Colorado Springs separates liability and workers’ compensation reserves from Utilities

The Colorado Springs City Council adopted ordinances Sept. 8 separating the city’s liability and workers’ compensation reserves from those of Colorado Springs Utilities and setting new authority for settling liability claims. The ordinances take effect Sept. 16.

The council approved both measures in a 9-0 consent-calendar vote, according to the Council meeting record.

Ordinance 26-46 creates separate City Claims Reserve and Utilities Claims Reserve funds for tort-related claims, federal-law claims, settlements, judgments, defense costs and insurance-retention obligations. Money remaining at the end of a fiscal year stays in the fund for which it was designated.

The ordinance also creates separate City and Utilities Claims Review Boards. Each board includes officials serving by position or designee, including the applicable chief financial officer, city attorney, top executive or mayoral representative, and director or manager of the affected department. Three members constitute a quorum.

For ordinary liability claims, the applicable risk manager may settle claims up to $50,000. The city attorney may settle claims up to $150,000, and the Claims Review Board may approve settlements up to $250,000. City Council approval is required above $250,000. For police-use-of-force claims, the city attorney’s limit is $100,000, the board’s limit is $200,000 and council approval is required above $200,000.

The ordinance requires a claims settlement report before a matter is settled. It also requires financial activity in the two liability reserve funds to be reported in the respective comprehensive annual financial reports. The city auditor must examine the reserve funds, related deductible accounts, claims procedures, accounting practices and use of settlement authority at least once every four years and present findings to the council.

Ordinance 26-47 creates separate City and Utilities Workers’ Compensation Claim Reserve Funds. The funds must be accounted for independently and may not be commingled. They will cover employee claims, investigations, settlements, judgments, defense costs and administration.

The workers’ compensation ordinance does not create settlement thresholds, a Claims Review Board or a separate council preapproval requirement. It assigns management and investment of each fund to the applicable chief financial officer and requires the CFO to approve payment requests. City and Utilities claims managers may investigate, admit, deny, compromise or settle workers’ compensation claims for their respective employees.

The ordinances establish the reserve and oversight framework but do not specify an appropriation, current reserve balance or projected liability.