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NJSIG

Board of Trustees Meeting

May 18, 2016

New Jersey Schools Insurance Group 6000 Midlantic Drive, Suite 300 North

Mount Laurel, New Jersey 08054 (609) 386-6060 • FAX (609) 386-8877

www.njsig.org

2015/2016 NJSIG Board of Trustees

Revised: 5/16/16

Anthony N. Tonzini, Jr. Chairperson v2016

P.O. Box 181 Monmouth Junction, NJ 08852 (South Brunswick)

O: (732)297-7800x5105 F: C:

H: [email protected]

Irene Le Febvre Trustee v2016

180 South Terrace Boonton, NJ 07005 (Boonton Town BOE)

O: F: C: (973) 513-2772

H: (973)335-3382 [email protected]

Vacant Trustee v2016

O: F: C:

H:

Thomas F. Connors, Ph.D. Trustee v2018

10 Seward Ave Piscataway, NJ 08854 (Piscataway Twp BOE)

O: F: C: (732) 491-3248

H: (732) 463-3230 [email protected]

Christopher Russo, Ed. D. Trustee v2016

1310 Mallard Lane Millville, NJ 08332 (Delran BOE)

O: (856) 461-6800x1006 F: C:


James J. Jencarelli, Jr. Trustee v2018

2 Mill Creek Road Sparta, NJ 07871 (Morris Hills Regional)

O: (973) 664-2291 F: C:


Kevin Kitchenman Trustee v2017

311 Hollyoke Road Somerdale, NJ 08083 (West Deptford Twp.)

O: (856)848-4300x3211 F: C:

H: [email protected]

Tyler Seville Trustee v2017

9 Briar Knoll Delran, NJ 08075 (Delran BOE)

O: (609) 858-9507 F: (800) 499-4419 C: (856) 577-4824


Steven K. Robinson Trustee v2018

5 Rodin Lane Marlboro, NJ 07746 (Livingston Twp. BOE)

O: (973)535-8000x8009 F: C:


William Mayo

Executive Director

6000 Midlantic Drive, Suite 300 North Mt. Laurel, NJ 08054

O: (609) 386-6060x3039 F: (609) 386-8877 C: (609) 500-4787




www.njsig.org

2015/2016 NJSIG Sub Fund Liaisons

Rev: 1/4/16

Frank Domin

BACCEIC Sub Fund Liaison v14/15

Berlin Borough 215 South Franklin Ave Berlin, NJ 08009

O: (856)767-0129 F: (856)767-2465 C: (609)405-1018

[email protected]

Barbara Prettyman

CAIP Sub Fund Liaison v14/15

Hammonton BOE 566 Olds Forks Road PO Box 631 Hammonton, NJ 08037

O: (609)567-7000 x353 F: (609)561-3567

[email protected]

Bernardo J. Giuliana

ERIC North Sub Fund Liaison v14/15

East Brunswick BOE 760 Route 18 East Brunswick, NJ 08816

O: (732) 613-6723 F: (732) 390-9307

[email protected]

Gene Mercoli ERIC South

Sub Fund Liaison v14/15

Cumberland Cnty. Voc. 601 Bridgeton Avenue Bridgeton, NJ 08302

O: (856) 451-9000 F: (856) 451-8487

[email protected]

Vincent A. Gonnella

ERIC West Sub Fund Liaison v14/15

Kenilworth Public Schools 426 Boulevard Kenilworth, NJ 07033

O: (908)276-1644x1550 F: (908) 709-7315

[email protected]

Loretta Hill MOCSSIF

Sub Fund Liaison, v14/15

Belmar BOE 1101 Main Street Belmar, NJ 07719

O: (732)681-8888 F: (732)681-8709

[email protected]

Anthony Dragona

NJEIF Sub Fund Liaison v14/15

Union City BOE 3912 Bergen Turnpike Union City, NJ 07087

O: (201) 348-5677 F: (201) 223-0471

[email protected]


Mount Laurel, New Jersey 08054 (609) 386-6060 FAX (609) 386-8877

www.njsig.org

Meeting Dates 2015/2016

Wednesday, September 16, 2015

Wednesday, October 21, 2015

Wednesday, November 18, 2015

Wednesday, January 20, 2016

Wednesday, March 16, 2016

500 Campus Drive, Suite 100, Morganville, NJ

Wednesday, May 18, 2016 6000 Midlantic Drive, Suite 300 North, Mount Laurel, NJ

Wednesday, June 15, 2016

500 Campus Drive, Suite 100, Morganville, NJ

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www.njsig.org

Rev.: 5/12/16

NJSIG BOARD OF TRUSTEES MEETING

Wednesday, May 18, 2016 6000 Midlantic Drive, Suite 300 North, Mount Laurel, NJ

Meeting 4:00 p.m. Dinner 5:00 p.m.

MAY AGENDA

PUBLIC SESSION ITEM #

*1 Call to Order

In accordance with the Sunshine Law, due notice of all pending meetings was given to the Atlantic City Press, Newark Star Ledger, and Trenton Times on April 29, 2016. Copies of these notices are on file with the New Jersey Secretary of State.

*2 Roll Call

Thomas F. Connors, Ph.D. Steven K. Robinson James J. Jencarelli, Jr. Christopher Russo, Ed. D Irene Le Febvre Tyler Seville Kevin Kitchenman Anthony N. Tonzini, Jr.

*3 Acceptance of the Public and Executive Session Minutes for March 16, 2016. *4 Public Participation - Opportunity for Public to address the NJSIG Trustees regarding specific

agenda items. Each person will have five minutes to speak. *5 Sub Fund Liaisons - Reports/Comments *6 Reports:

A. Executive Director William Mayo B. Comptroller Michele Carosi C. Client Relations and Underwriting Kelly Machu D. Loss Control Tony Jones E. Claims Tony Ruggeri F. Information Technology Jeff Cook G. Human Resources Chai Respes

*7 Demonstration:

A. Client Relations Dashboard Demonstration Shadi Hermina

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Rev.: 5/12/16

Board of Trustee Meeting – May 18, 2016 Agenda Pg. 2

*8 Discussion Item:

A. 2016/2017 Draft Budget William Mayo B. 2016/2017 Draft Plan of Risk Management William Mayo C. Banking, Custodial and Asset Management RFP William Mayo D. DOBI Exam Report and Management Response William Mayo

*9 Action Items:

A. Cash Management Plan William Mayo B. Nisivoccia Engagement Letter 6/30/2016 William Mayo C. First Policy Reading:

1. Employee Bonding Policy 3201 William Mayo 2. Trustee Expense Policy 3210 William Mayo

D. Second Policy Reading: 1. Expenditures/Expending Authority Policy 3200 William Mayo Staff Reimbursement of Expenses Policy 3220 E. Checking Accounts & New Claims Ratification William Mayo

*10 New Business *11 Executive Session

EXECUTIVE SESSION

EXECUTIVE SESSION RESOLUTION

WHEREAS, N.J.S.A. 10:4-6 et. seq., (“the Open Public Meetings Act”), authorizes public entities to meet in executive session under certain circumstances; and WHEREAS, the Open Public Meetings Act requires that the Group adopt a resolution at a public meeting to go into private session; now, therefore, BE IT RESOLVED by the Board of Trustees of the New Jersey Schools Insurance Group that it is necessary to meet in executive session to discuss certain items involving:

10A. Litigation; BE IT FURTHER RESOLVED that any discussion held by the Board of Trustees which need not remain confidential will be made public as soon as feasible. The minutes of the executive session will not be disclosed until the need for confidentiality no longer exists. FURTHER RESOLVED that the Board of Trustees may return to open session to conduct business at the conclusion of the executive session.



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4/11/16

Board of Trustees Meeting of May 18, 2016

Board of Trustees Meeting Minutes of March 16, 2016

New Jersey Schools Insurance Group’s Board of Trustees Meeting of March 16, 2016 at the Group’s Marlboro office. ATTENDEES Trustees: Thomas F. Connors, Kevin Kitchenman, Irene Le Febvre, Tyler Seville, and

Anthony Tonzini, Jr. Participants: Jay Lawton, Sub Fund Administrator representing ERIC North, David Rapuano

representing Archer & Greiner, and Dave Ritch representing Willis Towers Watson. NJSIG Staff: William Mayo, Executive Director; Jill Deitch, Chief Legal Officer; Anthony Jones, Loss Control

Manager, Louis Giannetto, Claim Manager; Tony Ruggeri, Liability Claim Supervisor; Chai Respes, Human Resource Manager; Claire King, Underwriting Supervisor; and Renee Johnson-Payne, Executive Assistant.

ITEM #1 CALL TO ORDER

With a quorum present, the meeting was called to order at 4:05 p.m. In accordance with the Sunshine Law, due notice of all pending meetings was given to the Atlantic City Press, Newark Star Ledger, and Trenton Times on March 8, 2016. Copies of these notices are on file with the New Jersey Secretary of State.

ITEM #2 ROLL CALL

Thomas F. Connors, Ph. D. √ Christopher Russo, Ed. D. A Kevin Kitchenman √ Tyler Seville √ Irene Le Febvre √ Anthony Tonzini, Jr. √ Steven Robinson A

ITEM #3 TRUSTEE NOMINATION A. NJASA Northern Region Superintendent Trustee Nomination Action Taken: M (Seville)\ S (Le Febvre)\ Carried (Affirmative Votes Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to approve the NJASA northern region Superintendent nomination of James J. Jencarelli, Jr. for the term of 3/16/16 to 6/30/18.



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Board of Trustees Meeting Minutes of March 16, 2016 Pg. 2 ITEM #4 EXECUTIVE SESSION

EXECUTIVE SESSION


WHEREAS, N.J.S.A. 10:4-6 et. seq., (“the Open Public Meetings Act”), authorizes public entities to meet in executive session under certain circumstances; and WHEREAS, the Open Public Meetings Act requires that the Group adopt a resolution at a public meeting to go into private session; now, therefore, BE IT RESOLVED by the Board of Trustees of the New Jersey Schools Insurance Group, that it is necessary to meet in executive session to discuss certain items involving:

4A. Matters involving attorney client privilege regarding personnel;

BE IT FURTHER RESOLVED that any discussion held by the Board of Trustees which need not remain confidential will be made public as soon as feasible. The minutes of the executive session will not be disclosed until the need for confidentiality no longer exists. FURTHER RESOLVED that the Board of Trustees will return to open session to conduct business at the conclusion of the executive session. Action Taken: M (Seville)\ S (Le Febvre)\ Carried (Affirmative Votes = Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to close public session at 4:15 p.m. and move to executive session.

Action Taken: M (Kitchenman)\ S (Connors)\ Carried (Affirmative Votes = Connors,

Kitchenman, Le Febvre, Seville, Tonzini) to close executive session at 4:40 p.m. and move to public session.

PUBLIC SESSION

ITEM #5 ACCEPTANCES OF THE PUBLIC AND EXECUTIVE SESSION MINUTES OF

JANUARY 20, 2016. Action Taken: M (Kitchenman)\ S (Seville)\ Carried (Affirmative Votes = Connors,

Kitchenman, Le Febvre, Seville, Tonzini) to accept the January 20, 2016 Public and Executive Session Board of Trustees Meeting Minutes.



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Board of Trustees Meeting Minutes of March 16, 2016 Pg. 3 ITEM #6 PUBLIC PARTICIPATION Action Taken: M (Le Febvre)\ S (Russo)\ Carried (Affirmative Votes Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to open the public session for public participation. Action Taken: M (Le Febvre)\ S (Russo)\ Carried (Affirmative Votes = Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to close the public session for public participation. ITEM #7 SUB FUND LIAISONS – Reports/Comments

There were no reports or comments.

ITEM #8 REPORTS Executive Director, William Mayo, reported some brokers have been attaching their own

addendum to the NJSIG’s three-year resolution to join the Group. Their addendum requires member districts to commit to the broker as though the Group mandated it. Mr. Mayo proposed seeking advice from the sub fund administrators on how best to present this matter.

Michele Carosi, Comptroller, reported on the DOBI audit recommendation that the

Group amend the custodian agreement with TD Bank with specific language in accordance with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements which is not in the current custodial agreement with TD Wealth Management. Their legal department will not change the current custodial agreement to comply with the regulations. Ms. Carosi, Mr. Mayo, Ms. Deitch, and Archer & Greiner are developing an RFP for banking services, and a cash management and wealth management plan. Those will likely come to the finance committee after finalization, and we begin to search for a new service provider.

Tony Jones, Loss Control Manager, reported the Safety Grant portal is active as of

Monday, March 14, 2016 everyone who provided a generic email address now has their application. Those who did not provide a generic email address will receive their application over the next 2 to 3 days.

Louis Giannetto, Claims Manager, introduced Tony Ruggeri, Liability Claims Supervisor.

Mr. Ruggeri has been with the Group for two years handling the general liability, automobile, and property claims. Theresa Shockling has announced her retirement effective April 1, 2016, she has been with the Group since 2002, and she will be sorely missed. Lois Mitzelman was hired to fill Ms. Shockling’s vacant position; she brings 20 years of claims experience.



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Board of Trustees Meeting Minutes of March 16, 2016 Pg. 4 Jeff Cook, Information Systems Manager, reported the Data Analyst has been filled by

Shadi Hermina. With the knowledge of Mr. Hermina, we will be able to utilize the gold mine of data that we have not fully exploited.

ITEM #9 DISCUSSION ITEMS:

A. Proposed Meeting Dates 2016-2017

Executive Director, William Mayo, proposed reducing the number of meetings from seven to six by eliminating the January meeting. That was done after an analysis of what we need to accomplish during these meetings to meet time deadlines for various purposes. We can host six meetings per year and alternate between Marlboro and Mount Laurel in fairness to Trustees from all parts of the state but also to attract participation from our members and the public. Secondly, upon legal opinion we can use Go To Meeting as opposed to non-participation. Those are what we're proposing for the upcoming year.

B. Nisivoccia Engagement Letter 6/30/2016

Action Taken: M (Le Febvre)\ S (Russo)\ Carried (Affirmative Votes = Connors, Kitchenman, Le Febvre, Seville, Tonzini) to approve the Nisivoccia Engagement Letter 6/30/16.

ITEM #10 ACTION ITEMS:

A. Reinsurance

Action Taken: M (Le Febvre)\ S (Connors)\ Carried (Affirmative Votes = Connors, Kitchenman, Le Febvre, Seville, Tonzini) to approve the proposed Property, Equipment Breakdown, Property Terrorism, Workers’ Compensation, Workers Compensation Supplemental Indemnity, Primary General Liability/Primary Auto/Excess, Crime, Excess Liability, School Leaders Errors and Omissions, School Violent Acts Insurance, Environmental, and Cyber Liability programs.

B. Credit Card Policy 6141 Elimination Action Taken: M (Le Febvre)\ S (Seville)\ Carried (Affirmative Votes = Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to approve the elimination of the Credit Card Policy 6141.



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Board of Trustees Meeting Minutes of March 16, 2016 Pg. 5 C. First Policy Reading:

1. Expenditures/Expending Authority Policy 3200 Staff Reimbursement of Expenses Policy 3220

Action Taken: M (Le Febvre)\ S (Kitchenman)\ Carried (Affirmative Votes = Connors,

Kitchenman, Le Febvre, Seville, Tonzini) to approve the Expenditures/Expending Authority Policy 3200 and Staff Reimbursement of Expenses Policy 3220 as a first reading.

D. Second Policy Reading:

1. Travel Expense Policy 6020 Action Taken: M (Le Febvre)\ S (Seville)\ Carried (Affirmative Votes = Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to approve the Travel Expense Policy 6020 as a second reading.

E. Checking Accounts & New Claims Ratification Action Taken: M (Le Febvre)\ S (Kitchenman)\ C (Affirmative Votes = Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to approve and ratify the checks and new claims which have been issued from accounts XXXX392 (operating account) and XXXX555 (claim account) for the period of 1/1/2016 to 2/29/2016.

ITEM #11 NEW BUSINESS

There was no new business. ITEM #12 EXECUTIVE SESSION

EXECUTIVE SESSION


WHEREAS, N.J.S.A. 10:4-6 et. seq., (“the Open Public Meetings Act”), authorizes public entities to meet in executive session under certain circumstances; and



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Board of Trustees Meeting Minutes of March 16, 2016 Pg. 6 WHEREAS, the Open Public Meetings Act requires that the Group adopt a resolution at a public meeting to go into private session; now, therefore,

BE IT RESOLVED by the Board of Trustees of the New Jersey Schools Insurance Group, that it is necessary to meet in executive session to discuss certain items involving:

12A. Litigation; BE IT FURTHER RESOLVED that any discussion held by the Board of Trustees which need not remain confidential will be made public as soon as feasible. The minutes of the executive session FURTHER RESOLVED that the Board of Trustees will not return to open session to conduct business at the conclusion of the executive session. Action Taken: M (Seville)\ S (Le Febvre)\ C (Affirmative Votes = Connors, Kitchenman,

Le Febvre, Seville, Tonzini) to make a motion to close open session at 5:01 p.m. and move meeting into executive session.

William Mayo William M. Mayo, CPCU, ARM Executive Director

New Jersey Schools Insurance Group 6000 Midlantic Drive Suite 300 North


www.njsig.org

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Board of Trustees Meeting of May 18, 2016 Executive Director’s Report

Staff is working as hard as they ever have on the upcoming renewals, budgeting, audits, Information Technology enhancements, new hires, the changing loss control landscape, and policy issues. Our Trustees are equally consumed with their own budgetary responsibilities. Now we present a voluminous Board package to Trustees to further compete for Trustee’s limited time. Although Trustees are diligent in reading the Board package, bylaws, etc., I hope a slightly changed format for the Executive Director’s report covering key issues in each Department will be useful to you. I will also include an excerpt from NJSIG’s Bylaws, policies & procedures or the Plan of Risk Management in each report to help keep everyone current on issues pertinent to the critically important role of governance. Comptroller’s report contains information regarding a new RFP for banking services, inclusive of investment advisory and cash management services that is compliant with statutory requirements. The Comptroller took the lead on this important initiative with support from Legal Department and Archer & Greiner. The Accounting Department completed this as they simultaneously prepared the budget, worked on renewal pricing. and responded to onerous information requests from auditors. They are also training a new hire for payroll accounting in confluence with auditor’s recommendation to move the process from Human Resources and into the Comptroller’s office. Client Relations and Underwriting is preparing for participation at the Charter School Conference in May. Based on the Department’s analysis, underwriting criteria are now revamped to accommodate growth from Charters, and Charters are good candidates for the initial Health Insurance Fund feasibility study. They have taken on this initiative while working on renewals, using improved applications they developed. The Department is pursuing solid new-business opportunities that are the result of Client Relations efforts. Information Technology will demonstrate an in-house analytics tool that is representative of a series of Information Technology initiatives to improve information management and data mining to continuously improve operations. Loss Control is seeing greatly improved results with the safety grant application process since implementing new application procedures. Members using the new portal will receive their payments shortly. Unlike one year ago, NJSIG can now monitor the status of the safety grant application process and eliminate any need for a valid “request for exception” from Members. Claims Department is under the capable management of Tony Ruggeri during Lou Giannetto’s extended leave. The Department is instituting a number of changes that are fairly described as collaborative, efficient and modern. Claims is working very closely with the Legal Department to improve defense panel counsel, examine coverage contracts, and manage litigation. Human Resources completed the process of bringing two new senior underwriters, a payroll accountant and claims examiner on board. They continue to pursue candidates for a vacant clerical position, two vacant claim staff positions and a new loss control/legal staff addition. Legal Department updates are too voluminous for concise summary. In nine months, Chief Counsel has tackled defense panel issues, coverage analysis, policy & procedure improvements, human resources issues, improving claim procedures, OPRA and OPMA requirements and protocols, establishing compliant contracting and has greatly improved the quality of communications internally and with Members. It is impossible to measure the savings



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Executive Director’s Report May 16, 2016 Page 2

multiple for NJSIG resulting from Chief Counsel’s efforts in getting legal work done internally versus by outside Board counsel. A capable, reliable management and supervisory staff is a prerequisite for the organization’s continued operational improvement, and NJSIG is very well positioned to make bold moves forward for the benefit of the Membership. From the Policies & Procedures – Trustee Appointment. Article V of the NJSIG Policy & Procedures describes Trustee qualification, the process for Trustee appointment to the NJSIG Board of Trustees, and the composition of the Board. This selection from the policy manual is timely as the Board moves toward term expirations and retirements. It is apropos to recognize the thoughtful and engaged governance of the volunteer Board of Trustees, and the critically important role they play in fulfilling NJSIG’s mission. ARTICLE V. ORGANIZATION

A. TRUSTEES QUALIFICATIONS 1. Each Trustee shall be a natural person 18 years of age or older who is a resident of this state.

Trustees shall be members or employees of the GROUP'S member boards of education. Any Trustee who ceases to be a member or employee of aboard of education may serve for not more than ninety (90) days following cessation of such membership or employment.

2. The GROUP’S Trustees shall consist of nine members. The nine (9) members will be equally divided between the north, central and southern regions of New Jersey. Each region of the state will have one (1) School Board Member, one (1) Business Administrator and one (1) Superintendent as a representative to the GROUP Trustee Board. New Jersey will be divided into thirds utilizing the following divisions by county;

North: Bergen, Essex, Hudson, Morris, Passaic, Sussex, Warren Central: Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset, Union South: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Salem a. Three (3) Trustees shall be School Board Members from the GROUP’S member districts. The

three (3) School Board Member Trustees will be nominated by the NJSBA according to their governance rules.

b. Three (3) Trustees shall be Business Administrators from the GROUP’S member districts. The three (3) Business Administrators will be nominated by the NJASBO according to their governance rules.



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Executive Director’s Report May 16, 2016 Page 3

c. Three (3) Trustees shall be Superintendents from THE GROUP’S member districts. The three (3) Superintendents will be nominated by the NJASA according to their governance rules.

d. Trustee nominations must be approved by a majority vote of the GROUP Trustees present when presented for approval.

e. Trustee terms begin at the beginning of the GROUP’S fiscal year.

f. Any Trustee vacancy shall be filled via nomination for the unexpired term by the appropriate

organization from which the leaving Trustee represented. A majority vote of the GROUP Trustees present is required to approve the nomination.

g. Those persons nominated shall serve subject to the advice and consent of the GROUP Trustees

for a period of three (3) years.

h. As terms expire the Trustee Board will be replenished with Trustees that meet the Trustee membership criteria. The transition will be developed and implemented by the Board of Trustees.

B. REMOVAL OF A TRUSTEE

A Trustee may be removed from office by a two-thirds (2/3) vote of the full membership of the Trustees for cause, or for failure to attend two (2) consecutive regularly scheduled meetings of the GROUP without justification acceptable to the Chairperson.

C. OFFICERS 1. The Chair and Vice-Chair will be determined by a majority vote of the Trustees present.

Respectfully, William Mayo William Mayo, CPCU, ARM Executive Director



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Revised: 5.13.16

Board of Trustees Meeting of May 18, 2016 Comptroller/Financial Reporting Report

The following are updates to and/or new accounting issues (if applicable) since the last Board Package. Ø ACCOUNTING DEPARTMENT PROCESSES:

(1) Billing & Accounts Receivable Processes: The NJSIG Accounting Department has

processed $123.7 million of 2015/2016 renewal gross premiums, and endorsements in our Billing Module as of the date of this report (05/11/2016). The Accounting Department is current with all business that has been bound and exported from the Underwriting system. In addition, the Accounting Department continues to invoice our customers in our Billing system for monthly Workers’ Compensation installments, 2015/2016 Renewals (off 07/01/2015), miscellaneous endorsements as we receive the billing data from the Underwriting Department. The Accounting Department has collected and applied $119.9 million of premium deposits (to date) for the 2015/2016 fiscal year. Collections of NJSIG premiums are kept current with the Accounting Department’s issuance of our color-coded NJSIG Customer Statements on the 15th of each month.

(2) Accounts Payable: All Accounts Payable vouchers and payments are current. The Accounting Department has processed $12.3 million of broker commissions as part of the Direct Bill procedures.

Ø FINANCIAL REPORTING ISSUES 2015/2016:

Please find the attached final financial reports for 02/2016. I have also included the most current Investment/Cash report.

Ø ACCOUNTING DEPARTMENT – NEW HIRE: After many interviews, we were able to secure a permanent, full time hire for the Payroll Specialist position. Maryann Osborne joined our department on Monday (5/09/15). Maryann comes to the Group with much experience as a seasoned payroll professional. She will be training with Chai Respes over the next month to fully assume the NJSIG payroll functions. (Please note that the transition of the payroll function for the Human Resources Department to the Accounting Department was a recommendation in the Nisivoccia audit report from 06/30/15.)



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Revised: 5.13.16

Comptroller’s Report – May 18, 2016 Page 2

Ø SPECIAL PROJECTS: Since our last board meeting in March, I have been working on the following special projects:

(1) Cash Management Plan – Please refer to the section of this board package which includes

the Cash Management Plan that I prepared (and a general summarized description of a cash management plan). This is an “Action items” for this board package and will require a Trustee ratification at the meeting.

(2) Request for Proposal (RFP) for Banking, Custodial and Asset Management Services – Please refer to the section of this board package which includes an explanation of the need for this RFP and the actual RFP that NJSIG plans to distribute.

(3) 2016/2017 Budget – Please refer to the budget in the “discussion item” section of this board package for your first reading. This budget has been reviewed and discussed with the NJSIG finance committee prior to our meeting.

(4) DOBI Audit & NJSIG’s Management Response – Please refer to the section of this report that includes the final DOBI report and NJSIG’s Management Response (to be submitted to DOBI by 06/04/16).

(5) Office of Legislative Services Audit (OLS) – I will be the lead liaison for the OLS Audit which started last week. The auditors have informed us that they will be in our office for the audit fieldwork through the end of July. This means that the OLS audit will run concurrently with the NJSIG fiscal year end 2015/2016 annual audit.

Please contact me if you have any questions or concerns (email is [email protected] and cell number is 609-949-1973). Michele Carosi Michele Carosi, Comptroller

5/11/20166:19 PM

N J S I G

DATE 5/11/2016

U.S. TREASURIES & AGENCIESINTEREST

DATE MATURITY NO OF PURCHASE RATE @ VALUE AT INVESTMENT DAYS TO

AQUIRED DATE DAYS PRICE PURCHASE MATURITY TYPE MATURITY

========= =========== ============ ================ =========== =========== ================ =====================

Totals at: 5/11/2016 0 0

CERTIFICATES OF DEPOSIT

DATE MATURITY NO OF INTEREST DAYS TO NAME OF money

ACQUIRED DATE DAYS AMOUNT RATE MATURITY BANK from

========= =========== ============ ================ =========== =========== ================ =====================

08/06/14 8/5/2016 730 20,000,000 0.61% 86 TD Bank 7637 From Concentration Acct

09/09/14 9/9/2016 731 20,000,000 0.67% 121 TD Bank 5589 From Concentration Acct

Totals at: 5/11/2016 40,000,000

WITH DEAN WITTER

LIMITED PARTNERSHIPS

& STOCK

LATEST SHARES OR NAME OF

QUOTE UNITS VALUE PARTNERSHIP

========= =========== ============ ================ ===========

60 1 CEN PEN INC XXIV

878 1 D W REALTY III

Totals at: 5/11/2016 2

GRAND TOTAL 40,000,002

1

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N J S I G

SUMMARY OF CASH AND INVESTMENTS

CASH

AS OF 2/29/2016

CASH MGT STATE 323,368

CLAIMS TD BANK (1,683,100)

TD WEALHT MGT - NJ Trst Fnd 8,199,886

LOCK BOX TD BANK (1,489,051)

PAYROLL TD BANK 0

OPERATING #2 TD BANK (335,800)

FSA/DCA TD BANK 0

Concentration TD BANK 152,949,195

Petty Cash 300

TOTAL CASH AS OF 2/29/2016 157,964,798

CERTIFICATES OF DEPOSIT & U.S. TREASURIES AND AGENCIES

AS OF 5/11/16

MATURITY CLAIM PAYOUT

AMOUNT % OF INVESTMENTS PATTERN

0 TO 12 MONTHS 40,256,000 100.00% 100%

12 TO 24 MONTHS 0 0.00% 0%

24 TO 36 MONTHS 0 0.00% 0%

36 TO 48 MONTHS 0 0.00% 0%

48 TO 60 MONTHS 0 0.00% 0%

OTHER 2 0.00% 0%

TOTAL OF CD'S & U.S. TREAS. AND AGENCIES

AS OF 5/11/16 40,256,002 100.00% 100%

TOTAL CASH AS OF 2/29/2016 = 157,964,798

TOTAL CD'S & US TREAS/AGENCIES AS OF 5/11/16 = 40,256,002

TOTAL = 198,220,800

2

NJSIG

Balance Sheet

For the Period Ended 2/29/2016

Current Balance Prior Year

Current Assets:

D.W. Active Assets 0.00 0.00

Petty Cash 300.00 300.00

Cash Mgmt. Fund - N.J. State 323,367.79 322,919.21

Operating Account (1st Union) 0.00 0.00

Concentration (1st Union) 0.00 0.00

Payroll (1st Union) 0.00 0.00

Claims (1st Union) 0.00 0.00

Legal Account (1st Union) 0.00 0.00

A.G. Edwards Cash 0.00 0.00

Concentration Acct (TD Bank) 152,949,195.35 107,204,120.71

Operating Acct (TD Bank) 0.00 0.00

Payroll Acct (TD Bank) 0.00 68.72

Claims Acct (TD Bank) (1,683,100.08) (3,506,617.88)

FSA/DCA Acct (TD Bank) 0.00 0.00

Lock Box Account(TD Bank) (1,489,050.90) (299,547.74)

Willis/NJSBAIG Cash (Commerce) 0.00 0.00

Cash Suspense 0.00 0.00

Tri-State Capital Bank Account 0.00 0.00

Beneficial Bank Accont 0.00 0.00

Operating Account (TD Bank2) (335,799.87) (991,106.68)

CASH IN BANKS 149,764,912.29 102,730,136.34

Certificates of Deposit 142,882,253.21 188,924,375.18

Partnership Interests 2.00 2.00

U.S. Treasury Bills (A.G. Edw) 0.00 0.00

N.J. State Investment Fund 8,199,886.28 8,199,358.30

Investment Premiums (NJ Inv F) 0.00 3,223.73

Market Value Adjust (NJ Inv F) (0.02) (3,223.75)

Certificates of Deposit Suspns 0.00 0.00

MARKETABLE SECURITIES 151,082,141.47 197,123,735.46

Reinsurance Rebate Receivable 0.00 0.00

Reinsurance Recoverables 0.00 0.00

Reins. Recovery Receivable 0.00 0.00

Reins. Recovery 85/86 Recvb'l (34,858.95) (529.30) REINSURANCE RECEIVABLES (34,858.95) (529.30)

Interest/Divid Recvb'l-AG Ewds 0.00 0.00

Interest/Divid. Recvb'l-NJ Inv 0.02 0.02

Interest/Divid Recvb'l-CD's 0.00 0.00

Interest/Divid Recvbl-Ptnr Dst 0.00 0.00

INTEREST/DIVIDENDS RECEIVABLES 0.02 0.02

NJSIG

Balance Sheet



Misc. Accounts Receivable 0.00 0.00

Assessments Receivable 0.00 0.00

Legal Settlement Recvb'l 100.00 100.00

Seminar/Training Academy Rec 0.00 0.00

Retro Premium/Service Recvbl 0.00 0.00

Retro Audit Receivable 0.00 0.00

Retro Endorsement Receivable 0.00 0.00

Retro Add'l Servcs Recvb'l 0.00 0.00

MISC ACCOUNTS RECEIVABLES 100.00 100.00

Audit Premium Receivable 0.00 0.00

Premium Recvb'l Installments 12,287,317.20 12,526,597.72

Premium Recvb'l Prebill 0.00 0.00

Premium Receivable 3,816,395.93 3,075,416.74

Commission Recvbl Control Acct 0.00 0.00

Allowance of Doubtful Accts 0.00 0.00

A/R Maintenance Control Acct. (186.02) (186.02)

Asset Transfer Control Acct. 0.00 0.00

Agent Commission Receivable 0.00 0.00

PREMIUM RECEIVABLES 16,103,527.11 15,601,828.44

TOTAL Current Assets 316,915,821.94 315,455,270.96

F&F Original Value 1,866,240.14 1,852,819.65

Accumulated Depreciation (972,283.07) (1,507,682.43)

Leasehold Improvements 0.00 0.00

Accumulated Amortization 0.00 0.00

TOTAL FIXED ASSETS 893,957.07 345,137.22

Other Assets:

Prepaid General Insurance 128,955.20 112,008.09

Prepaid Crime Insurance 17,241.36 9,334.05

Prepaid General Expenses 129,259.95 104,890.34

Prepaid TPA Expenses (0.12) (0.12)

PREPAID ASSETS 275,456.39 226,232.36

Unearned M&M Fees 0.00 0.00

Unearned Marsh Reins Exp 0.00 0.00

Unearned Marsh Ag Comm 0.00 0.00

Unearned Willis Fees 0.00 0.00

Unearned Reins Exp 578,013.38 656,843.48

Unearned Agent Comm. 197,928.47 222,719.97

Unrn'd Cigna/Fireman's Reins. 0.00 0.00

Unrnd Cigna/Fireman's Ag. Comm 0.00 0.00

Retro Reinsurance Unearned 0.00 0.00

NJSIG

Balance Sheet



Retro Agent Comm Unearned 0.00 0.00

Retro M&M Fee Unearned 0.00 0.00

UNEARNED EXPENSES 775,941.85 879,563.45

Travel Advance 0.00 100.00

Deposits 0.00 0.00

OTHER ASSETS 0.00 100.00

TOTAL OTHER ASSETS 1,051,398.24 1,105,895.81

TOTAL ASSETS 318,861,177.25 316,906,303.99

A/P Module ADM01 0.00 0.00

Notes Payable 0.00 0.00

Accrued Expenses Payable 124,395.07 135,533.93

A/P Module INS01 (29,282.87) (130,301.01)

Safety Grant Payable 2,798,541.65 2,602,362.07

Reins Recov Paybl- XL Reins 0.00 0.00

Mngmt Maintenance Syst Paybl 0.00 129.79

Broker Refund Payable 0.00 0.00

Federal Income Tax W/H 0.00 0.00

FICA W/H Employee 0.00 0.00

FICA W/H Employer 0.00 0.00

FUI Taxes Payable 0.00 0.00

SUI Payable 0.00 0.00

State Income W/H-NJ 0.00 0.00

State Income W/H-PA 0.00 0.00

Garnishment Payable 0.00 0.00

Medicare - Employee 0.00 0.00

Medicare - Employer 0.00 0.00

Employee Savings Payable 0.02 0.02

Local Income W/H-Phila 0.03 0.03

Group Term Life Payable 0.00 0.00

TOTAL CURRENT LIABILITIES 2,893,653.90 2,607,724.83

Estimated Unpaid Losses 213,198,000.00 213,382,000.00

Reserve-Unalloc Loss Adjust 1,721,588.39 1,788,085.01

Unearned Premiums-Marsh 0.00 0.00

Aggregate Contingency Fund 0.00 0.00

Unearned Premiums 1,555,470.06 1,711,496.16

Unrn'd Cigna/Fireman's Premium 0.00 0.00

Unernd Willis Mgt Fees/Ret Prm 0.00 0.00

Post Retirement Bene Paybl 900,777.83 829,335.52

Mngmt Maintenance Syst Paybl 0.00 0.00

Rate Stabilization-ERIC North 593,362.40 272,847.36

Rate Stabilization-ERIC South 377,053.53 377,053.53

NJSIG

Balance Sheet



Rate Stabilization - ERIC West 216,760.85 242,760.85

Rate Stabilization - BACCEIC 290,564.19 290,564.19

Rate Stabilization - MOCSSIF 215,463.00 215,463.00

Rate Stabilization - NJEIF 704,753.39 1,004,423.26

TOTAL LONG TERM LIABILITIES 219,773,793.64 220,114,028.88

Employee Benefits Payable 0.00 0.00

Pensions Payable 42,463.96 36,195.69

Dividend Payable 0.00 0.00

403B/T. Rowe Price Payable 4,854.53 4,324.20

Colonial Life Payable 0.00 0.00

Retro Claims (Cash) 332,670.97 204,626.84

STARS Recon/Claims Liability 0.00 0.00

Return of excess subrogation 0.00 0.00

AFLAC Payable 0.00 (1,982.62)

Group Term Life Payable 4,306.67 2,330.24

Due to Retro Reinsurer 0.00 0.00

Retro Agent Comm Payable 0.00 0.00

M&M Retro Fee Payable 0.00 0.00

Retro Unearned Prem/Service 0.00 0.00

Marsh Due to Reinsurers 0.00 0.00

Marsh Ag. Comm. Payable 0.00 0.00

Due to Reinsurers (1,898,562.96) (1,285,399.66)

Agent Comm. Payable 1,055,338.76 1,215,124.44

Due To Reinsurers Installments 0.00 0.00

Due To Reinsurers Prebill 0.00 0.00

Ag Comm Paybl Installments 0.00 0.00

Ag Comm Paybl Prebill 0.00 0.00

TOTAL OTHER LIABILITIES (458,928.07) 175,219.13

TOTAL LIABILITIES 222,208,519.47 222,896,972.84

Retained Earnings Fund Balance 69,281,694.86 66,169,762.73

Year-to-Date Earnings 27,370,962.92 27,839,568.42

Total Capital 96,652,657.78 94,009,331.15

Total Liabilities and Capital 318,861,177.25 316,906,303.99

NJSIG

Income Statement

For the Period Ending 2/29/2016

Actuals YTD Budget YTD Variance Actuals Month Budget Month Variance

Income:

4103 Workman's Compensation 63,511,336.08 67,058,688.19 (3,547,352.11) 128,638.83 0.00 128,638.83

4104 Property 18,575,444.16 20,365,914.70 (1,790,470.54) 107,293.31 0.00 107,293.31

4105 Automobile Liability 6,657,510.40 6,971,289.21 (313,778.81) 41,851.01 0.00 41,851.01

4106 Automobile Phys. Damage 1,125,521.06 1,060,274.22 65,246.84 6,210.92 0.00 6,210.92

4107 General Liability 9,619,887.85 10,142,363.81 (522,475.96) 57,449.29 0.00 57,449.29

4108 Boiler 1,047,528.41 1,074,202.39 (26,673.98) 6,153.34 0.00 6,153.34

4109 Errors & Omissions 15,197,458.26 15,739,323.41 (541,865.15) 76,723.88 0.00 76,723.88

4110 Umbrella 4,678,466.70 4,813,891.34 (135,424.64) 21,527.95 0.00 21,527.95

4111 Crime 603,233.52 601,004.32 2,229.20 1,519.67 0.00 1,519.67

4113 Pollution Liability Income 53,909.54 0.00 53,909.54 0.00 0.00 0.00

4114 E.D.P. 877,327.07 869,209.01 8,118.06 1,472.11 0.00 1,472.11

4117 Retro Accounts Income 5,701.35 0.00 5,701.35 180.60 0.00 180.60

4122 Supplemental Indemnity 1,474,222.08 1,185,843.31 288,378.77 0.00 0.00 0.00

4123 Bond Premium 280,366.60 293,193.70 (12,827.10) (3,996.81) 0.00 (3,996.81)

Premium Income 123,707,913.08 130,175,197.62 (6,467,284.54) 445,024.10 0.00 445,024.10

Retro Accounts Income 0.00 0.00 0.00 0.00 0.00 0.00

Total Income 123,707,913.08 130,175,197.62 (6,467,284.54) 445,024.10 0.00 445,024.10

Adjustments:

4301 Reinsurance Recoveries 7,018,685.36 0.00 7,018,685.36 107,158.18 0.00 107,158.18

4303 Accrued Reins Recoveries (1,892,475.39) 0.00 (1,892,475.39) 0.00 0.00 0.00

4304 Subrogation Income 712,742.24 0.00 712,742.24 50,525.24 0.00 50,525.24

Recoveries & Subro Income 5,838,952.21 0.00 5,838,952.21 157,683.42 0.00 157,683.42

Revenue 129,546,865.29 130,175,197.62 (628,332.33) 602,707.52 0.00 602,707.52

Page 1 of 5

NJSIG

Income Statement



Expenses:

5102 Salaries-Temporary Employees 105,859.90 79,333.33 26,526.57 1,991.91 9,916.67 (7,924.76)

5103 Salaries 3,538,935.46 4,001,862.91 (462,927.45) 445,933.83 500,232.86 (54,299.03)

5104 Salaries-Overtime 3,403.66 2,000.00 1,403.66 0.00 250.00 (250.00)

5108 Payroll Tax Expenses 306,239.26 351,192.00 (44,952.74) 42,113.60 43,899.00 (1,785.40)

5109 Pension Expense 0.00 404,640.00 (404,640.00) 0.00 50,580.00 (50,580.00)

5111 Recruiting Costs 7,826.50 6,666.66 1,159.84 158.25 833.33 (675.08)

5112 Post Retirement Bene Exp 0.00 52,000.00 (52,000.00) 0.00 6,500.00 (6,500.00)

5113 Employee Medical Benefits 595,944.20 766,480.00 (170,535.80) 69,930.94 95,810.00 (25,879.06)

5114 Employee Dental Benefits 33,166.71 36,636.00 (3,469.29) 4,354.12 4,579.50 (225.38)

5115 Employee Vision Benefits 13,810.82 16,000.00 (2,189.18) 1,750.78 2,000.00 (249.22)

5116 EE HRA Benefits 52,128.15 228,000.00 (175,871.85) 11,154.55 28,500.00 (17,345.45)

5117 Employee FSA Benefits 5,688.10 22,000.00 (16,311.90) 6,518.04 2,750.00 3,768.04

5118 Employee ST Disab & Other Ins 25,561.80 50,000.00 (24,438.20) 2,817.51 6,250.00 (3,432.49)

Personnel Expenses 4,688,564.56 6,016,810.90 (1,328,246.34) 586,723.53 752,101.36 (165,377.83)

5203 Marketing Expenses 7,437.87 8,000.00 (562.13) 4,575.15 1,000.00 3,575.15

Member Services Dept Expenses 7,437.87 8,000.00 (562.13) 4,575.15 1,000.00 3,575.15

5227 Loss Prevention 106,522.40 106,866.66 (344.26) 10,655.00 13,358.33 (2,703.33)

Loss Control Dept Expenses 106,522.40 106,866.66 (344.26) 10,655.00 13,358.33 (2,703.33)

5252 Claims Audit Expense 7,581.58 5,066.66 2,514.92 0.00 633.33 (633.33)

Claims Dept Expenses 7,581.58 5,066.66 2,514.92 0.00 633.33 (633.33)

5301 Accounting Fees 500.00 791.34 (291.34) 240.00 98.92 141.08

5303 Actuary Fees 55,960.75 106,666.66 (50,705.91) 0.00 13,333.33 (13,333.33)

5305 Mngmt Maintenance Syst Expense 62,817.92 43,333.34 19,484.58 1,465.00 5,416.67 (3,951.67)

5306 Legal & Professional Fees 92,716.09 200,000.00 (107,283.91) 14,008.00 25,000.00 (10,992.00)

5310 Third Party Admin.-Willis 337,500.00 450,000.00 (112,500.00) 0.00 56,250.00 (56,250.00)

Outside Service Fees 549,494.76 800,791.34 (251,296.58) 15,713.00 100,098.92 (84,385.92)

5309 MOCSSIF Agent Commission Exp. 0.63 0.00 0.63 0.00 0.00 0.00

5311 Agent Commission Exp 12,599,052.20 8,586,603.34 4,012,448.86 55,212.07 1,073,325.42 (1,018,113.35)

5312 NJEIF Agent Commission Exp. 0.72 0.00 0.72 0.00 0.00 0.00

5315 ERIC North Agent Comm. Exp. 296,856.20 0.00 296,856.20 0.00 0.00 0.00

5316 ERIC South Agent Comm Exp 0.75 0.00 0.75 0.00 0.00 0.00

Page 2 of 5

NJSIG

Income Statement



5318 ERIC West Agent Comm Exp 0.02 0.00 0.02 0.00 0.00 0.00

5319 BACCEIC Agent Commission Exp 0.82 0.00 0.82 0.00 0.00 0.00

5320 CAIP Agent Commission Expense 0.09 0.00 0.09 0.00 0.00 0.00

Total Agent Commission Expense 12,895,911.43 8,586,603.34 4,309,308.09 55,212.07 1,073,325.42 (1,018,113.35)

5401 Claims Expense 49,646,677.98 45,668,021.34 3,978,656.64 3,694,135.84 5,708,502.67 (2,014,366.83)

Claims Expenses 49,646,677.98 45,668,021.34 3,978,656.64 3,694,135.84 5,708,502.67 (2,014,366.83)

5505 Reinsurance Exp-District Bill 32,318,500.66 22,324,085.86 9,994,414.80 154,650.78 2,790,510.73 (2,635,859.95)

Reinsurance Expenses 32,318,500.66 22,324,085.86 9,994,414.80 154,650.78 2,790,510.73 (2,635,859.95)

5352 IT - Office Equipment Supplies 9,598.64 14,666.66 (5,068.02) 1,191.51 1,833.33 (641.82)

5353 Office Equipment Maintenance 8,930.74 29,600.00 (20,669.26) 0.00 3,700.00 (3,700.00)

5354 Computer Software Maintenance 107,563.94 160,506.66 (52,942.72) 8,393.98 20,063.33 (11,669.35)

Information Technology Dept Expenses 126,093.32 204,773.33 (78,680.01) 9,585.49 25,596.67 (16,011.18)

5702 Depreciation Expense 310,745.44 326,570.00 (15,824.56) 37,226.11 40,821.25 (3,595.14)

5703 Dues & Subscriptions 24,643.49 20,333.33 4,310.16 2,958.48 2,541.67 416.81

5704 Misc. Bank Fees 2,333.35 2,333.34 0.01 291.67 291.67 0.00

5708 Rent Expense 188,514.01 215,673.34 (27,159.33) 37,687.06 26,959.17 10,727.89

5709 Office Supplies 31,280.55 27,960.00 3,320.55 13,462.73 3,495.00 9,967.73

5710 Office Operating Expenses 76,125.97 57,335.34 18,790.63 4,535.08 7,166.92 (2,631.84)

5711 Office Leased Expenses 20,666.16 19,400.00 1,266.16 3,062.95 2,425.00 637.95

5712 Telephone Expense 0.00 3,266.66 (3,266.66) 0.00 408.33 (408.33)

5714 Utilities 21,542.26 22,133.34 (591.08) 385.00 2,766.67 (2,381.67)

5715 Group's Insurance Expense 122,823.37 148,666.66 (25,843.29) 24,660.46 18,583.33 6,077.13

5716 Group's Crime Insurance Exp. 24,868.01 31,333.34 (6,465.33) 3,175.75 3,916.67 (740.92)

5723 Postage 26,803.11 41,333.34 (14,530.23) 4,302.42 5,166.67 (864.25)

5727 Employee Seminar Expenses 17,366.29 40,000.01 (22,633.72) 1,167.00 5,000.00 (3,833.00)

5728 Insurance Course Fees 1,992.15 5,000.00 (3,007.85) 0.00 625.00 (625.00)

5729 Tuition Reimursement 1,310.00 11,259.34 (9,949.34) 0.00 1,407.42 (1,407.42)

5730 Audit Fees 1,773.00 0.00 1,773.00 0.00 0.00 0.00

5731 Consulting Fees 69,125.05 177,333.34 (108,208.29) 4,225.00 22,166.67 (17,941.67)

5732 Miscellaneous Expenses 35,820.18 43,833.34 (8,013.16) (1,465.55) 5,479.17 (6,944.72)

5733 Disaster Recovery Expenses 44,042.48 79,226.66 (35,184.18) 2,900.55 9,903.33 (7,002.78)

5737 Cell Phone Expense 9,900.42 11,706.66 (1,806.24) 1,228.89 1,463.33 (234.44)

5738 OPRA expenses 0.00 66,666.66 (66,666.66) 0.00 8,333.33 (8,333.33)

Business Operating Expenses 1,031,675.29 1,351,364.68 (319,689.39) 139,803.60 168,920.59 (29,116.99)

Page 3 of 5

NJSIG

Income Statement



5201 Travel & Related Expenses 81,295.71 115,333.34 (34,037.63) 8,999.53 14,416.67 (5,417.14)

5851 Annual Meeting 42,596.43 47,600.00 (5,003.57) 0.00 0.00 0.00

5852 Trustee Meeting Expense 7,027.04 16,000.00 (8,972.96) 0.00 2,000.00 (2,000.00)

Conferences & Meeting Expenses 130,919.18 178,933.34 (48,014.16) 8,999.53 16,416.67 (7,417.14)

Total Expenses 101,509,379.03 85,251,317.46 16,258,061.57 4,680,053.99 10,650,464.68 (5,970,410.69)

Page 4 of 5

NJSIG

Income Statement



Other Revenue and Expenses:

4413 Interest-NJ St Inv Fund 333.88 172.00 161.88 41.91 21.50 20.41

4414 Interest-NJ Cash Mgmt Fund 369.23 149.34 219.89 77.36 18.67 58.69

4415 Interest-Commerce Concentr 136,465.40 114,365.34 22,100.06 30,350.22 14,295.67 16,054.55

4420 Interest - Certificate of Dep (814,230.86) 410,925.34 (1,225,156.20) 0.00 51,365.67 (51,365.67)

Investment Income (677,062.35) 525,612.01 (1,202,674.36) 30,469.49 65,701.50 (35,232.01)

Financial Income 0.00 0.00 0.00 0.00 0.00 0.00

4603 Miscellaneous Income 1,579.01 0.00 1,579.01 0.00 0.00 0.00

4605 Seminar Income 8,960.00 2,166.66 6,793.34 570.00 270.83 299.17

Other Revenues 10,539.01 2,166.66 8,372.35 570.00 270.83 299.17

Investment Expenses 0.00 0.00 0.00 0.00 0.00 0.00

Total Other Revenue and Expenses (666,523.34) 527,778.67 (1,194,302.01) 31,039.49 65,972.33 (34,932.84)

Net Revenue 27,370,962.92 45,451,658.83 (18,080,695.91) (4,046,306.98) (10,584,492.35) 6,538,185.37

Page 5 of 5



www.njsig.org

1-888-NJ Pool 1

Board of Trustees Meeting of May 18, 2016 Client Relations and Underwriting Report

Effective June 1st, Underwriting is thrilled to welcome aboard Shevon Bennett. She will be filling the Underwriter position that has been vacant since September 2015. Shevon comes to us with over 25 years of experience, underwriting in excess of eight lines of coverage. Her professionalism, knowledge and “team player” attitude make her a perfect fit. Welcome Shevon! Both the Underwriting and Client Relations Staff are hard at work during this very busy renewal season. To date, we have approximately 165 renewal submissions in-house and approximately 10 new business submissions. The next five weeks will be very hectic as we are winding down with our Sub Fund meetings until September. Each Sub Fund will host a “training” day for its Members. ERIC North and MOCSSIF recently held a joint training day, which was an overwhelming success. Congratulations to both Sub Funds. Client Relations is in the process of revamping our marketing materials. We hope to go to print within the next week, just in time for the May 25th NJ Charter School Conference, Atlantic City, which will be attended by the Client Relations Staff. I’d like to take this opportunity to thank Anthony Tonzini, Jr. for his time served on our Board. Anthony always had the Groups best interest at heart, thus making him a pleasure to work with. We will miss you Anthony, and we certainly wish you well in your future endeavors. Dave Ritch, Willis Pooling reports the following:

1. We have bound all reinsurance coverages for the 2016-2017 program year. 2. We are in the process of now reviewing 2016-2017 binders and policies. 3. I, along with two of my staff members’ met with the Group in April to review and confirm rates. 4. Our analytics team finished a loss retention analysis for the Group. 5. We hosted our client symposium last week in North Carolina. 6. We have begun work to transfer our Envision software and Spatial Key software to the Group to provide

analytical and forecasting capabilities to the Group hosted on their system. 7. Presented at two sub fund meetings (NJEIF, ERIC North/MOCSSIF) to review 2016-2017 program coverage

changes. 8. We have a meeting scheduled with Munich Re to review a program that they are initiating for public school

transportation. Thank you, Kelly A. Machu Kelly A. Machu, Client Relations and Underwriting Manager



www.njsig.org

1-888-NJ Pool 1

Board of Trustees Meeting of May 18, 2016 Loss Control Report

Safety Net Newsletter The safety theme for May is Get the Lead Out…Safely. The article outlined the dangers of lead and how to remove lead safely. Safety Success provided an article announcing NJSIG Loss Control received the National School Safety Award from WeTip. An update on the safety grant process reminded the members to complete their applications by June 30, 2016. Senior Loss Control Representative, Sameer Sarfraz provided an article titled IRS Scams which alerted our membership to telephone calls from people identifying themselves as the Internal Revenue Service demanding payment of back taxes. In reality the IRS never calls a taxpayer. The Loss Control Department will conduct six defensive driving classes at the Mount Laurel office during the months of July and August. These dates were chosen to give teachers and their driving age children an opportunity to take the DDC class as they seldom have that opportunity during the school year. A copy of the newsletter is included with this report. Safety Grant The Loss Control Secretaries, Sue Williams and Joanne Gunter and Mike Ambrozaitis, Information Systems Specialist, have dedicated many hours away from their regular duties to make the on-line safety grant program successful. The majority of districts have initiated the grant process and about 25% have completed their application. Districts which provided a generic email address have had few, if any, problems completing the application. Many of the districts who relied on their personal email address claimed not to have received their access codes to begin the process. For this reason codes were sent again the beginning of this month via certified email and U.S. mail to all districts and their brokers who had not begun the application. The portal provides a report on all districts which have not completed their application every two weeks and the Loss Control Department reaches out to each member to assist them. In-House Training Senior Loss Control Representative, Sameer Sarfraz conducted Claim Coordinator and Affirmative Action Officer Training at the Mount Laurel Office. About 20 people attended each class. Legal One, who provides training for the New Jersey Principals and Superintendents Association, has scheduled a series of trainings at our Mount Laurel Office. All NJSIG members who attend will receive a 25% discount off of the training. Non-members who attend will have an opportunity to see our excellent training facilities. A schedule of Legal One training dates is included with this report. The entire Loss Control Field Staff was involved in CPR/Defibrillator training at several member districts over the last two months. We will hold a class at the Mount Laurel office for employees during the summer. Tony Jones Tony Jones, Loss Control Manager

The 2014 – 2015 Safety Grant Application is now available! Notifications have been sent out by email with each district’s application ID and grant code: To Access Your Grant

1. Visit: https://www.njsig.org/applications/safety-grant

2. Log into the NJSIG Website with the username/password: policies/policies

3. Enter your Application ID and your Grant Code All questions about your Safety Grant Application or the application process, please contact [email protected].

SAFETY GRANT APPLICATIONS MUST BE SUBMITTED BEFORE 11:59 PM EASTERN STANDARD TIME JUNE 30, 2016.

May 2016 New Jersey Schools Insurance Group

WeTip Honors NJSIG

2016 National School Safety Award WeTip is proud to announce NJSIG is one of the recipients of the 2016 National Awards! It is WeTip’s privilege to honor a select group of people who received awards at the 43rd Annual WeTip National Crime-Fighting Conference on April 20, 2016. These awards are given to those individuals who have shown extraordinary efforts and outstanding service in the field of crime prevention and WeTip service. Susan Aguilar states, “As the Chief Ex-ecutive Officer of WeTip, I take great honor in announcing that NJSIG has been chosen to receive the “National School Safety Award”. NJSIG’s work with WeTip has saved NJSIG members an estimated $5.76 million. The nationwide program begun over 40 years ago and NJSIG has been proud to provide this service to its mem-bers for the last eight years. More than 150 tips were generated for NJSIG members in the past two years. One notable case averted a school shooting, according to the local police department.

www.njsig.org May 2016 New Jersey Schools Insurance Group

People from all over the country are becoming target to a dangerous phone scam by scammers portraying themselves to be IRS agents. These IRS con-artists are calling up their targets, un-suspecting taxpayers and often elderly people or immigrants, and demanding that they pay taxes they don’t even owe, by either loading money on a prepaid card, PayPal or sending it via a wire transfer. Those who refuse to pay immediately are threatened by these “IRS con-agents.” The threats include jail time, deportation, seizure of the property, or the suspension of the victim’s business or driver’s license. In order to prove to people that they are real IRS agents, these con-artists play several tricks, in-cluding but not limited to, using a program to make the IRS’s toll-free number appear on the caller ID, call center background noise, and false agent badge numbers. If their target is not al-ready convinced, several callers are able to re-port the last four digits of the person’s Social Se-curity number. And this complex scam goes even further. Those who hang up on the caller may receive another call soon after from a scammer claiming to be a police officer, FBI or a DMV agent. Note that the IRS will never: Call to demand immediate payment, nor will

the agency call about taxes owed without first having mailed you a bill.

Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.

Require you to use a specific payment meth-od for your taxes, such as a prepaid debit card.

Ask for credit or debit card numbers over the phone.

Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

Following are some tips to safeguard yourself from this IRS scam and others like it: Beware of any caller claiming to be from the

IRS and demanding money. In general, never give anyone money or

credit card information over the phone. Never trust callers who use threats and hos-

tility to bully their targets into doing what they want. This is a tactic many scammers use.

Be skeptical of what a caller claims he or she can do if you refuse to meet their demand. An IRS agent will not get the police or an im-migration agency involved just because you owe taxes.

If you receive one of these calls, the attorney general recommends that "you should hang up immediately and report the scam to the IRS." To report any calls like this, contact the Treasury Inspector General for Tax Administration at 800-366-4484.

By Sameer Sarfraz NJSIG Senior Loss Control Representative

Sources: https://www.irs.gov/uac/Tax-Scams-Consumer-Alerts http://www.ustoday.com http://www.bbb.org

Internal Revenue Service (IRS) Phone Call Scam

New Jersey Schools Insurance Group is offering Defensive Driving Classes. The training is a six-hour class developed by the National Safety Council. The participants in the class will receive a certificate, which they can present to their insurance carrier for a 5% reduction in their personal automobile insurance. In addition, if they have points against their license they may apply to the Department of Motor Vehicles for a two-point reduction. There is no charge for any employee who drives for their district in any capacity. However, there is a $10.00 charge per person for employees who do not drive for the district, spouses and age appropriate children attending the training.

July 12, 2016

July 20, 2016

July 28, 2016

August 9, 2016

August 17, 2016

August 25, 2016

DefensiveDrivingClasses

New Jersey Schools Insurance Group (NJSIG)

Keeping Dollars in NJ

Phone: 609-386-6060 Fax: 609-386-8877 Website: www.njsig.org

6000 Midlan c Drive, Suite 300 North Mount Laurel, NJ 08054

Dates:

Time: 9:00 am to 3:00 pm

Cost: Employees who drive for their district: No Charge All other employees, spouses and age appropriate children: $10.00

**Please bring your lunch to the class.**

Location: New Jersey Schools Insurance Group 6000 Midlantic Drive, Suite 300 North, Mt. Laurel, NJ 08054

You must be pre-registered to attend the Defensive Driving Class. Please contact Sue Williams at 609-386-6060 extension 3005 or via email at [email protected]. Please bring a check payable to New Jersey Schools Insurance Group.

Class size limited: 20 per class

www.njsig.org New Jersey Schools Insurance Group May 2016

Get the Lead Out….Safely Recognizing the dangers of lead, the paint industry began to voluntarily phase out lead paint in 1960, yet many workers and their families are still exposed to this hazard. Lead poisoning has become a serious issue, especially in construction safety. Health ex-perts estimate that between 2 million and 3 million workers are at risk of lead exposure. According to OSHA, overexposure to lead is most common in the construction industry among trades such as plumbing, iron work, welding, lead-based paint removal, electrical work and others. These trades often are involved in activities that generate lead dust and fumes. Beware of exposure hazards Similar to asbestos, only upon being dis-turbed does lead become a hazard. You may get lead poisoning if you ingest or in-hale lead dust or fumes. In adults, common symptoms of acute lead poisoning include nausea, vomiting, loss of appetite, stomach cramps, headaches, fatigue, joint or muscle pain, constipation, anemia and decreased sexual drive. Lead poisoning also con cause damage to the nervous system and even lead to death. Workers who experience repeated exposure to lead over time can develop chronic lead poisoning, an accumulation of lead in the body. Lead accumulates in bones and is gradually released into the bloodstream. Long after the exposure has ended, the ef-fects of chronic lead poisoning can harm the nervous system, kidneys, bones, heart and reproductive system. Protect yourself and your family An effective lead-abatement program in-cludes protection against airborne lead ex-posure as well as good worker hygiene.

Workers can contaminate their homes when they unknowingly bring lead dust home on their clothes. Workers should wear protective clothing and dispose of it properly. The type of protective clothing and respiratory protection needed for workers can be determined by special monitoring equipment that measures the amount of lead in the air. Workers should also take showers and change into street clothes before leaving the worksite. Lead is absorbed through skin pores, as well as through inhalation, which makes it important for workers to remember to wash their hands before they eat or smoke. Employers should monitor the blood-lead levels of exposed workers to ensure that they are receiving adequate protection and to help identify problems. Employees need to be aware of the dangers of lead. Some companies hold training sessions and week-ly safety meetings to inform employees about lead and explain the monitoring devic-es. Industrial hygienists can help supervi-sors understand lab results so they can be explained to employees in easily under-standable terms. Employees should under-stand that lead poisoning is preventable. Remove lead safely Recommended techniques to reduce expo-sure to lead-based paint during removal or replacement include the use of power tools with high-efficiency particulate air vacuums, vacuum blasting, water blasting or chemical stripping. Because lead-based paint debris is considered a hazardous waste, you must handle and dispose of it according to feder-al, state or local regulations. Regardless of the technique chosen, work-ers should be able to perform the job safely

if companies follow OSHA regulations. The OSHA standard requires workers to receive training on the hazard of lead exposure, know how to perform their work safely, and have adequate protective clothing and equipment for abatement, disposal and cleanup. Decontaminating workers Some companies that work with lead have their workers and supervisors trained (and retrained) on lead hazards. They also give employees periodic physicals to check their blood-lead levels and pulmonary function tests to see if they are capable of wearing respirators. On some jobsites, companies that work with lead have a decontamination station or trailer with washing and shower facilities. Attack lead hazards before lead attacks you OSHA recommends a three-pronged attack on lead hazards which includes safe work practices (like the decontamination proce-dure listed above); engineering controls (mechanical and local exhaust ventilation, shrouded tools, and wetting agents to keep lead-contaminated debris from becoming airborne); and personal protective equip-ment, including supplemental respirator use. Workers and supervisors alike need to know the health effects of lead and the safe work practices and procedures that need to be followed. Otherwise, lead can be a silent killer.

National Safety Council

5 Minute Safety Talk

Date Name Time Training Room

Available

Booked

Training Rm

11/29/2016 AAO Certificate ‐ Day 1 9am ‐ 3pm YES

12/5/2016 Corrective Action Plans 9am ‐ 3pm YES

1/26/2017 ABS Certificate ‐ Day 2 9am ‐ 3pm YES

1/27/2017 ABS Certificate ‐ Day 3 9am ‐ 3pm YES


3/1/2017 Negligence & Security Issues 9am ‐ 3pm YES


5/22/2017 Gender ID 9am ‐ 3pm YES

6/7/2017 Corrective Action Plans 9am ‐ 3pm YES

Legal One 2016‐2017 Courses

NJSIG Training Room

New Jersey Schools Insurance Group is offering a Defensive Driving Class. The training is a six-hour class developed by the National Safety Council. The participants in the class will receive a certificate, which they can present to their insurance carrier for a 5% reduction in their personal automobile insurance. In addition, if they have points against their license they may apply to the Department of Motor Vehicles for a two-point reduction. There is no charge for any employee who drives for their district in any capacity. However, there is a $10.00 charge per person for employees who do not drive for the district, spouses and age appropriate children attending the training.

July 12, 2016

July 20, 2016

July 28, 2016

August 9, 2016

August 17, 2016

August 25, 2016

Defensive Driving Classes

New Jersey Schools Insurance Group (NJSIG)

Keeping Dollars in NJ Classrooms

Phone: 609-386-6060 Fax: 609-386-8877

Website: www.njsig.org

6000 Midlantic Drive, Suite 300 North

Mount Laurel, NJ 08054

Dates:

Time: 9:00 am to 3:00 pm

Cost: Employees who drive for their district: No Charge All other employees, spouses and age appropriate children: $10.00

**Please bring your lunch to the class.**

Location: New Jersey Schools Insurance Group 6000 Midlantic Drive, Suite 300 North, Mt. Laurel, NJ 08054

You must be pre-registered to attend the Defensive Driving Class. Please call Sue Williams at 609-386-6060 extension 3005 or via email at [email protected]. Please bring a check payable to New Jersey Schools Insurance Group.

Class size limited: 20 per class



www.njsig.org

Revised: 5.4.16

Board of Trustees Meeting of May 18, 2016 Claim Report

v March 1, 2016 to April 30, 2016 CLAIM ACTIVITY

Workers' Compensation Total pending work comp cases last month (as of February 29) 2639 New major work comp cases last month (March) 515 Total work comp cases last month (March) 3154 Total closed work comp cases last month (March) (506) Total Pending Work Comp Cases last month (as of March 31) 2648 Total pending work comp cases last month (as of March 31) 2648 New major work comp cases this month (April) 495 Total work comp cases this month (April) 3143 Total closed work comp cases this month (April) (585) Total Pending Work Comp Cases this month (April) 2558

Property / Liability Total pending property-liability cases last month (as of February 29) 613

New property-liability reports last month (March) 110 Total property-liability cases last month (March) 723 Total closed property-liability cases last month (March) (127) Total Property-Liability Cases last month (as of March 31) 596

Total new property-liability reports this month (April) 596 New property-liability cases this month (April) 81 Total property-liability cases this month (April) 677 Total closed property-liability cases this month (April) (92) Total Property-Liability Cases this month (April) 585

Office Totals Total pending cases (as of February 29) 3252 Total new reports last month (March) 625 Total cases last month (March) 3877 Total closed cases last month (633) Total Pending cases as of March 31 3244

Total pending cases (as of March 31) 3244 Total new reports last month (April) 576 Total cases this month (April) 3820 Total closed cases this month (April) (677) Total Pending Cases as of April 30 3143



www.njsig.org

Revised: 5.4.16

Claim Report – May 18, 2016 Page 2

nPENDING BY ADJUSTER TITLE

Job Title January - March Medical Claim Supervisor 0 Medical Claim Assistants 505 Legal Claim Examiners 214 Claim Examiners *1235 Senior Claim Representatives 870 Claim Representatives 319 Totals 3143

*Includes 2 Hurricane Sandy losses.

Work Load Standards Medical Claim Assistants – to 125 Files

Legal Claim Examiners – to 200 files Claim Examiners – to 200 files

Senior Claim Representatives – to 175 files Claim Representatives – to 150 files

n(March - April) The total number of new reports for this period was 1201. This is down 10.7% from a similar period last year (1346). Overall pending is 3143 was down 15% from prior year to date (3689) and down 4.3% from last report (3252). Our workers’ compensation incoming was up 12% and property-liability was down 28% during a similar reporting period from last month. There are only two (2) Hurricane Sandy cases pending. nCLAIMS PERSONNEL We extended a warm welcome to Lois Mitzelman who was hired as a Property Casualty Claim Examiner effective March 14, 2016. Lois will manage the ‘S’ desk. I have received the utmost cooperation and assistance from the Workers’ Compensation Supervisors, as well as Technical, Management and Support staff since becoming the Interim Claims Manager on April 5, 2016.



www.njsig.org

Revised: 5.4.16


nSELECTED SELF-AUDIT RESULTS

RATING

PERCENT Satisfactory Unsatisfactory

Reporting & Communication 199 17 92%

Direction 297 30 91%

48 Hour Contact 71 27 73%

Investigation 72 2 97% TOTALS 639 76 90%

The preceding results reflect audits completed on 10 individuals. Individual results: 98%, 95%, 93%, 93%, 93%, 89%, 88%, 87%, and 79%. (17 contact issues by 1 newer adjuster - performance addressed) nFRAUDULENT CHECK The fraud check was completed for March and April. There were no internal or external problems. We have completed an additional 25 checks in accordance with our direction from the Executive Director. nACCOUNT VISITATIONS AND INSTALLATIONS A claim review of the Winslow Township Board of Education was completed by Connie Rogers on May 3, 2016. Tony Ruggeri and Ivy Davis met with brokers for Jersey City Board of Education to review claims reporting procedure and deductible loss runs. nEDUCATION AND TRAINING On April 19, 2016, a training seminar was held in our office on the subject of obesity and how it influences injuries and injury recovery. The seminar was attended by our claims staff. Tony Ruggeri and Bill Miller attended the South Jersey Claim Association meeting which included a presentation on Social Media used for Claims Investigations on April 27, 2016. Tony Ruggeri attended the March 24, 2016 meeting which included a presentation on slip and fall claims in commercial establishments in which New Jersey Title 59 defenses were discussed.



www.njsig.org

Revised: 5.4.16


nMISCELLANOUS During the month of April, our yearly claims audit was conducted. Results will be discussed at the June board meeting. Monthly meetings are now being held on a regular basis with the claims staff and Supervisors are now meeting on a weekly basis. This facilitates open and active participation by the claims staff and has led to more efficient resolution of any issues and concerns that may arise. nLITIGATION Trial notifications and matters in litigation will be discussed in executive session.

Tony Anthony Ruggeri Claims Manager (interim)



www.njsig.org

1-888-NJ Pool 1

Board of Trustees Meeting of May 18, 2016 Information Technology Report

Ø VMware Upgrade Joe Fisicaro, Network Administrator, upgraded VMware to version 6.0 the week of April 18th, in both the Mount Laurel and Marlboro offices. VMware is our virtualization server and network software, the backbone of our network. VMware is also used for replication to our Disaster Recovery (DR) site and local backups. We were running VMware version 5.0 that was coming to end of life, and support was ending August 2016. I am happy to report the software and hardware upgrade went very well, a testament to the Information Technology Department’s project planning and hard work. Thank you Joe Fisicaro!

Ø ISO and WC Navigator

Chris Cozine, Shadi Hermina and I have been working with Qual-Lynx (Managed Care Company) to provide us with an electronic billing and claims feed that meets the data requirements for our ISO (Data Analytics and Claims Scoring) project. After many go arounds and much help from Qual-Lynx we were able to provide ISO with a data feed they have accepted and are testing. We anticipate some sample reports returned to us within the next week or so.

Ø Dashboards by Shadi Hermina

In the short period of time Shadi has been with us, he has done some very impressive work. You will have an opportunity to see a sample of what Shadi can do with raw data using dashboards at our May 18th Board of Trustees meeting. Shadi will do a short presentation on the dashboard he created for Client Relations. After his presentation, you will see how powerful these tools will be for our Board of Trustees, Staff, Brokers, Sub Funds, and Members.

Ø Data Warehouse

Chris Cozine and Shadi Hermina have created a data warehouse on our network; this warehouse will host data from multiple sources. This will be useful for future projects including dashboards and any other data extracts that are needed. There is no such thing as too much data!

Ø Claims Management Systems Search

STARS our claims management system’s three-year contract expires September 2016 and we have begun reviewing other claims management systems. When evaluating software one of the largest costs associated with a software change is the migration or implementation costs. These migration/implementation costs consist of data conversion, migration of data, custom solution requirements, number of man hours for the vendor to complete the project, and many other costs. The cost range has been between $62K and $300K for migration/implementation costs. The lower cost being due to less man hours needed to upgrade, the data model staying the same and upgrading to the newest cloud version 15.1.3 of the claims management system we are currently running (STARS). While evaluating software cost is a major factor, but so is functionality and stability of the software and the company designing the software. I will keep you posted as we move forward with this process.



www.njsig.org

1-888-NJ Pool 1

Information Technology Report May 18, 2016 Page 2

Ø Safety Grants

Mike Ambrozaitis created an electronic process for submitting grant applications in 2016 for the 2014/2015 policy year. Members can log into our website with credentials provided to them through email and submit their grant application electronically. This new electronic process should expedite the grant process and also gives NJSIG the ability to send notifications and updates to the members who provided us with generic email addresses. The updates are to notify the members of their grant status and walk them through the process. Mike attended all the sub fund meetings this year to address any questions and to give a demo of the electronic grant process. Mike will continue to attend the sub fund meetings through June 2016 to address any questions and concerns; he will also be giving a demo if requested by the sub fund administrator.

Ø POPE Project

The Information Technology Department has been asked to participate in the Post Offer Pre Employment Functional Capacity Testing (POPE) project. Arthur J. Gallagher & Co., one of our sub fund administrators and brokers presented this to us and asked if we could help with collecting data and analyzing over a period of time. We feel the POPE project will be a great service to districts in pre-screening employment applicants and a great benefit to NJSIG in possibly reducing claim cost. This is another example of how NJSIG can help our members reduce losses, therefore reducing cost and keep the dollars in the classroom.

Jeff Cook

Jeff Cook Information Systems Manager [email protected]



www.njsig.org

1-888-NJ Pool 1

Board of Trustees Meeting of May 18, 2016 Human Resource Report

We have successfully filled the open positions within the Underwriting and Accounting Departments. We are pleased to announce the hiring of Maryann Osborn as the Payroll-Accounting Specialist and Shevon Bennett as the newest Commercial Underwriter. Both of these employees bring a vast amount of technical experience to the Group. The State Health Benefits Commission has scheduled July 6th and July 13th as the meeting dates for rate renewal meetings. The content of these meeting provides the Group with information regarding the cost of the benefit plans for the upcoming year. There have been no published reports as of yet regarding what options the Commission is exploring. Proposed Department of Labor (DOL) rule changes to overtime eligibility could make five million white-collar workers previously classified as "exempt" eligible for overtime pay. The new rule is expected by most observers to be finalized soon and is likely to include a higher exempt salary threshold. Currently, employees earning less than $23,660 are eligible for overtime pay. The key provisions of the proposed rule primarily apply to updating the salary and compensation levels needed for white-collar workers to be classified as exempt. The DOL proposes:

1. Set the standard salary level at the 40th percentile of weekly earnings for full time salaried workers ($970 per week or $50,440 annually);

2. Increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually) and;

3. Establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.

The salaries test does not currently pose a significant cost expense to the Group at this time. In addition to the salary test, the DOL has solicited feedback on the other exemption tests. While the DOL did not propose specific changes to the duties test at this time, they did indicate their intent to determine whether the concurrent duties test is still useful and if the test should require that employers track time to ensure that exempt employees spend a certain percentage of their time performing exempt duties. A change to the “white collar” exemptions could raise the Group’s labor costs. NJSIG is a continually evaluating the scope of duties assigned to each position to ensure they are classified accordingly. Should you have any questions regarding any of the above issues or any other of the Group’s Human Resource matters I am always available. Chai Respes Chai Respes, Human Resource Manager



www.njsig.org

1-888-NJ Pool 1

Board of Trustees Meeting of May 18, 2016 Discussion Item

2016/2017 Budget

The 2016/2017 Budget is required to be submitted to the Department of Banking and Insurance (DOBI) each year. The draft attached is for discussion. The 2016/2017 Budget will be on the June agenda for approval. I have enclosed both a summary and detail of the draft. William Mayo William Mayo, CPCU, ARM Executive Director`

NJSIG

Income Statement

For the Periods Ending:

KEY:

A7 - 7 months actual

E12 - Estimate based on A7

B16 - Budgeted 2016 amount


FY 2013/2014 FY 2014/2015 FY 2014/2015 01/31/2016 01/31/2016 FY 2015/2016 FY 2015/2016 FY 2015/2016 FY 2016/2017

06/30/2014 06/30/2015 06/30/2015 7 Months 7 Months 12 Months 12 Months PROJECTED 12 Months

ACCT DEPT Description Actuals YTD Budget YTD Actuals YTD Budget YTD Actuals YTD Budget YTD PROJECTED Variance Budget YTD

Income:

4101 Audit Premium Written 1,235.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4102 Student Accident (770.32) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4103 Workman's Compensation 65,084,249.77 66,744,662.00 64,512,337.93 67,058,688.19 63,382,697.25 67,058,688.19 63,511,336.08 A7 (3,547,352.11) 67,264,966.00

4104 Property 17,722,319.35 18,170,480.00 18,886,995.01 20,365,914.70 18,468,150.85 20,365,914.70 18,575,444.16 A7 (1,790,470.54) 19,414,236.00

4105 Automobile Liability 6,781,997.19 6,872,319.00 7,088,622.05 6,971,289.21 6,615,659.39 6,971,289.21 6,657,510.40 A7 (313,778.81) 7,110,715.00

4106 Automobile Phys. Damage 986,396.74 1,005,850.00 1,032,699.33 1,060,274.22 1,119,310.14 1,060,274.22 1,125,521.06 A7 65,246.84 1,081,480.00

4107 General Liability 9,285,129.76 9,731,402.00 9,952,930.04 10,142,363.81 9,562,438.56 10,142,363.81 9,619,887.85 A7 (522,475.96) 10,345,211.00

4108 Boiler 1,142,055.62 1,009,383.00 1,055,165.88 1,074,202.39 1,041,375.07 1,074,202.39 1,047,528.41 A7 (26,673.98) 1,095,686.00

4109 Errors & Omissions 11,295,543.63 12,474,393.00 12,727,029.50 15,739,323.41 15,120,734.38 15,739,323.41 15,197,458.26 A7 (541,865.15) 16,054,110.00

4110 Umbrella 4,472,064.43 4,614,377.00 4,711,185.72 4,813,891.34 4,656,938.75 4,813,891.34 4,678,466.70 A7 (135,424.64) 4,910,169.00

4111 Crime 577,587.69 573,390.00 601,312.49 601,004.32 601,713.85 601,004.32 603,233.52 A7 2,229.20 613,024.00

4113 Pollution Liability Income 52,686.62 0.00 52,416.54 0.00 53,909.54 0.00 53,909.54 A7 53,909.54 0.00

4114 E.D.P. 847,159.62 852,590.00 872,291.46 869,209.01 875,854.96 869,209.01 877,327.07 A7 8,118.06 886,593.00

4115 Cigna/Fireman's Fund Income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4117 Retro Accounts Income 90,403.30 0.00 31,056.61 0.00 5,520.75 0.00 9,464.14 E12 9,464.14 0.00

4118 Willis Change in Unrnd Premium 118,873.11 0.00 156,026.10 0.00 0.00 0.00 0.00 0.00 0.00

4121 Builder's Risk 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4122 Supplemental Indemnity 1,085,052.70 1,140,624.00 1,183,685.62 1,185,843.31 1,474,222.08 1,185,843.31 1,474,222.08 A7 288,378.77 1,304,428.00

4123 Bond Premium 290,625.81 291,364.00 294,017.82 293,193.70 284,363.41 293,193.70 280,366.60 A7 (12,827.10) 299,058.00

4131 Willis ChngUnerndRetMgtFeePrem 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Premium Income 119,832,610.32 123,480,834.00 123,157,772.10 130,175,197.62 123,262,888.98 130,175,197.62 123,711,675.87 (6,463,521.75) 130,379,676.00

4202 Retro Prem/Srvc Written 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Retro Accounts Income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Income 119,832,610.32 123,480,834.00 123,157,772.10 130,175,197.62 123,262,888.98 130,175,197.62 123,711,675.87 (6,463,521.75) 130,379,676.00

5/6/2016

11:36 AM Page 1 of 5

NJSIG

Income Statement


KEY:





FY 2013/2014 FY 2014/2015 FY 2014/2015 01/31/2016 01/31/2016 FY 2015/2016 FY 2015/2016 FY 2015/2016 FY 2016/2017



Adjustments:

4301 Reinsurance Recoveries 19,050,137.06 0.00 12,954,141.75 0.00 6,911,527.18 0.00 6,911,527.18 A7 6,911,527.18 1,576,000.00

4302 Reins Recovery W/C 85/86 14,148.70 0.00 (34,329.65) 0.00 0.00 0.00 0.00 0.00 0.00

4303 Accrued Reins Recoveries 838,892.64 0.00 1,892,475.39 0.00 (1,892,475.39) 0.00 (1,892,475.39) A7 (1,892,475.39) 0.00

4304 Subrogation Income 0.00 0.00 1,127,723.08 0.00 662,217.00 0.00 662,217.00 A7 662,217.00 0.00

4306 Reinsurance Rebate Income 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Recoveries & Subro Income 19,903,178.40 0.00 15,940,010.57 0.00 5,681,268.79 0.00 5,681,268.79 5,681,268.79 1,576,000.00

Revenue 139,735,788.72 123,480,834.00 139,097,782.67 130,175,197.62 128,944,157.77 130,175,197.62 129,392,944.66 (782,252.96) 131,955,676.00

Expenses:

5102 Salaries-Temporary Employees 162,984.50 120,000.00 253,864.98 69,416.66 103,867.99 118,999.99 105,859.90 A7 (13,140.09) 107,500.00

5103 Salaries 5,194,780.10 5,770,300.00 5,472,796.80 3,501,630.05 3,093,001.63 6,002,794.37 5,302,288.51 E12 (700,505.86) 6,064,979.00

5104 Salaries - Overtime 8,930.47 500.00 20,195.37 1,750.00 3,403.66 3,000.00 3,403.66 A7 403.66 3,000.00

5108 Payroll Tax Expenses 449,225.14 484,525.00 451,129.41 307,293.00 264,125.66 526,788.00 452,786.85 E12 (74,001.15) 590,000.00

5109 Pension Expense 475,891.20 570,000.00 551,767.00 354,060.00 0.00 606,960.00 606,960.00 B16 0.00 660,312.00

5110 Employee Benefits Expense 380,317.25 0.00 (1,268.41) 0.00 0.00 0.00 0.00 0.00 0.00

5111 Recruiting Costs 8,271.74 8,500.00 5,447.45 5,833.33 7,668.25 10,000.00 7,826.50 A7 (2,173.50) 7,500.00

5112 Reiree Med Bene Exp 77,943.00 78,000.00 77,943.00 45,500.00 0.00 78,000.00 171,555.00 B17 93,555.00 171,553.00

5113 Employee Medical Benefits 474,341.62 905,000.00 859,315.26 670,670.00 526,013.26 1,149,720.00 901,737.02 E12 (247,982.98) 1,245,828.00

5114 Employee Dental Benefits 26,394.57 52,000.00 51,577.18 32,056.50 28,812.59 54,954.00 54,954.00 B16 0.00 56,400.00

5115 Employee Vision Benefits 10,659.76 24,000.00 21,131.34 14,000.00 12,060.04 24,000.00 24,000.00 B16 0.00 24,720.00

5116 EE HRA Benefits 156,490.38 340,000.00 204,229.21 199,500.00 40,973.60 342,000.00 342,000.00 B16 0.00 342,000.00

5117 Employee FSA Benefits 15,593.73 36,000.00 45,182.58 19,250.00 (829.94) 33,000.00 33,000.00 B16 0.00 33,000.00

5118 Employee ST Disab & Other Ins 20,825.00 75,000.00 57,283.57 43,750.00 22,744.29 75,000.00 75,000.00 B16 0.00 75,000.00

Personnel Expenses 7,462,648.46 8,463,824.99 8,070,594.74 5,264,709.54 4,101,841.03 9,025,216.36 8,081,371.43 (943,844.92) 9,381,792.00

5202 Newsletter Expenses 2,350.16 5,000.00 3,348.23 0.00 0.00 0.00 0.00 0.00 0.00

5203 Marketing Expenses 10,724.63 49,500.00 25,677.09 7,000.00 2,862.72 12,000.00 5,260.49 E12 (6,739.51) 12,000.00

Member Services Dept Expenses 13,074.79 54,500.00 29,025.32 7,000.00 2,862.72 12,000.00 5,260.49 (6,739.51) 12,000.00

5227 Loss Prevention 157,379.78 161,200.00 153,669.54 93,508.33 95,867.40 160,300.00 164,344.11 E12 4,044.12 175,400.00

5228 Office Equipment Maintenance 74.54 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5229 Computer Software Maintenance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Loss Control Dept Expenses 157,454.32 161,200.00 153,669.54 93,508.33 95,867.40 160,300.00 164,344.11 4,044.12 175,400.00

5/6/2016


NJSIG

Income Statement


KEY:





FY 2013/2014 FY 2014/2015 FY 2014/2015 01/31/2016 01/31/2016 FY 2015/2016 FY 2015/2016 FY 2015/2016 FY 2016/2017



5252 Claims Audit Expense 0.00 50,000.00 8,471.18 4,433.33 7,581.58 7,600.00 7,581.58 A7 (18.42) 12,000.00

5253 Claims Admin. Expenses 0.00 1,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Claims Dept Expenses 0.00 51,000.00 8,471.18 4,433.33 7,581.58 7,600.00 7,581.58 (18.42) 12,000.00

5301 Accounting Fees 960.00 1,300.00 1,210.00 692.42 260.00 1,187.00 857.14 E12 (329.86) 1,200.00

5303 Actuary Fees 125,908.52 135,000.00 148,269.66 93,333.33 55,960.75 160,000.00 160,000.00 B16 0.00 180,000.00

5305 Mngmt Maintenance Syst Expense 0.00 30,000.00 54,470.76 37,916.67 61,352.92 65,000.00 65,000.00 B16 0.00 90,000.00

5306 Legal & Professional Fees 299,798.11 275,000.00 179,710.86 175,000.00 78,708.09 300,000.00 158,941.87 E12 (141,058.13) 300,000.00

5310 Third Party Admin.-Willis 843,750.00 675,000.00 506,250.00 393,750.00 337,500.00 675,000.00 675,000.00 B16 0.00 675,000.00

Outside Service Fees 1,270,416.63 1,116,300.00 889,911.28 700,692.42 533,781.76 1,201,187.00 1,059,799.01 (141,387.99) 1,246,200.00

5309 MOCSSIF Agent Commission Exp. 420,442.59 444,442.00 344,570.00 0.00 0.63 398,646.48 398,646.48 B16 0.00 411,216.00

5311 Agent Commission Exp 12,258,873.97 12,669,812.00 12,825,878.22 7,513,277.93 12,543,840.13 12,879,905.02 12,599,052.72 A7 (280,852.30) 13,591,492.00

5312 NJEIF Agent Commission Exp. 408,263.79 443,386.00 456,864.00 0.00 0.72 492,058.76 492,058.76 B16 0.00 506,030.00

5315 ERIC North Agent Comm. Exp. 500,000.00 500,000.00 500,000.00 0.00 296,856.20 500,000.00 500,000.00 B16 0.00 500,000.00

5316 ERIC South Agent Comm Exp 239,548.09 252,806.00 239,872.00 0.00 0.75 248,267.96 248,267.96 B16 0.00 256,823.00

5318 ERIC WEST AG. COMM EXP 350,458.99 323,269.00 371,535.00 0.00 0.02 297,254.87 297,254.87 B16 0.00 306,376.00

5319 BACCEIC Agent Commission Exp 153,939.24 204,383.00 201,505.00 0.00 0.82 208,537.94 208,537.94 B16 0.00 215,508.00

5320 CAIP Agent Commission Expense 152,347.27 128,228.00 168,022.56 0.00 0.09 132,255.44 132,255.44 B16 0.00 136,582.00

Total Agent Commission Expense14,483,873.94 14,966,326.00 15,108,246.78 7,513,277.93 12,840,699.36 15,156,926.47 14,876,074.17 (280,852.30) 15,924,027.00

5401 Claims Expense 71,217,675.16 68,110,411.00 79,557,899.87 39,959,518.67 45,952,542.14 68,502,032.00 68,502,032.00 B16 0.00 68,707,000.00

5402 Change in Claims Reserves 14,387,000.00 0.00 (184,000.00) 0.00 0.00 0.00 0.00 0.00 0.00

5403 Change in Claims Reserves for ULAG 50,662.35 0.00 (66,496.62) 0.00 0.00 0.00 0.00 0.00 0.00

Claims Expenses 85,655,337.51 68,110,411.00 79,307,403.25 39,959,518.67 45,952,542.14 68,502,032.00 68,502,032.00 0.00 68,707,000.00

5502 Reinsurance Exp (Group/Flat) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5505 Reinsurance Exp-District Bill 26,782,841.56 28,130,596.00 29,021,094.05 19,533,575.13 32,163,849.88 33,486,128.80 32,318,500.66 A7 (1,167,628.14) 33,495,926.00

5507 Reinsurance Exp-NJSBAIG Paid 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Reinsurance Expenses 26,782,841.56 28,130,596.00 29,021,094.05 19,533,575.13 32,163,849.88 33,486,128.80 32,318,500.66 (1,167,628.14) 33,495,926.00

5352 IT - Office Equipment Supplies 20,415.50 22,000.00 11,672.12 12,833.33 8,407.13 22,000.00 22,000.00 B16 0.00 27,000.00

5353 Office Equipment Maintenance 29,132.06 36,100.00 15,192.00 25,900.00 8,930.74 44,400.00 39,400.00 B16 (5,000.00) 39,400.00

5354 Computer Software Maintenance 224,458.77 207,500.00 195,587.00 140,443.33 99,169.96 240,760.00 244,291.94 B16 3,531.94 296,760.00

Information Technology Dept 274,006.33 265,600.00 222,451.12 179,176.66 116,507.83 307,159.99 305,691.93 (1,468.06) 363,160.00

5702 Depreciation Expense 322,461.97 454,000.00 369,371.35 285,748.75 273,519.33 489,855.00 468,975.99 E12 (20,879.01) 578,740.00

5/6/2016


NJSIG

Income Statement


KEY:





FY 2013/2014 FY 2014/2015 FY 2014/2015 01/31/2016 01/31/2016 FY 2015/2016 FY 2015/2016 FY 2015/2016 FY 2016/2017



5703 Dues & Subscriptions 41,240.84 34,500.00 28,172.17 17,791.66 21,685.01 30,499.99 39,950.42 E12 9,450.43 89,765.00

5704 Misc. Bank Fees 3,500.03 3,500.00 3,232.36 2,041.67 2,041.68 3,500.00 3,500.00 B16 0.00 3,500.00

5708 Rent Expense 175,453.84 195,000.00 193,191.29 188,714.17 150,826.95 323,510.00 376,949.01 E12 53,439.01 466,697.00

5709 Office Supplies 23,785.71 42,126.00 29,630.80 24,465.00 17,817.82 41,940.00 53,578.05 E12 11,638.05 72,170.00

5710 Office Operating Expenses 93,075.21 105,499.99 85,515.03 50,168.42 71,590.89 86,003.00 84,287.35 (1,715.66) 61,578.00

5711 Office Leased Expenses 23,273.44 29,500.00 31,599.87 16,975.00 17,603.21 29,100.00 35,427.70 E12 6,327.70 39,500.00

5712 Telephone Expense 10,831.50 2,500.00 (2,735.59) 2,858.33 0.00 4,900.00 4,900.00 B16 0.00 2,500.00

5713 Employee Internet Reimbursmt 6,814.57 0.00 1,839.03 0.00 0.00 0.00 0.00 0.00 0.00

5714 Utilities 45,542.37 45,000.00 31,071.52 19,366.67 21,157.26 33,200.00 36,929.59 E12 3,729.58 0.00

5715 Group's Insurance Expense 192,169.87 215,000.00 194,352.20 130,083.33 98,162.91 223,000.00 223,000.00 B16 0.00 225,000.00

5716 Group's Crime Insurance Exp. 80,149.02 47,000.00 35,832.04 27,416.67 21,692.26 47,000.00 47,000.00 B16 0.00 20,000.00

5723 Postage 58,071.89 61,000.00 59,908.79 36,166.67 22,500.69 62,000.00 45,961.13 E12 (16,038.87) 63,500.00

5727 Employee Seminar Expenses 22,758.67 74,749.99 23,427.84 35,000.01 16,199.29 60,000.01 28,915.35 E12 (31,084.66) 110,175.00

5728 Insurance Course Fees 2,129.00 4,200.00 1,087.24 4,375.00 1,992.15 7,500.00 3,415.11 E12 (4,084.89) 8,000.00

5729 Tuition Reimursement 6,165.00 12,000.00 3,930.00 9,851.92 1,310.00 16,889.00 2,245.71 E12 (14,643.29) 21,750.00

5730 Audit Fees 43,350.00 44,225.00 119,927.00 0.00 1,773.00 45,000.00 46,773.00 1,773.00 70,500.00

5731 Consulting Fees 385,792.05 273,500.00 284,114.83 155,166.67 64,900.05 266,000.00 266,000.00 B16 0.00 342,500.00

5732 Miscellaneous Expenses 48,360.35 33,750.00 33,550.19 38,354.17 37,285.73 65,750.00 64,039.17 E12 (1,710.84) 7,450.00

5733 Disaster Recovery Expenses 50,875.15 53,600.00 40,756.37 69,323.33 41,141.93 118,840.00 123,617.86 4,777.87 114,410.00

5734 Building Appraisal Fees 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5735 DOBI Audit Fees 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5737 Employee Cell Phone Expense 14,752.43 17,000.00 13,864.00 10,243.33 8,671.53 17,560.00 16,972.15 E12 (587.85) 19,000.00

5738 540 OPRA Expense 0.00 0.00 0.00 58,333.33 0.00 100,000.00 0.00 (100,000.00) 100,000.00

5807 Ins. Write-off Exp 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5809 Safety Grant Distribution Exp 1,700,000.00 0.00 2,200,000.00 0.00 0.00 0.00 0.00 0.00 0.00

Business Operating Expenses 3,350,552.91 1,747,650.99 3,781,638.33 1,182,444.09 891,871.69 2,072,047.02 1,972,437.60 (99,609.42) 2,416,735.00

5201 Travel Related Expense 187,854.32 301,324.99 156,150.99 100,916.67 72,296.18 173,000.00 139,952.38 E12 (33,047.62) 150,836.00

5851 Annual Meeting 39,175.30 88,100.00 63,783.93 47,600.00 42,596.43 47,600.00 42,596.43 A7 (5,003.57) 50,600.00

5852 Trustee Meeting Expense 13,131.59 24,000.00 16,283.91 14,000.00 7,027.04 24,000.00 12,046.35 E12 (11,953.65) 20,000.00

Conferences & Meeting Expenses 240,161.21 413,424.99 236,218.83 162,516.67 121,919.65 244,600.00 194,595.17 (50,004.84) 221,436.00

Total Expenses 139,690,367.66 123,480,833.96 136,828,724.42 74,600,852.77 96,829,325.04 130,175,197.64 127,487,688.16 (2,687,509.48) 131,955,676.00

5/6/2016


NJSIG

Income Statement


KEY:





FY 2013/2014 FY 2014/2015 FY 2014/2015 01/31/2016 01/31/2016 FY 2015/2016 FY 2015/2016 FY 2015/2016 FY 2016/2017



Other Revenue and Expenses:

4405 Partnership Distributions 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4413 Interest-NJ St Inv Fund 851,500.03 316,110.00 148,514.08 150.50 291.97 258.00 500.52 E12 242.52 258.00

4414 Interest-NJ Cash Mgmt Fund 182.89 17.00 206.25 130.67 291.87 224.00 500.35 E12 276.34 224.00

4415 Interest-Commerce Concentr 178,304.99 30,949.00 162,758.69 100,069.67 106,115.18 171,548.00 181,911.74 E12 10,363.73 152,000.00

4419 Interest - Operating Account 0.37 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

4420 Interest - Certificate of Dep 502,707.65 142,189.00 762,608.96 359,559.67 (814,230.86) 616,388.00 (33,804.86) E12 (650,192.86) 75,000.00

4421 Tri-State Capital Intrst Inc 0.62 0.00 0.61 0.00 0.00 0.00 0.00 0.00 0.00

4422 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Investment Income 1,532,696.55 489,265.00 1,074,088.59 459,910.51 (707,531.84) 788,418.01 149,107.75 (639,310.27) 227,482.00

4501 Gain on Securities (685,704.26) 0.00 (109,794.40) 0.00 0.00 0.00 0.00 0.00 0.00

Financial Income (685,704.26) 0.00 (109,794.40) 0.00 0.00 0.00 0.00 0.00 0.00

4603 Miscellaneous Income 12,618.48 0.00 11,438.56 0.00 1,579.01 0.00 1,579.01 A7 1,579.01 0.00

4605 Seminar Income 6,800.00 0.00 3,865.00 1,895.83 8,390.00 3,250.00 8,390.00 A7 5,140.00 3,250.00

4609 Willis Change in Unrnd Ag Comm 492.42 0.00 (24,791.50) 0.00 0.00 0.00 0.00 0.00 0.00

4610 Willis Change in Unrnd Reins (56,738.94) 0.00 (78,830.10) 0.00 0.00 0.00 0.00 0.00 0.00

4620 Legal Settlement Income 520.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Other Revenues (36,308.04) 0.00 (88,318.04) 1,895.83 9,969.01 3,250.00 9,969.01 6,719.01 3,250.00

5901 Amortization of Inv. Premiums 75,665.76 0.00 32,810.60 0.00 0.00 0.00 0.00 0.00 0.00

5902 Investment Costs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Investment Expenses 75,665.76 0.00 32,810.60 0.00 0.00 0.00 0.00 0.00 0.00

Total Other Revenue and Expenses 735,018.49 489,265.00 843,165.55 461,806.34 (697,562.83) 791,668.01 159,076.76 (632,591.25) 230,732.00

Net Revenue 780,439.55 489,265.03 3,112,223.80 56,036,151.18 31,417,269.90 791,667.99 2,064,333.26 1,272,665.27 230,732.00

5/6/2016


New Jersey Schools Insurance Group 6000 Midlantic Drive


www.njsig.org

2016/2017 Budget PREMIUM INCOME Account # 4105 – 4118 Budget: $ 130,379,676 GROSS PREMIUM Estimated at current levels Workers’ Compensation $ 67,264,966 Property $ 19,414,236 Auto Liability $ 7,110,715 Auto Physical Damage $ 1,081,480 General Liability $ 10,345,211 Boiler $ 1,095,686 E&O $ 16,054,110 Excess Liability $ 4,910,169 Crime $ 613,024 Pollution $ 0 E.D.P. $ 886,593 Retro Income $ 0 Builders Risk $ 0 Workers’ Compensation Supplemental Indemnity $ 1,304,428 Bond $ 299,058 TOTAL $ 130,379,676



www.njsig.org

2016/2017 Budget REINSURANCE RECOVERY Account # 4301 Budget: $ 1,576,000 2016/2017 Reinsurance Recovery Expected (as per Reinsurance Carrier): Plainfield Fire $ 500,000 CAT 68 Pipe Freeze $ 180,000 Edison BOE $ 646,000 Hurricane Sandy $ 250,000 TOTAL $ 1,576,000



www.njsig.org

2016/2017 Budget INVESTMENT INCOME Account # 4406 - 4420 Budget: $ 230,732 Estimated Investment Income $ 230,732 TOTAL $ 230,732



www.njsig.org

2016/2017 Budget SALARIES TEMPORARY EMPLOYEES Account # 5102 Budget: $ 107,500 Claims $ 65,000 Information Technology $ 10,000 Administrative $ 32,500 TOTAL $ 107,500



www.njsig.org

2016/2017 Budget SALARIES Account # 5103 Budget: $ 6,064979 PERSONNEL SALARY EXPENSE 500 – Claims $ 2,389,767 510 – Loss Control $ 548,895 530 – Legal $ 128,750 540 – Administrative $ 745,114 550 – Accounting $ 486,196 560 – Underwriting $ 1,007,257 570 – Information Technology $ 759,000 All increases scheduled for 9/1/2015. TOTAL $ 6,064,979



www.njsig.org

2016/2017 Budget OVERTIME Account # 5104 Budget: $ 3,000 Administrative $ 3,000 TOTAL $ 3,000



www.njsig.org

2016/2017 Budget PAYROLL TAXES Account # 5108 Budget: $ 590,000 Social Security Unemployment tax $ 590,000 TOTAL $ 590,000



www.njsig.org

2016/2017 Budget EMPLOYEE PENSION EXPENSE Account # 5109 Budget: $ 660,312 Pension Expense - Estimated $ 660,312 Defined by the State of New Jersey actuary Based on employer appropriation. TOTAL $ 660,312



www.njsig.org

2016/2017 Budget

RECRUITMENT Account # 5111 Budget: $ 7,500 Help Wanted ads in local newspapers, Careerbuilder.com or Monster.com Administrative $ 7,500 TOTAL $ 7,500

New Jersey Schools Insurance Group 450 Veterans Drive

Burlington, New Jersey 08016 (609) 386-6060 • FAX (609) 386-8877

www.njsig.org

2016/2017 Budget RETIREE MEDICAL BENEFITS Account # 5112 Budget: $ 171,553 This funds the retiree medical benefits account. The NJSIG will pay $500/month for medical benefits to retired employees that have accumulated 25 years of service at a minimum age of 60. The budget amount has been determined by an actuary study. TOTAL $ 171,553



www.njsig.org

2016/2017 Budget EMPLOYEE MEDICAL BENEFITS Account # 5113 Budget: $ 1,245,828 Assumed 6% premium increase. $ 1,245,828 (2015 average increase – 7.4%) TOTAL $ 1,245,828



www.njsig.org

2016/2017 Budget EMPLOYEE DENTAL BENEFITS Account # 5114 Budget: $ 56,400 NJ State Actuary Report recommends $ 56,400 no increase TOTAL $ 56,400



www.njsig.org

2016/2017 Budget EMPLOYEE VISION BENEFITS Account # 5115 Budget: $ 24,720 Flat three year term expires 12/2015 $ 24,720 TOTAL $ 24,720



www.njsig.org

2016/2017 Budget EE HRA BENEFITS Account # 5116 Budget: $ 342,000 Based on 75 employees. $ 342,000 TOTAL $ 342,000



www.njsig.org

2016/2017 Budget EMPLOYEE FSA BENEFITS Account # 5117 Budget: $ 33,000 TOTAL $ 33,000



www.njsig.org

2016/2017 Budget EE SHORT TERM DISABILITY BENEFITS Account # 5118 Budget: $ 75,000 Based on 75 employees TOTAL $ 75,000



www.njsig.org

2016/2017 Budget TRAVEL AND RELATED EXPENSE Account # 5201 Budget: $ 150,836 Claims $ 40,000 Loss Control $ 46,636 Legal $ 5,000 Administrative $ 9,200 Accounting $ 1,000 Underwriting $ 49,000 Information Technology $ 0 TOTAL $ 150,836



www.njsig.org

2016/2017 Budget MARKETING/ADVERTISING EXPENSE Account # 5203 Budget: $ 12,000 Miscellaneous brochure folders training materials and advertising expenses $12,000 TOTAL $ 12,000



www.njsig.org

2016/2017 Budget LOSS PREVENTION MISCELLANEOUS EXPENSE Account # 5227 Budget: $ 175,400 Training Academy Expenses Food for 20 classes @ $150 each $ 3,000 250 folders for classes $ 500 NJ Safety Council – DDC

500 Books @ $13.50 per student $ 6,750 500 Certification @ $10 per student $ 5,000 NJSIGtrain.org $10,000 First Aid/CPR/AED Training $ 2,000 CPI Books & Certificates $ 2,000 Safety Materials Video $ 500 Family Safety Magazine $ 600

Top Health Newsletter $ 600

Safety Awards 45 @ $100 each $ 4,500 Safety Calendars 600 @ $3.25 $ 1,950 Safety Committee Recognition $ 1,000

Awards/Poster/Frames WeTip (discretionary) $ 1,000 Dupont/Coastal/Video Stream $ 3,000 Safe School Online Training $ 125,000 Boiler Seminar $ 8,000 TOTAL $ 175,400



www.njsig.org

2016/2017 Budget CLAIMS AUDIT Account # 5252 Budget: $ 12,000 Claim Audit $ 12,000 Independent auditor reviews claim operation TOTAL $ 12,000



www.njsig.org

2016/2017 Budget ACCOUNTING FEES Account # 5301 Budget: $ 1,200 Accounting Fees $ 1,200 Contractor used to support monthly closing TOTAL $ 1,200



www.njsig.org

2016/2017 Budget ACTUARIAL FEES Account # 5303 Budget: $ 180,000 Two reserve studies, one rating study, and miscellaneous services performed $ 180,000 by independent actuary. TOTAL $ 180,000



www.njsig.org

2016/2017 Budget MANAGEMENT MAINTENANCE SYSTEM EXPENSE Account # 5305 Budget: $ 90,000 School Dude reimbursements are made to members that have maintenance direct (MD) and scored $ 90,000 a minimum of two from School Dude. TOTAL $ 90,000



www.njsig.org

2016/2017 Budget LEGAL AND PROFESSIONAL FEES Account # 5306 Budget: $ 300,000 Archer & Greiner $ 125,000 Employment Law and Bullying Hotline $ 175,000 TOTAL $ 300,000



www.njsig.org

2016/2017 Budget AGENT FEES Account # 5309-5320 Budget: $ 15,924,027 Auto Liability & Physical Damage $ 1,218,247 General Liability $ 1,558,618 Property $ 2,807,305 EDP – Electronic Data Processing $ 131,197 Boiler & Machinery (equipment breakdown) $ 161,124 Auto Liability/General Liability Excess $ 735,393 Workers’ Compensation $ 4,325,906 Errors & Omissions $ 2,388,701 Crime $ 90,688 Bond $ 43,870 Workers’ Compensation Supplemental Indemnity $ 130,443 Pollution $ 0 Sub Fund Agent Commissions $ 2,332,535 TOTAL $ 15,924,027



www.njsig.org

2016/2017 Budget THIRD PARTY ADMIN FEE Account # 5310 Budget: $ 675,000 Broker Fees $ 675,000 Provide retail and reinsurance brokerage services - Willis TOTAL $ 675,000

New Jersey School Insurance Group 6000 Midlantic Drive, Suite 300 North


www.njsig.org

2016/2017 Budget INFORMATION TECHNOLOGY OFFICE SUPPLIES Account # 5352 Budget: $27,000 CD Copies $ 4,000 Cintas Paper Shredding @ 100 per month $ 4,000 Kodak Scanner Supplies $ 1,500 Miscellaneous Expenses $ 10,000 Pitney Bowes Supplies $ 4,000 Shredder Supplies $3,500 TOTAL $ 27,000



www.njsig.org

2016/2017 Budget OFFICE EQUIPMENT MAINTENANCE Account # 5353 Budget: $ 39,400 Avalanche (ML350) 1yr 13x5x4 Support $ 1,000 Dresx1 (Mt. Laurel) DL 380 G5 $ 1,000 Dresx2 (Mt. Laurel) DL 380 G5 $ 1,000 Dresx3 (Mt. Laurel) DL 380 G5 $ 1,000 DR Backup (Mt. Laurel) DL 380 G5 $ 1,000 DR San 4300 (DRISCSI 1) $ 2,800 DR San 4300 (DRISCSI 2) $ 2,800 DR Cisco Router 2901 (DRISCSI 2) $ 800 ESX1 DL380 G6 $ 1,000 ESX2 DL380 G6 $ 1,000 ESX3 DL380 G6 $ 1,000 ISCSI1 SAN 4500 $ 3,000 ISCSI2 SAN 4500 $ 3,000 ISCSI3 SAN 4500 $ 3,000 Kodak Scanner Support $ 4,000 Misc. Hardware Support $ 10,000 Backup $ 1,000 ImageRight Full Text DL 380 G4 $ 1,000 TOTAL $ 39,400



www.njsig.org

2016/2017 Budget COMPUTER SOFTWARE MAINTENANCE Account # 5354 Budget: $ 296,760 1099Pro $ 1,000 Brook Trout Fax Board Software $ 1,000 Cisco Support $ 1,600 Comcast Internet/TV $ 6,000 Escrow Tech for NavRisk $ 1,000 Ethernet 40MB Broadview (Data/Phone) $ 52,800 Go To Meeting $ 700 ImageRight $ 52,800 ImageRight (After 9-5) Support $ 2,000 Micro Scribe (Paperless Board Package) $ 2,360 Microsoft Web Mail $ 4,800 Misc. Software Support/Licensing $ 10,000 NavRisk Programming Projects $ 10,000 Oracle Database Support (STARS) $ 25,000 eFax (Cloud Faxing) $14,400 SSL VPN $ 9,000 STARS Programming Projects $ 10,000 Trend Micro Client/Server Protection $ 4,000 Veeam $ 2,500 VmWare $ 25,000 VmWare (upgrade 5.1 to 6.1) $10,000 VmWare View Licensing $ 7,500 Watchguard (Mt. Laurel/Marlboro) $ 10,000 Windows Server 2012 $ 5,000 Zetafax $ 1,800 Constant Contact Software $ 1,000 Crystal Reports $500 ISO Data Analytics $25,000 TOTAL $ 296,760



www.njsig.org

2016/2017 Budget AGENT FEES CLAIMS EXPENSE Account # 5401 Budget: $ 68,707,000 CLAIMS EXPENSE From Actuary Pricing Study $ 68,707,000 TOTAL $ 68,707,000



www.njsig.org

2016/2017 Budget REINSURANCE EXPENSE Account # 5505 Budget: $ 33,495,926 NET REINSURANCE Auto Liability $ 1,175,998 General Liability $ 1,084,324 Property $ 10,116,908 E.D.P $ 135,408 Boiler $ 869,144 Excess Liability $ 3,915,322 Workers’ Compensation $ 1,497,416 E&O $ 13,528,119 Crime $ 108,958 Bond $ 53,398 Workers’ Compensation Supplemental Indemnity $ 1,010,931 TOTAL $ 33,495,926



www.njsig.org

2016/2017 Budget DEPRECIATION Account # 5702 Budget: $ 578,740 1401 Capital

Monitors 22” LCD Flat Screen $250/each $ 5,000 Desktop Workstations/Thin Clients $1,250/each $ 25,000 All in One Printers (9 Road Personnel) $130/each $ 650 HP Laptop (Upgrades) $1,800/each $ 7,200 Laserjet Printers $2,000/each $ 4,000 LCD Projector $1,800/each $ 3,600 STARS $ 119,250 PeopleSoft (Oracle) $ 14,000 NavRisk $ 70,614 NavRisk Portal $ 21,000 2 Desktop Scanning $200/each $ 400 60 VM Ware View Desktops $200/each $ 12,000 SSL Certs $ 7,000 ImageRight Upgrade $ 50,000 STARS upgrade $ 50,000 New Claims Mgmt system migration $100,000 Upgrade 6 ESX servers (3 MTL, 3DR) $ 50,000 Office Furniture $100,000 Subtotal of Capital – Carry Forward $ 639,714

Continued on next page



www.njsig.org

2016/2017 Budget

DEPRECIATION Account # 5702 1401 Capital

Subtotal of Capital – from Previous Pages $ 639,714

Total Capital 2016/2017 $ 639,714

Total 2017/2016 Depreciation Expenses Budgeted $ 331,624 + Carried forward Depreciation Expenses from

previous years $ 247,116 Budget plus Carry Forward = 2016/2017 Depreciation Budget $ 578,740 TOTAL Depreciation Budget= $ 578,740



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2016/2017 Budget DUES & SUBSCRIPTIONS Account # 5703 Budget: $ 89,765 Claims $ 25,000 Loss Control $ 2,500 Legal $1,995 Administrative $ 56,770 Underwriting $3,500 TOTAL $ 89,765



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2016/2017 Budget MISCELLANOUS BANKING FEES Account # 5704 Budget: $ 3,500 Miscellaneous Banking Fees $ 3,500 TOTAL $3,500



www.njsig.org

2016/2017 Budget RENT EXPENSE Account # 5708 Budget: $ 466,697 Rent and Fees – Mt. Laurel Office $ 466,697 TOTAL $ 466,697



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2016/2017 Budget OFFICE SUPPLIES Account # 5709 Budget: $ 72,170 Office Supplies Administrative $68,670 Underwriting $3,500 TOTAL $ 72,170



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2016/2017 Budget OFFICE OPERATING EXPENSES Account # 5710 Budget: $ 61,578 UAS – Monthly $160 $ 2,400 Coffee Services (ML & DR) $ 4,000 Water Services (ML & DR) $1,000 Paychex $ 48,994 Verizon Wireless Tablet Fee $5,184 TOTAL $61,578



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2016/2017 Budget LEASE PAYMENTS Account # 5711 Budget: $ 39,500 Lease Payments $ 32,000 (copiers, fax machine and Pitney Bowes) Pitney Bowes Postage Machine $7,500 TOTAL $39,500



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2016/2017 Budget TELEPHONE EXPENSE Account # 5712 Budget: $ 2,500 Including long distance & fax lines $ 2,500 TOTAL $2,500



www.njsig.org

2016/2017 Budget GROUP’S INSURANCE Account # 5715 Budget: $ 225,000 Property/Liability $ 225,000 Workers’ Compensation Errors & Omissions Data Breach TOTAL $ 225,000



www.njsig.org

2016/2017 Budget CRIME INSURANCE Account # 5716 Budget: $ 20,000 Crime Coverage $ 20,000 TOTAL $20,000



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2016/2017 Budget POSTAGE Account # 5723 Budget: $ 63,500 Federal Express Postage $10,000 Pitney Bowes - Administrative $50,000 Pitney Bowes Pre-Sort – IT $3,500 TOTAL $ 63,500



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2016/2017 Budget EMPLOYEE SEMINAR EXPENSE Account # 5727 Budget: $ 110,175 Claims $ 10,000 Loss Control $ 12,000 Legal $4,200 Administrative $ 25,625 Accounting $ 5,500 Underwriting $ 17,350 Information Technology $ 35,500 TOTAL $ 110,175



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2016/2017 Budget INSURANCE EDUCATION Account # 5728 Budget: $ 8,000 Claims $ 1,000 Underwriting $ 7,000 TOTAL $ 8,000



www.njsig.org

2016/2017 Budget TUITION REIMBURSEMENT Account # 5729 Budget: $ 21,750 Loss Control $3,000 Administrative $15,750 Accounting $3,000 TOTAL $ 21,750



www.njsig.org

2016/2017 Budget

FINANCIAL AUDITS Account # 5730 Budget: $ 70,500 Nisivoccia, LLP – Fiscal Year End Audit $ 45,500 Nisivoccia, LLP –Special Payroll Audit $25,000 TOTAL $ 70,500



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2016/2017 Budget CONSULTING FEES Account # 5731 Budget: $ 342,500 Consultants for Information Technology, Accounting, Loss Control and Administration Loss Control WeTip and property Inspection $ 50,000 Accounting PeopleSoft $ 35,000 Information Technology $ 35,000 Administrative $ 207,500 CBIZ Crisis Management Retreat My Community Workplace Hay Group Legal One ISO Watson Consulting Legal Atlantic Workforce Solutions $ 15,000 TOTAL $ 342,500



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2016/2017 Budget MISCELLANEOUS Account # 5732 Budget: $ 7,450 Claims $250 Underwriting Storage Facility Files $2,200 Administrative Miscellaneous $1,000 Petty Cash Reimbursements $4,000 TOTAL $7,450



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2016/2017 Budget DISASTER RECOVERY Account # 5733 Budget: $ 114,410 Disaster Recovery Information Technology – Site Costs $ 105,610 Rent $ 56,610 Analog Phone Line $ 3,600 Ethernet Line $ 32,400 ADT – Alarm System $ 2,400 PSE&G $ 5,400 Postage $ 1,200 Comcast/Verizon $ 3,000 Misc. Annual Fees $ 1,000 Administrative – Site Costs $8,800 Cleaning Service $ 4,000 Copier Maintenance $ 4,800 TOTAL $ 114,410



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2016/2017 Budget CELL PHONES Account # 5737 Budget: $ 19,000 $1,500/month x 12 months $ 18,000 Data & International Package Annual Fee $ 1,000 TOTAL $ 19,000



www.njsig.org

2016/2017 Budget OPEN PUBLIC RECORDS ACTS (OPRA) EXPENSES Account # 5738 Budget: $ 100,000 Miscellaneous Administrative Expenses $ 100,000 related to OPRA requests. TOTAL $ 100,000



www.njsig.org

2016/2017 Budget ANNUAL MEETING Account #5851 Budget: $ 50,600 Hotel & Meeting Rooms Expense and Employee Meals $ 6,000 Booth Storage and Freight $ 3,000 NJSIG Booth Space $ 16,000 Union Labor & Booth Furniture $ 3,500 Convention Handouts/Materials $ 3,000 Trustee Accommodations $ 3,600 Badges $ 500 Annual Meeting and Luncheon $ 15,000 Total $ 50,600



www.njsig.org

2016/2017 Budget BOARD OF TRUSTEES MEETINGS Account# 5852 Budget: $ 20,000 $ 20,000 TOTAL $ 20,000



www.njsig.org

1-888-NJ Pool 1


2016/2017 Plan of Risk Management

The Plan of Risk Management (PORM) is required to be submitted to the Department of Banking and Insurance (DOBI) each year. The draft attached is for discussion. The PORM will be on the June agenda for approval. William Mayo William Mayo, CPCU, ARM Executive Director

Rev.: 5/13/16

New Jersey Schools Insurance Group

RISK MANAGEMENT PLAN

2015/2016 2016/2017

Rev.: 5/13/16

TABLE OF CONTENTS Page INTRODUCTION - Mission Statement 1 Coverage Provided, Limits of Liability, Self Insured Retention and Deductibles 2 Property 3 Boiler & Machinery 3 Comprehensive General and Automobile Liability 3 Workers’ Compensation 4 School Board Legal Liability 5 Reinsurance 5 Operational Philosophy 6 General 6 Premium Contribution 6 Agents and Brokers 7 Claims Response and Reserving 8 Standards of Performance 9 General Liability/Auto Liability 9 Workers’ Compensation 11 Property 13 Productivity/Pending Standards 15

Rev.: 5/13/16

TABLE OF CONTENTS Continued Page Legal Claim Handling 16 Claim Payment Procedures 16 Surveillance & Activity Checks 16 Outside Independent Assignments 17 Reporting Guidelines 17 Rehabilitation/Administrative Controls 17 Complaint Handling and Procedures 18 Complaint Procedures 19 General Comments 21 Discretionary Settlement Authority 21 Financial Management 23 Safety and Loss Prevention 24 Standards of Participation 26 Assessment/Dividend Policy 29 Assessments 29 Dividends 30 Closure of Plan Year 32

1 Rev.: 5/13/16

NEW JERSEY SCHOOLS INSURANCE GROUP RISK MANAGEMENT PLAN The mission of the New Jersey Schools Insurance Group, a nonprofit school insurance pool, is to provide the availability of insurance to the New Jersey school districts by offering the best coverage at the lowest possible cost and by providing insurance education and risk management services. I. INTRODUCTION The New Jersey Schools Insurance Group (NJSIG) is a School District Self Insurance Fund formed under the provisions of N.J.S.A. 18A: 18B-1 et. seq. As indicated by the Fund’s name, the NJSIG’s membership is comprised of Boards of Education.

The NJSIG commenced operations in October 1983.

The Fund’s objectives include the following:

1. Providing qualified school districts with a long-term alternative to the

conventional insurance market as a means of stabilizing the otherwise cyclical nature of insurance expenditures;

2. Maintaining a pro-active posture of safety and loss prevention programs specific to issues inherent in modern school district operations;

3. Aggressively evaluating, defending and/or settling claims made against member districts which fall within the coverage’s afforded through the Fund.

4. Maintaining a conservative funding posture in an effort to ensure long-term

financial security for the Fund and, by extension, the membership thereof.

2 Rev.: 5/13/16

II. COVERAGE PROVIDED, LIMITS OF LIABILITY, SELF INSURED RETENTION AND DEDUCTIBLES

A. GENERAL

The NJSIG offers coverage to its member districts either directly or through the commercial insurance market through one or more of the following vehicles:

• Pooled Self Insurance • Excess Insurance • Reinsurance • Individual Contracts

The NJSIG offers its member districts the following coverage’s:

1. Workers’ Compensation and Employers’ Liability

2. Automobile and Equipment Liability, General Liability and Property

Damage;

3. School Board Legal Liability

4. Boiler and Machinery

5. Crime and Position Bonds 6. Electronic Data Processing

7. Excess Liability

8. Supplemental Indemnity 9. Cyber Liability

10. Crisis Management

11. Environmental

The specific limits of liability of the various coverages afforded by the Fund incorporates individual district deductibles, funded self-insured retention, and various jointly purchased conventional and excess/reinsurance policies. Unless specifically stated to the contrary, limits shown in the following sections, shall be considered to be inclusive of applicable pooled self-insured retention.

3 Rev.: 5/13/16

The specific structure of the Fund includes elements of risk retention and risk transfer, which reflects what is believed to be optimal limits of risk retention and transfer. The structure capitalizes on the collective financial and purchasing strength of the districts comprising the Fund’s membership. The Fund also provides for aggregate excess insurance where applicable. B. PROPERTY

1. Limit of Liability $ 400,000,000 $ 450,000,000 Per Occurrence

2. NJSIG Self Insured Retention (SIR) $1,000,000 Per Occurrence

3. Member District Deductible optional $1,000 to $50,000

4. Perils Included see policies “Appendix A”

C. BOILER AND MACHINERY

1. Limit of Liability $100,000,000 per loss

2. NJSIG Self Insured Retention $0

3. Member District Deductible 12 hours/$1,000 - $5,000

4. Policy Sub-Limits/Extensions/Conditions see policy D. COMPREHENSIVE GENERAL AND AUTOMOBILE LIABILITY including Employee Benefits Liability

1. Limit of Liability up to $31,000,000 Per Occurrence

2. NJSIG Self Insured Retention (SIR): $500,000 Per Occurrence

3. Member District Deductible Liability - Options $0-$50,000 Except $1,000 Employee Benefits

4. Insuring Agreement Provides coverage for bodily injury, property damage and personal injury liability to which this insurance applies arising out of the business activities of any member district. See policy for further details.

4 Rev.: 5/13/16

E. WORKERS’ COMPENSATION

1. Limits of Liability: - Workers’ Compensation Statutory benefits as required by the

State of New Jersey - Employers Liability/Occupational $2,000,000 Per Occurrence

Disease

2. NJSIG Specific Self Insured Retention -Workers’ Compensation $1,000,000 - Employers Liability/O.D. $1,000,000

3. Member District Deductible None As respects any one loss and/or accident or diseases and/or claim(s) and/or occurrence(s), including suit(s) brought in connection therewith, the NJSIG Loss Fund shall not be charged with any amount in excess of $1,000,000 as respect any one loss and/or accident or disease and/or claim(s) and/or occurrence(s), including suit(s) brought in connection therewith. F. SCHOOL BOARD LEGAL LIABILITY

1. Limits of Liability Up to $31,000,000 Per Occurrence/Aggregate, per member, claims made from prior acts available

Limit chosen by district subject to retro-

active dates in some cases.

2. Member Deductible: Minimum $5,000 to $200,000 Coverage A 3. Member District Deductible Minimum $5,000 to $50,000 Coverage B 4. Insuring Agreement A: see policy for details

- Wrongful acts 5. Insuring Agreement B: see policy for details

-non monetary damages defense costs. 6. NJSIG Self Insured Retention $0

7. $1,000,000 to $31, 000,000 written as separate coverage with separate terms and conditions – see policy.

5 Rev.: 5/13/16

G. REINSURANCE

A. The NJSIG may purchase reinsurance or excess insurance subject to the terms and conditions of the excess or reinsurer. The NJSIG has purchased reinsurance for the following:

1. Property: The NJSIG cedes 100% net loss per occurrence excess of

$1,000,000 to a maximum of $ 400,000,000 $450,000,000.

2. Comprehensive General Liability and Automobile Liability: The NJSIG retains $500,000 and cedes 100% each and every occurrence on an indemnity only.

3. Workers’ Compensation: The NJSIG places excess statutory limits of

liability and employers’ liability in excess of $1,000,000 per occurrence.

B. The cost of reinsurance is variable depending on values or exposure insured. The final number will be determined by audit at year-end. Based upon known exposure at May 20, 2015 the cost will be as follows:

1. Workers’ Compensation $ 1,492,824 $ 1,497,416 2. General Liability $ 1,063,063 $ 1,084,324 3. Auto Liability $ 1,152,939 $ 1,175,998 4. Property $10,612,835 $10,116,908 5. Boiler & Machinery $ 852,102 $ 869,144 6. Excess Liability $ 3,838,551 $ 3,915,322 7. Errors & Omissions $13,262,862 $13,528,119 8. Electronic Data Processing $ 132,753 $ 135,408 9. Crime/Bond $ 106,821 $ 162,356 10. Supplemental Indemnity $ 919,028 $ 1,010,931

___________ _________ $33,486,128 $33,495,926 III. OPERATIONAL PHILOSOPHY

A. GENERAL

As is the case with any organization, an established operating philosophy, formalized in documentation such as this, is a necessary precursor to success. This section of the Risk Management Plan is developed to provide general instruction for employees and providers of service to the Fund. Also included here are sections, which restate (and amplify) the roles and responsibilities of important parties and stress the importance of activities upon which the long-term success of the Fund will hinge in whole or in part.

6 Rev.: 5/13/16

B. SUB FUNDS

NJSIG has divided the state into 7 geographical groups known as sub funds. An eighth group of members (non-geographical) encompasses the entire State. Therefore, there are 8 sub-groups of members called sub funds. These sub funds have no decision making authority relative to the operation of NJSIG. Sub fund governing documents do not supersede NJSIG bylaws and Plan of Risk Management (PoRM). Each sub fund is individually rated for workers’ compensation (WC) based on that particular sub fund’s loss profile. This rating is performed yearly by an independent actuary. The implemented rates are evaluated by the NJSIG actuary to ensure the appropriate assessment is collected. A sub fund administrator is assigned to each of the 7 geographical sub funds. That administrator is an insurance broker which has demonstrated school board risk management expertise. The administrator/NJSIG relationship is defined by a contract. That contract is reviewed and approved by the NJSIG Trustees. NJSIG members are assigned to a sub fund by the NJSIG Underwriting Department in conjunction with the sub fund administrator. Continued membership in the sub fund is predicated on that member meeting the minimum standards of participation and maintaining the required loss profile as defined by the eligibility requirements listed in the Safety and Loss Prevention section of this PoRM. Members may be removed from a sub fund (see Article III, Section 21, Subsection a, Eligibility Requirements) if they do not meet the eligibility requirements as defined in the Safety and Loss Prevention section of this PoRM upon recommendation of the NJSIG Loss Control Manager.

C. PREMIUM CONTRIBUTION

1. By May 15th of each year, the Actuary shall compute the probable net cost for the upcoming Fund year by line of coverage.

2. The annual assessment of each member school district shall be its pro-rated share of the probable net cost for the upcoming year for each line of coverage as computed, giving consideration for experience modifiers.

7 Rev.: 5/13/16

3. The Trustees may approve the division of the Group into one or more

sub funds for rating or other purposes. A district’s right to continue membership in a particular sub fund for the full term of its membership with the Group is contingent upon meeting the eligibility requirements defined in this Plan of Risk Management.

* See note to “D” General Auto Coverage and Workers’ Compensation

4. The calculation of contribution for each school district shall be based on the overall Fund year budget. Contributions may be modified to reflect the

Loss History or other pertinent data of the individual districts.

5. The total amount of each member’s annual assessment shall be certified by majority vote of the Trustees to the governing body of each member school

district at least one (1) month prior to the beginning of the next fiscal year, provided the district has sent in required renewal information, and where necessary insurance or reinsurance is in place to support the quote.

6. The annual assessment shall be paid in twelve (12) installments in the case of workers’ compensation and one installment for all other coverage’s.

7. In the event the final budget passed in June necessitates changes in the annual

assessment, a second installment shall be made to reflect this difference. (This is being said because regulations require us to say it. In the Group's history, this has never happened.)

D. AGENTS AND BROKERS

Member districts are encouraged but not required to retain the services of their

own agent or broker. Services expected of agents and brokers are as follows: a. The Agent or broker designated by the member district shall be

retained in conformance with applicable State Law or regulation.

b. Agents or Brokers shall be paid by the Group a fee as defined in the risk management fee policy updated May 20, 2015. This fee is added to the premium contribution of that member district.

c. The Agent or Broker’s specific responsibilities shall include but not be

limited to:

(1) The evaluation of the district’s exposures.

8 Rev.: 5/13/16

(2) The explanation of the various coverages available from the Group.

(3) The preparation of reports, applications, statements of values,

etc., required by the Group.

(4) The review of the school district’s premium contribution and assisting in the preparation of the district’s insurance budget.

(5) The review of the losses and engineering reports and providing assistance to the school district’s safety committee.

(6) Assisting in the claims settlement process.

(7) Attendance at the meetings of the Trustees is encouraged and the performance of such other services as required by the school district or the Group.

(8) Attendance at sub fund meetings by the named broker of record

relative to their member districts.

d. The Agent or Broker shall be a New Jersey licensed Property/Casualty Insurance Producer who has demonstrated and provided proof of prior experience in the management of public entity insurance risks. The Agent or Broker shall have at least a $5,000,000 errors & omissions limit.

E. CLAIMS RESPONSE AND RESERVING

1. CLAIM DEPARTMENT STATEMENT

a. Customer Service The goal is to provide extraordinary claim service to all member districts, as our membership ultimately determines the degree of success of our department. Of significance is the strong need to have all our members feel a partnership in developing case conclusions.

b. Quality Services

Departmental procedures in the claim handbook have been developed to meet the present and future needs of our members. Such procedures are constantly reinforced with pride in "doing things right the first time", thereby building membership loyalty. Getting consistent results is the clearest measure of quality services.

9 Rev.: 5/13/16

c. Productivity through People

The department's services are truly "people intensive" as people are considered the highest value. All business begins with people as clients. Likewise, the support staff of the department will provide extraordinary member service as partners with the membership.

d. Integrity

There are no degrees of integrity. "Doing what we say and when we say it will be delivered" is the cornerstone of integrity as is honesty, fairness, ethics and legality. There is never room for compromise around integrity.

e. Reporting

In addition to the following reporting and other requirements, any member district shall have access to their files in our computer system.

STANDARDS OF PERFORMANCE

2. GENERAL LIABILITY/AUTO/E&O

a. Coverages

Claims will be promptly reviewed for coverage with the expected result being a prompt, accurate coverage determination. If there is a question on coverage, the issues will be documented and the matter reviewed. If issues of coverage remain, the matter will be referred to general legal counsel or coverage counsel with a request for a timely determination. Excess and/or reinsurance carriers will be informed as needed. Upon determination of coverage, any remaining questions or issues will be documented and communicated to the covered party with a reservation of rights document.

b. Initial Technical Processing

New losses are assigned promptly and entered into the claim system within one business day of receipt. Appropriate initial reserving is completed. All bodily injury/emotional distress cases are filed with ISO Claim Search.

c. Clerical Processing

An insured acknowledgement letter is sent out upon file set up with a copy to the broker.

10 Rev.: 5/13/16

d. Insured/Claimant Contact

1. All insureds must be contacted within one business day of assignment to the claim handler.

2. Unrepresented claimants should be verbally contacted within two business

days of assignment.

3. Claimant attorneys should be contacted verbally within three business days of assignment, followed up by a confirmation letter.

e. Investigation

1. All claims involving serious exposure, and/or questionable liability,

whenever possible a statement that is either written or recorded will be obtained from an unrepresented claimant(s).

2. All cases where there is an expectation that a claim will be made, it will

require a full detailed investigation relative to exposure, liability and subrogation/mitigation.

3. In cases involving serious exposure and/or discrepancies of fact(s), if a

witness exists, a statement should be taken, as soon as their identity is known or within (30) thirty days of assignment.

f. Reporting and Communication

1. The claim file should be posted with all significant file developments.

General correspondence should be answered in a reasonable timely fashion depending on the request.

2. All reserves over $75,000 should be reviewed and approved by the

supervisor and/or management.

3. All reserves over $125,000 should be reviewed with and approved by the Assistant or Claim Manager.

4. Claims that are 50% of retention, catastrophic losses or that meet the

criteria under any of our reinsurance or excess reporting guidelines shall be reported to the reinsurer/excess carrier immediately.

5. All files must be on supervisor’s diary. All files must be on the claim

handler’s diary. Updates must be provided to the insured or their broker upon request.

11 Rev.: 5/13/16

g. Direction

Initial and subsequent supervisory direction should be noted in file. Reserves should be updated when appropriate. Effective diary control shall be maintained. Supervisor approval is required for any independent experts needed and not on our approved vendor listing and the claim handler must obtain the qualification and rate structure.

h. Recovery/Subrogation/Contribution

1. Subrogation recovery and /or contribution potential for all claims shall be

properly recognized and investigated and documented in the claim file.

2. Any subrogation, compromise or closure without recovery must be approved by management. Recovery/contribution shall be properly followed up on and concluded conducive toward maximizing the Insured's/Group's objectives and interests.

j Disposition

All claims should be finalized at the earliest possible time or after special damages are verified, and liability is known. Evaluation/authority should reflect liability, damages and mitigation. Negotiations should commence as soon as the above occurs.

j. General

1. Proper initial loss codes shall be utilized. Loss Control is to be notified as

to any condition which should be corrected to prevent future occurrences. Loss Control will do a follow up to make sure the condition is brought to the attention of the appropriate district representative.

2. For all physical damage automobile losses where damages exceed

$1,999 the vehicle must be inspected by an independent auto appraiser within five business days of assignment and concluded within ten business days. Two estimates must be obtained where damages are less than $2,000 and reviewed for reasonableness by the claim handler before payment is made.

3. CMS reporting under Section III will be complied with in all qualifying

cases.

12 Rev.: 5/13/16

3. WORKERS' COMPENSATION

a. Coverages

Coverage issues are promptly recognized, reviewed with management and resolved properly.


New losses are assigned promptly and entered into the claim system within one business day of receipt. Appropriate initial reserving is completed. All lost time cases are filed with ISO Claim Search.


An insured acknowledgement letter is sent out upon file set up with a copy to the claimant. A medical authorization request letter and medical only acknowledgement letter are sent within two business days of request.

d. Insured/Claimant Contact

All insureds must be contacted on lost time cases within two business days of assignment.

e. Investigation

1. All claims involving questionable medical casualty, serious exposure, or

subrogation, the claimant should be interviewed or statement obtained.

2. All cases involving questionable medical casualty, serious exposure, or subrogation, detailed insured investigation should be accomplished.

3. In cases involving discrepancies of fact(s), if a witness exists a statement

should be taken as soon as their identity is known or within (30) thirty days of assignment.


1. The claim file should be posted with all significant file developments.

General correspondence should be answered as dictated by the claim file or on diary, whichever is first.

2. All reserves combined over $75,000 should be reviewed and approved

by the supervisor and/or management.

13 Rev.: 5/13/16

3. All reserves combined over $150,000 should be reviewed with Claim Manager.

4. Claims that are at 50% retention, catastrophic losses or that meet criteria

under any of our reinsurance or excess reporting guidelines shall be reported to the reinsurer/excess carrier immediately.

5. Insured should be periodically updated as to status of all loss time cases.

Light duty must be explored in all cases.

g. Direction

Initial and subsequent supervisory direction should be noted in file. Reserves should be updated when appropriate. Effective diary control shall be maintained. Expense control should be maintained through proper utilization of outside services. Outside services must provide a pricing list for their services indicating charges as well as proof of insurance, if not on the approved vendor list.

h. Recovery/Subrogation/Contribution

1. Subrogation potential for all claims shall be properly recognized and investigated and documented in the claim file.

2. Subrogation/contribution shall be properly followed up on and

concluded conducive toward maximizing the Insured's/Group's objectives and interests.

i. General

1. Proper initial loss codes shall be utilized. Loss Control is to be notified as

to any condition which should be corrected to prevent future occurrences. Loss Control will do a follow up to make sure the condition is brought to the attention of the appropriate district representative.

2. Compensability analysis shall be proper and in accordance with State

Law.

3. Initial indemnity payment on all loss time cases shall occur within twenty one business days of receipt of loss.

4. Medical bills should be process/paid within ten business days of

receipt. 5. Lost wages/permanency are to be properly calculated based on current law

and disability chart. Disability chart is updated by the State annually.

14 Rev.: 5/13/16

6. Physician contact and control is completed based on the treatment plan

through our managed care company along with our in-house team.

7. CMS reporting under Section III will be complied with in all qualifying cases. FROI and SROI must be complied with in accordance with state law.

4. PROPERTY

a. Coverages

Claims will be promptly reviewed for coverage with the expected result being a prompt, accurate coverage determination. If there is a question on coverage, the issues will be documented and the matter reviewed. If issues of coverage remain, the matter will be referred to general legal counsel or coverage counsel with a request for a timely determination. Excess and/or reinsurance carriers will be informed as needed. Upon determination of coverage, any remaining questions or issues will be documented and communicated to the covered party with a reservation of rights document.


New losses are assigned promptly and entered into the claim system within one business day of receipt. Appropriate initial reserving is completed. Any loss involving asbestos, mold or any environmental hazard must be reported to the environmental impairment liability carrier.


An insured acknowledgement letter is sent out upon file set up with a copy to the broker.

d. Insured Contact

An insured acknowledgement letter is sent out upon file set up with a copy to the insured. Verbal contact with the insured business administrator within one business day of assignment and scope of damages must be documented in the claim file.

15 Rev.: 5/13/16

e. Investigation

An independent property appraiser from our approved vendor list should be assigned to verify damages, cause of loss and provide appraisal estimate for repair or replacement. This physical inspection must be completed within three business days of assignment. If no inspection is warranted receipts, purchase orders or other substantiated documentation must be obtained to verify and pay the loss. A police report must be obtained where there may be subrogation. All losses that may exceed $35,000 must be assigned to subrogation counsel.


1. The claim file should be posted with all significant file developments. General correspondence should be answered in a reasonable timely fashion.

2. All reserves over $75,000 should be reviewed and approved by the

supervisor.

3. All reserves over $150,000 should be reviewed and approved by the Assistant or Claim Manager.

4. Status/updates must be provided to the business administrator at no

longer than (30) thirty day intervals. 5. Claims that are reserved at 50% or more of retention or where there is a

major loss must be reported to our excess/reinsurance carriers as soon as possible.

g. Direction

Initial and subsequent supervisory direction should be noted in the claim file. Reserves should be updated when appropriate. Effective diary control shall be maintained. Expense control should be accomplished through proper utilization of outside services/experts. Supervisor approval is required for any independent experts needed and not on our approved vendor listing.

h. Recovery/Subrogation

Subrogation potential for all claims shall be properly recognized, investigated and documented in the claim file.

16 Rev.: 5/13/16

Subrogation shall be properly followed up on and concluded toward maximizing the Insured's/Group's objectives and interests. Any subrogation compromise or closure without recovery must be approved by the Claim Manager.

i. Disposition

1. Loss and damage information shall be properly verified. 2. Statement of loss prepared where necessary and authorization requests

in the file shall be timely and of good quality. 3. Depreciation shall be considered and applied, where appropriate. 4. Proper deductible shall be applied.

j. General

Proper initial loss codes shall be utilized. Loss Control shall be notified as to any losses/occurrences which could constitute a future risk, that is another loss/occurrence which may happen if there is no intervention or correction of the risk. Loss Control will notify the insured of the correction needed and follow up to make sure it is addressed.

5. PRODUCTIVITY/PENDING STANDARDS

a. Pending Guidelines

Claim Representative to 150 Field Claim Representative to 75 Sr. Claim Representative to 175 Claim Examiner to 200 Medical Claim Assistant to 125 Claim Supervisor shall have up to six adjusters under their direct supervision, with all adjuster files on an "override" diary.

b. Productivity Guidelines

1. The goal is for all technical personnel to maintain a "one for one" on average for files opened/closed, conducive with maintaining a stable pending within the pending guidelines.

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2. All technical personnel, on average, can receive two new files

assignments per day. Claim Assistant, can receive three to six new assignments per day.

6. LEGAL CLAIM HANDLING

a. Counsel Billing 1. Counsel billings must be on a per case basis. The itemized bill must

contain a description of each charged activity, the date of service and the time allocated for each activity. The bill must indicate the total time spent, the hourly approved rate, and the total charges. The file handler is expected to audit each bill and communicate with counsel on overcharges in terms of rates or activities conducted.

b. Legal Handling

1. On a general note, legal handling of counsel should be confined to the work, which only a lawyer is qualified to do. Investigative activities, etc. should generally be conducted by the file handler. As to negotiations, once suit is filed, generally defense counsel will handle. However, if a particular claim and the circumstances are such that it would be more advantageous to have the claim handler negotiate, then the claim handler should negotiate the claim. All negotiations should be documented in the file and formal notification will go out to the defense attorney to advise him/her of same.

7. CLAIM PAYMENT PROCEDURES

a. All indemnity payments, other than medical on all lines, are to be requested

via completion of the input payment screen in the risk management information system (RMIS). Use of the repetitive payment option is recommended on long term compensation claims.

b. On bill payments, once a medical, legal, or service bill is determined to be

proper, the claim handler highlights the amount to be paid, initials and dates it, indicates the payment and coverage kind and sends it to the bill processor for payment. A check of prior payments must be made to eliminate duplicate payments. Bills are to be paid within 10 calendar days of receipt, unless further clarification is necessary. IRS numbers found in the RMIS rolodex are to be used with all payments.

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8. INCOMING/OUTGOING CORRESPONDENCE

a. All incoming mail is date stamped on same day received and placed in ImageRight as a task for the respective claim handler. Before the end of the business day, the claim handler will process the task, and determine if it needs to be worked on as a priority or work it on diary.

b. Any correspondence not identified within two business days will be brought to the

attention of the claim handler's supervisor for further action. c. If after two business days of receipt such correspondence still cannot be matched,

supervisor will confer with the Claim Manager to decide upon a duplicate file set up.

d. All outgoing correspondence when typed will be "proofread" by the claim handler,

signed and placed in the out bin or copied to the file. The claim handler or file clerk will then make sure a copy of such outgoing correspondence is placed into the ImageRight file, and place into the mail the original correspondence. This entire procedure should take no longer than one business day.

9. SURVEILLANCE & ACTIVITY CHECKS

a. This activity is conducted on cases of extended disability cases where the

medical information does not coincide with the claimant's reported activity and cases on which fraud is suspected. Discuss planned checks with the insured prior to initiation.

b. Activity checks on benefit recipients in fatal and permanent total

compensation cases must be conducted every six to twelve months. c. All cases where surveillance is indicated, supervisory authorization must be

approved and indicated in the claim file.

10. OUTSIDE INDEPENDENT ADJUSTERS ASSIGNMENTS

a. First level of priority for files needing "Field Work" shall be our internal staff.

b. If internal staff is unable to handle due to "volume" or lack of specialty in a particular claim area, approval for outside assignment must be given by file handler's supervisor. If supervisor agrees with outside recommendation, such approval shall be indicated in the claim file and shall further be recorded in the independent assignment log.

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c. Only Independents on the Group's "approved" list shall be utilized.

d. The claim handler maintains direction and control of the independent. The claim handler based on the independent’s submission will make a liability assessment, reserve adjustments and determine the need for further work. Updates by independents are required at 30 day intervals.

11. REPORTING GUIDELINES

Claim handling reporting should be entered into the attachment screen of the claim file. These reports should be brief and to the point. Long dissertations, except in unusual circumstances, are both unnecessary and unwarranted.

Time limitations are as follows:

For workers’ compensation/lost time cases, the report should be on the attachment

screen within ten business days from receipt of the claim by the claim handler. For general liability it will be fifteen business days; and for property it will be fifteen business days.

12. REPORTING GUIDELINES WORKERS’ COMPENSATION

Workers’ Compensation (Lost Time Cases) within ten business days from receipt by the claim handler.

1. Occurrence/Accident Description 2. Compensability Accepted/Denied – if denied explanation 3. Accepted/Injury 4. Subrogation 5. Follow up action plan (treatment, disability petition) 6. Reserve

The above information should be entered into the attachment screen with the category noted in the claim file. This information should be brief and to the point with an explanation in each category.

13. REPORTING GUIDELINES GENERAL LIABILITY/AUTO /E&O

General Liability/Auto /E&O within fifteen business days from receipt by the claim handler.

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1. Description of Loss/Occurrence 2. Liability 3. Damages 4. Follow-up action plan

5. Reserves


14. REPORTING GUIDELINES – PROPERTY WITHIN FIVE BUSINESS DAYS FROM RECEIPT BY THE CLAIM HANDLER.

Property 1. Description of Loss/Occurrence 2. Coverages 3. Damages/Scope 4. Follow-up action plan 5. Reserve


15. REHABILITATION GUIDELINES - ADMINISTRATIVE CONTROLS

a. Criteria to be used in determining when a file should be referred for medical

rehabilitation.

1. The following cases should mean immediate referrals:

- Spinal Cord Injuries - Serious Head Injuries - Amputations - Severe Burn Cases - Crush Injuries - Heart Problems - Stress -Related Disorders - Serious Eye Injuries - Complex Regional Pain Syndrome (RSD)

21 Rev.: 5/13/16

2. Other possible referrals within the first 8-10 weeks post-injury could include:

- Herniated Disc - Multiple Fractures - Exacerbation of Pre-existing Condition - Exacerbation of Congenital Condition - Extensive Over-treatment for an Obvious Soft Tissue Injury A focus of rehabilitation is to assist the claimant in positive re-direction of his/her abilities, as well as to coordinate the medical aspects of the disability. Early identification and resolution of the barriers preventing a return to the labor market. All referrals are to be made to our staff rehabilitation nurse. If our staff is unable to handle due to “volume” outside assignment shall be discussed with the supervisor, who will provide approval on the assignment, and enter in the rehabilitation nurse assignment log.

16. COMPLAINT HANDLING AND PROCEDURES Complaint Handling

A consumer complaint may come from members, claimants, insurance departments, media, various organizations and businesses.

There are reasons that create a complaint. Review of the following may assist in reducing the number of complaints:

a. First -Time Communication

1. Improper conduct by employee or the independent

adjuster-appraiser.

2. Questionable claim handling.

3. Unreasonable delays. 4. Questionable business practices.

b. Second - Time Communication

1. Ineffective explanation as to how the claim was adjusted, to

policy owner, claimant, etc., etc.

22 Rev.: 5/13/16

2. Inadequate file documentation 3. Mistakes on the file 4. Failure to follow-up with member, claimant, and other

interested parties when requested. A complaint is an opportunity to re-sell our position and to demonstrate the organization’s commitment to service. This does not necessarily require a change in our position, but it most certainly requires a very prompt response. Resolution should occur within a few hours; surely within one business day. If the matter cannot be resolved in this length of time, the person complaining must be contacted with an explanation of the time they will receive a response. If possible, the person charged with the responsibility of the file should resolve the complaint.

Mail or phone inquiries from the Insurance Department office and those complaints that can be handled on initial contact, need not be logged, all other complaints must be responded to within one business day. The following should be documented in case there is a re-opening of the inquiry.

Those verbal complaint-inquires that cannot be initially resolved and those received in writing should be handled in accordance with the following complaint procedure.

Responses to complaints must be factual with no subjective comments. Supervisor must avoid becoming “Super Adjusters”. However, they are responsible for prompt and just resolution of the complaint.

Complaints are always reduced when the file is handled well the first time.

17. COMPLAINT PROCEDURE

a. Origin of the Complaint b. Date Complaint is received in our Claim Department.

c. Our Completion and Routing

It is very important for the initial completion to be timely, accurate and with prompt follow up routing. Please handle as follows.

23 Rev.: 5/13/16

1. When the complaint is received, the person receiving the complaint

will complete all applicable sections except the final disposition action. Please provide a clear, concise description of the complaint. All documents that accompany the complaint will be attached to the original, with a copy made for the Claims Manager.

2. Compliant Form Distribution - Original and one copy, with

attachments, to claim handler’s Supervisors for review and comments to claim handler on how the complaint can be used as a training tool.

3. Other Distribution - Claim Manager

Complaint Log

c. Update and Diary

1. Supervisor should diary for a complaint resolution within two business days.

2. Claim Manager should diary after five business days to

determine that all complaints are properly handled.

d. Resolution

1. When the complaint is resolved, fill-out the steps taken/final resolution section, including the following:

a. Brief description of resolution; be specific and relate

the facts of complaint only.

b. Attach copies of any letters or file notes that will become part of the permanent complaint file.

REMEMBER:

The complaint files are permanent records and subject to review by authorized individuals, such as State Insurance Department, attorneys, etc.

c. Claim Manager should diary review all correspondence

before it is sent out.

24 Rev.: 5/13/16

2. If complainant is not satisfied with our response they can go

up the chain of command for resolution or clarification. The Claim Manager is responsible for making sure all are aware of the issues. This should be done via telephone or/and email to the NJSIG Board President or designee as soon as possible.

18. GENERAL COMMENTS

1. Complaints from the media, consumer groups, outside vendors, or other

external customers must be immediately referred to the Executive Director. Any reply must be reviewed and authorized by the Claim Manager.

2. Response to Insurance Department complaints should be immediate, with a

written response no later than two business days after receipt.

3. Other complaints also need immediate response and again should be resolved within two business days.

19. DISCRETIONARY SETTLEMENT AUTHORITY

As part of their service contracts with the Group, the Group will pay workers' compensation medical and wage loss benefits when such payments are warranted and within the requirements of the law and the guidelines and policy of the Group or as ordered by a court. In the majority of cases, it will be whether or not liability exists in a particular case, and proper statutory benefits will be paid promptly.

There will be some claim, however, where either liability or the amount of benefit due is contested. It is unnecessary and unproductive to litigate every such case, as the administrative procedures are lengthy and costly. Therefore, the Group and the Executive Director must have the authority to settle such cases with claimants on behalf of the Group.

Therefore, the Board establishes the following procedures for the settlement of contested workers’ compensation claims including Section 20 Settlements:

25 Rev.: 5/13/16

Settlement Authority Grade Level

$1—$500 Bill Processor, Medical Claim Assistant 10-11 $501 - $60,000 Claim Rep. & Senior Claim Rep. 13-14

$60,001-$120,000 Claim Examiner, Claim Legal Examiner 15-16

& Field Claim Rep.

$120,001-$175,000 $200,000 Claim Supervisor 17

$175,001-$225,000 Eliminate Assistant Claim Manager 19 $225,001 $200,001-$299,999 Claim Manager 20 All of the above authorities would be given based on Claim Manager’s discretion.

26 Rev.: 5/13/16

DISCRETIONARY SETTLEMENT AUTHORITY

On all errors & omission claims, the insurer retains all rights of settlement authority. The Group will pay Personal Injury Protection medical, wage loss, and other benefits when such payments are warranted and within the requirements of the law and the guidelines and policy of the Group. On all liability lines the following authority levels will apply:

Settlement Authority Grade Level $1—$5,000 Bill Processor 10 $5,001 - $35,000 Claim Rep. & Senior Claim Rep. 13-14 $35,001-$60,000 Claim Examiner, Claim Legal Examiner 15-16 & Field Claim Rep. $60,001-90,000 Claim Supervisor 17 $90,001-$120,000 Claim Manager 20 $120,001-150,000 Claim Manager and Group Attorney 20 $150,001-$200,000 Claim Manager, Group Attorney 20 & Committee Rep. $200,001-Up Board of Trustees

All of the above authorities would be given based on Claim Manager’s discretion.

Note, it is recognized that where the Board of Trustees has approved authority and certain contingencies arise that more settlement authority is required. It may be impossible to reconvene the Trustees in a timely manner to further consider previously recognized authority. The Trustees authorize the Claim Manager, NJSIG legal counsel and one member of the NJSIG Claim Committee for the purpose of extending additional incremental authority on such previously extended cases, in an incremental amount not to exceed 120% of the original extended authority. All such situations falling within the parameters of this scenario shall be reported by the Claim Manager to the Trustees at the next regularly scheduled Trustee meeting.

27 Rev.: 5/13/16

DISCRETIONARY SETTLEMENT AUTHORITY Establishment of Claims Committee: In the event settlement authority is needed before the next regularly scheduled meeting, a Claims Committee shall be established. The Claims Committee shall be comprised of the Claim Manager, the Group attorney and up to three Board of Trustee Members. The Claims Committee shall have authority to approve claims at or above the threshold established for the Board of Trustees, provided that the amount is recommended by both the Claim Manager and the Group attorney. All three Trustee participants (NJSIG Chairman, NJSIG Vice-Chairman and one of the NJSIG ASBO Trustee Representatives) will be notified of any such meetings, however, only one Trustee is required to participate in order to extend settlement authority, in addition to the Claim Manager and NJSIG legal counsel. Agreement by a simple majority of attendees, along with the recommendation of the Claim Manager and NJSIG legal counsel, be sufficient to establish claim settlement value. 20. FINANCIAL MANAGEMENT Consistent with the objective of serving as long a term vehicle through which to stabilize the costs associated with the insurance coverages, the underlying premise of the Group's financial base shall be one of conservative up-front funding, prudent investment of idle funds, and maintenance of stringent paper and audit trails. As is the case with all other aspects of the Group, the financial assets of the Group are considered as monies held in public trust. Treatment and handling of these funds must be accomplished in a manner which reflects the stewardship obligation of those whose hands through which they pass. All actuarial, investment, treasury and banking functions of the Group are to be accomplished in a manner outlined in the Group’s bylaws. 21. SAFETY AND LOSS PREVENTION Every dollar spent to compensate for an avoidable loss, whether it is for property, workers' compensation or any other coverage afforded through the NJSIG, is a dollar, which might better have been used to educate a student in a member district. In an effort to avoid a preventable loss and the financial and human hardships that result there from, the NJSIG (operating through the District Safety Committee) will implement safety and loss control programs and procedures directed at reducing or eliminating conditions or practices which lead to loss. These programs, implemented in progressive steps, will include items such as: a. STANDARDS OF PARTICIPATION The following are the minimum standards for membership in the NJSIG.

28 Rev.: 5/13/16

Minimum Risk Management Standards

The following are the minimum safety and loss control standards from the NJSIG Board of Trustees:

1. The district board must adopt a policy that demonstrates the district's

commitment to the safety of students, employees, the public and the property and other resources of the district. This policy must clearly identify the specific accountabilities of the superintendent and other district officers.

2. The district superintendent and/or business administrator must direct the

risk management, safety and loss prevention efforts (District Safety Coordinator).

3. If the superintendent and/or business administrator elects to delegate

specific administrative responsibilities to other officers or staff, these responsibilities and the scope of authority must be clearly defined and documented. Top administrators will be ultimately responsible for the program regardless of delegation.

4. Each district must have a formal, documented safety and loss control program,

which would contain the following minimum specific elements:

a. The District Safety Policy.

b. Identification of the officers, staff and specialists charged with the responsibility for the administration of the Risk Management, Safety and Loss Prevention program and description of their respective responsibilities.

c. Procedures for, and frequency of surveys, inspections and incident

reporting conducted by district personnel to identify potential exposures to loss.

d. Procedures for continuous review and analysis of loss experience

reports.

e. Methods and criteria used by the district to monitor and evaluate the performance of the district Risk Management, Safety and Loss Prevention program. This includes the administrative and supervisory staff people to be held accountable during evaluations for meeting safety related goals.

f. Procedures for investigating and reporting injuries or property loss in

the district.

29 Rev.: 5/13/16

5. Each district must have a documented safety awareness program for its

employees that will consist of at least the following:

a. Indoctrination safety training for new employees.

b. Regular in-service safety training for existing employees. (Both professional and non-professional)

c. Monthly safety meeting or contacts for all employees.

6. Each district must adhere to the NJSIG Claims Procedures for the reporting

and handling of claims. 7. Each district must have an active district level Safety Committee which at the

minimum:

a. District superintendent is chairperson.

b. Includes principals and service department managers.

c. Meets monthly.

d. Documents all of its meetings and recommendations.

e. Reviews and recommends action on all safety suggestions from safety inspections or suggestions made by employees.

f. Reviews accidents on a regular basis.

8. Each district must have a regular and documented safety inspection policy

and program for the district and individual school sites. 9. Districts must comply with Department of Education regulations relating to

pupil transportation:

a. Drivers with more than 12 points or 2 or more "at fault" accidents during the preceding five years must not be used to transport students.

b. For non-ownership and hired automobile coverage, a contract bus

company must have a minimum of $2,000,000 in automobile liability coverage.

30 Rev.: 5/13/16

10. Districts must have for other district vehicles:

a. Motor Vehicle Record review at least annually on all drivers/operators.

b. Investigation of all accidents/incidents involving a district vehicle.

c. A documented, regular, pre-operational inspection check program

for each vehicle. 11. Each district must respond to NJSIG audits and inspections in writing within

30 days after the receipt of the report. 12. Each district must have a collection and review process for Certificates of

Insurance for events/projects being held/started on district property. 13. Each district will perform accident investigations. Any "lost time" accident

must be investigated by a school principal or service department head. The investigation of medical-only injuries may be delegated.

14. Each district will establish and actively manage a modified duty program for

both professional and non-professional employees. 15. Each district must be working toward compliance with mandated State and

Federal programs (i.e., Hazardous Materials Communications, Underground Tanks, Hazardous Waste Management, AHERA Regulations, Disaster Preparedness, etc.)

16. The panel physician program will be used exclusively for medical or

rehabilitative care. Eligibility Requirements

In order to maintain continuing eligibility for NJSIG participation, as part of a geographic sub fund or the NJSIG sub fund, each district will be screened using the criteria listed below. If two of the four criteria fall out of the acceptable range, a surcharge may be added to the district’s premium. If three of the four criteria fall out of the acceptable range, the district will lose its eligibility to participate in the geographic sub fund or the NJSIG sub fund.

1. Experience modification over 1.1 for three consecutive years is considered

unacceptable.

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2. An undeveloped Loss ratio for the most recent three years of over 80% is considered unacceptable. (Districts with less than three years of participation will be judged on their NJSIG history.)

3. A safety and loss control assessment score of less than 85 points. 4. Significant unacceptable trends of the experience modification and loss ratio.

The NJSIG Executive Director will notify the district by September of any eligibility concerns as outlined above. In each case, the district may appeal to the Board of Trustees for a one year probationary period. This appeal must be made to the NJSIG Trustees at least one week prior to the next NJSIG Board of Trustees meeting after notification has been provided to the district. If the Board of Trustees grants the district a probationary period, going forward the district will be judged on the eligibility requirements above with the exception of the safety and loss control assessment. Continuing improvement in safety and loss control programs at the district as judged by the NJSIG Loss Control Manager will be required in order to maintain Group eligibility. In each case, the district may appeal to the Board of Trustees for a one-year probation period. If granted, the district will be judged on the same criteria as the year before with the exception of the safety and loss control assessment. Continuing improvement in safety and loss control programs at the district as judged by the NJSIG Loss Control Manager will be required in order to maintain Group eligibility.

Automobile Liability & Physical Damage 1. All schools must comply with Department of Education regulations relating

to pupil transportation. 2. Motor vehicle records must be obtained for all drivers and drivers with two or

more "at fault" accidents during the preceding 5 years or drivers with more than 12 points must not be used.

3. For non-ownership and hired automobile coverage, a contract bus company

must have a minimum of $2,000,000 in automobile liability insurance. Property 1. Fire detection equipment as prescribed by the Uniform Building Code in

operating order. 2. All combustible materials must be properly stored.

32 Rev.: 5/13/16

Liability 1. Written emergency procedures including posted evacuation routes. 2. Exit doors must have automatic release and during period of occupancy must

not be locked or be otherwise obstructed. 3. There must be emergency lights on stairwells and in corridors; standard

illuminated exit signs. 4. All public areas must have adequate lighting. 5. Walkways must be unobstructed and all tripping hazards must be eliminated. 6. Pools must be locked when not being used. If public swimming is allowed,

lifeguards must be on duty at all times. 7. Outside groups or organizations using school premises must supply evidence

of at least $1,000,000 liability insurance. 8. For laboratories, chemical inventories must be current, showing expiration

dates. 9. Minimum dishwasher water temperature must be 180 degrees. IV. ASSESSMENT/DIVIDEND POLICY ASSESSMENTS From time to time, it is possible that the amount of premium collected in a fiscal year will not be sufficient to cover all claims and other expenses. In these cases, it will be necessary to assess additional contributions from districts, which were members during those years. The following method will be used in such cases: I. A calculation shall be made to determine to which policy(s) the deficit can be attributed.

Only that policy(s) will be assessed.

A. In the case of the package policy, the assessment shall be made only against that line(s) of coverage, which produced the adverse loss ratio, and the loss shall be shared among those purchasing that line(s) in the following manner:

1. The needed assessment shall be paid by all participants in direct proportion to

the premium they paid for that line(s) of coverage.

33 Rev.: 5/13/16

2. Except for property damage, which must be assessed and collected as needed,

calculations shall not be made until twelve months after the close of a fiscal year. At that time, any necessary assessments will be announced. Collections of money will be on or after the following July 1st and may be spread over as many years as the Trustees may deem advisable except that the money must be paid prior to the time that actuaries advise it will be needed to pay claims.

B. In the case of workers' compensation, assessments will be as follows:

3. Loss Ratio as % Assessment as %

of of Discounted Premiums Discounted Premium

85.1% to 95% 2.5% 95.1% to 105% 7.5% 105.1% to 115% 12.5% 115.1% to 125% 17.5% 125.1% to 135% 22.5% 135.1% to 145% 27.5% 145.1% to 155% 32.5% 155.1% to 165% 37.5% 165.1% to 175% 42.5% 175.1% and Higher 47.5%

4. In the event that this formula raises too much money, the portion shared by all will be adjusted downward proportionately. In the event that this raised too little money, the remaining assessment shall be shared by all participants in proportion to their premiums paid.

V. DIVIDENDS When there are more funds available for a policy during a particular year than are needed to pay all expenses, the Trustees may declare a dividend. If dividends are declared, they shall be paid as follows. I. A calculation shall be made to determine to which policy(s) the surplus can be attributed.

Only that policy(s) shall be eligible for dividends.

A. In the case of the package policy, dividends will be paid only for those lines of coverage which produced a surplus. Dividends will be shared among those districts purchasing those line(s) in the following manner.

1. The monies to be paid will go to all participants in that line in direct

proportion to the premiums they paid for that line(s) of coverage(s).

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2. Dividends will be calculated twenty-four months after the close of a fiscal year.

They can be paid out only if the Group has an overall surplus and then only fifty percent of the available dividend can be paid at that time. The remaining fifty percent can be paid only when that year is closed out or when eight years have elapsed since the close of the fiscal year, whichever comes first.

B. In the case of the workers' compensation policy, dividends shall be paid as follows:

Loss Sensitive

Schedule of Dividends

Loss Ratio as % Dividend Return as % of of

Discounted Premiums Discounted Premium

0.1 - 10% 15.6% 10.1 - 20% 13.0% 20.1 - 30% 10.4% 30.1 - 40% 7.8% 40.1 - 50% 5.2% 50.1 - 60% 2.6% over 60%

C. If not all dividends can be paid with the money available, then the reduction to all

shall be proportionate. Any remaining money shall be paid to all participants in proportion to their premiums.

D. Dividends shall be calculated twelve months after the close of a fiscal year. Up to fifty

percent of any available amount may be declared by the Trustees at that time. The remaining fifty percent shall be paid five years after the close of the fiscal year or when the year is closed out, whichever is sooner.

E. The Trustees may approve the division of some members into sub funds for the

purpose of calculating rates and dividends. In that case, dividends and assessments for the Groups will have use of the above formula, but will be adjusted for their own experience.

VI. Coverage Enhancements

A. All members are entitled to participate in the WeTip program. An 800 number is maintained and anonymous calls to this number detailing crimes or fraud which have happened or may soon happen are dealt with.

35 Rev.: 5/13/16

B. A legal call-in service is maintained for any district which purchases errors and omissions from the Group. These districts may discuss any situation where they intend to take any adverse action with regard to any employee and they will be advised with regard to any applicable state or federal laws.

VII. Closure of Plan Year The plan year may be closed after all claims relating to that plan year have been paid or otherwise disposed of. Full settlement will be made with each district as per IV and V above to bring the final plan year balancing to -0-. The Department of Banking and Insurance approves all plan year closures, as well as dividends and assessments. All records will be retained at the Group's office.



www.njsig.org

1-888-NJ Pool 1


Banking, Custodial and Asset Management Request for Proposal (RFP)

As part of the NJ Department of Banking and Insurance (DOBI) 6/30/2014 Audit, NJSIG was notified that the current custodial agreement with TD Wealth Management (a division of TD Bank) is missing specific language required by N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook Guidelines on Custodian and Safekeeping Agreements. NJSIG has attempted to resolve this issue with TD Wealth Management. However, TD Wealth Management’s Legal Department will not revise the custodial agreement to include the necessary language. Therefore, NJSIG will need to request proposals for a new organization that will provide investment custodial services and comply with the language requirements in N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook Guidelines on Custodian and Safekeeping Agreements.

NJSIG has a historical business relationship with TD Bank (formerly Commerce Bank). The Group feels that it has the potential to secure competitive &/or better interest rates on its Concentration Account balances and its several checking accounts by requesting proposals for banking services.

NJSIG has suffered from declining investment returns over the past several years. With an overall unfavorable investment market, the Group has turned to investing in CDs and/or allowing the proceeds of matured US Treasuries and CDs to remain in the Concentration Account. The Group feels that it would be beneficial to request proposals from asset management service providers as means to maximize investment returns (for the permitted investment options of the Group).

The following is the Request for Proposal (RFP) for all three of these services. Please be prepared to offer your comments, suggestions, or questions on the attached RFP at our meeting. Michele Carosi Michele Carosi, Comptroller



www.njsig.org

1-888-NJ Pool 1

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NEW JERSEY SCHOOLS INSURANCE GROUP (NJSIG) REQUEST FOR PROPOSALS FOR BANKING, CUSTODIAL AND ASSET MANAGEMENT SERVICES

The New Jersey Schools Insurance Group (“NJSIG” or the “Group”) is seeking a joint proposal from banking institutions interested in providing banking, custodial and asset management services. Your institution is invited to submit a proposal. We will consider proposal options as follows: Option 1 – Banking Services, Custodial Services and Asset Management Services Option 2 – Banking Services Option 3 – Custodial Services Option 4 – Asset Management Services NJSIG reserves the right to award any combination of options. ORGANIZATIONAL BACKGROUND NJSIG commenced operations on October 13, 1983 in accordance with N.J.S.A. 40A:10-36 entitled “An act concerning joint insurance funds for school boards”, which allows for two or more units of government to form a joint insurance fund for the purpose of group purchase/self-insurance against claims for various property and casualty type coverage. Additionally, because it is a school board joint insurance fund, the Fund has also been established in accordance with N.J.S.A. 18A:18B-1 et seq. The Group provides local school boards with economical means of obtaining insurance coverage for workers’ compensation, general liability, automobile liability, property, error and omissions, crime and auto physical damage coverages. The Group is currently comprised of approximately four hundred (400) school board member districts. As of 06/30/15, the Group’s financial assets were approximately $295 million, of which $288 million were cash and investments. The mix among asset classes varies over time depending upon rate relationships. The Group maintains a central concentration account and four subsidiary checking accounts for expenses specifically related to claims, operating expenses, payroll and FSA payments. The four subsidiary accounts are zero balance accounts. The Group also maintains a Lockbox account for receipt of Group member district insurance premium/assessments. The Group uses a custodial bank/institution for the safeguarding of its investments. The Group also has funds placed in the New Jersey Cash Management Fund. The Group is governed by the NJSIG Board of Trustees which is comprised of Superintendents, Business Administrators and School Board members from various Group member districts. The NJSIG Finance Committee is a subcommittee of the NJSIG Board of Trustees. The Group is managed by an Executive Director, a Chief Legal Counsel, a Comptroller and Managers of Information Technology, Claims, Underwriting/Client Relations, Loss Control and Human Resource departments.



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The NJSIG Board of Trustees, the NJSIG Finance Committee, the Group’s Executive Director and the Comptroller will review the Banking, Custodial & Asset Manager proposals and make the final decision on any service provider(s). RFP OBJECTIVE The Group’s leadership seeks to achieve economies of scale in the procurement of banking, custodial and investment services by jointly soliciting proposals. This RFP seeks to assist in meeting these needs by giving the banking and investment communities the opportunity to submit consolidated proposals for banking, custodial and asset management services. INVESTMENT AND BANKING OBJECTIVES The investment objectives of the entities are outlined in the attached cash and investment management plan. The plan also outlines permissible investments and other guidelines regarding control over cash and investments. Banking objectives are to obtain comprehensive and cost effective services to allow for the efficient collection of money, the disbursement of money, and the concentration of funds for investments. NOTICES, RESPONSES and AWARD Submit (a) one original paper copy, clearly marked as the “ORIGINAL” plus an electronic copy on CD or disk. The proposal must be addressed to: Michele Carosi, Comptroller New Jersey Schools Insurance Group 6000 Midlantic Drive Suite 300 North Mount Laurel, NJ 08054

Faxed or E-Mailed proposals will NOT be accepted.

Questions may be emailed to Michele Carosi at [email protected] Responses must be received by 2:00 P.M., MM/DD/YYYY. All questions regarding this RFP shall be in email form, shall be directed to the above, and must be received no later than MM/DD/YYYY. Responses shall be emailed back and shall be distributed along with questions to all firms which have been invited to bid.



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The Group reserves the right to reject ANY AND all proposals and to further negotiate on price and service issue. Contracts shall be awarded on the terms and conditions set forth herein. The investment custodial and asset management contract shall be negotiated, and each respondent shall provide a proposed form of such contract, with the understanding that the proposed form of contract may be used as a basis for a final contract with NJSIG, provided however the Group reserves the right to propose and use an alternate form of contract for such engagement. In all events the language and requirements contained in Exhibit B – Mandatory Contract Provisions shall be applied. Responses must include the completed questionnaire supplied herewith. The questionnaire form is designed for narrative responses and qualitative responses. Please adhere precisely to the forms. Failure to supply the response on the form will be cause for the proposal to be disregarded. Responses will be summarized by the Group and supplied to the NJSIG Finance Committee and the NJSIG Board of Trustees. As part of the decision making process, an onsite interview with team members who will be servicing this account may be required. The NJSIG Finance Committee will make a recommendation to the NJSIG Board of Trustees, which will award the Group’s contract. The estimated decision making time frame is as follows: • Proposal receipt by NJSIG: MM/DD/YYYY – 2:00 P.M. • Finance Committee Review/Recommendation: Month of MM • NJSIG Board of Trustees Action MM • Implementation NJSIG Accounts To Be Determined ENCLOSED FILES Enclosed is the narrative questionnaire (see Exhibit F). This document should be completed and returned with your response; please answer all questions. Also enclosed are NJSIG’s proposed cash and investment management plan and the form of contract that will be required. We thank you for your interest in working with NJSIG and look forward to receiving your proposal.



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MANDATORY CONTENTS OF PROPOSAL In its proposal, the firm must include the following: 1) Contact Information: Provide the name and address of the firm, the name, telephone number, fax number, and e-mail address of the individual responsible for the preparation of the proposal. 2) A fee proposals – based on a three year contract. (2016-2018)

For purposes of accurate proposal comparison, and ease of administration, the Group requires that fee proposals be stated on the following basis: • Fixed income investments – Compensation for all services shall be based upon a percentage of fixed

income assets under management as of the end of each month exclusive of any money market accounts that may be part of the asset manager portfolio.

• Bank Accounts – All banking services fees shall be waived (there shall be no charge for printing of checks, transfers, lock boxes, and any other account activity or services) and the central/concentration account shall earn interest on account balances at the three month Treasury bill rate plus “x” basis points – This rate shall be adjusted monthly based upon the latest auction date rate immediately preceding the beginning of a month. Proposal shall also include a guaranteed minimum interest rate for the central/concentration account.

• Custodial Fee – These services are currently billed to the GROUP as a flat fee on an annual basis. The NJSIG invites vendors to assess the needs expressed herein and offer alternative pricing proposals in addition to standard method required above. Before putting forth any alternatives, please confirm that such alternatives are permissible for Joint Insurance Funds operating in the State of New Jersey.

3) An executive summary of not more than three pages identifying and substantiating why the vendor is best qualified to provide the requested services. 4) A staffing plan listing those persons who will be assigned to the engagement if the vendor is selected, including the designation of the person who would be the vendor’s officer responsible for all services required under the engagement. This portion of the proposal should include the relevant resume information for the individuals who will be assigned. This information should include, at a minimum, a description of the person’s relevant professional experience, years and type of experience, and number of years with the vendor. The responder shall also include in an addendum a copy of the data forms required by the Department of Banking and Insurance pursuant to NJAC 11:15 – 2.6 (c) 8, as well as all documents required and attached hereto as Exhibits.



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5) A description of the vendor’s experience in performing services of the type described in this RFP and the attached questionnaire. Specifically identify client size and specific examples of similarities with the scope of services required under this RFP and the attached questionnaire. 6) A description of resources of the vendor (i.e., background, location, experience, staff resources, financial resources, other resources, etc.). 7) Describe how the vendor’s use of products, programs or systems can enhance the productivity of the Group’s Executive Director and Comptrollers offices, including their interaction with the banks and/or financial entities. Document any hardware devices, software or portals that may be available to the Group. 8) The location of the office, if other than the vendor’s main office, at which the vendor proposes to perform services required under this RFP and the attached questionnaire. Describe your presence in New Jersey. 9) Provide references including the contact names, titles, and phone numbers. 10) In its proposal, the vendor must identify any existing or potential conflicts of interest, and disclose any representation of parties or other relationships that might be considered a conflict of interest with regard to this engagement. 11) Governmental Unit Deposit Protection Act (GUDPA) certificate in PDF format 12) Answers to the attached Questionnaire (Exhibit G) INTERVIEW The Group reserves the right to interview any or all of the applicants submitting a proposal. Although interviews may take place, the proposal should be comprehensive and complete on its face. The Group reserves the right to request clarifying information subsequent to submission of the proposal. SELECTION CRITERIA AND CONTRACT The Group will select the vendor deemed most advantageous to the Group, price and other factors considered. The contract between the Group and the selected vendor(s) shall be comprised as contemplated under this RFP, any clarifications or addenda thereto, the selected vendor’s proposal, and any changes negotiated by the parties. All proposals will be reviewed to determine responsiveness. Non-responsive proposals will be rejected without evaluation. For vendors that satisfy the minimum requirements, the Group will evaluate proposals based on the following evaluation criteria, separate or combined in some manner, and not necessarily listed in order of significance:



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(a) The vendor’s general approach to providing the services required under this RFP and the attached questionnaire.

(b) The vendor’s documented experience in successfully completing contracts of a similar size and scope to the engagement addressed by this RFP and the attached questionnaire.

(c) The qualifications and experience of the vendor’s management, supervisory or other key personnel assigned to the engagement, with emphasis on documented experience in successfully completing work on contracts of similar size and scope to the services required by this RFP and the attached questionnaire.

(d) The overall ability of the vendor to mobilize, undertake and successfully complete the engagement within the timeline. This criterion will include, but not be limited to, the following factors: the number and qualifications of management, supervisory and other staff proposed by the vendor to perform the services required by this RFP; the availability and commitment to the engagement of the vendor’s management, supervisory and other staff proposed; the vendor’s contract management plan, including the vendor’s contract organizational chart.

(e) The vendor’s ability to match the Groups’ existing reporting capabilities, at minimum. (f) As the members of the NJSIG shall utilize the criteria set forth above in making an award pursuant

to this RFQ, you are urged to provide sufficient information on the above criteria in your submission.

(g) Selection of the award shall be based solely on the NJSIG’s evaluation of the submissions and the criteria. The NJSIG reserves the right to interview one or more of the most qualified respondents. The NJSIG also reserves the right to negotiate the terms and conditions of the contract to obtain the most advantageous situation for the NJSIG. The right to reject any or all submissions and to waive information required in the RFQ is reserved by the NJSIG.

(h) A screening of all responses will be conducted to determine overall responsiveness. Responses determined to be incomplete or non-responsive will be disqualified.

(i) The responses of each firm will be evaluated based upon the requirements of this RFQ. This evaluation process will take into account all items submitted pursuant to the RFQ and will not be based solely upon the fees submitted by the firm. The review will focus on the experience and expertise of the firm in providing similar services in the State of New Jersey to other governmental entities, authorities or bi-state agencies. This step of the overall evaluation may include verification of credentials and stated experience.

Exhibits:

A. Cash and Investment Management Plan B. Mandatory Contract Language C. Ownership Disclosure / Data Summary D. Non-Collusion Certificate E. Disclosure of Investment Activities in Iran F. Questionnaire



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EXHIBIT A



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NEW JERSEY SCHOOLS INSURANCE GROUP CASH MANAGEMENT AND INVESTMENT PLAN

1.) Cash Management and Investment Objectives The New Jersey Schools Insurance Group (hereinafter referred to as the GROUP) objectives in this area are: a.) Preservation of capital. b.) Adequate safekeeping of assets. c.) Maintenance of liquidity to meet operating needs, claims settlements and

grants/dividends. d.) Diversification of the GROUP's portfolio to minimize risks associated with individual

investments. e.) Maximization of total return, consistent with risk levels specified herein. f.) Investment of assets in accordance with State and Federal Laws and

Regulations. g.) Accurate and timely reporting of interest earnings, gains and losses by line of coverage in

each fund year. h.) Stability in the value of the GROUP’s economic surplus.

2.) Permissible Investments Investments shall be limited to the following: a.) Bonds or other obligations of the United States of America or obligations

guaranteed by the United States of America. b.) Government money market mutual funds. c.) Any federal agency or instrumentality obligation authorized by Congress that

matures within 397 days from the date of purchase, and has a fixed rate of interest not dependent on any index or external factors.

d.) Bonds or other obligations of the local unit or bonds or other obligations of school districts of which the local unit is a part or within which the school district is located; or

e.) Bonds or other obligations, having a maturity date not exceeding 397 days, approved by the Division of Investment of the Department of Treasury, the State Investment Council and the Department of Banking and Insurance for investment by local units.

f.) Local government investment pools.



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g.) Repurchase agreements of fully collateralized securities, subject to rules and conditions established by the NJ Department of Community Affairs and the NJ State Investment Council.

No investment or deposit shall have a maturity longer than five (5) years from date of purchase.

3.) Authorized Depositories In addition to the above, the GROUP is authorized to deposit funds in certificates of deposit and other time deposits in banks covered by the Governmental Unit Depository Protection Act, NJSA 17:9-14 et seq. (GUDPA). Specifically authorized depositories are as follows:

- TD Bank, N.A. - TD Wealth Management

All such depositories shall acknowledge in writing receipt of the Plan by sending a copy of acknowledgement to the GROUP’s Executive Director. The FUND is also authorized to invest its assets in the New Jersey Cash Management Fund.

4.) NJSIG for Investment Management The GROUP’s Executive Director (or retained asset manager) is directed by the NJSIG Finance Committee to authorize investments which are consistent with this plan and all appropriate regulatory constraints. When possible, federal securities shall be purchased directly from the US Treasury. Transactions may also be processed through the New Jersey Division of Investment by the GROUP’s Executive Director and/or a retained asset manager. The following institution is hereby designated as the firm with whom the Group’s Executive Director may deal for purposes of buying and selling securities identified in this Plan as “Permissible Investments” (permitted investments) or otherwise providing for Deposits.

- TD Wealth - TD Bank, NA - New Jersey Cash Management Fund

All such institutions shall acknowledge in writing receipt of the Plan by sending a copy of acknowledgement to the GROUP’s Executive Director.



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5.) Preservation of Capital Securities shall be purchased with the ability to hold until maturity.

6.) Safekeeping Securities purchased on behalf of the GROUP shall be delivered electronically or physically to the GROUP’s custodial bank, which shall maintain custodial and/or safekeeping of the accounts for such securities on behalf of the GROUP. These securities will be covered by a custodial agreement with the financial institution in the State of New Jersey. The custodial agreement will comply with the required language in N.J.S.A 18A:20-37-1(b) and the NAIC Financial Condition Handbook Guidelines on Custodian and Safekeeping Agreements. Such institution shall provide for the designation of such investment in the name of the GROUP to assure that there is no unauthorized use of the funds or the Permitted Investments or deposits. The purchase of any Permitted Investments that involve securities shall be executed by a “delivery versus payment” method to insure that such Permitted Investments are either received by the GROUP or by a third party custodian prior to or upon the release of the GROUP’s payment To assure that all parties with whom the GROUP deals either by way of Deposits or Permitted Investments are aware of the authority and the limits set forth in this Plan, all such parties shall be supplied with a copy of this Plan in writing and all such parties shall acknowledge the receipt of that Plan in writing, a copy of which shall be on file with the GROUP’s Executive Director.

7.) Reporting for Asset Managers (if applicable) The asset manager will submit written statements describing the proposed investment strategy for achieving the objectives identified herein. The asset manager shall also submit revisions to strategy when justified as a result of changing market conditions or other factors. Such statements shall be provided to the GROUP’s Executive Director and Comptroller. The asset manager shall provide the GROUP’s Executive Director with a copy of the institution's annual National Association of Security Dealers' audit.

8.) Reporting Requirements Asset managers will submit written statements to the GROUP’s Executive Director and Comptroller describing the proposed investment strategy for achieving the objectives identified herein. Asset managers shall also submit revisions to strategy when justified as a result of changing market conditions or other factors. Such statements shall be provided to the GROUP’s Executive Director and Comptroller. The statements shall also include confirmation that all investments are made in accordance with this plan. Additionally, the Asset Manager shall include a statement that



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verifies the reconciliation and determination of the appropriate fair value of the GROUP’s portfolio based on valuation guidelines that shall be kept on file in the GROUP’s Executive Director’s office. The GROUP’s Comptroller shall report to the NJSIG Board of Trustee at all regular meetings on all investments. This report shall include information on the balances in all bank and investment accounts, and purchases, sales, and redemptions occurring in the prior month.

9.) Audit This plan, and all matters pertaining to the implementation of it, shall be subject to the GROUP’s annual audit and to audits by the NJ Department of Banking and Insurance (DOBI).

10.) Cash Flow Projections Asset management decisions shall be guided by cash flow factors and payout factors supplied by the GROUP’s Actuary and reviewed by the NJSIG Finance Committee, the GROUP’s Executive Director and the GROUP’s Comptroller.

11.) Cash Management All moneys turned over to the GROUP shall be deposited within forty-eight (48) hours in accordance with NJSA 40A:5-15 and NJSA 18A:20-37. The GROUP’s Executive Director shall minimize the possibility of idle cash accumulating in accounts by assuring that all amounts in excess of negotiated compensating balances are kept in interest bearing accounts or promptly credited into the investment portfolio. Cash may be withdrawn from investment pools under the discretion of the GROUP’s Executive Director and/or the GROUP’s asset managers and only to fund operations. The GROUP’s Comptroller shall escheat to the State of New Jersey checks which remain outstanding for three years or more after the date of issuance. However, prior to implementing such procedures, the GROUP’s Comptroller, with the assistance of the GROUP’s Claims Manager, shall confirm that the outstanding check continues to represent a valid claim against the GROUP.



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12.) Authorized Signatories and Verification

Checks over $5,000 require two (2) signatures. The GROUP’s Executive Director is the primary signatory on all accounts. The alternate primary signatories on all accounts are the GROUP’s Loss Control Manager and/or the NJASBO Representative to the NJSIG Finance Committee and/or the GROUP’s Board of Trustee Chairperson. All wire transactions require initiation by the GROUP’s Executive Director (or the GROUP’s Loss Control Manager) and must be verified by the GROUP’s Claims Manager, Underwriting Manager and/or Information Technology Manager. The following is a listing of the GROUP’s accounts and the authorized signatories on the accounts: Concentration Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager serves as the permanent backup person to the ED. Additional designations on these accounts will be the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. Operating Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. The Claims Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account. Claims Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as permanent backup person to the ED. The Office Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account. Payroll Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. The Claims Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account. FSA/DCA Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. The Claims Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account.



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Lockbox Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. TD Bank CD’s: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. TD Wealth Management - NJSIG Capital Management Trust Fund: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. NJ Cash Management Fund: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees.

13.) Deviations/Amendments Any recommendation regarding a deviation or amendment to the Cash Management Plan (to the extent permitted by law then in effect), must first be approved by two-thirds (2/3) vote of the NJSIG Finance Committee, and then forwarded to the NJSIG Board of Trustees for action.

14.) Term of Plan This Plan shall be in effect from MM/DD/YYYY to MM/DD/YYYY. Attached to this Plan is a resolution of the NJSIG Board of Trustees approving this Plan for such period of time. The Plan may be amended from time to time. To the extent that any amendment is adopted by the NJSIG Board of Trustees, the GROUP’s Executive Director will supply copies of the amendments to all of the parties who otherwise have received the copy of the originally approved Plan, which amendment shall be acknowledged in writing in the same manner as the original Plan was so acknowledged.



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EXHIBIT B



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The following language shall be included in all contracts with the NJSIG. INDEMNIFICATION AND HOLD HARMLESS: SERVICE PROVIDER shall indemnify, defend and hold the GROUP, its Board of Trustees, appointed officials and member districts harmless from any and all claims or liabilities arising out of the activities of the SERVICE PROVIDER, its employees and agents in connection with all activities undertaken by the SERVICE PROVIDER, pursuant to this Agreement. It is the intention of the parties that any claim for relief of any type being asserted against the GROUP, its Board of Trustees, appointed officials and member districts, based upon any act or omission of the SERVICE PROVIDER, its affiliates and successors, shall be the responsibility of the SERVICE PROVIDER, and the SERVICE PROVIDER shall hold the GROUP harmless from same. INSURANCE: SERVICE PROVIDER shall provide, at its own cost and expense, proof of the following minimum insurance to the GROUP: Workers' Compensation: Statutory plus $100,000/$500,000/$100,000 for employers' liability: General Liability: $1,000,000/$2,000,000 CSL for bodily injury, property damage, and personal injury: Automobile Liability: $1,000,000 CSL covering all owned/non-owned, and hired automobiles: Professional Liability Insurance: $1,000,000/ $1,000,000 aggregate: Bond: If required by the by-laws or pursuant to NJAC 11:15-2 et seq., The SERVICE PROVIDER shall be bonded in a form and amount acceptable to the GROUP’s governing body Failure by the SERVICE PROVIDER to supply written evidence of these coverages shall result in default. It is required that, wherever possible, the GROUP be named as an "additional named insured" on any certificate of insurance The insurance companies for the above coverages must be licensed, solvent and acceptable to the GROUP. SERVICE PROVIDER shall not take any action to cancel or materially change any of the above insurance required under this Agreement without GROUP approval. Maintenance of insurance under this section shall not relieve SERVICE PROVIDER of any liability greater than the insurance coverage. TERMINATION: The GROUP may terminate this Agreement, at any time during the term thereof by the giving of ninety (90) days written notice, setting forth the cause or causes for termination to the SERVICE PROVIDER. The SERVICE PROVIDER shall have the opportunity for a hearing before the NJSIG Finance Committee. The NJSIG Finance Committee shall determine whether the reasons for the termination can be amicably and reasonably resolved or whether, in its sole determination, the Agreement shall be terminated. The SERVICE PROVIDER may terminate this Agreement, at any time during the term thereof, by the giving of ninety (90) days written notice. If the custodial agreement has been terminated or if 100% of the account assets in any one custody account have been withdrawn, the custodial SERVICE PROVIDER shall provide written notification, within three business days of termination or withdrawal, to the NJ Commissioner of Banking and Insurance. OWNERSHIP OF RECORDS: All records and data of any kind relating to the GROUP shall belong to the GROUP, and shall be surrendered to the GROUP upon expiration or termination of this Agreement. At all times during the term of this Agreement and for a period of five (5) years from the date of final payment, the GROUP, its appointed officials and other designated representatives, as authorized by the GROUP, shall have access to records and files maintained by the SERVICE PROVIDER for the GROUP during normal business hours. Furthermore, such records, books, and files relating to the operation and business of the GROUP are the property of the GROUP, regardless of site stored. Information released to the SERVICE PROVIDER by the GROUP for the purpose of performing the services as outlined herein shall be used only in connection with the performance of said duties. In addition, records must be made available to the state office of comptroller upon request. IF PAYMENTS ARE TO BE MADE BY THE NJSIG [PAYMENT: Payment shall be made in monthly installments (unless otherwise specified), provided the SERVICE PROVIDER submits a duly authorized invoice at least 20 days prior to the next regularly scheduled meeting of the GROUP's governing body. Final Payment will be withheld until the vendor’s continued service is determined. If the vendor’s contract will not be renewed or is terminated – final payment will not be made until all provisions of the contract have been satisfied. This payment schedule is subject to any rules and regulations promulgated by the Department of Banking & Insurance and the Department of Community Affairs.] SPECIAL PROVISIONS RELATING TO COMPENSATION. The compensation or service fee set forth in this Agreement includes: All administrative staff, including support staff, necessary to perform the work required of the SERVICE PROVIDER.



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Use of all physical equipment, and there shall be no further charges for rent, light, heat, office equipment or similar items. In-house computer services including all software and hardware provided by the SERVICE PROVIDER for the GROUP's use, it being understood that the software and hardware is and shall remain the property of the SERVICE PROVIDER. All data and records which pertain to the business and activities of the GROUP shall be the property of the GROUP and upon the request of the NJSIG Finance Committee or the GROUP's Executive Director the SERVICE PROVIDER shall provide a complete and current copy of all such data and records to the NJSIG Finance Committee or the GROUP's Executive Director in either hard copy or on computer tape or disk or both as the NJSIG Finance Committee or the GROUP's Executive Director may specify providing the SERVICE PROVIDER is able to comply with the type of copy request. Furthermore, the SERVICE PROVIDER shall take all reasonable steps necessary to safeguard data files, reports or other information from loss, destruction or erasure. Liability for cost or expense of replacing for damages resulting from the loss of such data shall be borne by the SERVICE PROVIDER unless at the time of loss, said data was in the exclusive custody of the GROUP. INDEPENDENT CONTRACTOR STATUS: The SERVICE PROVIDER at all times shall be an independent contractor, and employees of SERVICE PROVIDER shall in no event be considered employees of the GROUP. No agency relationship between the parties, except as expressly provided for herein, shall exist either as a result of the execution of this Agreement or performance there under. ENTIRE AGREEMENT: This instrument contains the entire Agreement of the parties hereto and may not be amended, modified, released or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto. NEW JERSEY LAW: This Agreement shall be governed by, and construed in accordance with, the laws of the State of New Jersey. BINDING ON SUCCESSORS AND ASSIGNS: Except as otherwise provided herein, all terms, provisions and conditions of this Agreement shall be binding on and inure to the benefit of the parties hereto, their respective personal representatives, successors and assigns. NO ASSIGNMENT: The SERVICE PROVIDER shall not assign this Agreement without the specific written consent of the GROUP. MODIFICATION: No modification of this Agreement shall be valid or binding unless the modification shall be in writing and executed by the GROUP and the SERVICE PROVIDER. NO WAIVER: No waiver of any term, provision or condition contained in this Agreement, nor any breach of any such term, provision or condition shall constitute a waiver of any subsequent breach of any such term, provision or condition by either party, or justify or authorize the non-observance on any other occasion of the same or any other term, provision or condition of this Agreement by either party. PARTIAL INVALIDITY: If any term, provision or condition contained in this Agreement, or the application thereof to any person or circumstances shall, at any time, or to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which this Agreement is invalid or unenforceable, shall not be affected thereby, and each term, provision or condition contained in this Agreement shall be valid and enforced to the fullest extent permitted by the law provided, however, that no such invalidity shall in any way reduce services to be performed by the SERVICE PROVIDER to the GROUP. CAPTIONS: The captions or paragraph headings contained in this Agreement are solely for purpose of convenience and shall not be deemed part of this Agreement for the purpose of construing the meaning thereof or for any other purpose. PROPRIETARY INFORMATION: The SERVICE PROVIDER shall not reveal to any third party any information that the GROUP has defined as proprietary without the express written consent of the GROUP. In addition, the SERVICE PROVIDER shall promptly advise the GROUP upon being interviewed or retained by a prospective new client operating in the field of casualty insurance involving public entities or public agencies in the State of New Jersey. Failure to comply with these requirements shall represent cause for termination of this agreement, in accordance with THE TERMINATION CLAUSE of this agreement. ELECTRONIC MAIL: The SERVICE PROVIDER agrees that it shall maintain and utilize the electronic mail systems in order to communicate with other service providers of the GROUP and to meet reporting requirements of the Executive Director. The SERVICE PROVIDER agrees that all financial and agenda reports shall be submitted in electronic formats established by the NJSIG Finance Committee via electronic mail. The SERVICE PROVIDER further agrees that all personnel working under this contract shall direct access to the SERVICE PROVIDER's electronic mail system and shall have individual electronic mail addresses.



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SPECIAL PROVISION: AFFIRMATIVE ACTION: During the performance of this contract, the contractor agrees as follows: The SERVICE PROVIDER, where applicable, will not discriminate against any employee or applicant for employment because of age, race, creed, color, national origin, ancestry, marital status, affectional or sexual orientation, gender identity or expression, disability, nationality or sex. Except with respect to affectional or sexual orientation and gender identity or expression, the contractor will take affirmative action to ensure that such applicants are recruited and employed, and that employees are treated during employment, without regard to their age, race, creed, color, national origin, ancestry, marital status, affectional or sexual orientation, gender identity or expression, disability, nationality or sex. Such action shall include, but not limited to the following: employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The SERVICE PROVIDER agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Public Agency Compliance Officer setting forth provisions of this nondiscrimination clause. The SERVICE PROVIDER, where applicable will, in all solicitations or advertisements for employees placed by or on behalf of the SERVICE PROVIDER, state that all qualified applicants will receive consideration for employment without regard to age, race, creed, color, national origin, ancestry, marital status, affectional or sexual orientation, gender identity or expression, disability, nationality or sex. The SERVICE PROVIDER, where applicable, will send to each labor union or representative or workers with which it has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency contracting officer advising the labor union or workers’ representative of the SERVICE PROVIDER’'s commitments under this act and shall post copies of the notice in conspicuous places available to employees and applicants for employment. The SERVICE PROVIDER where applicable, agrees to comply with any regulations promulgated by the Treasurer pursuant to N.J.S.A. 10:5-31 et seq. as amended and supplemented from time to time and the Americans with Disabilities Act. The SERVICE PROVIDER agrees to make good faith efforts to employ minority and women workers consistent with the applicable county employment goals established in accordance with N.J.A.C. 17:27-5.2, or a binding determination of the applicable county employment goals determined by the Division, pursuant to N.J.A.C. 17:27-5.2. The SERVICE PROVIDER agrees to inform in writing its appropriate recruitment agencies including, but not limited to, employment agencies, placement bureaus, colleges, universities, labor unions, that it does not discriminate on the basis of age, creed, color, national origin, ancestry, marital status, affectional or sexual orientation, gender identity or expression, disability, nationality or sex, and that it will discontinue the use of any recruitment agency which engages in direct or indirect discriminatory practices. The SERVICE PROVIDER agrees to revise any of its testing procedures, if necessary, to assure that all personal testing conforms with the principles of job-related testing, as established by the statutes and court decisions of the State of New Jersey and as established by applicable Federal law and applicable Federal court decisions. In conforming with the applicable employment goals, the SERVICE PROVIDER agrees to review all procedures relating to transfer, upgrading, downgrading and layoff to ensure that all such actions are taken without regard to age, creed, color, national origin, ancestry, marital status, affectional or sexual orientation, gender identity or expression, disability, nationality or sex, consistent with the statutes and court decisions of the State of New Jersey, and applicable Federal law and applicable federal court decisions. The SERVICE PROVIDER shall submit to the public agency, after notification of award but prior to execution of a goods and services contract, one of the following three documents: Letter of Federal Affirmative Action Plan Approval Certificate of Employee Information Report Employee Information Report Form AA302 The SERVICE PROVIDER shall furnish such reports or other documents to the Division of Contract Compliance & EEO as may be requested by the Division from time to time in order to carry out the purposes of these regulations, and public agencies shall furnish such information as may be requested by the Division of Contract Compliance & EEO for conducting a compliance investigation pursuant to Subchapter 10 of the Administrative Code at N.J.A.C.17:27.



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EXHIBIT C



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OWNERSHIP AFFIDAVIT

STATE OF ______________________) :ss COUNTY OF ____________________) ______________________________________________________ being sworn according to law, on his/her oath deposes and says:

1. That he/she is authorized to make this affidavit on behalf of _________________________________________________ (Name of Firm) 2. That in compliance with Chapter 33 of Public Laws of 1977, which provides that no

corporation or partnership shall be awarded any state, county, municipal or school district contract for the performance of any work or the furnishing of any materials or supplies unless prior to the receipt of the Proposal or accompanying the Proposal of said corporation or partnership there is submitted a statement setting forth the names and addresses of all stockholders in the corporation or partnership who own ten percent (10%) or more of its stock of any class, or of all individual partners in the partnership who own a ten percent (10%) or greater interest therein, the following is a complete list of all stockholders in the corporation/ partnership with ten percent (10%) or greater interest therein. NAME OF BUSINESS OWNER HOME

ADDRESS OWNERSHIP

PERCENTAGE

[Attach additional pages if necessary] By:___________________________________ Title:________________________________

Subscribed and sworn to before me this ______ day of ___________________, 20___ _______________________________________ [SEAL] Notary Public, State of ____________________ My commission expires ________________.



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CORPORATE DISCLOSURE CERTIFICATION

Name of Business______________________________________________________ I certify that the list below contains the names and home addresses of all stockholders holding 10% or more of

the issued and outstanding stock of the undersigned. OR I certify that no one stockholder owns 10% or more of the issued and outstanding stock of the undersigned. Check the box that represents the type of business organization: Partnership Corporation Sole Proprietorship Limited Partnership Limited Liability Corporation Limited Liability Partnership Subchapter S Corporation Sign and notarize the form below, and, if necessary, complete the stockholder list below. Stockholders: Name: ______________________________ Name: ______________________________

Home Address: _______________________ ____________________________________

Home Address: _______________________ ____________________________________

Name: ______________________________ Name: ______________________________

Home Address: _______________________ ____________________________________

Home Address: _______________________ ____________________________________

Name: ______________________________

Name: ______________________________

Home Address: _______________________ ____________________________________

Home Address: _______________________ ____________________________________

________________________________________________ (Signature) ________________________________________________ (Type or print name of affiant) Subscribed and sworn to before me this [SEAL] _____ day of ___________________, 20______. _______________________________________________ Notary Public, State of My commission expires ________________.



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DATA FORM SUMMARY

YEAR _____ Firm Name: ________________________________________________________________ Address: ________________________________________________________________ ________________________________________________________________ Phone No. __________________________Fax. No. _______________________ 1.) List all parties having or deriving any interest, right or benefit in the firm. Name Address Interest ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 2.) List all senior officers and directors who will be servicing the Fund, along with a description of professional qualifications. Name Title Qualifications ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ I hereby certify that the information on this disclosure is accurate and complete, and that I am an officer of the firm and am duly authorized to supply this information on behalf of the firm. Signature: _________________________________Print: _________________________ Title: _____________________________________Date: _________________________



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EXHIBIT D



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NON-COLLUSION AFFIDAVIT STATE OF NEW JERSEY

ss: COUNTY OF I______________________________of the City of______________________________ in the County of_________________and the State of____________________________ Of the firm of____________________________________________________________ of full age, being duly sworn according to law on my oath depose and say: 1. THAT I EXECUTED THE SAID PROPOSAL WITH FULL AUTHORITY SO TO DO; 2. THAT THIS PROPOSER HAS NOT, DIRECTLY OR INDIRECTLY ENTERED INTO

ANY AGREEMENT, PARTICIPATED IN ANY COLLUSION, OR OTHERWISE TAKEN ANY ACTION IN RESTRAINT OF FAIR AND OPEN COMPETITION IN CONNECTION WITH THIS ENGAGEMENT;

3. THAT ALL STATEMENTS CONTAINED IN SAID PROPOSAL AND IN THIS AFFIDAVIT ARE TRUE AND CORRECT, AND MADE WITH FULL KNOWLEDGE THAT NJSIG RELIES UPON THE TRUTH OF THE STATEMENTS CONTAINED IN SAID PROPOSAL AND IN THE STATEMENTS CONTAINED IN THIS AFFIDAVIT IN AWARDING THE CONTRACT FOR THE SAID ENGAGEMENT; AND

4. THAT NO PERSON OR SELLING AGENCY HAS BEEN EMPLOYED TO SOLICIT OR SECURE THIS ENGAGEMENT AGREEMENT OR UNDERSTANDING FOR A COMMISSION, PERCENTAGE, BROKERAGE OR CONTINGENT FEE, EXCEPT BONA FIDE EMPLOYEES OR BONA FIDE ESTABLISHED COMMERCIAL OF SELLING AGENCIES OF THE PROPOSER. (N.J.S.A.52: 34-25).

____________________________________________________(N.J.S.A. 52:34-15) (Name of Contractor) ___________________________________________________ (Also type or print name of affiant under signature) Subscribed and sworn to before me this Day of 20_______. _____________________________________ Notary Public of My commission expires:



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EXHIBIT E



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DISCLOSURE OF INVESTMENT ACTIVITIES IN IRAN Page 1 of 2

Bid Name:_______________________________________________________ Bid Due Date:____________________________________________________ Bidder:__________________________________________________________ PART 1: Pursuant to Public Law 2012, c. 25, any person or entity that submits a bid or proposal or otherwise proposes to enter into or renew a contract must complete the certification below to attest, under penalty of perjury, that the person or entity, or one of the person or entity’s parents, subsidiaries, or affiliates, is not identified on a list created and maintained by the NJ Department of the Treasury as a person or entity engaging in investment activities in Iran. If the Director of the NJ Department of Treasury finds a person or entity to be in violation of the principles which are the subject of this law, he/she shall take action as may be appropriate and provided by law, rule or contract, including but not limited to, imposing sanctions, seeking compliance, recovering damages, declaring the party in default and seeking debarment or suspension of the person or entity. I certify, pursuant to Public Law 2012, c. 25, that the person or entity listed above for which I am authorized to bid/renew: □ is not providing goods or services of $20,000,000 or more in the energy sector of Iran, including a person or entity that provides oil or liquefied natural gas tankers, or products used to construct or maintain pipelines used to transport oil or liquefied natural gas, for the energy sector of Iran, AND □ is not a financial institution that extends $20,000,000 or more in credit to another person or entity, for 45 days or more, if that person or entity will use the credit to provide goods or services in the energy sector in Iran. In the event that a person or entity is unable to make the above certification because it or one of its parents, subsidiaries, or affiliates has engaged in the above-referenced activities, a detailed, accurate and precise description of the activities must be provided in part 2 below to the New Jersey Schools Insurance Group under penalty of perjury. Failure to provide such will result in the proposal being rendered as non-responsive and appropriate penalties, fines and/or sanctions will be assessed as provided by law.



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PART 2 is required to be completed if both certification boxes in PART 1 were not certified. PART 2: PLEASE PROVIDE FURTHER INFORMATION RELATED TO INVESTMENT ACTIVITIES IN IRAN You must provide a detailed, accurate and precise description of the activities of the bidding person/entity, or one of its parents, subsidiaries or affiliates, engaged in the investment activities in Iran outlined above be completing the section below. PLEASE PROVIDE THOROUGH ANSWERS TO EACH QUESTION. IF YOU NEED ADDITIONAL ROOM, ADD ADDITIONAL PAGES. Name________________________Relationship to Bidder/Offeror__________ Description of Activities___________________________________________________ ________________________________________________________________ Duration of Engagement___________Anticipated Cessation Date_________ PART 3: CERTIFICATION SIGNATURE: Certification: I, being duly sworn upon my oath, hereby represent and state that the foregoing information and any attachments thereto to the best of my knowledge are true and complete. I attest that I am authorized to execute this certification on behalf of the above-referenced person or entity. I acknowledge that the New Jersey Schools Insurance Group is relying on the information contained herein and thereby acknowledge that I am under a continuing obligation from the date of this certification through the completion of any contracts with the New Jersey Schools Insurance Group to notify the New Jersey Schools Insurance Group in writing of any changes to the answers of information contained herein. I acknowledge that I am aware that it is a criminal offense to make a false statement or misrepresentation in this certification, and if I do so, I recognize that I am subject to criminal prosecution under the law and that it will also constitute a material breach of my agreement(s) with the New Jersey Schools Insurance Group and that the New Jersey Schools Insurance Group at its option may declare any contract(s) resulting from this certification void and unenforceable. Parts 1 and 3 or Parts 2 and 3 must be completed and signed to be responsive to the specifications. Failure to complete Parts 1 and 3 or parts 2 and 3 will render the bid non-responsive and the bid shall not be considered for an award. ________________________________ _____________________________ Signature Print Name



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EXHIBIT F



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NJSIG BANKING, CUSTODIAL AND ASSET MANAGEMENT RFP QUESTIONNAIRE

PRICING (Banking Services, Custodian Service and/or Asset Manager Services) Q. Describe your institution’s rate for custodian services of the Group’s investments. The Group pays its current institution an annual custodial flat fee. A. Q. Confirm that all banking services fees shall be waived. There will be no charges for:

- Check stock for NJSIG checks - Zero Balance Accounts and automatic maintenance - ACH and electronic data interchange services - ACH instant alerts and NJSIG approval for ACH payments - Account reconciliation services - Stop payments - Wire transfers - Positive Pay services - Lockbox services - Any other additional/add-on services not listed above

A. Q. Describe your institution’s rate of compensation for its services for asset management. It is the preference of the Group that the rate be stated in terms of basis points at various dollar thresholds. The rate should be inclusive of all charges including all requirements needed to comply with these specifications, the contract, the cash and investment management plan, etc. Provide a narrative description below and pricing data. Explicitly address whether pricing is on a market or book value basis, the time frame for billing, whether the fee is inclusive of all services, etc. A. ACCOUNTING PROCEDURES (Custodian Service and/or Asset Manager Services) Q. Will monthly fixed income accounting reports containing the following be provided by the 5th of each month for transactions and holdings as of the prior month end?



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¨ The position of individually named securities showing both initial cost of purchase and market values of all individually purchased securities;

¨ All principle cash transactions including all buys and sells; in sufficient descriptive detail; ¨ All income transactions, including all sources of interest in sufficient and descriptive detail. A. Q. Is a sample fixed income accounting report in PDF format enclosed with your response? And will this report be provided electronically on a monthly basis by the 5th of each month. A. Q. Will the monthly fixed income report be the same as the sample provided in the RFP, or, if not, will it include the same information. A. Q. Will you produce, upon special request, copies of documentation in support of buy, sell and hold decisions. A. MONITORING AND CONTROLS (Banking Services, Custodian Service and/or Asset Manager Services) Q. What system of accounting controls and audits are in place to prevent loss of trustee funds due to fraud,

error, misrepresentation or other irregularities as required by the custodial Service Agreement contract language for the “Special Provision - Indemnify and Hold Harmless” section of the contract?

A. PORTFOLIO STRATEGY REPORTING (Custodian Service and/or Asset Manager Services) Q. Do you acknowledge that the custodian institution/asset manager will be expected to submit a quarterly report to the Group’s Executive Director and Comptroller, the NJSG Finance Committee, and the NJSIG Board of Trustees that summarizes recent market conditions, economic developments, and anticipated investment conditions? (The report must summarize the investment policies employed; describe the portfolio in terms of investment securities, maturities, risk characteristics, and other factors. The report would indicate any areas of policy concern and any suggested strategy revisions as a result of this concern or as a result of perceived opportunities.) A.



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Q. Do you acknowledge that the asset manager's relationship manager shall be available to meet with the NJSIG Finance Committee at least quarterly, with the NJSIG Board of Trustees at least one time per year, and with the Group’s Executive Director and Comptroller on an as needed basis? A.

Q. Will the asset management services provided be comprehensive and include portfolio design recommendations, investment strategy, trade execution, and custodial services?

A. CUSTOMER BASE (Custodian Service and/or Asset Manager Services) Q. What fixed income assets are currently under management by the persons and unit that will be assigned to NJSIG? A. PAST INVESTMENT PERFORMANCE (Custodian Service and/or Asset Manager Services) Q. Detail the experience of the institution, and the specific manager, in implementing investment strategies similar to those being offered. Identify the performance of such portfolios over the past 12 months, and five (5) years. A. BOND TRADING PROCEDURE (Custodian Service and/or Asset Manager Services) Q. Describe the process by which bonds are purchased on behalf of NJSIG. Include the nature of broker/dealer relationships and any commission and/or "mark-up" credited to the asset manager outside of the stated management fee. A. BANKING INTEREST (Banking Services) Q. Describe the proposed and itemized basis of compensation for banking services, the basis for determining and applying interest earnings credits to demand deposit accounts, the effect of float and reserve requirements on DDA interest earnings, and any conditions regarding minimum balances.



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A. PROXIMITY TO BRANCH OFFICES (Banking Services) Q. Please identify the branch office which would service NJSIG. A. AVAILABILITY (Banking Services) Q. How many business days after a check is deposited are funds available for investment or disbursement? A. CHECK RECONCILIATION (Banking Services) Q. Explain the type of check reconciliation services, which can be provided for all NJSIG checking accounts. A. GUDPA CERTIFICATE Q. Is a GUDPA certificate in PDF format enclosed with the email response? A. GENERAL BANKING SERVICE QUESTIONS (Banking Services) Q. Can you provide monthly bank statement on CD, within 5 days of a month-end closing date to NJSIG? A. Q. Please confirm that wire transfer will be available by telephone, fax and internet. A. Q. Please confirm that you offer Lock Box Services and provide a description of these services, as well its feature and benefits.



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A. Q. Please confirm that you offer Zero Balance Account and automatic balance maintenance and provide a description of these services, as well its feature and benefits. A. Q. Please confirm that you offer ACH service, electronic data interchange services, and instant alerts/NJSIG ACH approvals and provide a description of these services, as well its feature and benefits. A. Q. Please confirm that you offer Stop Payment services and provide a description of these services, as well its feature and benefits. A. Q. Please confirm that you offer Wiring services and provide a description of these services, as well its feature and benefits. A. Q. Please confirm that you offer Positive Pay services and provide a description of these services, as well its feature and benefits. A. INTERNET BANKING (Banking Services) Q. Describe in detail how the productivity of the Group’s Executive Director, the Comptroller and the Accounting Department can be enhanced by using Internet banking products offered by your firm.

A. COMPLIANCE WITH CASH AND INVESTMENT MANAGEMENT PLAN AND CONTRACT (Banking Services, Custodian Service and/or Asset Manager Services) Q. Do you certify that your organization will comply with NJSIG’s cash and investment management plan?



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A. Q. Do you acknowledge that systems and data shall be subject to review and audit by the NJSIG auditors each

year and by the DOBI as requested and that timely and complete response to such inquiries is a condition of contract award?

A. Q. Do you certify that the form of the draft contract, including all procedural requirements, is acceptable? A. IMPLEMENTATION (Banking Services, Custodian Service and/or Asset Manager Services) Q. How quickly after a decision is made by the NJSIG, can the Group expect to have particular services

available? A.

Q. What steps will be taken by your institution to ensure that services and products are not implemented until all quality considerations have been fully addressed? A.

Q. Which products and services that are being offered, are currently in use by other customers and which must be developed for the particular needs of NJSIG? A.

Q. What time frame is needed for the development and testing of various systems? A.

Q. What type and amount of initial training or orientation will be provided to the Group’s Executive Director, the Comptroller and any other NJSIG staff (which will be end users) on the logistics involved with the various services being offered by your institution?

A. BANK OR INSTITUTION PROFILE



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Q. For periods ending 12/31/14 and 12/31/15, provide the following information regarding the financial status of the institution:

¨ Tier 1 leverage ratio ¨ Tier 1 Capital/risk adjusted assets

¨ Total risk based capital/risk adjusted assets ¨ Reserve for possible credit losses/loans ¨ Return on average assets ¨ Return on average stockholders' equity ¨ Return on average common stockholders' equity ¨ Net Income or Loss CUSTOMER BASE (Banking Services, Custodian Service and/or Asset Manager Services) Q. What clients and institutions similar to NJSIG are currently receiving banking and asset management services? (Particularly and specifically highlight NJ school board JIFs, school boards, municipalities, insurance companies, and any other government entities, which are clients). A. EMPLOYEES AND OFFICIALS OF THE INSTITUTION (Banking Services, Custodian Service and/or Asset Manager Services) Q. What are the names, titles, backgrounds, and normal business locations of persons that will be servicing this account? Be specific on the names and qualifications of the persons who will: ¨ Have responsibility for the overall relationship; ¨ Serve as a liaison with NJSIG and the Group’s Comptroller/Accounting Department

on a day-to-day basis; ¨ Have responsibility for computerization and record keeping; ¨ Manage the investment portfolio. A. Q. What is the trust department's organizational structure and what resources are available in the areas of operations, systems and investments? A. Please provide any additional information that you feel NJSIG should be made aware of when evaluating your institution.



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DOBI Exam Report and Management Response

The following is the final DOBI Audit Report (as of 06/30/2014) and NJSIG’s formal Management Response (due to DOBI before 6/4/16). This was a very favorable final audit with the same minor recommendations that I cited in the Comptroller’s Board package last month. Please review the following pages for the full report and NJSIG’s Management Response. Michele Carosi Michele Carosi, Comptroller

REPORT ON EXAMINATION

AS TO CONDITION OF THE

NEW JERSEY SCHOOLS INSURANCE GROUP

BURLINGTON, NEW JERSEY 08016

AS AT JUNE 30, 2014

TABLE OF CONTENTS

Page

Salutation 1 Scope of Examination 2 Compliance with Prior Examination Recommendations 2 History an kind of Business 3 Territory and Plan of Operation 15 Management And Control 18 Reinsurance and Excess Insurance 20 Fidelity Bond and Other Insurance Coverages 21 Audited Financial Report 21 Financial Statements 22 Exhibit A – Balance Sheet as of June 30, 2014 23 Exhibit B – Comparative Statement of Revenues, Expenses and Changes in Net Position for

the Years Ended June 30, 2014 and 2013

24 Note to the Financial Statements 25 Conclusion 29 Notarization 30

CHRIS CHRISTIE Governor

KIM GUADAGNO Lt. Governor

State of New Jersey DEPARTMENT OF BANKING AND INSURANCE

OFFICE OF SOLVENCY REGULATION PO BOX 325

TRENTON, NJ 08625-0325

TEL (609) 292-5350 FAX (609) 292-6765

RICHARD J. BADOLATO Acting Commissioner

PETER L. HARTT Director

April 6, 2016

Honorable Richard J. Badolato Acting Commissioner of Banking and Insurance State of New Jersey Trenton, New Jersey 08625 Commissioner: In accordance with the authority vested in you by the Revised Statutes of New Jersey, an examination has been made of the assets, liabilities, method of conducting business and other affairs of the:

NEW JERSEY SCHOOLS INSURANCE GROUP 450 VETERANS DRIVE, BURLINGTON, NJ 08016

hereinafter referred to in this report as the “Fund”.

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SCOPE OF EXAMINATION This financial condition examination was called by the Commissioner of Banking and Insurance of the State of New Jersey (NJDOBI) pursuant to the authority granted by Section 40A:10-47 of the New Jersey Revised Statutes. The examination of the Fund was made as of June 30, 2014 and addressed the fund year period from July 1, 2013 to June 30, 2014. The previous examination of the Fund covered the fund year from July 1, 2009 to June 30, 2010. The examination was conducted at the administrative offices of the Group located at 450 Veterans Drive, Burlington, NJ 08016. The conduct of the examination was governed by the procedures outlined in the NAIC Financial Condition Handbook, the New Jersey Accounting and Procedures Manual and followed accepted procedures of regulatory authorities and generally accepted insurance company examination standards. In determining the emphasis to be placed on specific accounts, consideration was given to the Fund’s system of internal control, the nature and size of each account, and its relative importance to solvency. In the verification of matters as shown in this report, limited test checks were made, some complete and others partial. Consideration was allowed for limiting the verification on certain accounts at a point where they were determined to be substantially correct or the account under review was considered insignificant and not crucial to the Fund's solvency. COMPLIANCE WITH PRIOR EXAMINATION REPORT RECOMMENDATIONS

Cash and Cash Equivalents 2010 Examination Recommendation: It is recommended by this examination that the Group adopt a formal escheatment policy in accordance with N.J.S.A. 46:30B-16 and escheat those funds presumed abandoned for three or more years to the Treasurer of the State of New Jersey. 2014 Examination Finding: The Fund has complied with this recommendation.

Cash and Cash Equivalents 2010 Examination Recommendation: The examination recommends that the Fund’s custodial agreement with TD Bank be amended to reflect the following:

1. Correct/current name of custodian;

2. Addition of an indemnification clause which should read as follows: “Custodian is obligated to indemnify the Fund for any loss of securities of the Fund in the custodian's custody occasioned by the negligence or dishonesty of the custodian's

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officers or employees, or burglary, robbery, holdup, theft, or mysterious disappearance, including loss by damage or destruction. In the event of a loss of those securities for which the custodian is obligated to indemnify the Fund, the securities shall be promptly replaced or the value of the securities and the value of any loss of rights or privileges resulting from the said loss of securities shall be promptly replaced.”

3. A termination clause noting that if the custodial agreement has been terminated or if 100% of the account assets in any one custody account have been withdrawn, the custodian shall provide written notification, within three business days of termination or withdrawal, to the Commissioner of Banking and Insurance.

2014 Examination Finding: The Fund did not comply with the three recommendations. HISTORY AND KIND OF BUSINESS The Fund commenced operations on October 13, 1983 in accordance with N.J.S.A. 40A:10-36 entitled “An act concerning joint insurance funds for school boards”, which allows for two or more units of government to form a joint insurance fund for the purpose of group purchase/self-insurance against claims for various property and casualty type coverage. Additionally, because it is a school board joint insurance fund, the Fund has also been established in accordance with N.J.S.A. 18A:18B-1 et seq. The Fund’s objectives include the following:

1. Providing qualified school districts with a long-term alternative to the conventional insurance market as a means of stabilizing the otherwise cyclical nature of insurance expenditures;

2. Maintaining a pro-active posture of safety and loss prevention programs specific to issues inherent in modern school district operations;

3. Aggressively evaluating, defending and/or settling claims made against member districts which fall within the coverages afforded through the Fund, and;

4. Maintaining a conservative funding posture in an effort to ensure long-term financial security for the Fund and, by extension, the membership thereof.

The Fund was originally formed to provide the following coverage for its Member school boards/districts:

1. Any loss or damage (real or personal) to a member’s property, motor vehicles, equipment or apparatus;

2. Any loss or damage from liability resulting from the use or operation of motor vehicles, equipment or apparatus owned or controlled by the member;

3. Any loss or damage from liability for the member’s acts or omissions and for acts or omissions of its officers, employees or servants arising out of and in the course of the performance of their duties, including but not limited to, any liability established by

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the “New Jersey Tort Claims Act,” N.J.S. 59:1-1 et seq., or by any federal or other law;

4. Any loss or damage from liability as established by Chapter 15 of Title 34 of the Revised Statutes, Labor and Workers’ Compensation (N.J.S.A. 34:15-1 et seq.);

5. Expenses of defending any claim against the board, district, office, employee or servant arising out of and in the course of the performance of their duties, whether or not liability exists on the claim.

The Fund began with six school board members: Berlin Township, Downe Township, Elsinboro Township, Monmouth Beach, Rahway, and Ringwood. At June 30, 2014, the Fund was comprised of four hundred (400) school board members as follows:

Member

Effective Date Of Membership

1 Absecon City Board of Education 7/1/2013 2 Academy Charter High School 7/1/2013 3 Adelaide L. Sanford Charter School 7/1/2013 4 Alexandria Township Board of Education 7/1/2013 5 Allamuchy Township Board of Education 7/1/2013 6 Allenhurst Board of Education 7/1/2013 7 Alloway Township Board of Education 7/1/2013 8 Andover Regional Board of Education 7/1/2013 9 Asbury Park Board of Education 7/1/2013

10 Atlantic City Board of Education 7/1/2013 11 Atlantic Highlands Board of Education 7/1/2013 12 Audubon Board of Education 7/1/2013 13 Avalon Board of Education 7/1/2013 14 Avon Borough Board of Education 7/1/2013 15 Barack Obama Green Charter High School (The) 7/1/2013 16 Barrington Borough Board of Education 7/1/2013 17 Bass River Township Board of Education 7/1/2013 18 Bay Head Board of Education 7/1/2013 19 Bayonne Board of Education 7/1/2013 20 Bayshore Jointure Commission 7/1/2013 21 Bedminster Township Board of Education 7/1/2013 22 Belleville Board of Education 7/1/2013 23 Belmar Board of Education 7/1/2013 24 Belvidere Board of Education 7/1/2013 25 Bergen Arts & Science Charter School 7/1/2013

4

Member Effective Date Of Membership

26 Berkeley Township Board of Education 7/1/2013 27 Berlin Borough Board of Education 7/1/2013 28 Berlin Township Board of Education 7/1/2013 29 Bernards Township Board of Education 7/1/2013 30 Bethlehem Board of Education 7/1/2013 31 Beverly City Board of Education 7/1/2013 32 Black Horse Pike Regional Board of Education 7/1/2013 33 Blairstown Township Board of Education 7/1/2013 34 Bloomfield Township Board of Education 7/1/2013 35 Bloomsbury Board of Education 7/1/2013 36 BOE Of Special Services School District & Vo Tech School District COA 7/1/2013 37 Bogota Board of Education 7/1/2013 38 Boonton Town Board of Education 7/1/2013 39 Boonton Township Board of Education 7/1/2013 40 Bordentown Regional School District 7/1/2013 41 Bound Brook Board of Education 7/1/2013 42 Bradley Beach Board of Education 7/1/2013 43 Branchburg Board of Education 7/1/2013 44 Brick Township Board of Education 7/1/2013 45 Bridgeton Board of Education 7/1/2013 46 Bridgewater-Raritan Regional Board of Education 7/1/2013 47 Brielle Borough Board of Education 7/1/2013 48 Buena Regional School District 7/1/2013 49 Burlington County Institute of Technology 7/1/2013 50 Burlington County Special Services 7/1/2013 51 Burlington Township Board of Education 7/1/2013 52 Camden Academy Charter High School 7/1/2013 53 Camden City School District 7/1/2013 54 Camden County Educational Services Commission 7/1/2013 55 Camden County Technical Schools 7/1/2013 56 Cape May City Board of Education 7/1/2013 57 Cape May County Special Services 7/1/2013 58 Cape May County Technical School District 7/1/2013 59 Carteret Borough Board of Education 7/1/2013 60 Cedar Grove Township Board of Education 7/1/2013 61 Central Jersey Arts Charter School 7/1/2013

5

Member


62 Central Jersey College Prep Charter School 7/1/2013 63 Central Regional Board of Education 7/1/2013 64 Chester Board of Education 7/1/2013 65 Chesterfield Township Board of Education 7/1/2013 66 City Invincible Charter School 7/1/2013 67 Clark Township Board of Education 7/1/2013 68 Classical Academy Charter School of Clifton 7/1/2013 69 Clayton Board of Education 7/1/2013 70 Clearview Regional Board of Education 7/1/2013 71 Cliffside Park Board of Education 7/1/2013 72 Clinton Township Board of Education 7/1/2013 73 Clinton-Glen Gardner Board of Education 7/1/2013 74 Colts Neck Township Board of Education 7/1/2013 75 Commercial Township Board of Education 7/1/2013 76 Compass Academy Charter School 7/1/2013 77 Corbin City Board of Education 7/1/2013 78 Cumberland County Vocational Board of Education 7/1/2013 79 Cumberland Regional Board of Education 7/1/2013 80 D.U.E. Season Charter School 7/1/2013 81 Deal Borough Board of Education 7/1/2013 82 Deerfield Township Board of Education 7/1/2013 83 Delaware Valley Regional High School BOE 7/1/2013 84 Delran Township Board of Education 7/1/2013 85 Delsea Regional High School District 7/1/2013 86 Dennis Township Board of Education 7/1/2013 87 Denville Township Board of Education 7/1/2013 88 Discovery Charter School 7/1/2013 89 Downe Township Board of Education 7/1/2013 90 Dr. Lena Edwards Academic Charter School 7/1/2013 91 Dunellen Board of Education 7/1/2013 92 Eagleswood Township Board of Education 7/1/2013 93 East Amwell Township Board of Education 7/1/2013 94 East Brunswick Township Board of Education 7/1/2013 95 East Hanover Board of Education 7/1/2013 96 East Orange Board of Education 7/1/2013 97 East Orange Community Charter School 7/1/2013 98 East Windsor Regional Board of Education 7/1/2013 99 Eatontown Board of Education 7/1/2013

100 Edgewater Park Township Board of Education 7/1/2013

6

Member


101 Edgewater Township Board of Education 7/1/2013 102 Edison Township Board of Education 7/1/2013 103 Elizabeth Board of Education 7/1/2013 104 Elmer Board of Education c/o Pittsgrove Board of Education 7/1/2013 105 Elmwood Park Board of Education 7/1/2013 106 Elsinboro Township Board of Education c/o Alloway Shared Services 7/1/2013 107 Elysian Charter School of Hoboken 7/1/2013 108 Englewood City Board of Education 7/1/2013 109 Englewood on the Palisades Charter School 7/1/2013 110 Essex County Vocational Board of Education 7/1/2013 111 Essex Fells Board of Education 7/1/2013 112 Essex Regional Educational Services Commission 7/1/2013 113 Ethical Community Charter School (The) 7/1/2013 114 Fair Haven Board of Education 7/1/2013 115 Fair Lawn Board of Education 7/1/2013 116 Fairfield Township Board of Education 7/1/2013 117 Fairview Board of Education 7/1/2013 118 Farmingdale Borough Board of Education 7/1/2013 119 Florence Township Board of Education 7/1/2013 120 Florham Park Board of Education 7/1/2013 121 Foundation Academy Charter School 7/1/2013 122 Franklin Township Board of Education (Gloucester) 7/1/2013 123 Franklin Township Board of Education (Warren) 7/1/2013 124 Franklin Township School District (Somerset) 7/1/2013 125 Freedom Prep Charter School 7/1/2013 126 Freehold Borough Board of Education 7/1/2013 127 Freehold Regional High School District 7/1/2013 128 Freehold Township Board of Education 7/1/2013 129 Galloway Community Charter School 7/1/2013 130 Garfield Board of Education 7/1/2013 131 GCITSD & BOE of SSSD & VSDCG 7/1/2013 132 GCSSSD & BOE of SSSD & VSDCG 7/1/2013 133 Gibbsboro Board of Education 7/1/2013 134 Glassboro Board of Education 7/1/2013 135 Gloucester City Board of Education 7/1/2013 136 Great Meadows Regional Board of Education 7/1/2013 137 Greater Brunswick Charter School 7/1/2013 138 Greater Newark Charter School 7/1/2013 139 Greenwich Township Board of Education (Cumberland) 7/1/2013

7

Member


140 Greenwich Township Board of Education (Gloucester) 7/1/2013 141 Hackensack Board of Education 7/1/2013 142 Hackettstown Board of Education 7/1/2013 143 Hainesport Township Board of Education 7/1/2013 144 Hamburg Borough Board of Education 7/1/2013 145 Hamilton Township Board of Education 7/1/2013 146 Hammonton Board of Education 7/1/2013 147 Hampton Borough Board of Education 7/1/2013 148 Hampton Township Board of Education 7/1/2013 149 Hanover Park Regional High School District 7/1/2013 150 Harmony Township Board of Education 7/1/2013 151 Harrison Board of Education 7/1/2013 152 Harrison Township Board of Education 7/1/2013 153 Hazlet Township Board of Education 7/1/2013 154 Henry Hudson Regional School Board of Education 7/1/2013 155 Hi Nella Board of Education 7/1/2013 156 Highland Park Board of Education 7/1/2013 157 Highlands Board of Education 7/1/2013 158 Hillsborough Township Board of Education 7/1/2013 159 Hillside Township Board of Education 7/1/2013 160 Hoboken Board of Education 7/1/2013 161 Hoboken Charter School 7/1/2013 162 Holmdel Township Board of Education 7/1/2013 163 Hope Academy Charter School 7/1/2013 164 Hope Community Charter School 7/1/2013 165 Hopewell Township Board of Education 7/1/2013 166 Howell Township Board of Education 7/1/2013 167 Hudson County Schools of Technology 7/1/2013 168 Hunterdon Central H.S. and Flemington Raritan Joint Venture 7/1/2013 169 Hunterdon Central Regional Board of Education 7/1/2013 170 Hunterdon County Educational Services Commission 7/1/2013 171 Interlaken Borough Board of Education 7/1/2013 172 International Charter School of Trenton 7/1/2013 173 Island Heights Board of Education 7/1/2013 174 Jamesburg Board of Education 7/1/2013 175 Jersey City Board of Education 7/1/2013 176 Jersey City Community Charter School 7/1/2013 177 Jersey City Golden Door Charter School 7/1/2013 178 Keansburg Board of Education 7/1/2013

8

Member


179 Kenilworth Board of Education 7/1/2013 180 Keyport Board of Education 7/1/2013 181 Kingsway Regional High Board of Education 7/1/2013 182 Kingwood Township Board of Education 7/1/2013 183 Knowledge A to Z Academy Charter School Inc 7/1/2013 184 Knowlton Township Board of Education 7/1/2013 185 Lacey Township Board of Education 7/1/2013 186 Lady Liberty Academy Charter School 7/1/2013 187 Lake Como Board of Education (South Belmar) 7/1/2013 188 Lakehurst Board of Education 7/1/2013 189 Lambertville Board of Education 7/1/2013 190 Lavallette Borough Board of Education 7/1/2013 191 Lawnside Borough Board of Education 7/1/2013 192 Lawrence Township Board of Education (Cumberland) 7/1/2013 193 Lawrence Township Board of Education (Mercer) 7/1/2013 194 LEAP Academy University Charter School 7/1/2013 195 Learning Community Charter School 7/1/2013 196 Lebanon Borough Board of Education 7/1/2013 197 Liberty Academy Charter School 7/1/2013 198 Lincoln Park Board of Education 7/1/2013 199 Linden Board of Education 7/1/2013 200 Little Falls Township Board of Education 7/1/2013 201 Little Silver Borough Board of Education 7/1/2013 202 Livingston Township Board of Education 7/1/2013 203 Lodi Board of Education 7/1/2013 204 Long Branch Board of Education 7/1/2013 205 Lower Alloways Creek Township Board of Education 7/1/2013 206 Manasquan Board of Education 7/1/2013 207 Manchester Township Board of Education 7/1/2013 208 Mannington Township Board of Education 7/1/2013 209 Mansfield Township Board of Education (Burlington) 7/1/2013 210 Mantua Township Board of Education 7/1/2013 211 Margate City Board of Education 7/1/2013 212 Maria L. Varisco-Rogers Alternative Charter School 7/1/2013 213 Marion P. Thomas Charter School & Friends of Marion P. Thomas Charter School 7/1/2013 214 Marlboro Township Board of Education 7/1/2013 215 Matawan-Aberdeen Regional Board of Education 7/1/2013 216 Maurice River Township Board of Education 7/1/2013 217 Mendham Borough Board of Education 7/1/2013

9

Member


218 Mendham Township Board of Education 7/1/2013 219 METS Charter School 7/1/2013 220 Metuchen Board of Education 7/1/2013 221 Middlesex Borough Board of Education 7/1/2013 222 Middlesex County Vocational & Technical High Schools 7/1/2013 223 Middlesex Regional Educational Services Commission 7/1/2013 224 Middletown Township Board of Education 7/1/2013 225 Milford Borough Board of Education 7/1/2013 226 Millstone Township Board of Education 7/1/2013 227 Milltown Board of Education 7/1/2013 228 Millville Board of Education 7/1/2013 229 Monmouth Beach Board of Education 7/1/2013 230 Monmouth County Vocational Board of Education 7/1/2013 231 Monmouth Regional High School District 7/1/2013 232 Monmouth-Ocean Educational Services Commission 7/1/2013 233 Monroe Township Board of Education (Gloucester) 7/1/2013 234 Monroe Township Board of Education (Middlesex) 7/1/2013 235 Montague Township Board of Education 7/1/2013 236 Montclair Board of Education 7/1/2013 237 Montgomery Township Board of Education 7/1/2013 238 Morris Hills Regional School District 7/1/2013 239 Morris School District Board of Education 7/1/2013 240 Morris-Union Jointure Commission 7/1/2013 241 Mountain Lakes Board of Education 7/1/2013 242 Mullica Township Board of Education 7/1/2013 243 Neptune City Board of Education 7/1/2013 244 Netcong Board of Education 7/1/2013 245 New Brunswick Board of Education 7/1/2013 246 New Hanover Township Board of Education 7/1/2013 247 New Horizons Community Charter School 7/1/2013 248 New Providence Board of Education 7/1/2013 249 Newark Educators Community Charter School 7/1/2013 250 Newfield Board of Education 7/1/2013 251 North Bergen Board of Education 7/1/2013 252 North Brunswick Board of Education 7/1/2013 253 North Caldwell Board of Education 7/1/2013 254 North Hanover Township Board of Education 7/1/2013 255 North Hunterdon/Voorhees Regional High School District Board of Education 7/1/2013 256 North Star Academy Charter School of Newark 7/1/2013

10

Member


257 North Warren Regional Board of Education 7/1/2013 258 Northern Valley Regional Board of Education 7/1/2013 259 Oakland Board of Education 7/1/2013 260 Oaklyn Borough Board of Education 7/1/2013 261 Ocean City Board of Education 7/1/2013 262 Ocean County Vocational Board of Education 7/1/2013 263 Ocean Gate Board of Education 7/1/2013 264 Ocean Township Board of Education (Monmouth) 7/1/2013 265 Ocean Township Board of Education (Ocean) 7/1/2013 266 Oceanport Board of Education 7/1/2013 267 Oceanside Charter School 7/1/2013 268 Orange (City of) Board of Education 7/1/2013 269 Pace Charter School of Hamilton 7/1/2013 270 Passaic Arts & Sciences Charter School 7/1/2013 271 Passaic City Board of Education 7/1/2013 272 Passaic County Technical Institute 7/1/2013 273 Paterson Arts & Science Charter School 7/1/2013 274 Paterson Charter School for Science and Technology 7/1/2013 275 Pennsauken Township Board of Education 7/1/2013 276 Perth Amboy Board of Education 7/1/2013 277 Philips Academy Charter School 7/1/2013 278 Pinelands Regional School District 7/1/2013 279 Piscataway Township Board of Education 7/1/2013 280 Pittsgrove Township Board of Education 7/1/2013 281 Plainfield Board of Education 7/1/2013 282 Pleasantville Public Schools 7/1/2013 283 Plumsted Township Board of Education 7/1/2013 284 Pohatcong Township Board of Education 7/1/2013 285 Point Pleasant Beach Board of Education 7/1/2013 286 Point Pleasant Borough Board of Education 7/1/2013 287 Port Republic Board of Education 7/1/2013 288 Pride Academy Charter School & Shining Schools Inc. 7/1/2013 289 Princeton Charter School 7/1/2013 290 Prospect Park Board of Education 7/1/2013 291 Queen City Academy Charter School 7/1/2013 292 Quinton Township Board of Education 7/1/2013 293 Rahway Board of Education 7/1/2013 294 Ramapo Indian Hills Regional High School District 7/1/2013 295 Rancocas Valley Regional High School 7/1/2013

11

Member


296 Red Bank Borough Board of Education 7/1/2013 297 Red Bank Charter School 7/1/2013 298 Red Bank Regional High School District 7/1/2013 299 Ridge & Valley Charter School 7/1/2013 300 Ridgefield Park Board of Education 7/1/2013 301 Ringwood Board of Education 7/1/2013 302 Riverbank Charter School of Excellence 7/1/2013 303 Robbinsville Board of Education 7/1/2013 304 Robert Treat Academy Charter School 7/1/2013 305 Rockaway Borough Board of Education 7/1/2013 306 Rockaway Township Board of Education 7/1/2013 307 Roosevelt Borough Board of Education 7/1/2013 308 Roseland Board of Education 7/1/2013 309 Roselle Borough Board of Education 7/1/2013 310 Roselle Park Board of Education 7/1/2013 311 Roxbury Township Board of Education 7/1/2013 312 Rumson Borough Board of Education 7/1/2013 313 Rumson-Fair Haven Regional High School District 7/1/2013 314 Runnemede Borough Board of Education 7/1/2013 315 Salem City Board of Education 7/1/2013 316 Salem County Special Services School District 7/1/2013 317 Salem County Vocational Board of Education 7/1/2013 318 School District of the Chathams 7/1/2013 319 Sea Girt Borough Board of Education 7/1/2013 320 Sea Isle City Board of Education 7/1/2013 321 Seaside Heights Borough Board of Education 7/1/2013 322 Seaside Park Borough Board of Education 7/1/2013 323 Shore Regional High School District 7/1/2013 324 Shrewsbury Borough Board of Education 7/1/2013 325 Soaring Heights Charter School 7/1/2013 326 Somerdale Borough Board of Education 7/1/2013 327 Somerset County Educational Services Commission 7/1/2013 328 Somerset Hills School District 7/1/2013 329 Somerville Board of Education 7/1/2013 330 South Bergen Jointure Commission 7/1/2013 331 South Bound Brook Board of Education 7/1/2013 332 South Brunswick Township Board of Education 7/1/2013 333 South Hunterdon Regional Board of Education 7/1/2013 334 South Orange-Maplewood Board of Education 7/1/2013

12

Member


335 South Plainfield Board of Education 7/1/2013 336 South River Board of Education 7/1/2013 337 Spotswood Board of Education 7/1/2013 338 Spring Lake Board of Education 7/1/2013 339 Spring Lake Heights Boro Board of Education 7/1/2013 340 Springfield Public School District 7/1/2013 341 Sterling High School District 7/1/2013 342 Stillwater Township Board of Education 7/1/2013 343 Stone Harbor Board of Education 7/1/2013 344 Stow Creek Township Board of Education 7/1/2013 345 Stratford Borough Board of Education 7/1/2013 346 Sussex County Charter School for Technology 7/1/2013 347 Sussex County Educational Services Commission 7/1/2013 348 Swedesboro-Woolwich Board of Education 7/1/2013 349 Team Academy Charter School 7/1/2013 350 Teaneck Community Charter School 7/1/2013 351 Tewksbury Township Board of Education 7/1/2013 352 The Institute for Excellence Charter School 7/1/2013 353 Tinton Falls Board of Education 7/1/2013 354 Toms River Regional Schools 7/1/2013 355 Totowa Board of Education 7/1/2013 356 Township of Union Board of Education 7/1/2013 357 Trenton Board of Education 7/1/2013 358 Tuckerton Borough Board of Education 7/1/2013 359 Union Beach Borough Board of Education 7/1/2013 360 Union City Board of Education 7/1/2013 361 Union County Teams Charter School 7/1/2013 362 Union Township Board of Education 7/1/2013 363 Unity Charter School 7/1/2013 364 University Academy Charter High School 7/1/2013 365 University Heights Charter School 7/1/2013 366 Upper Pittsgrove Township Board of Education 7/1/2013 367 Upper Township Board of Education 7/1/2013 368 Village Charter School 7/1/2013 369 Vineland City Board of Education 7/1/2013 370 Visions Academy Charter High School 7/1/2013 371 Wallkill Valley Regional Board of Education 7/1/2013 372 Wanaque Board of Education 7/1/2013 373 Warren County Special Services 7/1/2013

13

Member


374 Warren County Technical School 7/1/2013 375 Warren Township Board of Education 7/1/2013 376 Washington Borough Board of Education (Warren) 7/1/2013 377 Washington Township Bd. of Ed. c/o Mullica Twp. BOE 7/1/2013 378 Waterford Township Board of Education 7/1/2013 379 Wayne Township Board of Education 7/1/2013 380 Weehawken Township Board of Education 7/1/2013 381 West Amwell Township Board of Education 7/1/2013 382 West Cape May Board of Education 7/1/2013 383 West Deptford Board of Education 7/1/2013 384 West Long Branch Board of Education 7/1/2013 385 West New York Board of Education 7/1/2013 386 West Orange Board of Education 7/1/2013 387 West Wildwood Board of Education 7/1/2013 388 Westfield Board of Education 7/1/2013 389 Westwood Regional Board of Education 7/1/2013 390 Wharton Borough Board of Education 7/1/2013 391 White Township Board of Education 7/1/2013 392 Wildwood City Board of Education 7/1/2013 393 Wildwood Crest Board of Education 7/1/2013 394 Winfield Township Board of Education 7/1/2013 395 Winslow Township Board of Education 7/1/2013 396 Woodbine Board of Education 7/1/2013 397 Woodbridge Township Board of Education 7/1/2013 398 Woodbury Board of Education 7/1/2013 399 Woodland Township Board of Education 7/1/2013 400 Woodstown-Pilesgrove Regional Board of Education 7/1/2013

The name of the registered agent and address upon whom process may be served at June 30, 2014 was obtained and is noted below:

William Mayo, CPCU, ARM Executive Director New Jersey Schools Insurance Group 450 Veterans Drive Burlington, NJ 08016

During the year ended June 30, 2014 the Bylaws were amended changing the name from New Jersey School Boards Association Insurance Group to New Jersey Schools Insurance Group.

14

TERRITORY AND PLAN OF OPERATION The Fund was formed to provide local school boards with an economical means of obtaining insurance coverages. The purpose of the Fund is to permit the Boards of Education joining to make a more efficient use of their powers and resources by cooperating on a basis that will be of mutual advantage; and to provide a procedure of the development, administration, and provision of Risk Management Programs, a Joint Self-Insurance Fund or Funds, Joint Insurance Purchases and related services for members and their employees for the following:

• Worker’s Compensation and Employers’ Liability; • Motor Vehicle Liability and liability other than Motor Vehicles; • Property Damage • School Board Legal Liability; • Boiler and Machinery; • Umbrella Liability; • Student Accident; • Environmental Impairment Liability • Supplemental Indemnity.

Pursuant to N.J.S.A. 18A:18B-1, et. seq., a qualified Board of Education shall, by resolution, agree to join the Fund. The resolution shall provide for execution of a written agreement specifically providing for acceptance of the Fund’s bylaws as approved and adopted. The resolution shall provide for the execution of an Indemnity and Trust agreement as defined in the Fund bylaws. Any Board of Education seeking membership shall also submit an application for membership to the Fund on a form acceptable to the Commissioner. The application shall include the executed Indemnity and Trust agreement and the resolution required under the Fund bylaws. An application may be approved by a majority vote of the full-authorized membership of the Trustees based on the following criteria: 1. The applicant’s three (3) year claims history shows safety performance consistent with the

Fund’s objectives and the applicant’s physical location and makeup indicates a prospective likelihood of satisfactory future claim performance.

2. A safety inspection and evaluation, where required, conducted by the Fund’s safety

manager shows the applicant meets the Fund’s safety standards. 3. The Fund has the administrative capability to absorb additional memberships without

undue inconvenience or strain. 4. The Trustees may authorize acceptance of districts by staff personnel under guidelines

approved by the trustees.

15

Within 15 days of its approval by the Fund, the executed Indemnity and Trust Agreement and the resolution required under Subsection 1 above shall be filed with the Department and shall be accompanied by such amendments to the Fund’s Budget and Risk Management Program as well as any other documents required pursuant to N.J.A.C. 11:15-4.9. The Fund provides coverage for workers' compensation, general and automobile liability, physical damage, property, errors and omissions and crime. The Fund uses reinsurance agreements to reduce its exposure to large losses on the types of coverages. A summary of the risk amounts retained by the Fund, by line of coverage, are as follows: Line of Coverage Retention Workers' compensation $1,000,000 per occurrence for fund years

2004 to 2013, $350,000 per occurrence for fund years 1992 to 2002, and $500,000 per occurrence for fund years 1986 to 1991 and 2003. For periods prior to 1987, annual aggregate retention based on minimum varying percentages of standard earned premium.

General liability and automobile liability $500,000 per occurrence for fund years 2003

to 2013, $100,000 per occurrence for fund years 1999 to 2002, $250,000 per occurrence for fund years 1988 to 1998, and $200,000 per occurrence for periods prior to fund year 1988.

Property $1,000,000 per occurrence for fund years

2002 to 2013, $150,000 per occurrence for fund years 1989 to 2001, and $250,000 per occurrence for periods prior to fund year 1989.

Errors and Omissions $1,000,000 per occurrence for fund years

2003 to 2008. Crime $100,000 per occurrence Auto Physical Damage 100% retention In addition, there are aggregate retentions applicable to losses in excess of the per occurrence retentions. For fund years 1994 to 1998, the aggregate retention is $250,000 for general and

16

automobile liability losses and $350,000 for workers' compensation losses. For fund years 1999 to 2002, the aggregate retention is $100,000 for general and automobile liability and $350,000 workers' compensation losses. For fund years 2003 to 2008 the aggregate retention is $500,000 for general and automobile liability and workers' compensation losses. The Group also provides claims processing services and purchases reinsurance policies for several New Jersey School Districts. The Group does not retain any risk for these school districts. The following is a listing of Fund Professionals serving at June 30, 2014: Director: Marty Kalbach- The Director shall be an individual or firm engaged by the group to carry out the duties and responsibilities set forth below. The Director shall be experienced in Risk Management matters and shall not be a Trustee of the Fund. Also, the Director and other employees, shall not be an employee, officer or director of, or have either a direct or indirect financial interest in, a servicing organization. The Director shall have the following duties and responsibilities:

1. Shall carry out the policies established by the Trustees and to otherwise administer and provide for the day-to-day management of the Fund.

2. Shall advise the Trustees on risk management matters. 3. Shall maintain underwriting data and shall provide for the purchase of insurance,

excess insurance or reinsurance as authorized by the Trustees. 4. Shall prepare draft bid specifications for services for any outside services. 5. Shall monitor the performance of service companies. 6. Shall write a draft budget for review by the Trustees. 7. Shall, on not less than a quarterly basis, provide the Trustees with a Fund status

report including, but not limited to the minutes of Fund meetings and a summation of Fund activity.

8. Shall perform such other duties as provided for by the Fund’s Trustees, the Bylaws,

and the laws and regulations of the State of New Jersey. 9. Shall serve according to a written contract or at the pleasure of the Trustees. 10. Shall function as custodian of funds under Article XIV of the bylaws.

Fund Actuary: Towers and Watson - The Actuary shall certify the actuarial soundness of the Fund and shall provide such actuarial reports as required by the New Jersey Department of

17

Banking and Insurance. The actuary shall also certify that the Fund’s annual budget is actuarially sound with respect to funding for the claim or loss retention accounts. Fund Auditor: Nisovoccia - The Auditor shall be an independent Certified Public Accountant (CPA) or a Registered Municipal Accountant (RMA)and shall not be a Trustee. The Auditor shall conduct the annual audit of the Group and may perform such other duties as provided for by the Board of Trustees, the bylaws and the applicable laws and regulations of the State of New Jersey. Fund Service Provider: Willis Administrative Services Corporation – The fund service provider shall act as the reinsurance intermediary. In this capacity, they shall obtain reinsurance for the Fund and administer payments for the reinsurance. Fund Attorney: Archer & Greiner - The Fund’s attorney shall be admitted to the New Jersey Bar, and should not be a trustee of the group. The attorney shall advise the group on all legal matters including, but not limited to, the appropriateness of claims settlements recommended by the claims administrator, as requested by the group. The attorney shall advise the Board of Trustees on the selection of counsel to represent the group or it’s Fund participants in the defense of claims when requested. However, the Attorney or any member of the Attorney’s law firm shall not defend any claim against the group or its Fund participants. The attorney shall perform such other duties as required or requested by the Board of Trustees, the bylaws and the applicable laws and regulations of the State of New Jersey. In addition to the above contracted positions, the Fund’s bylaws allows for the appointment of other service agents as needed. Appointed persons or entities shall be compensated for their services pursuant to written fee guidelines submitted annually and approved by a majority vote of the Board of Trustees. Any appointed person or entity shall serve at the pleasure of Fund and can be removed at any time without cause. MANAGEMENT AND CONTROL The By-laws of the Fund have the following requirements of its Trustees:

1. Each Trustee shall be a natural person 18 years of age or older who is a resident of this state. Trustees shall be members or employees of the Fund’s member boards of education. Any Trustee who ceases to be a member or employee of a board of education may serve for not more than ninety (90) days following cessation of such membership or employment.

2. The Fund’s Trustees shall consist of nine (9) members. The nine members will be

equally divided between the north, central and southern regions of New Jersey. Each region of the state will have one (1) School Board Member, one (1) Business Administrator and one (1) Superintendent as a representative to the GROUP Trustee Board. New Jersey will be divided into thirds utilizing the following divisions by county;

18

North: Bergen, Essex, Hudson, Morris, Passaic, Sussex, Warren

Central: Hunterdon, Mercer, Middlesex, Monmouth, Ocean, Somerset, Union

South: Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester, Salem

a) Three (3) Trustees shall be School Board Members from the Fund’s member

districts. The three (3) School Board Member Trustees will be nominated by the NJSBA according to their governance rules.

b) Three (3) Trustees shall be Business Administrators from the GROUP’S member

districts. The three (3) Business Administrators will be nominated by the NJASBO according to their governance rules.

c) Three (3) Trustees shall be Superintendents from the Fund’s member districts. The

three (3) Superintendents will be nominated by the NJASA according to their governance rules.

d) Trustee nominations must be approved by a majority vote of the Fund Trustees

present when presented for approval.

e) Trustee terms begin at the beginning of the Fund’s fiscal year.

f) Any Trustee vacancy shall be filled via nomination for the unexpired term by the appropriate organization from which the leaving Trustee represented. A majority vote of the Fund Trustees present is required to approve the nomination.

g) Those persons nominated shall serve subject to the advice and consent of the Fund

Trustees for a period of three (3) years.

h) As terms expire the Trustee Board will be replenished with Trustees that meet the Trustee membership criteria. The transition will be developed and implemented by the Board of Trustees.

19

The members of the 2013/2014 Board of Trustees serving at June 30, 2014 are as follows: Eva M. Nagy, Chairperson Franklin Twp. BOE Mark Finkelstein, Vice Chairperson Middlesex Ed Serv Com William Herman Millville BOE Daniel G. Vivarelli, Sr. Cumberland Cty Tech Ed Donald Webster, Jr. Manchester Twp. BOE Christopher Russo, Ed. D. Delran BOE Jeffrey Rutzky Roseland BOE Irene Le Febvre Boonton Town BOE The Fund has a Finance/Personnel Committee. The members elected and serving at June 30, 2014 are as follows:

Eva M. Nagy Donald Webster, Jr

Christopher Russo, Ed. D. A listing of the Sub-Groups that are maintained by the Fund as at June 30, 2014 is presented below:

North Jersey Educational Insurance Fund (NJEIF) Educational Risk and Insurance Consortium North (ERIC North) Educational Risk and Insurance Consortium South (ERIC South) Educational Risk and Insurance Consortium West (ERIC West) Burlington and Camden Counties Educators Insurance Consortium (BACCEIC) Monmouth-Ocean Counties Shares Services Insurance Fund (MOCSSIF) Cape and Atlantic Insurance Pool (CAIP)

REINSURANCE AND EXCESS INSURANCE The Fund may purchase reinsurance or excess insurance subject to the terms and conditions of the excess or reinsurer. The Fund has purchased reinsurance for the following:

1. Property: The Fund cedes 100% net loss per occurrence excess of $1,000,000 to a maximum of $350,000,000.

2. Comprehensive General Liability and Automobile Liability: The Fund retains

$500,000 and cedes 100% each and every occurrence on an indemnity only. 3. Workers’ Compensation: The Fund places excess statutory limits of liability and

employers’ liability in excess of $1,000,000 per occurrence.

The Fund also has Boiler and Machinery reinsurance with an aggregate indemnity limit of $100,000,000 per loss occurrence with no retention.

20

The Fund has contracted with Willis Administrative Services Corporation to act as its reinsurance intermediary broker. There is a written reinsurance intermediary agreement between the Fund and Willis Administrative Services Corporation which outlines and defines the services that Willis Administrative Services Corporation will provide on behalf of the Fund, as well as the agreed upon costs for these services. FIDELITY BOND AND OTHER INSURANCE COVERAGES The Fund is required under N.J.S.A. 11:15-4.6(d) to maintain the following minimum insurance coverage:

1. A fidelity bond for all persons handling Fund assets;

2. A surety bond for the claims administrator (not applicable to the Fund, as claims are processed by the Fund itself, not a third-party administrator);

3. Errors and omissions coverage for all servicing organizations and the servicing

organization that negotiates excess insurance or reinsurance on behalf of the Fund. A review of the coverage in affect revealed that the Fund did appropriately maintain the required types of insurance coverage. It was also noted that the Fund held the appropriate amount of fidelity bond coverage to satisfy the suggested minimum amounts of fidelity bond coverage as outlined by the National Association of Insurance Commissioners (NAIC). All Fund Professionals have provided proof of their "Certificate of Liability Insurance Coverage" in accordance with their executed contracts for the Fund Year 2014. AUDITED FINANCIAL REPORT Pursuant to N.J.A.C. 11:2-26.4 an annual audit was performed by the CPA firm Nisivoccia LLP and an audited financial CPA and state financial reports were filed with the Commissioner of the Department of Banking and Insurance.

21

FINANCIAL STATEMENTS AND OTHER EXHIBITS Exhibit A – Balance Sheet as of June 30, 2014 Exhibit B – Summary of Statement of Revenue, Expenditures and Changes in Net Position for the years ended June 30, 2014 and 2013

22

NOTES TO THE FINANCIAL STATEMENTS NOTE 1: CASH AND CASH EQUIVALENTS The Fund reported a balance of $102,149,821 at June 30, 2014 which will be accepted as stated by this examination. Pursuant to the requirements of N.J.S.A. 46:30B-1 “Uniformed Unclaimed Property Act”, and the "Unclaimed Property Filing Statement Instructions," the Fund is required to file a report with the State of New Jersey on an annual basis. Each year the report must be filed before November 1st regardless of whether the Fund has escheatable funds. Upon review, it was determined that the Fund had not filed the report as required. It is recommended that the Fund file the necessary report as required by N.J.S.A. 46:30B-1 “Uniformed Unclaimed Property Act”. NOTE 2: INVESTMENTS The Fund reported a balance of $168,566,982 at June 30, 2014. This balance will be accepted as stated by this examination. In reviewing the Fund custodian agreement with TD Bank, it was noted that the Fund did not comply with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements. The following provisions of the Fund custodian agreement with TD Bank needs to be amended for the agreement to be in accordance with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements:

1. The Custodian name needs to be changed from Commerce Bank to TD Bank.

2. The Principal name needs to be changed from New Jersey School Boards Association Insurance Group to New Jersey Schools Insurance Group.

3. Addition of an indemnification clause which should read as follows: “Custodian is

obligated to indemnify the Fund for any loss of securities of the Fund in the custodian's custody occasioned by the negligence or dishonesty of the custodian's officers or employees, or burglary, robbery, holdup, theft, or mysterious disappearance, including loss by damage or destruction. In the event of a loss of those securities for which the custodian is obligated to indemnify the Fund, the securities shall be promptly replaced or the value of the securities and the value of any loss of rights or privileges resulting from the said loss of securities shall be promptly replaced.”


25

It is recommended that the Fund amend their custodian agreement with TD Bank with the above mentioned amendments to be in accordance with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements. NOTE 3: REINSURANCE RECEIVABLE The Fund reported an asset for “Reinsurance Receivable” in the amount of $16,747,077 which was $561,958 more than the amount determined by the examination of $16,185,119. The examination differences was a reporting error of the Fund’s Reinsurance Recoverable Payable - XL Reinsurance account being reclassified as an reduction of the asset in the amount of $477,884 from the liability account titled – Accounts Payable and Accrued Expenses and Reinsurance Receivable balances in the Crime and Errors and Omissions Line of Business that were uncollected for over one fund year in the amount of $84,074. It is recommended that the Fund non-admit all reinsurance receivable that are uncollected for over one fund year in future audited statements. NOTE 4: LOSS RESERVES Loss Reserves as reported by the Fund at June 30, 2014 were $213,382,000. Paid losses were reconciled to Fund reports and no material exceptions were noted. Samples of payments were selected and traced to supporting documentation without exception. Completeness testing was performed on the Fund’s loss files without exception to materiality. A review of the reserves for losses was completed under the direction of the Property and Casualty Actuarial Unit of the Office of Solvency Regulation of the New Jersey Department of Banking and Insurance. On the basis of this review, the Fund's reserves were determined to be reasonable and the balance will be accepted as stated. NOTE 5: ACCOUNTS PAYABLE AND ACCRUED EXPENSES The Fund reported a liability for “Accounts Payable and Accrued Expenses” in the amount of $3,928,122 which was $477,884 more than the amount determined by the examination of $3,450,238. The examination difference was a reclassification of the Fund’s Reinsurance Recoverable Payable - XL Reinsurance to the asset account titled – Reinsurance Receivables.

26

NOTE 6: NET POSITION The Fund reported net position at June 30, 2014 of $66,169,762 which consisted of investment in capital assets of $379,892 and Unrestricted of $65,789,870. The examination reported net position of $66,085,688 which was $84,074 less than the amount reported by the Fund. This decrease is due to an examination change to certain asset and liability accounts, which ultimately affected the net position account as follows: Net Position at June 30, 2014 (per Fund)

$66,169,762

Decrease in Net Position:

Reinsurance Receivable $561,958

Increase in Net Position:

Accounts Payable and Accrued Expenses $477,884 Net Decrease in Net Position

$84,074

Net Position at June 30, 2014 (per Examination)

$66,085,688

27

SUMMARY OF EXAMINATION RECOMMENDATIONS Cash and Cash Equivalents (page 25) It is recommended that the Fund file the necessary report as required by N.J.S.A. 46:30B-1 “Uniformed Unclaimed Property Act”. Investments (page 26) It is recommended that the Fund amend their custodian agreement with TD Bank to be in accordance with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements. Reinsurance Receivable (page 26) It is recommended that the Fund non-admit all reinsurance receivable that are uncollected for over one fund year in future audited statements.

28

CONCLUSION The examination was conducted by the undersigned with the assistance of fellow examiners of the New Jersey Department of Banking and Insurance examination staff. The examination and audit was conducted at the New Jersey Schools Insurance Group office in Burlington, NJ. The courteous assistance and cooperation of the Fund's officers and employees is acknowledged. Respectfully Submitted,

Vincent Kaighn, CFE CFE Reviewer

29

NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE (DOBI)

REPORT EXAMINATION AS TO THE CONDITION OF THE

NEW JERSEY SCHOOLS INSURANCE GROUP

AS OF 06/30/2014

MANAGEMENT’S RESPONSE:

PLEASE SEE BELOW (IN RED) FOR NJSIG MANAGEMENT’S RESPONSE:

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: CASH AND CASH EQUIVALENTS

The Fund reported a balance of $102,149,821 at June 30, 2014 which will be accepted as stated by this examination.

Pursuant to the requirements of N.J.S.A. 46:30B-1 “Uniformed Unclaimed Property Act”, and the "Unclaimed Property Filing Statement Instructions," the Fund is required to file a report with the State of New Jersey on an annual basis. Each year the report must be filed before November 1st regardless of whether the Fund has escheatable funds. Upon review, it was determined that the Fund had not filed the report as required. It is recommended that the Fund file the necessary report as required by N.J.S.A. 46:30B-1 “Uniformed Unclaimed Property Act”.

NJSIG MANGEMENT’S RESPONSE: Although NJSIG has no current escheatable funds, as of 07/01/16, NJSIG’s management will implement new procedures in accordance with N.J.S.A. 46:30B-1 “Uniformed Unclaimed Property Act” which includes revised Claims and Accounting procedure for stale-dates checks and escheatable funds. NJSIG will also file the required reports with the State of New Jersey starting this upcoming November 1st (2016).

NOTE 2: INVESTMENTS

The Fund reported a balance of $168,566,982 at June 30, 2014. This balance will be accepted as stated by this examination.

In reviewing the Fund custodian agreement with TD Bank, it was noted that the Fund did not comply with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements. The following provisions of the Fund custodian agreement with TD Bank needs to be amended for the agreement to be in accordance with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements:

1. The Custodian name needs to be changed from Commerce Bank to TD Bank.

2. The Principal name needs to be changed from New Jersey School Boards Association Insurance Group to New Jersey Schools Insurance Group.

3. Addition of an indemnification clause which should read as follows: “Custodian is

obligated to indemnify the Fund for any loss of securities of the Fund in the custodian's custody occasioned by the negligence or dishonesty of the custodian's officers or employees, or burglary, robbery, holdup, theft, or mysterious disappearance, including loss by damage or destruction. In the event of a loss of those securities, for which the custodian is obligated to indemnify the Fund, the securities shall be promptly replaced or the value of the securities and the value of any loss of rights or privileges resulting from the said loss of securities shall be promptly replaced.”


It is recommended that the Fund amend their custodian agreement with TD Bank with the above mentioned amendments to be in accordance with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements.

NOTE 2: INVESTMENTS (Continued):

NJSIG MANGEMENT’S RESPONSE: TD Wealth has not updated the custodial agreement for their name change or the Group’s name change. In addition, TD Wealth refused to follow DOBI’s recommended custodial agreement language to comply with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements. NJSIG prepared an updated cash management plan and a RFP for banking, custodial institutions, financial advisors and investments to rectify this issue. The RFP is in legal review at the current time but will be distributed/advertised shortly to find new banking, custodians, investments and financial advisors that will comply with the necessary N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements requirements.

NOTE 3: REINSURANCE RECEIVABLE

The Fund reported an asset for “Reinsurance Receivable” in the amount of $16,747,077 which was $561,958 more than the amount determined by the examination of $16,185,119.

The examination differences was a reporting error of the Fund’s Reinsurance Recoverable Payable - XL Reinsurance account being reclassified as an reduction of the asset in the amount of $477,884 from the liability account titled – Accounts Payable and Accrued Expenses and Reinsurance Receivable balances in the Crime and Errors and Omissions Line of Business that were uncollected for over one fund year in the amount of $84,074.

It is recommended that the Fund non-admit all reinsurance receivable that are uncollected for over one fund year in future audited statements.

NJSIG MANGEMENT’S RESPONSE: The NJ DOBI chose a reporting adjustment to NJSIG’s presentation of a reinsurance receivable amount of $16,747,077 and a reinsurance payable amount (consolidate in “Accounts Payable & Accrued Expenses” line item) of $477,884. NJ DOBI chose to net these two amounts as one “Reinsurance Receivable” amount of $16,269,193. (This was just a reporting preferences/reclass between line items). In addition, NJ DOBI non-admitted any reinsurance recovery (for fully reinsured lines of coverage) that exceeded one fund year equal to $84,074. NJSIG will no longer include reinsurance recoveries on its financial reports for time periods exceeding one fiscal year.

NOTE 4: LOSS RESERVES

Loss Reserves as reported by the Fund at June 30, 2014 were $213,382,000.

Paid losses were reconciled to Fund reports and no material exceptions were noted. Samples of payments were selected and traced to supporting documentation without exception. Completeness testing was performed for the Fund’s without exception to materiality.

A review of the reserves for losses was completed under the direction of the Property and Casualty Actuarial Unit of the Office of Solvency Regulation of the New Jersey Department of Banking and Insurance. On the basis of this review, the Fund's reserves were determined to be reasonable and the balance will be accepted as stated.

NJSIG MANGEMENT’S RESPONSE: No recommendations noted – no NJSIG changes needed.

NOTE 5: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The Fund reported a liability for “Accounts Payable and Accrued Expenses” in the amount of $3,928,122 which was $477,884 more than the amount determined by the examination of $3,450,238.

The examination difference was a reclassification of the Fund’s Reinsurance Recoverable Payable - XL Reinsurance to the asset account titled – Reinsurance Receivables.

NJSIG MANGEMENT’S RESPONSE: The NJ DOBI chose a reporting adjustment to NJSIG’s presentation of a reinsurance receivable amount of $16,747,077 and a reinsurance payable amount (consolidate in “Accounts Payable & Accrued Expenses” line item) of $477,884. NJ DOBI chose to net these two amounts as one “Reinsurance Receivable “amount of $16,269,193. (This was just a reporting preferences/reclass between line items). No recommendations noted – no NJSIG changes needed.

NOTE 6: NET POSITION

The Fund reported net position at June 30, 2014 of $66,169,762 which consisted of investment in capital assets of $379,892 and Unrestricted of $65,789,870. The examination reported net position of $66,085,688 which was $84,074 less than the amount reported by the Fund. This decrease is due to an examination change to certain asset and liability accounts, which ultimately affected the net position account as follows:

Net Position at June 30, 2014 (per Fund) $66,169,762

Decrease in Net Position:

Reinsurance Receivable $561,958

Increase in Net Position:

Accounts Payable and Accrued Expenses $477,884

Net Decrease in Net Position $84,074

Net Position at June 30, 2014 (per Examination)

$66,085,688

NJSIG MANGEMENT’S RESPONSE: The NJ DOBI chose a reporting adjustment to NJSIG’s presentation of a reinsurance receivable amount of $16,747,077 and a reinsurance payable amount (consolidate in “Accounts Payable & Accrued Expenses” line item) of $477,884. NJ DOBI chose to net these two amounts as one “Reinsurance Receivable “amount of $16,269,193. (This was just a reporting preferences/reclass between line items). In addition, NJ DOBI non-admitted any reinsurance recovery (for fully reinsured lines of coverage) that exceeded one fund year equal to $84,074. NJSIG will no longer include reinsurance recoveries on its financial reports for time periods exceeding one fiscal year.

SUMMARY OF EXAMINATION RECOMMENDATIONS

Cash and Cash Equivalents (page 25) It is recommended that the Fund file the necessary report as required by N.J.S.A. 46:30B-1 “Uniformed Unclaimed Property Act”. NJSIG MANGEMENT’S RESPONSE: NJSIG will file the required reports with the State of New Jersey with the next filing date of November 1st (2016). Investments (page 26) It is recommended that the Fund amend their custodian agreement with TD Bank to be in accordance with N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements.

NJSIG MANGEMENT’S RESPONSE: A NJSIG RFP is in legal review at the current time but will be distributed/advertised shortly to find new banking, custodians, investments and financial advisors that will comply with the necessary N.J.S.A. 18A:20-37-1(b) and the NAIC Financial Condition Handbook guidelines on Custodian and Safekeeping Agreements requirements.

Reinsurance Receivable (page 26) It is recommended that the Fund non-admit all reinsurance receivable that are uncollected for over one fund year in future audited statements.

NJSIG MANGEMENT’S RESPONSE: NJSIG will no longer include reinsurance recoveries on its financial reports for time periods exceeding one fiscal year.



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Board of Trustees Meeting of May 18, 2016 Action Item

Cash Management Plan

NJSIG is required to have a Cash Management Plan to comply with N.J.S.A 40A:5-14. Every local government unit is required to have such a plan. The cash management plan must list the Governmental Unit Deposit Protection Act (GUDPA) approved depository banks, any brokers/dealer, and the approved investment instruments selected by the local unit’s governing body.

The cash management plan is adopted by resolution of the local unit’s governing body, usually at the reorganization meeting, or first meeting of the year. The annual cash management plan may be amended at any time during the year to reflect changes due to changes in laws, depositories, funds, or investments.

The cash management plan should provide precise guidance and/or specify the type, class, or features of obligation for which investment is authorized.

The cash management plan is subject to audit.

The cash management plan provides instruction for the governing body to receive reports at regular meetings that provide information on investments related to class/type of security, book value, interest rates, market values, and/or sold/matured/purchased investments.

The attached is the NJSIG Cash Management Plan for the period of 07/01/15 through 09/30/16. An updated cash management plan will be presented to the Board of Trustees at the first meeting of each fiscal year (usually September 20XX) for their approval. Recommended Resolution: Accept the NJSIG Cash Management Plan for the period of 07/01/2015 through 09/30/2016. Michele Carosi Michele Carosi, Comptroller



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NEW JERSEY SCHOOLS INSURANCE GROUP CASH MANAGEMENT AND INVESTMENT PLAN

1.) Cash Management and Investment Objectives The New Jersey Schools Insurance Group (hereinafter referred to as the GROUP) objectives in this area are: a.) Preservation of capital. b.) Adequate safekeeping of assets. c.) Maintenance of liquidity to meet operating needs, claims settlements and

grants/dividends. d.) Diversification of the GROUP's portfolio to minimize risks associated with

individual investments. e.) Maximization of total return, consistent with risk levels specified herein. f.) Investment of assets in accordance with State and Federal Laws and Regulations. g.) Accurate and timely reporting of interest earnings, gains and losses by line of

coverage in each fund year. h.) Stability in the value of the GROUP’s economic surplus.

2.) Permissible Investments Investments shall be limited to the following: a.) Bonds or other obligations of the United States of America or obligations

guaranteed by the United States of America. b.) Government money market mutual funds. c.) Any federal agency or instrumentality obligation authorized by Congress that

matures within 397 days from the date of purchase, and has a fixed rate of interest not dependent on any index or external factors.

d.) Bonds or other obligations of the local unit or bonds or other obligations of school districts of which the local unit is a part or within which the school district is located; or

e.) Bonds or other obligations, having a maturity date not exceeding 397 days, approved by the Division of Investment of the Department of Treasury, the State Investment Council and the Department of Banking and Insurance for investment by local units.

f.) Local government investment pools. g.) Deposits with the State of New Jersey Cash Management Fund



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h.) Repurchase agreements of fully collateralized securities, subject to rules and conditions established by the NJ Department of Community Affairs and the NJ State Investment Council.

3.) Authorized Depositories In addition to the above, the GROUP is authorized to deposit funds in certificates of deposit and other time deposits in banks covered by the Governmental Unit Depository Protection Act, NJSA 17:9-14 et seq. (GUDPA). Specifically authorized depositories are as follows:

- TD Bank, N.A. - TD Wealth Management

All such depositories shall acknowledge in writing receipt of the Plan by sending a copy of acknowledgement to the GROUP’s Executive Director. The FUND is also authorized to invest its assets in the New Jersey Cash Management Fund.

4.) NJSIG for Investment Management The GROUP’s Executive Director (or retained asset manager) is directed by the NJSIG Finance Committee to authorize investments which are consistent with this plan and all appropriate regulatory constraints. When possible, federal securities shall be purchased directly from the US Treasury. Transactions may also be processed through the New Jersey Division of Investment by the GROUP’s Executive Director and/or a retained asset manager. The following institution is hereby designated as the firm with whom the Group’s Executive Director may deal for purposes of buying and selling securities identified in this Plan as “Permissible Investments” (permitted investments) or otherwise providing for Deposits.

- TD Wealth - TD Bank, NA - New Jersey Cash Management Fund

All such institutions shall acknowledge in writing receipt of the Plan by sending a copy of acknowledgement to the GROUP’s Executive Director.



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5.) Preservation of Capital

Securities shall be purchased with the ability to hold until maturity.

6.) Safekeeping Securities purchased on behalf of the GROUP shall be delivered electronically or physically to the GROUP’s custodial bank, which shall maintain custodial and/or safekeeping of the accounts for such securities on behalf of the GROUP. These securities will be covered by a custodial agreement with the financial institution in the State of New Jersey. The custodial agreement will comply with the required language in N.J.S.A 18A:20-37-1(b) and the NAIC Financial Condition Handbook Guidelines on Custodian and Safekeeping Agreements. Such institution shall provide for the designation of such investment in the name of the GROUP to assure that there is no unauthorized use of the funds or the Permitted Investments or deposits. The purchase of any Permitted Investments that involve securities shall be executed by a “delivery versus payment” method to insure that such Permitted Investments are either received by the GROUP or by a third party custodian prior to or upon the release of the GROUP’s payment To assure that all parties with whom the GROUP deals either by way of Deposits or Permitted Investments are aware of the authority and the limits set forth in this Plan, all such parties shall be supplied with a copy of this Plan in writing and all such parties shall acknowledge the receipt of that Plan in writing, a copy of which shall be on file with the GROUP’s Executive Director.

7.) Reporting for Asset Managers (if applicable) The asset manager will submit written statements describing the proposed investment strategy for achieving the objectives identified herein. The asset manager shall also submit revisions to strategy when justified as a result of changing market conditions or other factors. Such statements shall be provided to the GROUP’s Executive Director and Comptroller. The asset manager shall provide the GROUP’s Executive Director with a copy of the institution's annual National Association of Security Dealers' audit.



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8.) Reporting Requirements

Asset managers will submit written statements to the GROUP’s Executive Director and Comptroller describing the proposed investment strategy for achieving the objectives identified herein. Asset managers shall also submit revisions to strategy when justified as a result of changing market conditions or other factors. Such statements shall be provided to the GROUP’s Executive Director and Comptroller. The statements shall also include confirmation that all investments are made in accordance with this plan. Additionally, the Asset Manager shall include a statement that verifies the reconciliation and determination of the appropriate fair value of the GROUP’s portfolio based on valuation guidelines that shall be kept on file in the GROUP’s Executive Director’s office. The GROUP’s Comptroller shall report to the NJSIG Board of Trustee at all regular meetings on all investments. This report shall include information on the balances in all bank and investment accounts, and purchases, sales, and redemptions occurring in the prior month.

9.) Audit This plan, and all matters pertaining to the implementation of it, shall be subject to the GROUP’s annual audit and to audits by the NJ Department of Banking and Insurance.

10.) Cash Flow Projections Asset management decisions shall be guided by cash flow factors and payout factors supplied by the GROUP’s Actuary and reviewed by the NJSIG Finance Committee, the GROUP’s Executive Director and the GROUP’s Comptroller.

11.) Cash Management All moneys turned over to the GROUP shall be deposited within forty-eight (48) hours in accordance with NJSA 40A:5-15 and NJSA 18A:20-37. The GROUP’s Executive Director shall minimize the possibility of idle cash accumulating in accounts by assuring that all amounts in excess of negotiated compensating balances are kept in interest bearing accounts or promptly credited into the investment portfolio.



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Cash may be withdrawn from investment pools under the discretion of the GROUP’s Executive Director and/or the GROUP’s asset managers and only to fund operations. The GROUP’s Comptroller shall escheat to the State of New Jersey checks which remain outstanding for three years or more after the date of issuance. However, prior to implementing such procedures, the GROUP’s Comptroller, with the assistance of the GROUP’s Claims Manager, shall confirm that the outstanding check continues to represent a valid claim against the GROUP.

12.) Authorized Signatories and Verification Checks over $5,000 require two (2) signatures. The GROUP’s Executive Director is the primary signatory on all accounts. The alternate primary signatories on all accounts are the GROUP’s Loss Control Manager and/or the NJASBO Representative to the NJSIG Finance Committee and/or the GROUP’s Board of Trustee Chairperson. All wire transactions require initiation by the GROUP’s Executive Director (or the GROUP’s Loss Control Manager) and must be verified by the GROUP’s Claims Manager, Underwriting Manager and/or Information Technology Manager. The following is a listing of the GROUP’s accounts and the authorized signatories on the accounts: Concentration Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager serves as the permanent backup person to the ED. Additional designations on these accounts will be the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. Operating Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. The Claims Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account. Claims Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as permanent backup person to the ED. The Office Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account.



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Payroll Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. The Claims Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account. FSA/DCA Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. The Claims Manager, the Underwriting Manager, the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees are the additional signatories on this account. Lockbox Account: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be the NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. TD Bank CD’s: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. TD Wealth Management - NJSIG Capital Management Trust Fund: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees. NJ Cash Management Fund: The Executive Director (ED) and the Loss Control Manager are the designated authorities on this account. The Loss Control Manager will serve as the permanent backup person to the ED. Additional designations on these accounts will be NJASBO Representative to the NJSIG Finance Committee & the Chairperson of the Trustees.



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13.) Deviations/Amendments

Any recommendation regarding a deviation or amendment to the Cash Management Plan (to the extent permitted by law then in effect), must first be approved by two-thirds (2/3) vote of the NJSIG Finance Committee, and then forwarded to the NJSIG Board of Trustees for action.

14.) Term of Plan This Plan shall be in effect from MM/DD/YYYY to MM/DD/YYYY. Attached to this Plan is a resolution of the NJSIG Board of Trustees approving this Plan for such period of time. The Plan may be amended from time to time. To the extent that any amendment is adopted by the NJSIG Board of Trustees, the GROUP’s Executive Director will supply copies of the amendments to all of the parties who otherwise have received the copy of the originally approved Plan, which amendment shall be acknowledged in writing in the same manner as the original Plan was so acknowledged.



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First Policy Reading Employee Bonding Policy 3201

NJSIG Trustees expressed interest in reviewing pertinent components of the NJSIG policies and procedures to identify opportunities for improvements and needed changes. It was agreed that that NJSIG managers would participate in policy committee meetings under the leadership of Watson Consulting to recommend policy and procedure changes to the Board of Trustees for approval and ratification. The proposed policy update to the Employee Bonding Policy 3201 is continuing the effort. Recommended Resolution: Approve the Employee Bonding Policy 3201 as a first reading. William Mayo William Mayo, CPCU, ARM Executive Director


NJSIG Policies

Adopted: 11/83 Index #: 3201 Amended: 09/11 Page 1 of 1 Reviewed: 06/17/11, 05/18/16

EMPLOYEE BONDING All staff shall be covered by an employee dishonesty bond POLICY OF INSURANCE purchased by the Group with limits and deductibles determined by the Board of Trustees.



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First Policy Reading Trustee Expense Policy 3210

NJSIG Trustees expressed interest in reviewing pertinent components of the NJSIG policies and procedures to identify opportunities for improvements and needed changes. It was agreed that that NJSIG managers would participate in policy committee meetings under the leadership of Watson Consulting to recommend policy and procedure changes to the Board of Trustees for approval and ratification. The proposed policy update to the Trustee Expense Policy 3210 is continuing the effort. Recommended Resolution: Approve the Trustee Expense Policy 3210 as a first reading. William Mayo William Mayo, CPCU, ARM Executive Director


NJSIG Policies

Adopted: 09/83 Index #: 3210 Amended: 10/93, 6/11 Page 1 of 1 REVIEWED: 06/20/11, 5/18/16

TRUSTEE REIMBURSEMENT OF EXPENSES

Trustees may apply to be reimbursed for actual expenses incurred on behalf of the Group, per the guidelines of the New Jersey Schools Insurance Group.

TRAVEL Public carrier fares are chargeable if travel is for official Group business. Reimbursement shall occur on the least costly but practical means of transportation. For airplane and train travel, Trustees shall procure travel at the lowest available fare unless such transportation is not available.

HOTEL ACCOMODATIONS Room accommodations for Trustee travel shall be at rates considered mid-fair.

MILEAGE Reimbursement may be claimed for any mileage accrued for business purposes. A Trustee using their personal automobile for approved Group business shall be reimbursed at a rate equal to the Federal Internal Revenue Service (IRS) mileage allowance. A Trustee who is authorized to use their personal automobile must provide the Group with proof of a valid drivers’ license and proof of liability insurance in force at the time the business travel occurs and with insurance coverage minimums equal to or greater than those set by New Jersey law.

PER MEAL ALLOWANCE A per meal allowance, up to the limits of the Federal per meal allowance, will be paid for meals consumed by a Trustee conducting Group business. The allowance is not authorized for meals provided as part of any registration, conference or program whose registration was paid by the Group. The per meal allowance for meals will be that which is annually set as the Federal per meal guidelines. Alcohol will be an approved expense only when part of business entertainment.



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First Policy Reading Discretionary Settlement Authority Policy 7680

Discretionary Settlement Authority on workers’ compensation, limits settlement authority for the Assistant Claims Manager. The position has been eliminated so should the Settlement Authority. See attached. It is recommended that the Claims Supervisor authority be increased from $175,000 to $200,000 (New authority being $120,001 - $200,000). It is also recommended the Claim Manager authority be changed to $200,001- $299,999. Recommended Resolution: Approve the Discretionary Settlement Authority Policy 7680 as a first reading. William Mayo William Mayo, CPCU, ARM Executive Director

New Jersey Schools Insurance Group Revised: 4/6/16

NJSIG Policies & Procedures

Adopted: 11/83 Index #: 7680 Amended: 08/89, 09/90, 04/93, 09/01, 03/03, 10/05, Page 1 of 4 06/10, 05/11, 11/12, 5/14 POLICY


The Group will pay workers' compensation medical and wage loss benefits when such payments are warranted and within the requirements of the law and the guidelines and policy of the Group or as ordered by a court. In the majority of cases, it will be whether or not liability exists in a particular case, and proper statutory benefits will be paid promptly. There will be some claims, however, where either liability or the amount of benefit due is contested. It is unnecessary and unproductive to litigate every such case, as the administrative procedures are lengthy and costly. Therefore, the Group and the Executive Director must have the authority to settle such cases with claimants on behalf of the Group. Therefore, the Board establishes the following procedures for the settlement of contested workers’ compensation claims including Section 20 Settlements:


$1—$500 Bill Processor, Medical Claim Assistant 10-11 $501 - $60,000 Claim Rep. & Senior Claim Rep. 13-14

$60,001-$120,000 Claim Examiner, Claim Legal Examiner 15-16

& Field Claim Rep.

$120,001-$175,000 $200,000 Claim Supervisor 17

$175,001-$225,000 Eliminate Assistant Claim Manager 19 $225,001 $200,001-$299,999 Claim Manager 20

$300,000-Up Board of Trustees All of the above authorities would be given based on Claim Manager’s discretion.


NJSIG

Policies & Procedures Adopted: 11/83 Index #: 7680 Amended: 08/89, 09/90, 04/93, 09/01, 03/03, 10/05, Page 2 of 4 06/10, 05/11, 11/12, 5/14 POLICY


On all errors & omission claims, the following authority levels will apply:


$1—$5,000 Bill Processor 10 $5,001 - $30,000 Claim Rep. & Senior Claim Rep. 13-14 $30,001-$70,000 Claim Examiner, Claim Legal Examiner 15-16 & Field Claim Rep. $70,001-$100,000 Assistant Claim Manager, Claim Supervisor 17 $100,001-$125,000 Claim Manager 20 $125,001-$150,000 Claim Manager & Group Attorney 20 $150,001-200,000 Claim Manager, Group Attorney 20 & Claim Committee Rep. $200,001-Up Board of Trustees All of the above authorities would be given based on Claim Manager’s discretion. Note, it is recognized that where the Board of Trustees has approved authority and certain contingencies arise that more settlement authority is required. It may be impossible to reconvene the Trustees in a timely manner to further consider previously recognized authority. The Trustees authorize the Claim Manager, NJSIG legal counsel and one member of the NJSIG Claims Committee for the purpose of extending additional incremental authority on such previously extended cases, in an amount not to exceed 120% of the original extended authority. All such situations falling within the parameters of this scenario shall be reported by the Claim Manager to the Trustees at the next regularly scheduled Trustees meeting.




DISCRETIONARY SETTLEMENT AUTHORITY The Group will pay Personal Injury Protection medical, wage loss, and other benefits when such payments are warranted and within the requirements of the law and the guidelines and policy of the Group. On all liability lines the following authority levels will apply:


$1—$5,000 Bill Processor 10 $5,001 - $35,000 Claim Rep. & Senior Claim Rep. 13-14 $35,001-$60,000 Claim Examiner, Claim Legal Examiner 15-16 & Field Claim Rep. $60,001-90,000 Claim Supervisor 17 $90,001-$120,000 Claim Manager 20 $120,001-150,000 Claim Manager and Group Attorney 20 $150,001-$200,000 Claim Manager, Group Attorney 20 & Claim Committee Rep. $200,001-Up Board of Trustees All of the above authorities would be given based on Claim Manager’s discretion. Note, it is recognized that where the Board of Trustees has approved authority and certain contingencies arise that more settlement authority is required. It may be impossible to reconvene the Trustees in a timely manner to further consider previously recognized authority. The Trustees authorize the Claim Manager, NJSIG legal counsel and one member of the NJSIG Claim Committee for the purpose of extending additional incremental authority on such previously extended cases, in an amount not to exceed 120% of the original extended authority. All such situations falling within the parameters of this scenario shall be reported by the Claim Manager to the Trustees at the next regularly scheduled Trustees meeting.




DISCRETIONARY SETTLEMENT AUTHORITY Establishment of Claims Committee: In the event settlement authority is needed before the next regularly scheduled meeting, a Claims Committee shall be established. The Claims Committee shall be comprised of the Claim Manager, The Group Attorney and up to three Board of Trustee Members. The Claims Committee shall have authority to approve claims at or above the threshold established for the Board of Trustees, provided that the amount is recommended by both the Claim Manager and the Group Attorney. All three Trustee participants (NJSIG Chairman, NJSIG Vice-Chairman and one of the NJSIG ASBO Trustee Representatives) will be notified of any such meetings, however, only one Trustee is required to participate in order to extend settlement authority, in addition to the Claim Manager and legal counsel. Agreement by a simple majority of attendees, along with the recommendation of the Claim Manager and legal counsel, be sufficient to establish claim settlement value.



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Board of Trustees Meeting of March 16, 2016 Action Item

Policy Second Readings Expenditures/Expending Authority Policy 3200 Staff Reimbursement of Expenses Policy 3220

Recommended Resolution: Approve the second reading of Expenditures/Expending Authority Policy 3200 and Staff Reimbursement of Expenses Policy 3220 as attached. William Mayo William M. Mayo, Executive Director


NJSIG Policies

Adopted: 1/87 Index #: 3200 Amended: 03/88, 06/99, 05/11 Page 1 of 1 Reviewed: 05/11/11, 3/16/16

EXPENDITURES/EXPENDING AUTHORITY The Board of Trustees or its designee shall establish accounts as it deems necessary for the purpose of, conducting the business of the Group as set forth in the Group’s By-Laws, Article XIV, Section C. All monies paid to such accounts shall be held in the name of the Group. The Board of Trustees shall provide for the manner and dates for preparation by the Executive Director of an annual budget and reports on the financial condition of accounts. The Board of Trustees shall approve a list of individuals authorized to sign all checks for the payment of Group invoices. Checks up to $5,000 shall be issued and signed by the Executive Director or his/her designee. Checks in excess of $5,000 must be signed by two individuals who are authorized by the Board of Trustees to be signatories on the Group’s checking accounts. The Executive Director will have the authority to make and/or approve alcoholic beverage purchases if appropriate for annual/special business meetings/functions.


NJSIG Policies

Adopted: 11/83 Index #: 3220 Amended: 06/11 Page 1 of 1 Reviewed: 06/20/11, 3/16/16

STAFF REIMBURSEMENT OF EXPENSES

TRAVEL Public carrier fares are chargeable if travel is for official Group business. Reimbursement shall occur on the least costly but practical means of transportation. For airplane and train travel, Group representatives shall procure travel at the lowest available fare unless such transportation is not available.

HOTEL ACCOMODATIONS Room accommodations for Group travel shall be at rates considered mid-fair.

MILEAGE Reimbursement may be claimed for any mileage accrued for business purposes. An authorized Group representative, using their personal automobile for approved Group business shall be reimbursed at a rate equal to the Federal Internal Revenue Service (IRS) mileage allowance. A Group representative who is authorized to use their personal automobile must provide the Group with proof of a valid drivers’ license and proof of liability insurance in force at the time the business travel occurs and with insurance coverage minimums equal to or greater than those set by New Jersey law.

PER MEAL ALLOWANCE

A per meal allowance, up to the limits of the Federal per meal allowance, will be paid for meals consumed by a Group representative conducting Group business. The allowance is not authorized for meals provided as part of any registration, conference or program whose registration was paid by the Group. The per meal allowance for meals will be that which is annually set as the Federal per meal guidelines. Alcohol will be an approved expense only when part of business entertainment.


Travel Expense Policy INTRODUCTION It is the policy of New Jersey Schools Insurance Group (NJSIG) to reimburse staff for necessary and reasonable expenses incurred with approved NJSIG business travel. The purpose of this policy is to illustrate allowable business expenses eligible for reimbursement. These include necessary expenses as defined under section 162 of the Internal Revenue Code. Additional reference information is included in order for NJSIG employees to receive timely reimbursement. Expense limits are set for reimbursement, however, all employees should use their professional judgment while managing expenses and making decisions. Employees are expected to conduct themselves in a responsible and professional manner at all business functions/meetings. Employees should always be mindful of NJSIG’s Mission Statement and the client's best interest, NJSIG strongly encourages the use of travel discounts. Employees seeking reimbursement should incur the lowest reasonable travel expenses and exercise care to avoid impropriety or the appearance of impropriety. There may be instances when clients or other business associates offer to pay for a meal or other business expense for an NJSIG employee. See Employee Conflict of Interest policy #6160 or your Manager for further details and guidance. Business related travel, meetings and functions represent an opportunity to bolster NJSIG's professional brand. It is expected that employees will uphold a high standard of ethics, business practices and professionalism, in order to positively represent and protect NJSIG’s reputation and brand, at all times. RESPONSIBILITY NJSIG will reimburse employees for all reasonable and necessary expenses as noted in this policy while traveling on pre-approved company business or during a business function/meeting. The employee is responsible for being knowledgeable of and complying with all aspects of this policy. The Manager who approves and signs expense reports is responsible for accurately reviewing expense reports for compliance. Employees will not be reimbursed for expenses that are not in compliance with this policy. Expenses over listed limits will not be reimbursed and the employee will be responsible for payment of any expense above the limits. Expenses requiring but missing an itemized receipt will not be reimbursed Altering of itemized receipts may result in disciplinary action. If you have any questions about expense limits, itemized receipt requirements or other questions about this policy, speak with your Manager before incurring the expense. Submission of your expense reimbursement request shall mean you understand this policy.


CASH ADVANCES NJSIG’s policy is not to issue cash advances. If an employee anticipates an expense requiring a cash payment of over $500 that will result in an undue hardship, he/she should discuss the matter with his/her Manager. Any exceptions must be discussed with and approved by the Executive Director. PROCEDURES FOR REIMBURSEMENT Employee travel must be pre-approved or authorized as a typical component of an employee’s job responsibilities. Employees should verify that planned travel is eligible for reimbursement before making travel arrangements. 1. Employee must ensure he/she has pre-approval from his/her Manager for

the planned travel. 2. Employee must obtain lowest possible prices on hotel, airfare and the like. 3. Employee must accurately complete all sections of the Travel and Expense

Report Form including the correct Account number/Department Number. a. Employee should contact his/her manager for clarification on the

correct Account number/Department number if unsure. 4. Employee must submit the completed form with all credit card statements,

itemized receipts and any other expense documentation to his/her Manager for approval. Do not staple receipts to form.

5. The employee’s Manager must approve and sign all expense reports. No employee is authorized to approve his/her own, a peer’s, or a Manager’s travel expense report. The Manager is responsible for verifying:

• Business purpose • Correct totals • Supporting documentation and itemized receipts • Policy compliance including that expenses are in-line with pre-

approved expectations. 6. Once approved the Manager forwards the Travel and Expense Report Form

with all required receipts/documentation to Finance. 7. Manager level expense pre-approvals and process is the same except

Executive Director shall approves. 8. Executive Director level expense pre-approval and process is the same

except NJSIG Trustee shall approves. 9. Within 60 days of completion of a trip or of incurring an expense, employee

must submit and complete. a Travel and Expense Report Form. Travel and Expense Report Forms not submitted within 60 days require approval by the Executive Director.

10. Expense reports that are incorrect, incomplete or include disorganized itemized receipts will be returned to the approving Manager for completion/correction and may result in delay or non-reimbursement of some expenses.

11. Effective June 1, 2016, reimbursement checks will be issued monthly.


NON-REIMBURSABLE EXPENSES The following items will not be reimbursed by NJSIG:

• Airline club / Country club membership dues. • Airline, Auto or Lodging upgrades. • Car repair. • Child care, babysitting, house-sitting, or pet-sitting/kennel charges. • Commuting between home and the primary work location. • Costs incurred by traveler’s failure to cancel travel reservations in a timely

fashion. • Credit card interest charges. • Evening or formal wear expenses. • Overweight or additional baggage charges. • Expenses for travel incurred by companions / family members and/ or

related to vacation or personal days while on a business trip. • Haircuts, spa treatments and all other personal grooming (including

toiletries). • Laundry and dry cleaning. • Loss / Theft of personal funds or property / Lost baggage. • Medicines. • Passports, vaccinations and visas when not required as a specific and

necessary condition of the travel assignment. • Personal entertainment expenses, including in-flight movies, headsets,

health club facilities, books, magazines, bar bills, hotel pay-per-view movies, in-theater movies, social activities and related incidental costs.

• Pet hotel stays or pet transportation. • Traffic citations (parking tickets or fines). • Travel accident insurance premiums or purchase of additional travel

insurance. • Other expenses not directly related to the business travel.

VACATION IN CONJUNCTION WITH BUSINESS TRAVEL When vacation time is taken in addition to a business trip, any expense variance in airfare, car rental lodging or the like, must be clearly communicated and pre-approved by your Manager. No personal expenses will be reimbursed. EXPENSE GUIDELINES FOR REIMBURSEMENT The following table lists common travel expenses that are eligible for reimbursement. It is not all-inclusive. If you have any questions, contact your Manager before incurring the expense. In order to be reimbursed, the travel must be pre-approved (or authorized as a typical component of an employee’s job responsibilities) and the guidelines and procedures in this policy must be followed.


Table: Expense Guidelines for Reimbursement

QUALIFIED EXPENSE

CATEGORIES DETAILS EXPENSE GUIDANCE

Personal

Automobile

An employee authorized to use his /her own personal automobile must provide NJSIG with proof of a valid drivers’ license and proof of liability and with insurance coverage minimums equal to or greater than those set by New Jersey law. Reimbursement may be claimed for any mileage accrued for business purposes, excluding commuting miles between employee’s home and primary office location, when using a personal vehicle. Travel and Expense Report Form is required for reimbursement at the mileage reimbursement rate established by the IRS.

Mileage reimbursement is based on the prevailing IRS reimbursement rate. Please visit IRS.gov for the most up to date rate. Effective immediately; the maintenance reimbursement chart will expire and mileage reimbursement will be based solely on the prevailing IRS reimbursement rate.

Parking, Tolls Ferry, or Bus

Passes

Original receipts are required for parking fees (including airport parking). The lodging bill can be used as a receipt when charges are included as part of the overnight stay. No receipts for parking meters are required up to $10.00. Tolls. Original receipts or EZ-Pass statements/receipts are required for tolls. Miscellaneous transportation. Original receipts are required for taxi, bus, subway, metro, ferry and other modes of transportation.

Alternate transportation to the airport such as a car service, or cabs will be reimbursed up to the expected total of parking, mileage and tolls should the employee have driven him/herself. Receipts for the alternate transportation are required.

Airfare Travelers are expected to obtain the lowest available airfare that reasonably meets business travel needs, and book as far in advance as possible. For airfare reimbursement an original itemized airline receipt, an e-ticket receipt/statement or an Internet receipt/statement is required. The

For airplane travel, employees shall travel economy class unless such transportation is not available at which point, employees must get approval for a policy exception from his/her Manager. Exceptions should be made only under


receipt must show the method of payment and indicate that payment was made.

extraordinary circumstances. Additional fees for upgraded seating or any other upgrades will not be reimbursed.

Rail Transportation NJSIG will reimburse rail transportation provided that the cost does not exceed the cost of the least expensive airfare. or travel in the employees personal vehicle. For rail transportation reimbursement an original itemized receipt, original e-ticket receipt/statement or Internet receipt/statement is required. The receipt must show the method of payment and indicate that payment was made.

For rail transportation, employees shall travel economy class unless such transportation is not available at which point, employees must get approval for a policy exception from his/her Manager. Exceptions should be made only under extraordinary circumstances.

Rental Vehicles

Reimbursement for a commercial rental vehicle as a primary mode of transportation is authorized only if the rental vehicle is more economical than any other type of public transportation, or if the destination is not otherwise accessible. Vehicle rental at a destination city is reimbursable. Original receipts are required. The rental agreement must clearly show the date and the points of departure/arrival, as well as the total cost. Drivers must adhere to the rental requirements, and restrictions must be followed. Original receipts are required. When vehicle rentals are necessary, NJSIG encourages travelers to purchase collision damage waiver (CDW) and loss damage waiver (LDW) coverage. NJSIG will reimburse the cost of CDW and LDW coverage; all other insurance reimbursements will be denied. Drivers must be aware of the extent of coverage (if any) provided by his or her personal auto insurance company for travel that is business or not personal in nature.

NJSIG authorizes reimbursement for the most economic vehicle available. In certain circumstances larger vehicles may be rented, with Manager approval. Exceptions should be made only under extraordinary circumstances.


Parking fees, tolls and other incidental costs associated with the vehicle use are not covered by the rental agreement but may be covered under this policy. See Parking, Tolls Ferry, or Bus Passes section. Employees are required to fill the gas tank before returning the vehicle to the rental. Any service fees or additional fuel rates for failure to fill the tank prior to returning the vehicle will not be reimbursed.

Conference Registration Fees

Conference registration fees are reimbursed as long as they are pre-approved.

Lodging (commercial only)

The cost of overnight lodging (room rate and tax only) will be reimbursed to the employee if the authorized travel is 45 miles or more from the employee’s home or primary worksite. Exceptions to this restriction must be approved in writing by your Manager. NJSIG will reimburse lodging expenses at reasonable, single occupancy or standard business room rates. When the hotel or motel is the conference or convention site, reimbursement will be limited to the conference rate. Only single room rates are authorized for payment or reimbursement unless the second party is representing the company in an authorized capacity. If the lodging receipt shows more than a single occupancy, the single room rate must be noted. If reimbursement for more than the single room rate is requested, the name of the second person must be included.

As a general guideline, room accommodations for travel shall be at rates considered mid-fare or mid-tier among available rates.

Meals Per diem and per meal allowances are reimbursable for in-state and out-of –state overnight travel that is 45 miles or more from the employee’s home or primary worksite. NJSIG per diem and per meal rates are based on the U.S. General Services Administration Guidelines. In addition to meals these rates include incidental

Per Diem meal and incidental expense allowance is up to $65/day.


expenses such as laundry, dry cleaning and service tips (e.g., housekeeping or porter tips). Incidental expenses, unless specifically cited in this policy, will not be reimbursed. Per diem reimbursements are based on departure and return times over the entire 24-hour day and are prorated accordingly. If a free meal is served on the plane, included in a conference registration fee, built in to the standard, single hotel room rate or replaced by a legitimate business meal, the per diem allowance for that meal may not be claimed. Receipts are required for per diem and per meal allowances.

Business Meals and Business Meeting

expenditures

Employees must provide the following information in order to be reimbursed for any business related meals or business meeting expenditures:

• Names of individuals present, their titles and company name listed on the receipt or Travel and Expense Report Form

• Name and location of where the meal or event took place

• Exact amount and date of the expense

• Itemized receipts for all expenditures.

• Itemized receipts for meals. • Alcohol will not be an

approved expense.

Employees are expected to provide all information required for business meals and business meeting expenses. Employees are also expected to exercise good judgment to keep these expenses reasonable in support of NJSIG.

Business Expenses Business expenses, including faxes, photocopies, Internet charges, data ports and business telephone calls incurred while traveling, can be reimbursed. Original itemized receipts are required. Telephone calls. The costs of personal telephone calls are the responsibility of the individual.

Employees are expected to exercise good judgment and balance business need with lowest possible cost when incurring business expenses and making business phone calls.


Visa, Passport

Fees, and Immunizations

If these items are required for international travel, their reimbursement is left to the discretion of your Manager. Original itemized receipts are required.

Levels of expense may vary but must approved by your Manager



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Checking Accounts and New Claims

Attached are the check registers for March and April 2016. In addition, attached is a list of all new claims. The claims list has been provided to coincide with the check registers. The list includes all new claims from March and April 2016. This report shows the nature and financials for each claim. Recommended Resolution: Approve and ratify the checks and new claims which have been issued from accounts XXXX392 (operating account) and XXXX555 (claim account) for the period of 3/1/2016 to 4/30/2016 as shown on the attached reports. William Mayo William Mayo, CPCU, ARM Executive Director

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