Officials in the WOLF Pack, Wyckoff-Oakland-Franklin Lakes, presented an amendment to the Bergen County JIF – Joint Insurance Fund- to allow individual towns to negotiate fees paid to Risk Managers. The amendment promoted by the WOLF Pack will allow local officials to keep whatever remains of the existing 6% required thru the bylaws. The Mayors of Oakland and Wyckoff argued the case to allow significant savings for municipalities who now are forced to pay 6% as specified below:
“On behalf of the member, the Fund shall pay the Risk Management Consultant a fee of 6% of the annual assessments of members served by the Risk Management Consultant. This fee shall be paid quarterly and each member’s assessment shall separately identify the fee to be paid to the Risk Manager. In the event a member changes its Risk Manager during a Fund Year, the Fund shall prorate the Risk Management fee.”
The idea behind joint insurance is to bring together a number of local governments to pool the resources needed for self-insurance, jointly purchase insurance needed to cover large claims, and create the specialized administration needed to effectively manage the program. Each JIF in New Jersey creates its own bylaws for member communities, and the bylaw that Wyckoff, Oakland, and Franklin Lakes would like to see amended is focused on fixed compensation for Risk Managers. This is a substantial amount of money that increases annually as payments go up. While it apparently lacks the logic of a competitive bid process, it also guarantees a substantial fee increase for consultants without the addition of new services. In comparison, the Monmouth County JIF states in its bylaws offer a caveat for the 6% rule:
“Unless otherwise directed by the municipality, the Fund shall pay to the named consultant a fee equal to six percent (6%) of the municipality’s assessment…”
The proposed amendment needs 75% of the members to vote in the affirmative for it to be passed. According to publicly available information from the Bergen County JIF, there are 13 towns who are home to consulting agencies profiting by the existing structure. This would leave approximately 25 towns, amongst them Wyckoff, Oakland and Franklin Lakes, who’s only apparent interest can be assigned to municipal cost cutting. While there is no indication other town representatives might base their decision on politics, the WOLF Pack appears to lack that specific baggage. 25 towns is only slightly less than the three quarters required for approval.
According to research conducted by The Journal, there are approximately 38 towns in this Bergen JIF which is overseen by 7 committee members who are either town administrators or elected officials. There are approximately 14 Risk Consultants working for the Bergen County JIF representing one or several towns. Of the 7 committee members, Ridgewood stands alone as the only member not to be home to one of the Risk Consultant providers. The remaining 6 members of the Bergen County JIF board have at least 1 of 14 well compensated consulting agencies within their own borders.
The Bergen County JIF, Joint Insurance fund, originally started in 1985 when many municipalities needed to find a new formula for affordable insurance. Prior to the formation of JIFs, local governments had two choices for their property/casualty programs – commercial insurance or individual self-insurance. The problem of individual self-insurance is that most local governments are not large enough to retain a substantial portion of the risk. There are many JIFs through out the state of New Jersey, but the first municipal JIF in New Jersey was established by fourteen Bergen County municipalities.