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BEAUMONT INDEPENDENT SCHOOL DISTRICTBeaumont, Texas

EXHIBIT liB"Page 1 of 7

TO Dr. Carrol A. Thomas, Jr.Superintendent of SchoolsFROM: Robert ZingelmannChief Business OfficerDATE: September 15, 2011SUBJECT: Consider and, if Appropriate, Take Action to Approve Second YearOption of the Workers Compensation Claims Program for the 2011 2012 School Year

The Board of Trustees approved the Third Party Transition of theWorkers Compensation Claims Program last August at the regularscheduled Board Meeting. The recommendation by RobertRobertson, the district's insurance consultant, to approve the secondyear option of the program is attached.Administration recommends approval of this request.

AGENDASeptember 15, 2011

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JS. Edwards- -&- Sherlock

INSURANCE AGENCY

September 2, 2011

Mr. Robert ZingelmannDirector of Business & FinanceBeaumont Independent School District3395 Harrison AvenueBeaumont, TexasRe: Workers CompensationClaims Administration Services (October 1,2011-2012)Dear Mr. Zingelmann,Since 1992 the District has operated a self-funded Workers Compensation program topay medical and disability benefits to employees injured on the job. Our mission underthis program is two-fold: (1) pay claims promptly and fairly and (2) save money for theDistrict.Generally, this self-funded program has worked well, providing "cash flow" benefits,opportunities for local control, and saving money when compared to a standard workerscompensation program. But "savings" earned under this program are preliminary andmust be adjusted annually to reflect final "development" of claims that continue for twoor more years.To manage its long term financial obligations under this program, the District obtains anannual report from Milliman, Inc., an independent auditor. As of October 15, 2010,Milliman recommends that $3.4 million be set aside for "development" and finalpayment of all claims.To operate this self-funded program, the District purchases (1) Stop-Loss insurance and(2) Claims Administration Services. The Claims Administration Services includemanagement and payment of claims, administration of loss funds, production of claimsdata, and supervision of litigation and subrogation.For a number of years, the District purchased these Claims Administration Services fromFARA Company. However, effective September 1,2010, the District assigned theseresponsibilities to Texas Association of School Boards (TASB), the entity that hashandled our Auto and General Liability insurance since 2001. Because TASB is anintergovernmental risk pool and because the District has signed an inter-local agreement,public bidding is not required.

4155 Phelan Boulevard Beaumont, IX 77707 P.O. Box 22237,77720-2237Beaumont (409) 832-7736 Fax (409) 833-1721 Houston (713) 224-8723

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With TASB, the annual contract for Claims Administration Services comes up forrenewal October 1,2012. For this renewal, TASB proposes the same fees and expensesas expiring, which includes $10,000 for Program Administration, $725 for eachIndemnity Claim, $125 for each Medical-Only Claim, and $20 for each Record-OnlyClaim. Of course, total fees and expenses depend on claims experience and will not beknown until after the service year expires.Generally speaking, TASB has rendered good service during the first year, taking care ofinjured employees and protecting the interests of the District. Also, during the first year,as of August 31, 2011, the District has total incurred losses of $528,071. While thisnumber represents only ten months, it appears now that District losses for the first yearwill be favorable when compared to previous years.The new TASB program also includes a comprehensive safety program, which isprovided at no charge, and which offers the opportunity to prevent injuries and savemoney. I urge the District to work with the TASB loss control representatives and toadopt their safety programs as appropriate.In my view, the Claims Administration Services renewal offered by TASB is attractiveand can be accepted with confidence.Thank you,

~ O " ' / / J V / . / l V o J ' ~ ; Z " " - : : : : : : : - - - - - -

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Lana Thomp_s_o_n _From: Rosa Brown [Rosa.Brown@tasb.org]Monday, August 08,2011 9:12 AMTo: Robert ZingelmannCc: Lana Thompson; 'Robert Robertson'; Codi BoldingSubject: Beaumont ISD 2011-12 Workers' Compensation RenewalAttachments: Beaumont ISD 2011-12 Renewal CCS.pdf

Good Morning Robert,The TASB Risk Management Fund (Fund) is pleased to present the 2011-12 renewal proposal for your continuedparticipation in the Fund's Workers' Compensation program. At its meeting on June 2, the Fund Board of Trusteesapproved a funding plan for next year based on the following goals:

Provide budgetary relief and cost stability to Fund members. Focus on membership retention without jeopardizing the Fund's long-term financial strength.This renewal proposal reflects the above goals and includes the following features: All fees charged by the Fund are being held at 2010-11 levels. Fees are guaranteed for a two year period from October 1, 2011 throughOctober 1, 2013.Please review and complete the attached Contribution and Coverage Summary (CCS), and return it at least 30 daysprior to the renewal date. As a reminder, your participation automatically renews for 2011-12 if we do notreceive a written notice of termination by September 1, 2011. Please note that Bid Specifications or Requestfor Proposals do not constitute writ ten notice of termination.The Fund remains the largest and one of the most financially and operationally successful risk pools serving Texaspublic school districts and other public educational entities. The difference between the Fund and other riskmanagement options is clear. No other provider matches the Fund's financial and membership strength,commitmentto service and excellence in operations. With over 1100 members, more than $300 million in assetsand over $170 million in Members' Equity, the Fund is uniquely positioned to help its members weather these verychallenging times.We appreciate your participation and look forward to another successful year. Ifyou have any questions regardingthis workers' compensation renewal, please call me at 800-482-7276, extension 6286.Sincerely,Rosa BrownSenior ConsultantRisk Management ServicesTexas Association of School Boards, Inc.~ 8 0 0 . 4 8 2 . 7 2 7 6 , extension 6286

713.417.6737 cell~ 5 1 2 . 4 6 7 . 3 6 2 3 faxrosa.brown@tasb.orgwww.tasbrmf.org

CONFIDENTIALlIY NOTICE: The e-mail transmitted is intended only fo r the person or enti ty to which it is addressed and may contain confident ial information. Anyreview, retransmission, dissemination or other use of or taking any action in reliance upon this info rmation by persons or ent ities other than the intended recipient isprohib ited. If you received this in error, please contact the sender and delete the material immediatel y from your computer or device.

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TASB RISK MANAGEMENT FUNDWorkers' Compensation Administrative Services Only (ASO)

Contribution & Coverage SummaryBeaumont ISDCD# 123910

Participation Period: October 1,201112:01 a.m. through October 1,201212:01 a.m.Rate Guarantee: Fees are guaranteed from October 1,2011 to October 1,2013.

STOP LOSS COVERAGEA stop loss policy will be issued by the stop loss carrier to the Program Participant andthe Participant will be governed by the terms and conditions ofthe policy. The Fund shallhave no responsibility beyond securing a quote for stop loss coverage, binding coverageupon Participant's written instructions, billing and remitting stop loss premiums. Stoploss premiums will be determined by the stop loss carrier and are not guaranteed by theFund. The original policy was mailed in April to the Participant under separate cover.POLITICAL SUBDIVISION WORKERS' COMPENSATION ALLIANCEPROGRAM ADMINISTRATION FEESGeneral Administration ServicesOptional Annual Actuarial Review of reserve for losses. (GASB 10 compliance)CLAIMS ADMINISTRATION FEESIndemnity ClaimInjury where the employee has experienced more than seven days of compensable 10 sttime, reduced wages for more than one week, incurred substantial medical treatment,compensability is questionable, involves subrogation or has reported an occupationalillness, even if the employee has not missed any time from work.Medical ClaimInjury requiring minor medical treatment and no more than seven days ofcompensable lost time.Record Only ClaimInjury or incident requiring no medical treatment or lost time.Catastrophic ClaimsDuration of Claims Handling Activity

FEES ALLOCATED TO CLAIM FILEClaim FeesDWC BRCs, CCHs and SOAHsMedical Dispute Resolution (MDR)DWC Proposed Employer Violations NegotiationDWC RepresentationLitigation ManagementDWC/CMS Electronic Reporting

Included - Participation Required

$10,000 Annually[]J;4,500 Annually

$725 per claim

$125 per claim

$20 per claim

No extra charge, treated as indemnity claimLife of participation in the Fund's WCprogram

Prevailing judicial ratesIncludedPrevailing judicial ratesIncludedIncludedIncluded

.TASBRISKP MANAGEMENT FUNDPage 1 Beaumont ISDwww.tasb..mf.org 800-482-7276 we ASO ees 2011-12August 1, 2011

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Stop Loss Filing/ReportingAll DWC FonnsSubrogationExternal InvestigationsLegal FeesCost Containment FeesPre-authorizations Nurse ReviewExternal Case Management (ECM)ECM Travel & Waiting TimeBill ReviewPeer Review by Physician AdvisorMiscellaneous Administration FeesInternal InvestigationPhotocopying/FaxPhotographsPhone ChargesChecking and Banking Fees (Check Writing)*On-line Data access (view only) w/trainingClaims Liaison and Quality Control ServiceNon-standard Customized Reports

IncludedIncluded

Included; 33% + expense if attorneyassignedAt Cost

Per attorney rates set by DWC

$80 pe r pre-authorization$80lhour

First two hours at fee, $40lhour thereafter$6.50 per bill

Time & Expense

IncludedIncludedIncludedIncludedIncludedIncludedIncluded

$100 per report/$75 maintenance and/oradjustments

*Program Participant is responsible for requi red hardware, communication software, and long distance charges to connect.LoSS PREVENTION SERVICES - The following Loss Prevention services are complementary to Program Participants of the Fund' s Propertyand/or Auto Liability programs. District Safety Consultations are available upon request.Custom Service Plan - designed specifically for Program ParticipantSafety Consultant Visits - as determined by custom Service PlanSafety Training & Facility Surveys - as determined by custom Service PlanLoss Prevention Reports/Presentations - as neededLoss Prevention Safety KitLoss Prevention Video and Resource Library -full accessLoss Prevention ManualLoss Prevention Reports - quarterly & annuallyEmployee Safety Handbooks - standard/customizedSEASONAL BENEFIT ADJUSTMENTS

IncludedIncludedIncludedIncludedIncludedIncludedIncludedIncludedAt Cost

Adjustments are made during the summer break; self-insured Program Participants can decide to adjust weekly workers' compensationtemporary income benefits to zero during specific holidays. The Program Participant elects to stop/reduce weekly benefits during theselected breaks:Spring Break DYes DNo Thanksgiving Break DYes 01\10 Winter Break DYes DNoFEES AFTER TERMINATIONContinued claims handling upon program participation tennination $50 per month, per open claim

.TASBRISKP MANAGEMENT FUNDPage 2 Beaumont ISDwww.tasbrmf.org 800-482-7276 we ASO ees 2011-12August 1, 2011

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Term of AgreementlRenewal:The term of this Agreement is for one year, and it automatically renews for successive one-year terms, unless terminated in accordancewith the provisions of the Interlocal Participation Agreement (copy attached). Please make sure to read and comply with the terminationprovisions ofthe Agreement.Coordinator:The Program Participant is required to designate a Program Coordinator that has express authority to represent and bind the ProgramParticipant in all Workers' Compensation program matters as outlined in the Interlocal Participation Agreement. If a Coordinator, and theircontact information, is not provided below, the currently designated Coordinator, along with the current contact information, will remain ineffect.

Name of Coordinator Coordinator title

Coordinator address City, state, and zip

Coordinator phone Coordinator fax E-mail address

Program Participant:I hereby certify that the information contained herein is correct.I affirm that I am duly authorized to sign this Contribution & Coverage Summary. The named Fund member agrees to participate for theabove stated Participation Period unless participation is sooner terminated in accordance with the provisions in the Interlocal ParticipationAgreement. Furthermore, I certify that I have read and understand this Contribution & Coverage Summary and the Interlocal ParticipationAgreement.

Authorized signature Date

Printed name and title

TASB Risk Management Fund

James B. Crow, Secretary Date

MTASBR1SKP MANAGEMENT FUNDPage 3 Beaumont ISDwww.tasbrmf.org 800-482-7276 we ASO ees 2011-12August 1, 2011