Title
Consider/Discuss/Act on an Ordinance Establishing a Self-Funded Self-Insurance Program in accordance with Texas Government Code Chapter 2259 and Establishing a Self-Funded Retainage
Summary
COUNCIL GOAL: 2.1 Balance available resources to accommodate the growth and maintenance needs of the city.
4.4 Create financial plans for future growth as well as future maintenance.
MEETING DATE: September 1, 2026
DEPARTMENT: Human Resources
CONTACT: Jim Parrish, Human Resources Director
Mark Barta, Human Resources Risk Manager
RECOMMENDED ACTION:
Approve an Ordinance Establishing a Self-Funded Self-Insurance Program in accordance with Texas Government Code Chapter 2259 and Establishing a Self-Funded Retainage.
ITEM SUMMARY:
• This Ordinance establishes a Self-Funded Self-Insurance Program in accordance with Texas Government Code Chapter 2259 and establishes a self-funded retainage in an amount of Two Million Eight Hundred Fifty Thousand Dollars ($ 2,850,000) for the 2026-2027 Fiscal Year to encumber the funds for the City’s basic or primary layer of self-insurance coverage (the “Retainage”) necessary to operate a Self-Funded Self-Insurance Program.
• The City must pay the Retainage out of its then current funds for any losses or damages the City incurs or suffers before the City can assert a claim for excess or surplus insurance coverage extending above and beyond the amount of Retainage and before the excess or surplus insurance carrier is obligated to act.
• This Ordinance also authorizes the City to utilize current funds to identify and acquire layers of excess insurance coverage that will reduce the City’s exposure to and protect the City from any catastrophic financial impacts arising out of some insurable event that can be protected with the various excess insurance carriers that have agreed to provide excess insurance coverage policies in amounts that exceed the City’s self-insurance retainage.
BACKGROUND INFORMATION:
• The Human Resources, Legal, and Procurement Departments have collaborated and worked together to prepare a Self-Funded Self Insurance Program that will allow the City to facilitate the use of a Broker of Record and the benefits and coverages available to protect the City’s interests.
• Approval of and funding for the Self-Funded Self-Insurance Program is a required prerequisite for the City to enter into contracts with the various excess insurance carriers that may agree to provide excess insurance coverage policies above the amount of the City’s basic retainage to protect the City from a catastrophic event.
• The recommended Self-Funded Self-Insurance Program for City-Owned Real and Personal Property, Airport Liability, and Environmental Liability will become effective on October 1, 2026, although the Ordinance establishing the Program will take effect immediately.
• The proposed retainage amount to be budgeted for the Self-Funded Self-Insurance Program for the 2026-2027 Budget Year is proposed to be Two Million Eight Hundred Fifty Thousand Dollars ($ 2,850,000).
FINANCIAL SUMMARY:
• Funding for the Retainage Amount required to adopt and operate the Self-Insurance Program for City-Owned Real and Personal Property will be available in FY26/27 budget account 015-2111-413.85-55. Funding for the Retainage Amount required to adopt and operate the Self-Insurance Program for Airport Liability and Environmental Liability will be available in FY26/27 budget account 015-2111-413.85-52. These amounts may have to be renewed from time to time as claims occur.
BOARD OR COMMISSION RECOMMENDATION:
• N/A