2010R55-Nonprofit Benefits Trust RESOLUTION NO. 10-R-55
A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF
SCHERTZ, TEXAS AUTHORIZING A DECLARATION OF TRUST
ESTABLISHING A SINGLE NONPROFIT BENEFITS TRUST, AND
OTHER MATTERS IN CONNECTION THEREWITH
WHEREAS, the City of Schertz has heretofore adopted one or more insured employee
welfare benefit plans (collectively, the "Plan"), the sole purpose of which is to provide life,
disability, sickness, accident, and other health benefits solely for the employees or retirees of the
City of Schertz and their eligible dependants covered by the Plan;
WHEREAS, the insurance policy or policies making up the Plan (collectively, the
"Policy"), as and when issued, will constitute part of the fund to be held for the benefit of the
employees or retirees, and their eligible dependents under and in accordance with the Plan;
WHEREAS, the City of Schertz desires to establish The City of Schertz Employee
Benefits Trust as a "single nonprofit trust" within the meaning of Section 222.002(c)(5) of the
Texas Insurance Code, as amended, so that the premiums paid with respect to the Policy may
qualify for the exclusion from "taxable gross premiums" within the meaning of such section;
WHEREAS, the City Council has determined that it is in the best interest of the City to
authorize a Declaration of Trust in the form attached hereto as Exhibit A establishing a single
nonprofit benefits trust.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
Section 1. The City Council hereby authorizes the Members of the City Council to
execute the Declaration of Trust in substantially the form set forth on Exhibit A. The City
Manager is hereby directed to pay Barnard-Donegan Insurance ("BDI") $5,510 for costs incurred
by BDI at the request of the City for preparation of the Declaration of Trust.
Section 2. The recitals contained in the preamble hereof are hereby found to be true,
and such recitals are hereby made a part of this Resolution for all purposes and are adopted as a
part of the judgment and findings of the City Council.
Section 3. All resolutions, or parts thereof, which are in conflict or inconsistent with
any provision of this Resolution are hereby repealed to the extent of such conflict, and the
provisions of this Resolution shall be and remain controlling as to the matters resolved herein.
Section 4. This Resolution shall be construed and enforced in accordance with the
laws of the State of Texas and the United States of America.
Section 5. If any provision of this Resolution or the application thereof to any person
or circumstance shall be held to be invalid, the remainder of this Resolution and the application
of such provision to other persons and circumstances shall nevertheless be valid, and the City
Resolution 10-R-SS.doc
Council hereby declares that this Resolution would have been enacted without such invalid
provision.
Section 6. It is officially found, determined, and declared that the meeting at which
this Resolution is adopted was open to the public and public notice of the time, place, and subject
matter of the public business to be considered at such meeting, including this Resolution, was
given, all as required by Chapter 551, Texas Government Code, as amended.
Section 7. This Resolution shall be in force and effect from and after its final
passage, and it is so resolved.
PASSED AND ADOPTED, this 21St day of September, 2010.
CITY OF S HER ,TEXAS
ayor
ATTEST:
City Secretary
(CITY SEAL)
Resolution 10-R-SS.doc
EXHIBIT A
DECLARATION OF TRUST
See attached
1
Resolution 10-R-55.doc A-1
DECLARATION OF TRUST
I.
CREATION OF TRUST
The City of Schertz, as settler or creator of this trust (the "City"), designates the members
of the City of Schertz City Council from time to time to be Trustees and declares that the City
holds in trust the funds described in Schedule A attached hereto and incorporated herein by
reference, which is the property of the City, and all substitutions and additions to such funds, for
the purpose of providing or offering, whether now or possibly in the future, group health,
accident, and life insurance and other health benefits to .the City's officers, employees, and
qualified retirees, and their dependents. The trust shall be named and hereinafter referred to as
"The City of Schertz Employee Benefits Trust".
II.
PURPOSE
This is a nonprofit trust created for the purpose of providing or offering, whether now or
possibly in the future, City officers, employees, and qualified retirees, and their dependents with
life, disability, sickness, accident, and other health benefits either directly or through the
purchase of insurance and to perform operations in furtherance thereof.
III.
DURATION
The Trust shall continue until terminated by operation of law or by majority vote of the
Trustees.
IV.
TRUSTEES: COMPOSITION, OFFICERS, COMPENSATION, AND MEETINGS
A. COMPOSITION. The Trustees are the members of the City Council from time to
time, and the term of each Trustee shall be contemporaneous with his or her term of office as a
Member of the City Council. Whenever a Trustee ceases to be a member of the City Council,
the person succeeding him or her in office will automatically become a successor Trustee of the
Trust.
Declaration of Trust.doc
B. OFFICERS. The Mayor shall serve as Chair and shall preside at meetings of the
Trustees and shall have all such other powers as are conferred herein or by majority vote of the
Trustees at a duly called meeting at which a quorum is present. The Mayor Pro Tem shall serve
as Vice Chair and shall preside at meetings of the Trustees whenever the Chair is absent. The
Secretary shall rotate, coinciding with the City's Fiscal Year, between the Councilmembers
based upon their designated places, skipping the Mayor Pro Tem and beginning with the
Councilmember for Place 1. The Secretary will oversee the preparation of meeting agendas,
giving notice of meetings to the Trustees, and the minutes of the meeting of the Trustees.
C. COMPENSATION. The Trustees shall be reimbursed for all reasonable and
necessary expenses incurred by them in the performance of their duties and will otherwise
receive no compensation for their service as Trustees.
D. MEETINGS. A meeting of the Trustees may be called by the Chair or on written
request to the Chair by two or more Trustees. Trustees shall have at least three days written
notice of any meeting. For purposes of this section, electronic mail notice is written notice.
V.
RIGHTS, POWERS, AND DUTIES OF TRUSTEES; QUORUM AND VOTING
A. RIGHTS POWERS. AND DUTIES. In addition to all other powers and duties
conferred on them by this Declaration of Trust and imposed or authorized by law, the Trustees
shall have the following powers and duties:
1. The Trustees shall carry out all of the duties necessary for the proper
operation and administration of the Trust on behalf of the covered persons
and shall have all the powers necessary and desirable for the effective
administration of the affairs of the Trust.
2. The Trustees have the general power to make and enter into all contracts,
leases, and agreements necessary or convenient to carry out any of the
powers granted by this Declaration of Trust or by law or to effectuate the
purpose of the Trust. All such contracts, leases, and agreements or any
other legal documents herein authorized shall be approved by the trustees
Declaration of Tiust.doc 2
by majority vote at a duly called meeting at which a quorum is present and
signed by the Chair on behalf of the Trust. The Trustees may also
designate another Trustee to sign such documents.
3. The Trustees shall use the Trust's funds to accomplish the purpose of the
Trust, as described in Part II herein, and to operate and administer the
Trust solely in the interest of the covered City officers, employees, and
qualified retirees, and their dependents and for the exclusive purpose of
providing or offering benefits to such persons and defraying the
reasonable expenses of administration of the Trust. To this end, the
Trustees may purchase life, disability, or accident and health insurance to
provide or offer coverage for participating City officers, employees, and
qualified retirees, and their dependents. The Trustees may also adopt a
health benefits plan that covers eligible City officers, employees, and
qualified retirees, and their dependents.
4. The Trustees may accept contributions to the Trust funds from any source
including contributions from covered persons receiving benefits from the
Trust.
5. The Trustees shall be authorized to contract with any qualified
organization to perform any of the functions necessary for providing or
offering life, disability, sick, accident, and other health benefits, including
but not limited to excess loss insurance, stop loss insurance, claims
administration, administrative services, and any other services that the
Trustees shall deem expedient for the proper operation of the Trust. When
required by law or desired by the Trustees, the Trustees shall seek sealed
competitive bids or sealed competitive proposals with respect to contracts
required to carry out the operations of the Trust and to effect the purposed
of the Trust.
6. The Trustees shall arrange for the investing of the funds of the Trust so as
to keep the same invested according to law and at the best interest rates
Declaration of Trust.doc 3
obtainable for the benefit of the covered persons. The Trustees may hire
money managers and shall adopt an investment policy for its own use and
that of its agents in making investments. The Trustees shall select a
depository for the Trust's funds and provide for the proper security of any
and all investments. The Trustees shall designate signatories for the
Trust's depository accounts.
7. The Trustees may purchase, out of the Trust funds, insurance for the
Trustees and any other fiduciaries appointed by the Trustees and for the
Trust itself to cover liability or losses occurring by reason of the act or
omission of any one or more of the Trustees or any other fiduciary
appointed by them. Any insurance purchased by the Trustees must give
the insurer recourse against the Trustees or other fiduciaries concerned for
breach of any fiduciary obligation or fiduciary duty owed to the Trust.
8. The Trustees shall arrange for proper accounting and reporting procedures
for the Trust's funds and shall also provide for an annual audit of the
Trust's financial affairs by a certified public accountant.
9. The Trustees may retain legal counsel to represent the Trust and the
Trustees in all legal proceedings as well as to advise the Trust and the
Trustees on all matters pertaining to the operation and administration of
the Trust.
10. The Trustees have the authority to terminate the Trust at any time.
11. Upon termination of the Trust, the Trustees shall provide for the payment
of Trust obligations, debts, losses, and other liabilities and shall provide
for the disposition of the remaining Trust funds in accordance with Part IX
herein.
B. QUORUM AND VOTING. A majority of the Trustees shall constitute a quorum
for the transaction of business at any meeting of the Trustees, and the vote of a majority of the
Declaration of Trust.doc 4
Trustees present shall be required for approval of any action at such meeting. The vote of such
majority of the Trustees at such meeting shall constitute action of the Trustees as a group.
VI.
BENEFICIARIES
The beneficiaries of the Trust are the City officers, employees, and qualified retirees, and
their dependents who are covered by a life, disability, sick accident, or other health benefits plan
purchased or adopted by the Trust (also called "covered persons" herein). Beneficiaries may
make contributions to the Trust for use by the Trustees in fulfilling the purposes of the Trust. No
beneficiary shall have any claim against the funds or any other property of the Trust. The rights
and interests of the beneficiaries are limited to the insurance or health benefits specified in any
policy purchased or plan adopted by the Trustees.
VII.
TRUST FUNDS
The Trust funds consist of the funds described in Schedule A hereto as provided by the
Settlor to institute this Trust, future contributions by the Settlor, beneficiary contributions,
investment income, and any other money or property which shall come into the hands of the
Trustees in connection with the administration of the Trust. The Trustees may use the Trust's
funds as follows:
1. to pay all expenses which the Trustees consider necessary in establishing
the Trust and in administering the Trust and all reasonable expenses
incurred by the Trustees in the performance of their duties;
2. to pay premiums on any insurance policies purchased by the Trust;
3. to make authorized investments;
4. to pay claims under any health benefits plan adopted by the Trustees;
5. to pay for all necessary professional services, property, and equipment
required for the proper operation of the Trust;
6. to pay all legal obligations of the Trust; and
Declaration of Trust.doc 5
7. to pay any judgment entered against the Trust or to compromise and settle
litigation in which the Trust is a party.
VIII.
LIABILITY OF TRUSTEES AND OFFICERS
The Trustees shall use ordinary care and reasonable diligence in the exercise of their
powers and the performance of their duties hereunder, and they shall not be liable for any
mistake of judgment or other action made, taken, or omitted by them in good faith, nor for any
action taken or omitted by any agent, employee, or independent contractor selected with
reasonable care; nor for loss insured through investment of the Trust funds or failure to invest.
No Trustee shall be liable for any action taken or omitted by any other Trustee. No Trustee shall
be required to give a bond or other security to guarantee the faithful performance of his or her
duties hereunder. To the fullest extent permitted by law, (a) the Trust shall indemnify each
Trustee who was, is or is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding ("Proceeding"), any appeal therein, or any inquiry or investigation
preliminary thereto, by reason of the fact that the Trustee is or was a Trustee; and (b) the Trust
shall pay or reimburse a Trustee for expenses incurred (i) in advance of the final disposition of a
Proceeding to which such Trustee was, is, or is threatened to. be made a party, and (ii) in
connection with such Trustee's appearance as a witness or other participation in any Proceeding.
IX.
AMENDMENT, REVOCATION, AND TERMINATION
This Declaration of Trust and the Trust created herein shall terminate when and if
required by operation of law. The Trustees shall have the power to amend, modify, terminate, or
revoke, in whole or in part, this Declaration of Trust and the Trust created herein by majority
vote at a duly called meeting at which a quorum is present. Notwithstanding the foregoing, the
Trustees shall have no power to amend Part II of this Declaration of Trust. Beneficiaries of the
Trust shall have no right to amend this Declaration of Trust, and their approval shall not be a
condition or requirement for an authorized amendment by the Trustees.
Upon termination of the Trust, the Trustees shall pay all obligations, debts, losses, and
other liabilities of the Trust. Thereafter, the Trustees shall first use the remaining Trust funds to
pay covered claims of persons covered under the City's health benefits plan that maybe in effect
Declaration of Truust.doc 6
at the time of termination of the Trust and, then, either apply any remaining balance of the funds
for the benefit of those covered persons in such manner as the Trustees determine shall best carry
out to purposes of this Trust or pay such balance over to such covered persons on a per capita
basis. Notwithstanding the foregoing, the Trustees, upon termination of the Trust and payment
of all Trust obligations may, by vote of a majority of the Trustees, transfer the remaining funds
or any portion thereof to the Trustees of any Trust or Trusts established by the City for a
substantially similar purpose to be applied for uses substantially similar to those set forth in
Part II herein.
X.
GOVERNING LAW
This Declaration of Trust and the Trust created herein shall be construed and governed by
the laws of the State of Texas in force from time to time.
XI.
MISCELLANEOUS
Whenever the context so admits and such treatment is necessary to interpret this
Declaration of Trust in accordance with its apparent intent, the use herein of the singular shall
include the plural, and vice versa, and the use of the feminine, masculine, or neuter gender shall
be deemed to include the other genders.
The captions or headings above the various Parts and Paragraphs of this Declaration of
Trust have been included only to facilitate the location of the subjects covered by each Part or
Paragraph but shall not be used in construing this Declaration of Trust.
If any clause or provision of this Declaration of Trust proves to be or is adjudged invalid
or void for any reason, such invalid or void clause, provision, or portion shall not affect the
whole, but the balance of the provisions hereof shall remain operative and shall be carried into
effect insofar as is legally possible.
[The remainder of this page intentionally left blank.)
Declaration of Tivst.doc 7
IN WITNESS WHEREOF, the undersigned parties have executed this Declaration of
Trust, consisting of ten (10) pages and Schedule A attached hereto, on the dates of their
respective acknowledgments below. By joining in the execution of this Declaration of Trust, the
Trustees acknowledge receipt of the property described in Schedule A, signify acceptance of the
Trust created hereunder, and covenant that the Trust will bee ' cuted with all due fidelity. This
Trust is effective as of the last date of signature below
Mayor, Hal Baldwin, Settlor and Trustee
Co ncilman Place 1, Jim Fowler, Trustee
Cou Gilman Place 2, vid cagliola, Trustee
Coup i 3, George Antuna, Trustee
Councilman Place 4, Ce dwards, Sr., Trustee
Co nci an Place 5, Michael Carpenter, Trustee
Declaration of T~ust.doc S-1
STATE OF TEXAS §
COUNTY OF GUADALUPE §
This instrument was acknowledged before me on September/ , 2010, by Hal Baldwin,
Mayor of the City of Schertz on behalf of Settlor.
Notar Pub ic, State f Texas
Print Name: /nQ,,,P u . L1,~ c~22a.
My Commission expires: -Sz-~z -02 of
Y G G
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STATE OF TEXAS § `;'q~ Commis~~on Ex~@~~s
COUNTY OF GUADALUPE §
This instrument was acknowledged before me on September , 2010, by Jim Fowler,
Trustee. ~/~/1
a1G~i ~ J
Notary Public, Stat of Texas
Print Name: f7~1a,,2 u ~/6
My Commission expires: ap2 -moo/~
Ilit";ri sE 1 R
p~ ~ ~ ~ G~ PubltG ~s
STATE OF TEXAS § = ~ - os Texas
§ ~ ~ soF? ~~~#i?~8
COUNTY OF GUADALUPE § "`'~`µ~4' "3 ~`x ~
This instrument was acknowledged before me on September ~J , 2010, by David
Scagliola, Trustee.
Nota
y
P lic, State Texas
Print Name: iY1GZ,~ u ~ . ar~'a~
My Commission expires: ~ -aZO/S~
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Declaration of Trust.doc S _2
STATE OF TEXAS ' §
COUNTY OF GUADALUPE §
This instrument was acknowledged before me on September 2010, by George
Antuna, Trustee.
Notary Publi ,State Texas
Print Name:
My Commission ex Tres: ~ - ~ CI/ ~
STATE OF TEXAS § - ~ f '
§ ; .
COUNTY OF GUADALUPE § ~ -y ey,~~;~:~~ . --:.w
This instrument was acknowledged before me on September ~I , 2010, by Cedric
Edwards, Sr., Trustee.
a.2~s a~ ~~r J
Notary Pub c, State Texas
Print Name: YI') a.~2 a ~~a /Z,2c
My Commission expires: ~--~a -~O/~
P,r. _ .
M1:.
STATE OF TEXAS § ~ ~
COUNTY OF GUADALUPE §
This instrument was acknowledged before me on September ~,l/ , 2010, by Michael
Carpenter, Trustee.
,d~~~ /
Notary Publ c, State o~I'exas
Print Name: ~ri~„/z U ~ . C/ Cc.,~2,~ w
My Commission expires: ~ ~ -~U/~
Declaration of Trust.doc S-3
SCHEDULE A
The following is a list of the assets initially transferred by the City of Schertz, Settlor, to
the Trust:
City of Schertz's first month (October 2010) contributions for Employee, and Dependent
Medical/Pharmacy Benefits, Dental Benefits, Life Insurance Benefits, and Long Term Disability
Benefits.
City of Schertz Employees and Dependents first month (October 2010) of Plan Year's
payroll deductions or contributions for Medical/Pharmacy Benefits, Dental Benefits, Life
Insurance Benefits, and Long Term Disability Insurance Benefits.
Declaration of Trust.doc Schedule A