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The Kentucky Association of Counties Workers' Compensation Self-Insurance Fund held a Board of Trustees meeting at 11:00 a.m. on Wednesday, July 26, 2023. This meeting was held at the KACo offices located at 400 Englewood Drive in Frankfort, Kentucky and via video teleconference, pursuant to proper notice given in accordance with KRS 61.826 and KRS 65.312(3).
The roll was called. The following Trustees were present: Chairman Greg Terry, Carlisle Co. Judge/Executive; Vice-Chair Dan Mosley, Harlan Co. Judge/Executive; Michael Logsdon, Oldham Co. Magistrate; and David Nicholson, Jefferson Co. Circuit Court Clerk.
Others present included: Jim Henderson, Executive Director/CEO; Temple Juett, Director of Insurance and Business; Paul Harnice, Board Counsel, Stoll, Keenon & Ogden, PLLC; Tim Sturgill, General Counsel; Karen Basham, Chief Financial Officer; Rich Ornstein, Staff Attorney; Michael Ray, Safety and Loss Control Manager; Jeremy Head, Claims Manager; Phil Crumpton, Law Enforcement Specialist, Andrea Morse, Insurance Agency Manager; Marie Skinner, Accounting Manager; Kathy Basham, Macy Thompson and Lindsey Bowman, Customer Service Representatives; Jon Kovach, Emergency Management Liaison; Alyssa Rogers, Staff Accountant; Sue Porter and Michele Barrett Roeding Insurance/KACo Marketing Agents; Clint Combs, Hub/Peel & Holland/KACo Marketing Agent; Joe Greathouse, Commonwealth Insurance Company/KACo Marketing Agent; Rob Brown, Local Government Insurance Agency/KACo Marketing Agent; Shellie Hampton, Director of Government Affairs; Jennifer Burnett, Director of Strategic Operations; Greg Sisson and Ed Meredith, Charles Taylor, TPA (via video teleconference); GeeAnn Missi, Marsh (via video teleconference); Jesse Penn, Computer Support Specialist; and Sonya Chesser, Executive Assistant to CEO/Director of Administrative Services.
Chairman Terry called the meeting to order at 11:00 a.m.
Motion made by Michael Logsdon, seconded by Dan Mosley, to approve the minutes of the June 28, 2023 meeting as presented. Motion carried.
Ms. Basham presented and discussed the following reports: balance sheet as of June 30, 2023; statement of operations and claims expense report as of June 30, 2023; check history report for period June 1 - 30, 2023; FY 2022/23 PAF budget for period July 1, 2022 - June 30, 2023; and FY 2022/23 agent commissions by agency as of June 30, 2023.
Motion made by David Nicholson, seconded by Dan Mosley, to acknowledge receipt of the financial reports as presented. Motion carried.
Ms. Basham presented the investment report for June 2023; the investment transactions for June 2023; and the FY 2022/23 investment portfolio summary by month. The board received a full listing of the Fund's investments electronically prior to the meeting. She said the Fund is in compliance with the ratios as statutorily required.
Judge Mosley expressed concerns with the Fund's return on investments over the last six months as compared to other accounts he has seen. Ms. Basham said she understood his concern and that Mr. Juett would be proposing to contract with a third party investment consultant in his report. Mr. Sturgill said the statute requires that 50% of the Fund's investments must be in cash and governmental securities, which could result in lower investment returns in the current financial environment.
Motion made by David Nicholson, seconded by Michael Logsdon, to acknowledge receipt of the investment report and to ratify the security changes as presented. Motion carried.
Mr. Juett provided a reinsurance update and said the County Reinsurance Limited (CRL) Conference, held July 11-14 in Idaho was a great success. Chairman Terry, Squire Logsdon and Court Clerk Nicholson concurred that the meeting was very informational. Kentucky will host the 2024 CRL Conference in Louisville.
Mr. Juett recommended seeking an investment consultant to serve as an intermediary between the Fund and investment managers to assist with policy, to assist in overseeing compliance with the investment ratios, and ensure appropriate benchmarks are being selected and performance meets or exceeds these benchmarks. The board concurred and suggested hearing more often from the Fund's investment portfolio managers at future board meetings.
Mr. Harnice recommended having the investment managers to provide an explanation at next month's meeting for why the Fund has not achieved as others over the past six months. Mr. Nicholson asked that Mr. Harnice and staff work together to determine the questions to ask the investment managers and staff present their findings at the next meeting.
Mr. Juett recommended conducting a capital surplus study by engaging an actuary to provide analyses to address scenarios that may pose plausible risks to the Fund and suggest a range of appropriate levels of surplus to sufficiently protect the Fund should those scenarios become a reality. The board concurred.
The next board meeting will be August 30 at 11 a.m.
Motion made by David Nicholson, seconded by Michael Logsdon, to go into closed session at 12:07 p.m. to discuss proposed or pending litigation involving the board as authorized by KRS 61.810 (1)(c). Motion carried.
Motion made by David Nicholson, seconded by Michael Logsdon, to return to open session at 12:11 p.m. Motion carried. No action was taken in closed session.
Motion made by Michael Logsdon, seconded by David Nicholson, to adjourn the meeting at 12:11 p.m. Motion carried.
