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Originally Adopted by MVRMA Board: March 20, 1995
Amended: June 16, 2008
PURPOSE OF A DISBURSEMENT OF SURPLUS LOSS RESERVE FUNDS POLICY
As a loss year closes out, the loss reserves for that particular year become available to the membership. The MVRMA Bylaws outline several alternatives for handling each city's share of these surplus funds including the issuance of a refund, a credit to an upcoming annual billing or some combination thereof.
The purpose of this policy is to prescribe a consistent procedure for handling these funds.
POLICY STATEMENT
When all known claims and lawsuits have been settled and paid, the Executive Director shall notify the Finance Committee. The Finance Committee will make a recommendation to the full Board at its next meeting to declare the loss year closed, if the loss year has been in existence at least four years. The Board may then declare the loss year "closed." The remaining loss reserves for that year are considered "surplus."
Once the loss year has been declared closed by the MVRMA Board, the remaining loss reserves may be distributed. Within thirty (30) days of declaring the loss year closed, MVRMA will deposit each member’s surplus to the General Reserve Fund held by MVRMA, unless notified in writing, prior to that time of the municipality’s decision to:
1. Apply all or a portion of its surplus to any outstanding MVRMA invoice.
2. Receive all or a portion of its surplus in the form of a refund.
GENERAL RESERVE FUND
Participation in the General Reserve Fund is voluntary. The fund is established with surplus loss funds from closed loss years with separate accounting designed to preserve each member municipality's percentage ownership. All interest is allocated proportionally to each member's percentage ownership in the General Reserve Fund.
The primary purpose of the General Reserve Fund is to provide a means for stabilizing premium contributions from year to year, without substantially impacting a member’s budget. These funds may be used to supplement payment of any MVRMA invoice throughout the year.
Other withdrawals are permitted only in January, unless otherwise approved by the Executive Director.