any dispute arising from the
operation of the Trust, the affected Member shall first appeal to the Board. In a matter relating to a
claim under a Coverage Document, the appeal must be made within 30 days of the Trust's proposed
resolution of the disputed claim unless otherwise provided in the Coverage Document. To institute
an appeal, the Member must give written notice to the Chair or Vice-Chair of the Board, providing
a written summary of the dispute, detailing in reasonable detail the facts and circumstances of the
issue and the requested remedies. At the next scheduled Board meeting or at such other time as
determined by the Chair, the Board will review the matter, using procedures as promulgated by the
Board. The Board's decision will be communicated to the Member within 90 days of the Board's
hearing of the appeal.
(b) Mandatary Mediation. Ifa dispute is not resolved by appeal to the Board, it
must be submitted to the Arbitration Services ofPortland ("ASP"), or its successor, for mediation.
The Trust or any Member may commence mediation by providing ASP and the other affected
parties a written request for mediation, setting forth the subject of the dispute and the relief
requested. The Trust and each affected Member shall cooperate with ASP and with one another in
selecting a mediator from the ASP panel of neutrals and in scheduling the mediation proceedings.
They agree that they will participate in the mediation in good faith and that they will share equally
in the costs (the Trust will pay one half of the costs and the other half will be paid by the affected
Member, or if more than one Member, each shall contribute equally to that half or otherwise as they
may agree). All of the offers, promises and conduct and statements, whether oral or written, made
in the course of the mediation by any of the parties, their agents, employees, experts and attorneys,
and by the mediator or any ASP employees, are confidential and privileged and inadmissible for
any purpose, including impeachment, in any arbitration or other proceeding involving the parties,
providing that evidence that is otherwise admissible and discoverable will not be rendered
inadmissible or non-discoverable as a result of its use in the mediation.
(c) Mandatary Arbitration. Ifthe matter is not resolved through mediation, then
it shall be submitted to ASP, or its successor, for fmal and binding arbitration pursuant to the rules
ofcommercial arbitration for ASP. The Trust or a Member may initiate the arbitration with respect
to the matter submitted to mediation by filing a written demand for arbitration at any time following
the initial mediation session or at any time following 45 days from the date of filing the written
request for mediation, whichever occurs first ("Earliest Initiation Date"). The mediation may
continue after the commencement of arbitration if the parties agree. At no time prior to the Earliest
Initiation Date will either side initiate an arbitration or litigation related to this Agreement, except
as provided by the rules of commercial arbitration for ASP or by agreement of the parties. All
applicable statutes of limitations and defenses based upon the passage of time shall be tolled until
15 days after the Earliest Initiation Date. The parties will take such action, if any is required, to
effectuate such tolling. The dispute will be settled by a single arbitrator. The parties will
cooperate with ASP and with one another in selecting an arbitrator and in scheduling arbitration
proceedings. Arbitration will occur in Salem, Oregon unless the parties otherwise agree. The
parties will be entitled to conduct discovery in accordance with the Federal Rules of Civil
Procedure, subject to limitation by the arbitrator to secure the just and efficient resolution of the
dispute. Ifthe amount in controversy exceeds $250,000, the arbitrator's decision shall include a
statement specifying in reasonable detail the basis for and computation of the amount of the award, (
First Restatement of Declaration of Trust Page 14
Special Districts Insurance Services Trust
Aprill,2014
ifany. In any arbitration. arising out ofor. related ~this Agreem~t,the. arbittatot may not award
8I1Y incidental, indirect ofconsequentiaI daftlages,mcludirig danut.p fQrJost profits. The
decisioo·ofthe aibitratot will be fUJal. and binding: The party PteVBiliDgiiitb.eaIbitration will also
be eDtitlcd to recover any amount forms.or her costs and attorney (eesinc~in connection with
1i,le arb~as determined by the arbitratOr. JUdgment upon the atbitration award may be
entered in any court havingj'i.JriSdiction.
(d) Coverage Document Dispute Resolution. The disp~eresolution
provisions in any Coverage Docm;neilt shall apply for the matters. to which such provisionS are
~11PPJ1cable in the Coverage Document, andshallsupetsede the dispute resolution ptQvisions
of1his Section 9.6. Ifa Coverase Document is silent, or thedlspute resolutions contained within it
do not apply to apaiticular dispute, the dispute resolution provisions ofthis SeCtion 9.6 shall
apply.
This FirstDeclaration ofTrust is executed by tbeSponsorinaMemberandby the Trustees, who by
affixing their signatutehereto. agree to accept thefr appointment as TJ'USfeeS under this First
Restatement of1he Declaration ofTrust oftheSpecia! Districts lnsurance Services Trust as ofthe
Effective Date.
SPONSORING MEMBER:
Its:. _SDAO Board of Directors President
TRUSTEES:
Position No. 1
Position No.2
Position No.3
Position No.4
l'osition No,S
Position No.6
Position No. 7
First ~t ofDeclatation ofTrust
SpeCial DistriCtS Insurance Servic:e$Trust
Aprill, 20.14