HomeMy WebLinkAboutAgenda Report - August 20, 2014 C-21AGENDA ITEM COV
?� • CITY OF LODI
COUNCIL COMMUNICATION
TM
AGENDA TITLE: Adopt Resolution Approving Government Crime Policies and Faithful Performance
of Duty Coverage for the Purpose of Bonding City Officers and Employees and
Establishing Policy Limits
MEETING DATE: August 20, 2014
PREPARED BY: Risk Manager
RECOMMENDED ACTION: Adopt resolution approving Government Crime Policies and faithful
performance of duty coverage for the purpose of bonding City
officers and employees and establishing policy limits
BACKGROUND INFORMATION: The recent appointment of the City Manager creates an opportunity
to review the bonding requirements of this position and other city
officers and employees. Lodi Municipal Code Section 2.12.040
states, "The city manager shall furnish a surety company bond to be approved by the council in such sum
as may be determined by the city council." (See the Ordinance item on this Agenda.) A thorough search
of past Lodi City Council Resolutions does not reveal a specific dollar amount set for this bond. Further,
the California Government Code does not specify an amount, nor does it require that a City Manager be
bonded. However, for other City officers, California Government Code section 36518 does state that,
"Before entering upon the duties of their offices, the city clerk and city treasurer shall each execute a
bond to the city. Except as otherwise provided, the bonds shall conform to the provisions of this code
relating to bonds of public officers. The penal sum of the bond shall be in a reasonable amount
recommended by the city attorney and fixed by the city council, by resolution, and may be changed
during their terms of office." Resolution No. 2050 adopted by the Lodi City Council August 7, 1957
specifies a dollar amount for these positions - "Resolved, that the Fidelity Bond of the Finance Director -
City Treasurer of the City of Lodi be, and the same is hereby fixed at $100,000."
For several years the City has purchased, and recently purchased again, a Government Crime Policy,
with an endorsement for faithful performance of duty coverage, to comply with the requirements stated
above. The policy covers all City of Lodi employees for the period 7/1/14 to 7/1/17 and protects the City
against various forms of dishonesty such as, employee theft, forgery or alteration, theft of money and
securities, funds transfer fraud, willful neglect of duty, bad faith, and other forms of employee
malfeasance with policy limits of $1,000,000. In prior years, the Presiding Judge of the San Joaquin
County Superior Court has been asked, and has granted, a miscellaneous order that such policy be
approved as a substitute for any bond required by State law. A similar request will be made again for the
recently purchased policies.
Staff has conducted a survey of cities in our region regarding surety bond limits for City Managers. Given
that the California Government Code does not require bonding for the position of City Manager, several
cities do not have any requirements. When their municipal codes do require bonds, limits have been set
at either $100,000 or $1,000,000. Staff, with the concurrence of the City Attorney, recommends the
APPROVED: 1
Stephen Schwiabaubr, City Manager
amount of the fidelity bond or insurance equivalent be fixed at $1,000,000 for City officers and
employees, including the City Manager, City Clerk and Finance Director -City Treasurer.
FISCAL IMPACT: The renewal premium for Zurich, the incumbent carrier for the City's
Government Crime Policy is $22,192 for a three year term. The Faithful
Performance component of the policy currently has limits set at $100,000.
It is recommended that limits on this component of the policy be raised to
$1,000,000. The cost associated with this change is an additional $410.33
per year. Over the three year term of the policy, total additional premium
will be $1,231.
FUNDING AVAILABLE: Sufficient funds have been budgeted in account 301201.8059 during FY
14-15 to cover all costs associated with the purchase of the crime policy.
J.,Evans, Risk Manager
Attachments
RESOLUTION NO 2014-159
A RESOLUTION OF THE LODI CITY COUNCIL
APPROVING GOVERNMENT CRIME POLICIES FOR
THE PURPOSE OF BONDING CITY OFFICERS AND
EMPLOYEES AND ESTABLISHING POLICY LIMITS
WHEREAS, California Government Code §36518 requires City Council by
resolution establish the penal sum of the bond for the positions of City Clerk and City
Treasurer; and
WHEREAS, California Government Code §36519 provides that the City Council
may require bonds of any other officer or employee of the city; and
WHEREAS, California Government Code §37209 requires execution of a bond
by a Director of Finance where duties imposed by law upon the City Clerk are
transferred to a Director of Finance; and
WHEREAS, California Government Code §1480 provides that every officer agent
or employee not required by statute to give an official bond may be required to give an
individual official bond or other form of individual bond in the amount to be fixed by the
appointing power and such bond shall inure to the benefit of the appointing power, state,
county, or municipality by whom such officer, employee, or agent is employed as well as
the officer under whom the employee or agent serves; and
WHEREAS, Lodi Municipal Code §2.12.040 requires the City Manager shall
furnish a surety company bond to be approved by the Council in such sum as may be
determined by the City Council; and
WHEREAS, California Government Code §1463 states, ... 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 §§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 §1481; and
WHEREAS, California Government Code §1481 (b) provides that
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, California Government Code §1481 (c) provides that a master bond
under this section shall be in the form and for the term which is approved by the
appointing power or the legislative body of a local public agency and shall inure to the
benefit of the appointing power, state, or local public agency by whom the officer,
employee, or agent is employed as well as the officer or officers under whom the
employee or agent serves.
NOW, THEREFORE, BE IT RESOLVED by the Lodi City Council as follows:
1. That the City Council deems it expedient that the bonding requirements for public
officers and employees required by California Government Code, Lodi Municipal
Code, or City Council Resolution, shall be in the form of a Government Crime
Insurance Policy that provides coverage for City of Lodi officers and employees;
2. That the limits of the Government Crime Policy shall be at least $1,000,000 per
occurrence for employee theft, with a deductible amount of not more than $10,000 per
occurrence, with sub -limits for other forms of loss covered by the policy as deemed
appropriate; and
3. That the premiums shall be paid by the City.
Dated: August 20, 2014
I hereby certify that Resolution No. 2014-159 was passed and adopted by the
City Council of the City of Lodi in a regular meeting held August 20, 2014, by the
following vote:
AYES: COUNCIL MEMBERS — Hansen, Johnson, Mounce, Nakanishi, and
Mayor Katzakian
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
NIFE OBISON
b Clerk
2014-159