The bill, SB 297-FN, amends existing laws governing pooled risk management programs for political subdivisions, introducing several key provisions aimed at enhancing financial oversight and accountability. It empowers the secretary of state to require the abatement of asset deficiencies or seek receivership if necessary. The bill mandates that participating members be assessed on a pro rata basis to cover any identified deficiencies and establishes standards for the governing board's management, emphasizing a duty of care and fiduciary responsibility to member political subdivisions. New definitions for terms such as "administration," "reserves," and "assessments" are also introduced to clarify responsibilities. Key changes include the requirement for the governing board to act with diligence and prudence, and to manage the program solely for the benefit of its members, along with provisions for notifying members and the secretary of state if contingency reserves fall below specified thresholds.

Additionally, the bill mandates annual audits by independent certified public accountants and requires the establishment of written bylaws for governance. It introduces a health care stabilization fund, requiring members to allocate at least 4% of their annual contributions to cover potential assessments. The bill sets guidelines for maintaining contingency reserves, stipulating minimum and maximum percentages based on member contributions, and outlines procedures for replenishing reserves. It also allows boards to request temporary increases in maximum coverage limits for workers' compensation and health coverage, contingent upon specific requirements. A new disclaimer is required in member agreements, clarifying that these programs do not function like traditional insurance and may necessitate additional assessments. The bill is projected to save the state over $250,000 annually while potentially increasing financial obligations for municipalities and counties involved in these programs.

Statutes affected:
Introduced: 5-B:2, 5-B:5, 5-B:6
As Amended by the Senate: 5-B:2, 5-B:5, 5-B:6